Expect managed services models to become a more prevalent fixture in the litigation support landscape.
Stephen Cole, Legaltech News
Managed services around litigation support (and more specifically e-discovery) has garnered enormous buzz in the industry in the past couple of years. From national to regional providers, law firms are increasingly presented with options to offload all (or components) of their internal litigation support offering including infrastructure, software, and people when paired with a guaranteed time and revenue commitment (going beyond the traditional transactional models).
In a 2015, managed e-discovery and litigation support survey (reported on by LTN here), 28 percent of respondents indicated that their firm had entered into some form of managed services arrangement concerning their litigation support offering. In addition, 46 percent of respondents indicated that their firm is considering the use of Managed Services for litigation support moving forward. There are a number of factors driving firms to consider such an arrangement:
- Risk mitigation;
- Disaster recovery;
- Technology obsolescence;
- Staffing expertise;
- Cost; and
- Pricing model.
Risk Mitigation, Security and Disaster Recovery Addressed by Outsourcing
Many firms are looking to exit the business of hosting client data. With data breaches constant front-page news, firms have decided that using their own infrastructure is not worth the risk for hosting client data. Instead, they are looking to providers that have all the proper security protocols, certifications, uptime and bandwidth guarantees, and disaster recovery fallback that the firm cannot possibly justify the investment (nor want to offer to their clients as a business). Firms have been able to shift a former sunk capital expenditure to more of an on-going operational expense that can be passed along to their clients.
Some firms have looked to an infrastructure-as-a-service (Iaas) model that allow them to maintain control with their own staff. This allows them to avoid creating their own data centers and incurring the cost of servers, exploding storage requirements, and security while still directly licensing and running their internal software systems. This has also allowed the firms to move legacy systems to a hosted environment while maintaining complete administrative control at the application level.
Firms have discovered that the tools they invested in only a few years ago have now been replaced with the latest review tool, analytics engine in support of technology assisted review (TAR), or workflow automation—which is another reason firms are leaving it to a third-party provider. The outsourced party is in the business of being an expert, market leader in their offering: the onus shifts to the provider to keep up with the investment in the latest and greatest while offering their clients a complete tool box with a number of options to provide the best fit.
Layered on top of IaaS, a software-as-a-service (SaaS) model allows firms to have the latest technology in a secure environment while freeing their staff to provide high-level service to the end-users (data loading, review batching, productions, etc.).
Staffing Expertise, Cost and Pricing Model
In addition, firms continue to look to drive efficiency throughout all of their back and middle office service offerings (copy/print, imaging, records, document processing, administrative resources/secretarial, accounts payable, etc.). One of the common questions is whether it makes sense to staff departments for peak periods when a partnership with a third-party can alleviate bottlenecks, provide cross-functional synergies, and allow firms the staffing flexibility they need (while still having access to highly trained, highly skilled resources with a career path)?
This “people layer” when combined with IaaS and SaaS layers rounds out a complete managed services offering. The environment, the latest tools, combined with expert staffing allow the firm to concentrate on its principle practice of law. The ability to “flex” up or down in this model to meet the firm’s demand (often referred to as “bursting”) is not easily accomplished in a firm-owned brick-and-mortar operation.
Lastly, as firms continue to struggle with the recovery of soft costs, a managed services model often allows the firm to present a third-party hard-cost with a much higher client billable recovery realization. Clients are much more willing to pay a third- party invoice versus internally generated user fees, data storage, and project management hours.
In the same survey cited earlier (here), 80 percent of respondents indicated the ability to recover for third-party expenses related to litigation support and e-discovery. As for cost, the annual or multi-year agreements behind these managed services arrangements allows for a significant savings when compared to traditional transactional models for processing and hosting of data. A fixed level or “tier” of data consumption tied with users translates to guaranteed revenue that allows the service providers to offer a much lower cost-per-unit than otherwise available in a transactional model.
As discussed above, managed services for litigation support comes in a variety of forms and sizes. Some firms with expertise on staff and a desire to control the operation of the applications might only consider procuring the infrastructure or the infrastructure with software in such a manner. Other firms might consider the ability to procure an entire end-to-end litigation support department (including the human capital) as an easy way to level the playing field when it comes to tackling the problem of employing automation in support of the litigation process. Either way, expect these models to become a more prevalent fixture in the litigation support/e-discovery landscape.
Stephen Cole is director, client technology and strategy at Mattern & Associates. He can be reached at firstname.lastname@example.org.