A few years ago, many corporations would leave the heavy lifting of e-discovery to outside counsel and vendors. Additionally, many of those outside counsel firms would do the same, playing more the role of a broker than a participant. But, increasingly, both corporations and law firms are creating structured groups or departments to effectively handle e-discovery.

These e-discovery groups are being defined and organized into different models, running the spectrum from fully outsourced to fully insourced, and any number of hybrid approaches in between. This article will help corporate legal departments and law firms determine what model is best for their organizations and point to some common stumbling blocks in each.

For years, companies and law firms have leveraged vendors to a high degree to deal with e-discovery issues, process and technology. Corporations would often rely on their law firms to point to reputable vendors for e-discovery services. Law firms would have existing relationships and often get preferred pricing, which clients could leverage. As time progressed, corporations started interjecting themselves into the process. Now, it is not uncommon for larger corporations to have a preferred vendor list or require outside counsel to use vetted e-discovery vendors where the corporation has negotiated national or preferred pricing. But as access to technology grows, so too has the extent to which corporations are willing to dive into the e-discovery pool.

As e-discovery technology companies have expanded sales efforts, software is now being purchased and leveraged within the walls of corporations. Additionally, law firms are bringing in-house more pieces of technology in an effort to limit the reliance on vendor services. Both instances are allowing the organizations to control a larger percentage of the overall workflow and cost. This evolution has occurred for one main reason: the need to control costs associated with e-discovery.

The latest trend is to charge or hire a person in the organization to create outright an e-discovery group where none existed, to revamp an e-discovery group or litigation support group, or leverage existing resources to find solutions to e-discovery. As a result, directors of e-discovery are an emerging role in larger corporations and law firms.

When creating or revamping an e-discovery group, the first step is to assess what type of model you are using and what type of model you want to be using. What type you currently use should be easy enough to determine. List all the technology and people you have in place and determine how much of the overall process your corporation or law firm is involved in from legal hold to trial. It should fit in one of the following models (discussed in more detail below): outsourced, insourced or hybrid. An actual pen-to-paper process is recommended; you may be surprised by the results.

To determine what model you would like to be using, or should be using, first requires an examination of your goals. For instance, if you are building a group for a corporation, do you want increased access to technology? Risk mitigation? To develop skill sets within staff? To decrease costs or increase efficiency? The same questions apply for law firms, but they should ask these additional questions: Do you want the e-discovery group to be a pass-through cost to clients, a profit center, a cost of doing business? Will it be a marketing tool? Additionally, ask some questions about your organization: What does your litigation profile look like? What is your annual e-discovery spend?

The first thing to keep in mind is that no one model is the right one and no model will be the same from one organization to the next. The trick is finding the right one for your organization. Additionally, build flexibility into the model so it can mature and develop. It is not uncommon for a model to mature and change over time. One that started as a fully outsourced model may become more and more insourced as technology is adapted and understood or the skill set of your people grows and changes. This is why it is important to clearly outline your goals and keep an eye toward achieving those goals.

Once the leg work has been done, you can then look to choosing what type of model will work best for your organization. There are three broad bucket categories that you can fit all e-discovery groups into. This is really a sliding scale from a fully outsourced model on the left-hand side to a fully insourced model on the right-hand side. The hybrid model captures the middle ground. The following is an examination of the characteristics of each model and some of the pitfalls within each to watch out for.

Outsourced Model

A fully outsourced model means an organization will rely on vendors for virtually all services. Legal hold management will be done by one vendor; enterprise collection and forensics work will be done by vendors specializing in this area; processing of data, analytics and culling, hosted review and production will typically be done by another vendor; trial support services and graphics will be done by yet another vendor.

It is possible that all of these services will be offered by the same vendor. The move by e-discovery vendors in recent years has been to expand their service offerings to cover a full “end-to-end” solution. This means different things to different vendors, and the likelihood is that every vendor has a stronger set of skills in one area over another.

To set up a fully outsourced model, it is necessary to start the relationships. Finding the right single vendor or mix of vendors is not an easy task. The RFP process, should you choose to use this method, is long and tedious. An RFP is only as good as the questions asked, the answers received and to whom it is sent. Compiling all of the RFP responses into a digestible and comparable format is equally as challenging.

Approach the work systematically. Prioritize the areas that need the most attention or that are most easily parceled off. Work on establishing those services first and start to build out slowly. Instead of an RFP process, attend a couple of the larger e-discovery conferences, like ITLA or LegalTech. Do research, read papers and articles, join social networking groups and, above all, ask lots of questions. Find an organization that has done it before and reach out for advice. Doing this can yield better results than an RFP and can take less time.

Some of the larger stumbling blocks found in this model come largely from misconception. Often it is thought that the organization does not have to do much work anymore, that vendors will take care of it. But, in reality, project management will be critical to the success of this model. Other inherently necessary tasks, like tracking, budgeting, relationship building, managing expectations and creating overall workflows and billing and invoicing, also make this approach a very large job.

Last, you do not want to find yourself in a contract or relationship that is difficult to get out of or where your organization is now heavily dependent on that of another. Similarly, as your data set grows within the vendor of choice, it will be harder and harder to move it.

Insourced Model

A fully insourced model is one where there is little-to-no reliance on vendors. The law firm or corporation in this model makes a capital investment up front to purchase the right technology and hire the right people. The organization then builds a consistent and defensible process and workflow around the new resources to meet the e-discovery demands of the organization.

Typical technology investments include bringing in-house the ability to manage litigation holds in a central tool and to handle and manage collection of ESI in a forensically sound manner. Next would be the ability to process ESI, which is really indexing and preservation of metadata. After processing, there is technology needed to conduct culling, searching and advanced analytics. What comes out of the culling phase would get put into some type of hosted review and production database, which would be the last and most scrutinized piece of the technology puzzle. If you have trial needs, there would also be a host of trial software and graphics applications to consider in the courtroom setting.

Technology, regardless of what your e-discovery software sales representative says, is no magic bullet, and owning the right technology will not automatically solve your e-discovery woes. You also need the right people to run the technology, to build the processes and workflows and maintain and mature the whole model moving forward.

To find the right mix of people and technology, again turn to a systematic approach. Determine what your greatest need is and focus on that first. For example, if you want to replace a review database like Concordance with a new hosted review platform, do that first and build out from there.

The priority of focus with the insourced model will be different among different size corporations and law firms. For example, legal hold management should be a priority and a strong consideration for insourcing in most corporations, while enterprise collection would be in that consideration set for large corporations.

Further, processing, analytics, searching and culling, as well as hosted review and production, could be on the consideration list for corporations, but it is far more likely that law firms would benefit from bringing in this type of technology. The infrastructure and staff needed to run it on par with a good vendor are often too much for a single corporation, given the inconsistent nature of the demand.

One of the bigger pitfalls of this model is that of scalability. As the work increases, so do the demands on the technology and people. More people will be needed, additional technology will get added. Depending on the goals of the group and the type of organization you are in, this could pose issues. Another issue with this model is one of pure maintenance. Technology upgrades, process improvements, documentation, project management software, HR issues, billing and invoicing, legal conflicts and agreements … the list is endless when it comes to maintaining the whole group. It is easy to lose sight of your goals when dealing with so many day-to-day business aspects.

Hybrid Model

Anything that is not fully outsourced or fully insourced falls in the hybrid model. In reality, most models are really hybrids. Again, it is a sliding scale.

Hybrid models leverage both vendor relationships and purchased insourced technology to cover all points in the workflow. Your organization also will exist as a hybrid if you are moving from one model to another. You may have made the choice to bring everything in-house, but that process will take a number of months or years. You tackle the most pressing areas in the workflow first and leave the rest for vendors. Or you may find that a certain aspect of the workflow is not something your organization wants to get involved with. Forensic and collection work are a good example. Many organizations leave this to vendors because of the skill level at which many of these specialists are trained, or because of potential conflict issues with collecting your own data or your own client’s data.

Though all three models will continue to mature over time, and the general buckets are likely to remain the same, there is no quick fix for solving your e-discovery issues.

Close examination of your organization and clearly defined goals are the starting point. Technology will help, but the right people are critical to bring that technology to full potential. Your internal workflow and the process you build around your chosen model are the glue that holds it all together.

Lastly, your e-discovery efforts are never complete. The latest hot e-discovery technology will be replaced, new disruptive technology will appear in business, data sizes and types will continue to grow and globalization will only increase the complexity of the puzzle. But you have built a flexible and customized solution to meet the demands of your organization to tackle these changes. •

Michael Boland is the managing director for Drinker Discovery Solutions LLC, a wholly owned subsidiary of Drinker Biddle & Reath. Drinker Discovery Solutions provides full life-cycle e-discovery consulting, technology and project management services. He can be contacted at 312-569-1915 or michael.boland@dbr.com.