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Why Legal Directors are Bringing E-Discovery In-House

Created on March 8, 2019


E-Discovery Market Analyst at Exterro

In-house counsel play many roles for their organizations. They advise on legal issues and business transactions. They develop and implement company policies, ensuring that the organization complies with relevant laws and regulations. They oversee litigation, working with outside counsel to set strategy, and managing the relationship with outside firms and legal service providers.

But as litigation costs have ballooned in legal years, they have been compelled to find ways to control legal costs and mitigate risks.  And for large organizations with terabytes of data and dozens if not a hundred or more ongoing civil matters, e-discovery operations has been a prime target for both of these objectives.

After all, RAND’s famous e-discovery study, Where the Money Goes: Understanding Litigant Expenditures for Producing Electronic Discovery, found that organizations spent an average of 96% of all e-discovery expenses externally. Organizations began to realize that something needed to change, and that something was bringing e-discovery in-house with the use of technology. Just a few years later in 2015, according to the “Law Firms in Transition Survey,” conducted by Altman Weil, 67% of law firms said they were currently losing business to corporate law departments who had taken a DIY approach.

Additionally, bringing e-discovery operations in-house can reduce risk by providing greater control over both strategy and outcomes. In-house counsel can take greater control over preservation, ensuring against accidental spoliation; assess data earlier with Early Case Assessment techniques, allowing them to set strategy; and establish and refine review parameters that accurately reflect both relevance and privilege.

These two goals have been growing in importance for several years, as the evidence presented in Exterro’s series of In-House Legal Benchmarking Reports have shown. In 2018, the data revealed that this trend is now reaching deeper into the mid-market organizations, with smaller legal teams and lower volumes of ongoing litigation than the traditional enterprise market for e-discovery technology.

We first asked the question Why Bring E-Discovery In House? to legal directors in a white paper in 2015, we found that the big factors were achieving three goals:

  • Predictability: Consistency breeds predictability. It's easier to develop consistent outcomes when more of the process is being handled in house.
  • Efficiency: Internal teams have a better understanding of corporate systems and business processes and can get to key electronically stored information (ESI) much quicker than can external parties.
  • Risk Mitigation: Gaining a centralized view of e-discovery activities helps to prevent against accidental deletion of data that is tied to multiple matters.

For legal directors, the most common answer to that question is reducing external litigation costs, which for many large companies add up to many million dollars every year.

However, bringing new e-discovery technology in-house can be a tedious, time-intensive endeavor. It’s not one click and then you’re done, like downloading an app on your phone. There are numerous groups (inside and outside your organization) which need to be consulted for a successful implementation.

Challenges of In-sourcing E-Discovery

Despite the compelling reasons listed above for bringing e-discovery in house, legal directors face a number of structural and cultural hurdles that make such projects challenging, including:

  • Demonstrating ROI: Like any business process, e-discovery requires internal investment in people, process and technology to run efficiently. Getting a capital expenditure approved at a large corporation can be an uphill battle that requires very thorough justification. This can be difficult when e-discovery expenditures are not closely tracked.
  • Workload Fluctuations: By its nature, e-discovery is unpredictable, and demands fluctuate greatly over time. It's a challenge for any legal director to assess the level of personnel resources needed to handle routine e-discovery demands, while building in the necessarily flexibility for the peaks in workload.
  • Opportunities for Mistakes: The e-discovery process is loaded with dependencies, and bringing more of the process in house can increase opportunities for mistakes. Seemingly minor mishaps in the earliest stages of the process not only impact subsequent steps but can expand into larger issues if not immediately addressed.

Best Practices
Any organization with a large litigation portfolio is going to have established processes for how things are done, and it's important to remember that e-discovery is only one part of a much larger legal ecosystem. The best way to gain alignment from senior leadership to break from the status quo is to develop a plan, make a compelling business case for why investment in e-discovery technology is necessary and demonstrate continued value to the organization.

  • Assign a project manager who is responsible for keeping everything on track.
  • When putting together your business plan, find your past costs for e-discovery in comparison to the cost of the software and incorporate them into the plan.
  • Find your key players and get cross departmental buy-in early on
  • Finally, understand your internal processes so you have a clear idea of what you’re fighting for

For more tips on implementations, check out this blog’s interview with an e-discovery expert, Three Keys to a Successful E-Discovery Solution Implementation.

Conclusion

Like most things that any of us do, cost savings is the primary driving factor. But bringing e-discovery in-house also brings with it the benefit of defensibility. With the latest in e-discovery tools, it now becomes possible to employ a consistent, repeatable, and defensible process that includes the metrics and visibility required to more effectively manage, measure, and optimize for predictable outcomes.