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Investing in E-Discovery Versus Showing it the DoorConcordance and Summation are two words familiar through the halls of nearly every large law firm in the country. They are two of the most commonly used early platforms for managing basic, electronic data coming in and out of law firms.
2012-11-15 12:00:00 AM
Editor's note: This is the second installment of a four-part series examiningthe ways in which firms are managing e-discovery work and whether there is profit to be had in such endeavors.
Concordance and Summation are two words familiar through the halls of nearly every large law firm in the country. The early versions of the programs were the most commonly used platforms for managing electronic data for trial.
Even firms that have insourced the entire e-discovery process still use early versions of Concordance and Summation for small matters. But the growing number of matters are far from small when it comes to the amount of electronic data in even the simplest of cases.
The question then becomes, should firms invest in newer, more modern software and the infrastructure to run them internally or should they outsource larger e-discovery projects to vendors that have the staffing and latest technology?
While many business decisions in the legal industry get implemented across firms like falling dominoes with one firm following what a competitor before it did, such is far from the case in e-discovery.
Models are varied and most firms are still undecided. The Legal spoke with a few firms across the spectrum about how they've approached the delivery of e-discovery services.
Leave it to the Experts
Ralph Losey is a partner in the Orlando office of labor and employment boutique Jackson Lewis. He serves as the firm's national e-discovery counsel and chairman of its e-discovery practice group. For nine months he reviewed the firm's internal e-discovery service offerings and decided in June to outsource to Kroll Ontrack all nonlegal e-discovery work that the firm's litigation support department had been handling.
Kroll will now handle forensic investigations, collections, processing, hosting and advanced software that includes predictive coding when needed. Jackson Lewis will handle the legal work, including advising clients on litigation readiness, interviewing witnesses, handling court conferences, issuing document requests to opposing parties, conducting computer-assisted review, filing motions and handling trials.
If a matter is small enough, Jackson Lewis associates will do the document review, and if the matter is too large, Kroll's document review center will handle it, Losey said.
"The big mistake law firms make is that they don't understand the complexity of e-discovery," Losey said. "There's such confusion and muddiness. Law firms should do what they are supposed to do and the only thing they have a license to do, honestly. That is legal services."
Losey said most e-discovery work is legal advice, something vendors aren't allowed to provide.
Many firms that bring the e-discovery process and technology in-house say they can offer clients cheaper rates through leveraging that work across their client roster. But Losey said he was surprised to find out that by leveraging all of the firm's buying power on one vendor, Jackson Lewis was able to charge less than what its litigation support department was charging, which he said was already below traditional vendor prices.
That was a pleasant surprise for Losey, who was hoping to be able to divest the firm of nonlegal e-discovery work.
"I believe a professional organization whose job it is to do e-discovery is always going to be better than a department in a law firm because that's not what we do," Losey said.
While Losey said many people disagree with his approach and feel only a law firm could provide its clients with the best quality, he said that was "naive." He said firms don't realize how good vendors have become and the special treatment they will provide firms that hand over their entire e-discovery portfolio.
"I'm telling you from experience, it's more trouble than it's worth," Losey said of insourcing e-discovery business.
But from the perspective of firms such as WilmerHale and Morgan, Lewis & Bockius, it has been worth doing just that.
Stephanie A. "Tess" Blair heads up Morgan, Lewis & Bockius' 70-person eData practice group in which the firm has insourced the entire e-discovery practice.
Aside from Blair, there are two partners and three directors with the rest of the group split between associates and technologists. The more senior lawyers advise clients on litigation readiness and the rest of the team handles the spectrum of e-discovery, from collections to processing and hosting to review.
Blair said the vast majority of firms have someone like her a lawyer who understands e-discovery. But often that work is done part-time, she said. The predominant model at this point, she said, is for there to be a lawyer who understands the legal and tech issues, has a few litigation support people in-house to assist and outsources the rest of the process. Oftentimes firms will do some processing and document review through Concordance or Summation, she said.
At Morgan Lewis, the firm still uses Concordance for its smaller matters and had purchased Recommind's Axcelerate technology with predictive coding for the firm's largest, most sophisticated matters.
Blair said the firm realized it didn't always need the "big guns," as many matters could be handled in more "middle-market" technology. So this summer the firm invested in a third software platform, kCura's Relativity with Equivio.
Morgan Lewis does e-discovery work for its own clients and also goes out and competes against vendors and other firms to serve as discovery counsel even when Morgan Lewis isn't the merits counsel on a matter, Blair said.
The associates in the eData practice serve as project managers, shepherding the document review process along and doing some of it themselves. Morgan Lewis also has a contingent of 200 to 300 document review contract lawyers on staff. The contract lawyers aren't hired for specific matters, but rather serve at the firm continually, and often for years at a time, Blair said. Document review is not outsourced to vendors, she said.
Morgan Lewis has four document review centers two in Philadelphia, one in Washington and one in San Francisco. The firm also has a small center in New York for specialized matters, such as foreign language review.
"There's a certain level of competency every lawyer has to have now and every firm needs to meet that threshold and competently give legal advice related to discovery," Blair said. "Now whether you want to make an investment, and it really is ... some might say that's not our sweet spot or core competency and we'll just develop the basic level needed and outsource the rest. That's perfectly reasonable."
Blair said Morgan Lewis felt it was worth the investment to insource and could structure the department to deliver cost-effective, high-quality work. She said the eData practice also gives her colleagues in other practice areas a competitive advantage when they are pitching for work.
Blair said it could be challenging to bring work in-house in the current environment because clients have become very good at unbundling the litigation process and often put out the discovery piece to a competitive bid.
For Drinker Biddle & Reath, the time was right to bring the process in-house. The firm is a few months into the launch of its subsidiary, Drinker Discovery Solutions.
Michael J. Boland, managing director of the subsidiary, said there are a few of the law firm's clients who can't use the subsidiary at this point because they have preferred provider relationships with e-discovery vendors. And there are clients who are bringing e-discovery matters in-house, or, like some large corporations, are hiring e-discovery directors.
Boland said that is a good thing and doesn't eliminate the need for outside lawyers who have e-discovery experience on several matters across more than one client type.
"I don't think it's going to limit the work from a law firm standpoint," he said.
Drinker Discovery Solutions has signed on more than 50 matters since its launch and is currently hosting more than six terabytes of data, he said. The subsidiary, which is housed in Drinker Biddle's law offices in Chicago, Philadelphia and elsewhere, does not have a document review center. Drinker Biddle attorneys do the document review for smaller matters. If a matter requires 15 or more lawyers, Drinker Discovery Solutions contracts it out. The subsidiary purchased HP's e-discovery software, Autonomy.
Boland said there isn't a right answer for how firms should handle e-discovery.
"That's what people don't want to hear," he said.
He said it worked for Drinker Biddle to bring it in-house because the 650-lawyer law firm has a substantial litigation practice that creates a need for e-discovery work. The firm saw it as a good way to address a pain point for clients the cost of e-discovery. Drinker Discovery Solutions is also looking to do work for clients who are not clients of the law firm.
In a smaller firm that has 125 lawyers or only 20 percent litigation, the capital investment might not be there to bring the service in-house. It might make sense for that firm to buy just one piece, Boland said.
For WilmerHale, the firm's Dayton, Ohio, back-office business services center provided the perfect place for the firm to hire document review lawyers and technicians at lower salaries to run WilmerHale Discovery Solutions.
Along with a group of more senior lawyers and a director of operations in various WilmerHale offices, the firm employs 60 document review lawyers in Dayton.
New York-based Steven Berrent, managing director of WilmerHale Discovery Solutions, said the firm brought advanced technology from Recommind in-house to increase the efficiency in which the firm managed matters and to save clients money.
The firm still uses vendors, as some clients have strong relationships with vendors, Berrent said. But clients have the option to use the technology the firm has invested in and become familiar with, he said. WilmerHale Discovery Solutions only works on matters in which the law firm is engaged as counsel.
"We're not looking to drum up business just for Discovery Solutions," Berrent said.
Because of the increased volume of data in the discovery space, the distance between the merits counsel who uses that data at trial and the discovery of those facts has grown. In the paper days, Berrent said, the person who looked at all of the documents was the same one who ultimately took depositions, wrote briefs and went to trial.
"A commoditized view of document review removes the people most interested in the facts from the discovery of those facts," Berrent said.
While the firm realizes things can't go back to the paper days, Berrent said senior attorneys can leverage technology to become more familiar with the facts. Berrent said bringing work in-house is a financial and time investment that is admittedly hard to do.
"No one will criticize for just pushing it all out," Berrent said. "The problem or question for us is, at some point you have to have an understanding of the facts. We'd rather be more involved with that."
Underlying any conversation about e-discovery is the concern over growing costs for clients. But law firms and vendors are not charities and there are billions of dollars at stake in this space. Read Friday's installment of Discovery Dollars in The Legal to see who can get a piece of the estimated $5 billion pie.