When "Protect and Defend" Becomes "Preserve and Collect" – Options for Helping In-House Counsel Select Their Best eDiscovery Solution

Wednesday, March 9, 2016

For many attorneys working in a corporate legal department, their image of the role they serve is that of a chivalrous knight, there to protect and defend the castle from nefarious predators. While that still may be true, today's in-house attorneys may find themselves having to serve another role, more akin to that of a gatekeeper, ensuring that the appropriate preservation, collection, and flow of information is meticulously maintained in the event of litigation or audit.

Without question, corporate legal operations want and genuinely need to find ways to reduce their costs, control their relationships with outside counsel and service providers, and maximize the value received from these third parties in managing their litigation. But figuring out how to achieve these goals without sacrificing long-trusted affiliations, exposing the company to additional risk on eDiscovery issues, and coordinating compliant data management policies may be more than in-house legal teams can handle alone.

So what's a corporate legal department to do? A few options are discussed below:

1) Hire outside counsel and leave matters of eDiscovery to the law firm.

For many companies, this is the easy solution and path of least resistance.  Increasingly, lawyers exposed to matters involving the exchange of electronic data have an obligation to understand the rules, processes, and procedures around an eDiscovery practice (see, e.g., State Bar of California Standing Committee on Professional Responsibility and Conduct issued Formal Opinion No. 2015-193).  And while eDiscovery is becoming intertwined inextricably with many practice areas, there are parts of the process distinctly "legal" in nature and others that are squarely "technical" and even more that fall well within a gray area. 

While some may say, "let the lawyers practice law" and experts focus on their area of expertise, many companies still select outside counsel as their primary eDiscovery service provider—covering everything from collections and processing through associates performing document review.  Recent case law, such as H.M. Electronics, Inc. v. R.F. Technologies, Inc., et al  Case No. 3:12-cv-02884-BAS-MDD (S.D. Cal. August 7, 2015, ordering sanctions against counsel for widespread eDiscovery misconduct and incompetence), make the inquiry into any firm’s real knowledge of eDiscovery more relevant than ever.

In answering this question, in-house counsel must investigate whether law firms are adequately equipped to fulfill the obligations of data management or comply with the rules of eDiscovery—begging the question of whether some law firms should be involved with at least the technical aspects of ESI and data moving through the EDRM spectrum at all. Per recent opinions, such as the California Ethics Opinion and H.M. Electronics, a law firm has to be able to demonstrate competency not only in practicing law and vigorous advocacy, but also in creating and maintaining quality IT systems, eDiscovery competence, data privacy and security, and defensibility.

With that in mind, many law firms have abandoned the notion of running their litigation support departments to handle this workflow and, instead, work exclusively with third-party vendors (many of which are directed by their clients).  Some law firms are bucking this trend and instead creating their versions of ESI specialist teams within the confines of their firm or as subsidiary entities. While this is a positive step in ensuring that the firms are taking all necessary measures to comply with required expertise and security, it may raise additional questions for clients, especially concerning motivation, pricing, and competitiveness. 

2) Bring it all in-house and create a collaborative technical/legal department.

This alternative also poses hazards. While it may be significantly less expensive than hiring an outside firm, the risk then rests squarely on the shoulders of the corporate lawyers and IT professionals, who may or may not comprehend the cross-pollination of skills required to ensure a complete and unbiased approach. So by saving some money on the outsourcing, the company may be forced to spend considerable sums on the education, training, and hiring of professionals familiar with the requirements of eDiscovery.  This may not be a cost-effective solution; hiring full-time specialized professionals whose only work is handling eDiscovery matters (which are hopefully relatively rare) may not be an appropriate staff addition. In other words, if your company has a need for eDiscovery expertise only sometimes, you don't need a full-time solution.

3) Hire a professional firm specializing in eDiscovery compliance.

In essence, this business decision provides the benefits of a blended legal and technical operation but with the extra support and diligence that comes from hiring a professional.  While such a team can supplement and support the legal team (whether in-house or outside counsel), their primary focus is ensuring the appropriate actions to hold, preserve, collect, review, and produce required discovery materials while protecting confidential or privileged information in a defensible manner. By choosing a specialized, focused company to handle your eDiscovery needs, you get the best of all possible results. You get a dedicated team that you only pay when required, and you get the benefit of experience and expertise at a reasonable price with a commitment to supporting your needs in a fair, unbiased, objective, and professional manner. And you get the support that comes from a long-term and in-depth understanding of your corporate operations from a company whose primary goal and focus is ensuring that your discovery responses deliver everything that you are required to provide…. and nothing you are not.

Evaluating the value of eDiscovery partners

Regardless of the option selected, or some combination of all three for a "blended" approach, the fact remains that the legal responsibility for defensible discovery responses ultimately rests on corporate shoulders. So the question of the value of contracted services is a legitimate, albeit complex one.  In the world of eDiscovery commerce, evaluating the overall value of third party services is not as simple as looking at price alone.

It is fair to say that the three options presented above are likely not all priced the same. Instead of only looking at price, then, when evaluating eDiscovery options, a corporate in-house department needs to look at the total value offered and, to the best of their ability, the actual and ultimate cost (as well as transparency and predictability).  The hidden factors in value and cost are comprised of less tangible consequences, such as data privacy and security (or lack thereof); defensibility of process (and the cost of motion practice involved in addition to that); and, worst of all, sanctions.

The best solution, then, will be the one that minimizes risk, maximizes cooperation and collaboration, optimizes expertise from those in the best position to offer it, and controls the storage and management of data. Will that one always be the least expensive? Perhaps not if you simply look at the "sticker price," but when you factor in the other equations and add in the risk of not having maintained adequate protocol and protections, is the value added by these enough to make the cost make sense?

What it boils down to is simply this: the price is only one piece of the puzzle. Depending on your company's size, needs, and storage requirements, as well as risk tolerance, resources, and expertise, different solutions may seem optimal. Some service providers may offer a "per document" or "per unit" fixed price while others may also offer a flat-rate subscription option. Using your company's history and metrics to identify and leverage opportunities may help you partner with the right organization and get the biggest return on your investment—and ultimately make the right choice for your company's approach to eDiscovery.

Marc Zamsky, Chief Operating Officer

Marc offers nearly twenty years of experience architecting, marketing and delivering comprehensive discovery solutions and legal staffing services. As COO, Marc applies a strong record of building profitable markets through strategic planning, organic business development and operational efficiency. He guides the firm’s strategic growth, defining processes and workflows to deliver the highest standards of quality and customer service.

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