Outsourcing, Insourcing, and Right Sourcing in eDiscovery

Balancing the business drivers of cost, time, and complexity in the conduct of electronic discovery continues to be one of the greatest challenges faced by legal professionals today.

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An article by Rob Robinson

Outsourcing, Insourcing, and Right Sourcing in eDiscovery

As electronic discovery requirements continue to increase in light of the ever-expanding universe of digital data, many firms are questioning more than ever the way in which they conduct electronic discovery. In a market that has hundreds of products and service providers, there are many options available to those sourcing electronic discovery tasks.  With this sourcing in mind, organizations are having to make important strategic decisions on whether they outsource or insource specific technology and expertise.

As the ultimate goal for organizations appears to be centered around how they can leverage internal and external resources to efficiently enhance and transform their electronic discovery efforts, the following definitions and thoughts are provided to help legal professionals consider the balancing of options and opportunities as they seek to “right source“ their electronic discovery requirements.

Outsourcing: Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. In the arena of electronic discovery, outsourcing can be considered as the support of electronic discovery tasks with the use of externally provided technologies and people.

Insourcing: Insourcing is often defined as the delegation of operations or jobs within a business to an internal (but ‘stand-alone’) entity that specializes in that operation. In the area of electronic discovery, insourcing can be considered the support of electronic discovery tasks with the use of internally deployed technologies and people.

Right Sourcing:  Simply stated, Right Sourcing is the balancing of internal and external resources in order to best accomplish a specific business function.  In the area of electronic discovery, right sourcing can be considered the support of electronic discovery tasks with the best balance of internally and/or externally provided technologies and people.

What is driving the need for Right Sourcing in eDiscovery? 

Balancing the business drivers of cost, time, and complexity in the conduct of electronic discovery continues to be one of the greatest challenges faced by legal professionals today.

1)     Cost – The cost of electronic discovery has become such an important factor in litigation that, in some cases, it may actually drive counsel recommendations as much, if not more, than actual evidentiary positions.  Costs range from the specified monetary costs of sourcing the technology and people necessary to complete needed electronic discovery tasks to the implied opportunity costs associated with tasks and/or projects.  Costs to be considered for sourcing electronic discovery may include:

  • Cost of Electronic Discovery Technology (To Include Upgrades and Maintenance of Technology)
  • Cost of IT Staff to Support and Manage Electronic Discovery Technology
  • Cost of Legal Professional Staff To Complete Electronic Discovery Tasks

2)     Time – The ability of legal professionals to manage the time components associated with electronic discovery is of paramount importance if counsel wants to both efficiently execute electronic discovery tasks and ensure that they are compliant with the requirements of audit, investigation, and/or litigation requests.  Time components to be considered for sourcing electronic discovery may include:

  • Time Available to Respond To Audit, Investigation, and/or Litigation Requirements
  • Time Required to Initiate and Complete Electronic Discovery Tasks
  • Time Constraints based on Technology Availability and IT/Legal Professional Staff Availability

3)     Complexity – Litigation is inherently rife with risk, and the complexity of electronic discovery only increases this risk based on the intricacies of digital data, the continually growing volume of data available, and evolving ESI related law.  Complexity considerations to be considered for sourcing electronic discovery may include:

  • Complexity of Risk Associated with Electronic Discovery Technology
  • Complexity of Systems and Processes Required in Dealing with ESI
  • Complexity of Expertise Needed to Execute and Manage both Electronic Discovery Technology and Tasks

Each of these drivers plays an important part in the consideration by counsel to outsource, insource, or right source their electronic discovery capabilities.

In looking further at right sourcing, a logical next step beyond understanding the definition and drivers of right sourcing appears to be determining what eDiscovery tasks might be beneficially considered for right sourcing.

What are the eDiscovery Tasks to be considered for Right Sourcing?

Potential core eDiscovery Tasks that might be reasonably considered by counsel for right sourcing include:

  • Collection Tasks that help acquire potentially relevant electronically stored information (ESI).
  • Analytics Tasks that help identify and eliminate irrelevant document sets early in your efforts.
  • Processing Tasks that help prepare relevant files for subsequent use while ensuring that the techniques used are defensible.
  • Review Tasks that help define and examine data sets of documents for relevance, responsiveness, privilege, and/or confidentiality.
  • Production Tasks that help deliver or make available to another party documents and/or ESI deemed responsive to a discovery request.
  • Proactive Hosting Tasks (Pre-Discovery/Post-Matter) that help accelerate the electronic discovery process by providing a readily accessible repository that contains potentially relevant ESI.

While each of these core tasks is imperative for counsel to consider as they seek to be able to conduct complete eDiscovery, it appears reasonable to state that for most organizations the choice of a single approach (i.e. fully insourcing or fully outsourcing) may not be the best approach for all services.

What are the potential models for Right Sourcing?

In considering right sourcing eDiscovery, there are generally three models that warrant careful attention.  These models include:

Fully Insourced Model – A fully insourced model of eDiscovery is defined by the fact that all core electronic discovery technology and expertise is completely maintained within an organization (i.e. corporation, governmental entity).  Key characteristics of firms employing this model may include:

  • Dedicated In-House eDiscovery Technology – Acquired, maintained, and supported Internally.
  • Dedicated In-House IT and Legal Professional Staff – Resourced to support eDiscovery technology and conduct of all eDiscovery core tasks.

Fully Outsourced Model – A fully outsourced model of eDiscovery is defined by the fact that all core electronic discovery technology and expertise is completely transferred to outside counsel and/or external service providers. Key characteristics of firms employing this model may include:

  • Leveraged Externally Provided eDiscovery Technology – Provides legal technology for outside counsel execution of core eDiscovery tasks.
  • Leveraged Outside Counsel Staff – Conducts all eDiscovery efforts on behalf of in-house counsel and monitors external service provider efforts.

Hybrid Sourcing Model – A hybrid sourcing model of eDiscovery is defined by the fact that a combination of insourced and outsourced technology and expertise is used by in-house counsel to accomplish all required electronic discovery tasks.  Key characteristics of firms employing this model may include:

  • Flexible eDiscovery Technology – A combination of in-house and externally provided eDiscovery resources designed to ensure the most time and cost efficient use of available resources.
  • Flexible Staff In-House IT and Legal Professional Staff – Scalable (Depending on Cost, Time, and Complexity) to either fully support and/or fully manage all eDiscovery efforts.

Informed Choices. Aligned Decisions.

Understanding that Right Sourcing is the balancing of internal and external resources in order to best accomplish a specific business function, aligning the specific model which best suits an organization with the model an organization chooses to implement will be a key contributor to an organization’s overall ability to successfully conduct electronic discovery tasks in support of audit, investigation, and litigation requirements.

Additional Reading:

Source: ComplexDiscovery

Business as Unusual? Eighteen Observations on eDiscovery Business Confidence in the Summer of 2020

The results of the recent Summer 2020 eDiscovery Business Confidence Survey present the unfortunate and continuing impact of COVID-19 on the business of eDiscovery. However, for these pandemic-driven results to be fully understood, they should be viewed through the contextual lens of the results of all nineteen surveys that have been administered to eDiscovery professionals since the inception of the eDiscovery Business Confidence Survey in early 2016.



Check Out the Observations Now!

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