Corporations Moving Into the E-discovery Driver's Seat 

by: Matt Mohwinkel and Joy Holley, Corporate Counsel 

Date: 6/13/2014

 

As the economy recovers and companies settle into the "new normal," a tectonic shift in the relationship between corporations, law firms and e-discovery vendors is taking place. Today’s sophisticated corporate clients are looking for partners—law firms and e-discovery service providers—with demonstrated expertise in the broad, related fields of data management, data security and e-discovery. They increasingly demand that their partners foster structural innovation around the e-discovery process and apply technology in creative ways to help solve their unique data challenges, They also want to take a more active role in important decisions throughout the e-discovery process.

 

On the law firm side, corporations want partnerships with outside counsel that have dedicated practice groups focusing on e-discovery law, document review and legal project management. Although outside e-discovery counsel may make its own significant, ongoing investment to internalize the support infrastructure and absorb some of these costs, they are now expected to form strategic relationships with e-discovery service providers when dictated by cost as part of the overall value proposition. Whether managed directly or through a law firm partner, corporations expect an e-discovery service provider to come to the table offering value independent of e-discovery counsel.

 

Corporate e-discovery partners are also expected to offer an extensive array of web-based tools to price engagements, track those engagements in detail, analyze and compare engagements in order to develop best practices, report project and budget progress to clients, and offer transparency in the operational process.

 

E-Discovery Sourcing Models

 

With newfound control—along with commensurate pressures—corporate counsel face significant challenges in determining the right balance for their organization. The traditional approach of simply leaving e-discovery to outside counsel led to silos and inconsistent data handling, and thus decentralized practices from matter to matter, resulting in organizations adopting a decentralized and hybrid e-discovery approach involving multiple tools and an ecosystem of outside providers.

 

Many companies now outsource certain tasks to a single provider or a panel of providers, who in turn provide consistent expertise, sound project management and state-of-the-art technology across the organization’s entire litigation portfolio. This evolution allows corporations to leverage the specialized services of vendors and maintain their focus on big-picture case strategy rather than scrambling to meet the demands of fast-paced discovery deadlines.

 

Conversely, as the cost of technology has declined and pressure to reduce external costs has risen, some organizations have opted to bring certain processes in-house to exercise greater control over data security and confidentiality, and maintain central oversight to improve consistency and defensibility. This requires a significant up-front investment in human capital and technology—an investment likely to continue indefinitely, given the rapid advancement in technology.

 

While insourcing and outsourcing provide a useful procurement framework, a thoughtfully designed and implemented approach that is collaborative can allow organizations to retain ultimate control, optimize cost structure and resource allocation, create replicable processes and leverage the newest technologies based on their cases—rather than attempting to do everything themselves or outsourcing everything.

 

Corporations Increasingly “Looking Left” to Drive Processes

 

While corporations are focused on driving strategy over driving processes, they are willing to take the driver’s seat when the processes are part of their core competencies.

The Electronic Discovery Reference Model (EDRM) offers a widely accepted conceptual framework for the e-discovery process, starting on the left side of the model with the initial steps of data identification and preservation, and progressively moving to the right with subsequent steps in the process, including collection, processing, review, analysis and, on the far right of the model, production. (While the model itself looks somewhat linear, steps are often carried out iteratively and in a different order.) The tasks on the left-hand side of the framework—data identification, preservation and collection—are closely related to broader corporate responsibilities of information governance and data management required to run a business and meet associated regulatory obligations. A company’s existing IT staff is often best positioned to take the lead in these early steps, which can lead to significant savings later, because data identification and collection help define the volume of the data universe that will move to the costly review phase.

 

The starting point of taking greater control in the early stages of the process must be an internal assessment of the company’s existing records-management policy. If the company does not have a good handle on how, where and why it stores and manages data from a business and risk perspective, it is not well positioned to drive the critical phases of identification, preservation and collection. The company’s IT staff must have the bandwidth to work closely with the legal department (or outside counsel) to direct these processes. Corporate e-discovery partners may act as important consultants to ensure that the net is cast wide enough to capture potentially relevant information and avoid sanctions that may occur later from improper preservation efforts. But they must also take care not to cast it too widely to avoid incurring costs of collecting, processing and reviewing nonrelevant data.

 

“Looking Right:” A Collaborative Approach

 

As corporations “look right” on the EDRM—that is, at the processing, review and analysis phases—a blended approach involving their law firms and e-discovery service providers is becoming more prevalent. Document review continues to represent the phase in which most clients wisely defer to their merits counsel. While courts and licensing authorities have debated whether document review constitutes the practice of law, determinations requiring the exercise of legal judgment should remain with outside counsel. However, outside counsel can expect the client to take an active role.

 

For example, corporations are increasingly driving the selection of service providers through negotiating strategic arrangements independently or taking a coordinated approach with outside counsel in decision-making that sets the course (and often the cost) of the review, often involving specialized managed review teams. By relying on the same law firm or service provider for multiple projects, that partner will build a valuable repository of institutional knowledge, avoiding the need to reinvent the wheel, facilitating the creation of best practices and standards across various matters and, hence, producing optimal results.

 

Additional Considerations

 

As companies evaluate how much they want to drive, they should also factor in other considerations, including the following:

 

Litigation Profile: This includes attributes such as overall data volume, types and classes of matters, target data sources, data collection challenges, complexity of workflows, and reporting and geographic footprint. Corporations in heavily regulated industries are most likely to benefit from economies of scale if they bring more e-discovery processes in-house.

 

Budget and Cost Control: The total cost of ownership requires a predictable and transparent budget to achieve accountability within the client organization. The budget should account for the scope on a particular project and across the entire discovery lifecycle for an organization, including the cost of the highly skilled human capital required to manage enterprise-wide technology solutions. Clients should consider outside counsel and service providers who drive innovative solutions leveraging alternative and fixed-fee cost arrangements.

 

Infrastructure Strategy, Security and Scalability: Corporations understand firsthand the challenges behind building and maintaining infrastructure. Organizations can maintain their security obligations, manage their costs and control their risks even when outsourcing. They should partner with preferred providers that have extensive data center security certifications and law firms that are sensitive to these concerns.

 

Technology Innovation: Most companies do not have the budget to invest and reinvest in technology to stay abreast of the latest developments aimed at making their work more efficient, predictable and cost effective. E-discovery service providers continually invest in technology development—such as technology-assisted review and advanced analytics—to improve end-user workflows and efficiencies. Collaborating with an e-discovery service provider, especially if that technology is hosted in the provider’s data center, with updates and upgrades rolled out automatically to users, gives organizations access to the latest tools.

 

In sum, all parties—the corporation, the law firm and the e-discovery service provider—can expect their traditional relationships to continue to evolve. The result is an emerging triangle among corporate legal departments, their outside counsel and e-discovery vendors, with each focusing on their core competencies and, as a result, enhancing their respective abilities to provide a greater quality of service and better outcomes.