Copyright © 2011 Cary J. Calderone
Sometimes customers and prospects can ask me difficult questions. The question on whether to in-source or outsource E-Discovery is an easy question. The answer is, Yes. There is no company, or law firm, no matter how large or small, that should do all or none of their E-Discovery themselves. Where should you draw the line between the two? Now, that is a more challenging question. Here are three factors to consider when deciding:
1) Your Potential Issues: There are many legal matters that can start small and then blossom into larger lawsuits. For example, the routine hiring and firing of employees goes on without worry, until a claim comes in. For many regular and routine items your hiring personnel and IT support should be trained to handle and secure electronic data in a defensible manner, when the need arises. As they run through the usual security checks, and other departing employee procedures, it does not take a much extra effort to secure the data so it could be authenticated for potential litigation. Bringing in an outside E-Discovery firm or law firm, for every routine employee departure would be overkill. On the other hand, even seasoned HR personnel know that sometimes routine terminations come back as big complicated lawsuits, so having a process in place that is legally defensible, is great insurance, even when you ultimately may hand off the matter to an outside firm. Also, when the matter is not routine and/or if your legal department has not already handled a particular type of case before, you may have to ask yourself, if your staff will even know what data is most critical? If you do not absolutely know the answer to that question, score another point for outsourcing.
2) The Experience Level of Your People: Will an outside vendor/firm be better than your knowledgeable staff? Sticking to the employee termination example, in many companies HR and IT positions are low turn-over. Often they have many years of experience and specific knowledge of your industry standards and data practices. Will an outside vendor be able to send in somebody who is already familiar with your issues? Doubtful. Your inside staff should be able to handle it. On the other hand, if the matter involves larger and more complicated legal issues, that might necessitate securing hundreds of gigabytes of different types of data, your staff could easily be overwhelmed. Will you over-collect or, under-collect data? In this instance, familiarity with the tools and techniques for large data sets are likely to be more critical to your E-Discovery success, than familiarity with your business practices. Plus, having an independent third party collecting potential evidence can make it more trustworthy and more likely the procedures will withstand legal scrutiny. Of course, your knowledgeable staff will need to work with the outside vendor to achieve the best results.
3) Your Budget: Doing it all yourself or never doing it yourself will waste money. There are great inexpensive E-Discovery tools available, if you do not already have a system that is set up to hold and collect data for E-Discovery purposes. For example, SharePoint 2010 and Exchange Server, as well as many other applications, have built-in features for E-Discovery purposes. However, when it comes to complicated and large volume matters, it is very unlikely your tools, hardware, and software, will be adequate. This is when an outside third-party firm can come to your rescue. Hiring outside managed services when your capacity is stretched, or, for only occasional "big litigation" matters will probably save you money. Infrequent litigation makes it difficult to justify the ROI on what might be a rather large investment in hardware, software, and staff training, just to be ready for the occasional big case.
In summary, there is no hard and fast rule for when to in-source or outsource. Each company must assess their own situation before making the decision. This article should make it rather obvious though, that if your decision to outsource E-Discovery is always, or never, you probably have not considered the correct factors.