Posted on: Legaltech News
By: Frank Ready
Attorneys come and go from law firms—but so does the work. Mattern’s 2019 e-Discovery and Litigation Support Survey indicates that while the vast majority of firms are still conducting the bulk of their litigation support-related activities in-house, growing concerns around information security and difficulties with expense recovery may eventually lead to some of those tasks being outsourced.
Still, that change doesn’t appear to be in any hurry to arrive. Of the 30 law firms that responded to the survey, just under 80% indicated that their volume of on-site litigation had increased. However, it’s not a process that’s light on firm resources, with most of those services (about 55%) performed by firm employees or a combination of firm employees and outside contractors (just over 30%).
Robert Mattern, president and founder of Mattern, believes that the trouble firms are encountering in some of those soft costs—which are expenses charged to client but without a direct payment made to vendor—may ultimately drive more firms to consider outsourcing litigation support work instead.
“Right now it’s kind of caught in the middle. Everything you are reading and everything we’re seeing shows firms moving more and more to an outsource solution. So I think that’s a glimpse of the future,” Mattern said.
Just how effective that strategy is from a financial perspective remains to be seen. While close to 60% of survey respondents indicated that they are passing along all on-site costs to clients without markup, there remains some tasks for which clients are reluctant to break out their checkbook—most of which have to do with electronically stored information.
For example, while privacy regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act have raised the stakes around the way information is stored and managed, survey respondents ranked data hosting (just under 20%) and data processing (just under 15%) highest among the costs clients are refusing to pay.
This presents a less than ideal ratio of effort to firms and their employees. Around two-thirds of respondents indicated that firms and their employees are doing the work of processing electronic data for import to a review application. Meanwhile, most data hosting (50%) is being done inside of a third-party infrastructure, as opposed to a law firm infrastructure (30%) or some combination of the two (20%).
But why are clients declining to foot the bill? Nathan Curtis, a Mattern consultant, thinks it may come down to a case of poor communication. “In my experience attorneys, for the most part, struggle with a talk track that resonates with clients to explain why ESI hosting and processing fees can climb so high but are so necessary,” Curtis said.
Invoices, however, may be a universal language, with clients more apt to consider a bill from an outside provider as proof that a specialized and tangible level of expertise has been engaged. The survey results would tend to support that theory, with the majority of respondents (46%) citing expense recovery from clients as a key driver for outsourcing litigation support. “Utilizing off-site expertise” came in second at 31% and “risk mitigation/security risks” followed at 23%.
Curtis believes that transitioning soft costs to hard costs—expenses that a firm generates on behalf of a client that require payment to a vendor—could ultimately help law offices recoup the cost of their litigation support work.
“The underlying theme that we see is there’s a much higher degree of rate of recovery and what makes up the bill is actually paid by clients,” Curtis said.
See the article on Legaltech News: “Litigation Support Outsourcing May Be on It’s Way In at Law Firms.”