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Litigation Technology Paradigm Shift from Law Firms to Corporate Legal Departments

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Tuesday, August 5, 2008

Litigation Technology Paradigm Shift from Law Firms to Corporate Legal Departments

Since the amendments to the Federal Rules of Civil Procedure (FRCP) went into effect in December 2006, I have seen an increased level of fear, uncertainty and doubt (FUD) within the legal departments of the Fortune 5000 in regards to what will happen if changes are not made to how they respond to the new rigors of eDiscovery. Further, I have seen an erosion of faith in outside council's ability to provide the guidance, services, technology and consulting required to meet these needs.

Discovery as Normal?
Nevertheless, some enterprises are continuing to rely on their IT department and outside council and respond to discovery as discrete events as they have before. Costs are continuing to increase and depending upon the skills of the participants, the results have ranged from satisfactory at best to a complete disaster subjecting the enterprise to undue settlements, losses and sanctions because it didn't do the right thing(s) and can't defend its practices.

eDiscovery Readiness
The more progressive legal departments are taking overt action to improve their eDiscovery readiness through assessment, planning and implementation of technology independent of outside council. They are putting resources in place to gain better understanding of their electronically stored information (ESI) and data repositories. They are creating a dialogue with their IT department in which they discuss what business processes to put in place as a result of the changes. And they are creating formal eDiscovery response plans to reduce the unpredictability of eDiscovery and mitigate risk.

ESI Changes Discovery
One of the biggest changes revolves around the fact that the scope of discovery has significantly expanded, along with the definition of what is subject to discovery. In addition to all of the paper, discovery now includes everything from e-mail to voice mail and proprietary files stored on databases. And, the analysts are predicting that the market for technology to proactively manage all of this new technology is already one of the fastest growing markets in the technology sector.

Gartner estimates that the worldwide e-mail active-archiving market was $376 million in new software license revenue and maintenance services in 2007, an increase of 33.7% over 2006. The market is expected to grow to $1.7 billion by 2012 (see “Dataquest Insight: E-Mail Archiving Software Market, Worldwide, 2008″).

Moose on the Table
As I have covered all of these topics in great detail, this post is not about the accelerating increase in the volume ESI, the changes to the FRCP or opportunities for technology vendors to fill the needs of this ever growing market.

Instead, it is about the proverbial "Moose on the Table" regarding the new role of law firms in the litigation process. Or, why is our outside council involved in providing litigation technology? Are they the best organization to be working with? And, how is it effecting the overall cost of litigation?

Over the past ten (10) years, many of the major law firms throughout the US have invested in massive internal IT organizations and literally become litigation technology vendors. I can't count how many Partners from many of these firms that have told me that they didn't go to law school and spend the time and effort to build their litigation practices to become litigation technology providers. However, starting with scanning and imaging and moving into internal hosting and review platforms, many of them woke up one morning and had multi-million dollar technology investments.

But now, with the onslaught of the technology rigors of eDiscovery possibly rendering the current investments that law firms have in technology along with the growing realization in the market that the enterprise needs to manage their own ESI, where does this leave the technology offering(s) from the law firm? And, what value to they bring to the supply chain? Should law firms go back to providing legal council and leave the technology to the technology vendors and the legal departments? Or should the law firms jump into the single source vendor fray and truly be a source for all of the legal advice, technology, services and consulting required to support the entire litigation case lifecycle?

Gathering Input to Publish a Report
Over the next month I will be investigating these questions and therefore welcome input and/or comments from law firms, corporate legal departments, litigation technology vendors and litigation services providers. I will publish my finding in early October 2008.

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