2017 Survey by Exterro, BDO, and EDRM Finds More Legal Departments Moving to Bring E-Discovery Services In-House
Control, in and of itself, isn’t a positive thing. But knowing what needs to be controlled in precise ways is a key element to any solution. You can throw money, resources, and personnel at a problem and may effect some change, but when you know exactly what needs to be managed, you can get the same or better result with a fraction of the cost and effort. The 2017 In-House Legal Benchmarking Report shows the areas of focus that corporate legal teams are homing in on in the hopes of gaining the kind of control that will bring efficiency: control over the process, both in-house and with 3rd-party vendors; control over project management through the use of technology; and control over data volumes and data types during preservation.
by George Socha, Co-Founder, EDRM, and Managing Director, BDO
Litigation services have come in-house, with the majority of respondents reporting they do over half their litigation work themselves. Generally, corporations are satisfied with the quality of work done internally, more so than with the work done by outsiders. For now, they are doing a lot with a little. They tend to deploy fairly small, dedicated workforces, ranging from a single person to maybe half a dozen people or more, but those people (along with other employees) tackle a lot; in-house personnel and individual custodians do most of the data preservation work, for example. Then comes the kicker: when asked which litigation metrics corporations track, companies overwhelmingly focus on the cost of outside services. What does this mean? As we peer into our murky crystal ball, we are seeing corporations making ever-growing investments in internal capabilities, especially those built around data analytics and artificial intelligence.
We discern a dwindling reliance on outside resources — including law firms. And we suspect the likely outside winners will fit into two broad categories: those who can deliver standardized services efficiently, effectively, and at a very low cost, or at least lower than can be achieved internally; and those who deliver custom and specialized services — bespoke services — that only the rare corporation is likely to invest in developing itself.
The Move In House Continues
Any way you look at it, corporations now conduct a significant percentage of their litigation services internally. Fifty-one percent of respondents reported they did over half of their own litigation work themselves, 85% said they did at least a quarter, and only 15% said a quarter or less had litigation services performed externally. Over the past year, more than a third of respondents increased the amount of litigation services they did themselves.
When asked why they brought more work in-house, they most frequently responded that it was because they could (they had built or expanded internal capacity and now were using it), to save money, or because better software had become available.
When asked why their use of outside service providers (including law firms) has changed over the last five years, companies gave responses in line with the answers above. 28% percent reported they have been outsourcing less work. Add to that the number who have held steady, and the total increased to 75% who are outsourcing less or at the same level as last year. Only 15 percent said they have increased outsourcing.
Controlling or reducing costs, along with leveraging internal expertise, were the main reasons offered for outsourcing less. The work kept in-house vs. the work sent outside breaks down along predictable lines. The two types of services corporations kept in-house the most were legal holds (69%) and preservation and collection (56%). The work most likely to be sent outside was review (31%) and production (26%). Looking to the future, corporations don’t see much change. 21% said they expect their law department to use more outsourcing in the next two years, 33% thought they would stay the same, and 29% anticipated that they would outsource less.