E-discovery's tipping point: In or out?

This is the first in a three-part series examining the ways in which firms are managing e-discovery work and whether there is profit to be had in such endeavors.

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Litigation support services departments in law firms -- now largely tasked with helping attorneys manage the e-discovery needs of clients -- are at a crossroads. To invest or divest.

Some firms are doubling down and investing millions in e-discovery technology, people and processes, looking to recapture the revenue paid to e-discovery vendors and offer clients a cheaper way to handle their discovery needs all under one roof.

On the other end of the spectrum, firms are doing away with hosting data, buying software, processing electronically stored information and conducting forensic investigations. They would rather leave that to the experts.

And when they ship all of those processes out the door, they are often looking for a preferred vendor, known as managed services providers, who can handle it all across the firm's platform in order to manage efficiency and cost for clients. These firms are choosing to handle only the legal work, which some say is often the more lucrative work, associated with e-discovery.

And of course there is always the gray area -- the majority of firms that have a hybrid approach to handling what has become a vexing issue for some clients and an opportunity for others who have taken the matter into their own hands and chosen their own preferred e-discovery vendors.

Jason Lichter joined Pepper Hamilton in September as the firm's director of discovery services and litigation support. His main charge since joining the firm from Seyfarth Shaw is to figure out just where in the spectrum of e-discovery models Pepper Hamilton will fall.

Mr. Lichter said a fully integrated e-discovery operation is certainly on the table at Pepper Hamilton, but he is looking at many options. The collection of electronic data, Mr. Lichter said, is best performed by certified forensic examiners.

"Pepper as a firm does not presently have any intention of getting into the collections business," Mr. Lichter said. "But immediately after collection [comes] processing, filtering and culling and I'm very much including that among which we are addressing."

Mr. Lichter said there are different options for where information can be housed, be it internally or on a vendor's server. He said the lawyers who need to access the data don't care where it is, just that it can be retrieved quickly and efficiently.

Mr. Lichter created a working group within the firm to examine the best approaches with an eye toward making a decision by the end of the first quarter of 2013.

But backing the wrong horse in terms of investing seven figures in technology that might quickly become obsolete is a concern, Mr. Lichter said.

Regardless of whether Pepper Hamilton takes the "all-in" approach adopted by firms such as Morgan, Lewis & Bockius, WilmerHale or, more recently, Drinker Biddle & Reath, the firm needs to remain flexible and have the ability to give clients more than one offering considering many clients are creating their own preferred relationships with vendors, Mr. Lichter said.

David Cowen's company, The Cowen Group, focuses in part on placing e-discovery lawyers with law firms and law departments. He recently surveyed a number of his clients and found that more than 40 Am Law 200 firms are looking to move in the opposite direction of an "all-in" model and considering using managed services providers.

"It's quite remarkable the number of firms outsourcing to a managed services model," Mr. Cowen said.

The law firms that are making the capital investments in the people, processes and technology to bring e-discovery services in-house have a strong handle on what their clients' needs are and are making a strategic decision based on that rather than an opportunistic move, Mr. Cowen said.

Before 2004, vendors were focused on getting into the law firms, Mr. Cowen said. From 2004 to 2012, they were focused on penetrating the corporate market. Now the vendors have a clear understanding of what the corporate market needs, he said.

What is clear from all involved in figuring out these questions of delivery models, wherever they may fall on the spectrum, is that there is no right answer and no one would be judged for sending the work to vendors.

legalnews

Gina Passarella: 215-557-2494 or at gpassarella@alm.com. To read more articles like this, visit www.thelegalintelligencer.com.


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