Executive Summary
Contents
E-Discovery Landscape ....................................................................................................................................................................... 2
Survey Highlights ................................................................................................................................................................................. 5
Strategic Importance ........................................................................................................................................................................................... 5
Current Services .................................................................................................................................................................................................. 6
Future Services .................................................................................................................................................................................................... 7
Revenue Expectations ......................................................................................................................................................................................... 8
Spending Focus.................................................................................................................................................................................................... 9
E-Discovery Technology .................................................................................................................................................................................... 10
Conclusion ......................................................................................................................................................................................... 12
About The Survey .............................................................................................................................................................................. 14
About HBR Consulting ....................................................................................................................................................................... 15
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E-Discovery Performance + Priorities
Revenue
Spending
Technology
exceeded
expectations
for
a high, essential
or medium priority
for
initiatives include:
93
%
of firms
71
%
of firms
Technology
Assisted
Review
Legal
Hold
Document
Review
Tools
E-Discovery Landscape
The process of identifying, reviewing and producing relevant documentary evidence in the context of litigation and / or investigations
has evolved rapidly over the past fifteen years. A process that was once dominated by banker’s boxes is now firmly rooted in the
digital realm. The volume of electronically-stored information (“ESI”) has grown exponentially along with the speed of business in the
knowledge era. Over the past decade, innovations have attempted to lower the cost of managing electronic discovery while
accelerating the process. What began as the first attempt at innovation -- recording an attorney’s decisions in a database -- has
advanced to computer algorithms attempting to replicate and propagate the attorney’s judgement. We’ve gone from nearly stone age
to space age in the span of a decade.
Along the way, attempts to lower the cost of document review personnel have taken the industry around the world and back again.
Progress has been made, and yet, the root problem persists: discovery costs too much. While the perceived value of reviewing
documents has declined, the complexity of delivering the service has substantially increased. See Figure 1. The introduction of
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advanced technologies to the process has expanded the expertise required to encompass not only legal mastery, but knowledge of
statistics, algorithms, linguistics and information technology.
Hig
h
Perceived Value
Complexity of Service
Delivery
Lo
w
Pre-1995
Figure 1
2015
Corporate law departments have not been asleep at the switch. To supplement HBR Consulting’s Annual Law Department Survey, we
conducted a Flash Survey in November 2014 to identify trends in law department e-Discovery operations and 2015 planning around
staffing, spending and technology. Cost Management continues to be the most cited key challenge for law departments, second only
in terms of priority to the regulatory environment.
Litigation spending on outside counsel fees has increased significantly year over year and measures to reduce costs remain a priority
for most corporations. With outside counsel fees accounting for as much as 50% of discovery costs, it’s no surprise that the focus on
e-Discovery remains a priority. Over 80% of the law departments surveyed indicated that spending on e-Discovery improvements will
be at least a medium priority in 2015. Our survey revealed that while over half of the companies report having less mature eDiscovery programs, 2015 will find them working with existing staff and technology tools to drive efficiency in an effort to reduce
costs. Without the benefit of capital budgets to introduce new tools or resources, the spotlight frequently lands on reducing the hourly
rates and fees of outside counsel as a means to reduce costs.
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Several forces are currently at a confluence in the industry:







client demands to contain costs;
judicial acceptance of advanced technologies;
growing document populations;
a plethora of service providers;
continuous technological innovations;
expanding sources of digital evidence; and
proposed revisions to the discovery rules in the Federal Rules of Civil Procedure.
Additionally, the ever-present legal obligation to take reasonable efforts to provide complete and correct productions of evidence to
opposing party(ies) remains.
This report addresses how law firms are responding to these industry demands.
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Survey Highlights
Q: How important is the firm's e-Discovery capabilities to securing new clients and/or retaining clients?
Strategic Importance
E-Discovery is perceived as being strategically important
to the growth of the firm.
6%
25%
19%
50%
Very Important
Moderately Important
Unimportant
Important
Of Little Importance
HBR Insights
A law firm’s capability to provide e-discovery services has gone from a novelty to a business necessity. The pendulum between
outsourcing and building in-house capabilities has shifted as technology solutions evolve, enabling the delivery of services without
the necessity of employing computer programmers to fix software bugs or build custom programs. With so much attention given to
the technical and data aspects of electronic discovery, it’s easy to lose sight of the fact that the heart of the matter is the evidence to
support or defend the client’s case.
Rapidly identifying relevant documents, and ultimately finding the key documents, are vital to developing an effective case strategy
and providing timely and accurate counsel to clients. Therefore, e-Discovery capabilities and competence is integral to securing and
retaining clients as reflected in the responses to this question.
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Q: Indicate the e-Discovery services that you currently offer your clients and the party that has the primary
responsibility for delivering each service.
Current Services
The majority of firms support
the full e-Discovery lifecycle
with some firms relying upon
vendors for collection,
processing and data hosting
support.
Defining e-Discovery
Strategy on Matters
Negotiating ESI Protocols
(with Opposing Counsel)
Legal Hold
Management
Collection
Processing
Data Hosting
Document Review
Application(s)
Technology or Computer
Assisted Review Application(s)
First Pass Review
(Initial Relevance)*
Privilege Review*
Second Pass
(Final Review)
Production
Current Responsibility
*N/A responses from a firm primarily
focused on Plaintiff matters
Firm
Vendor
N/A
Source: 2015 HBR Law Firm e-Discovery Survey
HBR Insights
Participating firms were asked to disclose the services across the e-Discovery lifecycle they currently offer to clients and to identify if
the services were provided by the firm’s personnel or delivered via third party vendors. The majority of firms provide the full spectrum
of services with some firms relying upon vendors for collection, processing and data hosting support.
The majority of firms rely upon vendors to provide collection services. This comes as no surprise given that the process of collecting
the data from source systems is a complex activity requiring specialized technology and often involving logistical challenges.
Processing services are almost evenly split between in-house and vendors. That said, it is common for a firm to maintain some inhouse processing capabilities for smaller matters or matters where the sensitivity prevents engaging third-party vendors. Maintaining
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significant in-house processing and data hosting capabilities requires capital expenditures in hardware and personnel to meet the
voluminous document populations. The majority of the firms reported maintaining the primary responsibility for the delivery of those
services. Despite the commoditization and low margin of the technical-centric processes, firms are maintaining those services inhouse in order to sustain continuity of the overall delivery of professional services.
Q: Do you plan to change the e-Discovery services your firm provides to its clients in 2015? If so, please
indicate which services you plan to add by selecting Add from the list next to the service or if you plan to stop
providing specific services indicate by selecting Stop next to the service.
Future Services
In 2015 firms are focusing on adding perceived higher
value services, such as: adding Technology Assisted
Review capabilities and Legal Hold Management
services.
HBR Insights
The survey responses indicated that firms will focus in 2015 on adding perceived higher value services: defining e-Discovery strategy
on matters, legal hold management and technology assisted review (“TAR”). This is a shift in the market and reflects recognition that
providing high value e-Discovery services requires earlier and substantive involvement of the attorneys to make critical legal and
business decisions. The addition of TAR to the spectrum of services will require an expansion of knowledge and development of
skills not presently taught in law school. While some firms may be investing in purchasing TAR tools, there appears to be alignment
between the firms relying upon third-party suppliers for data hosting services and firms with externally provided hosted TAR tools.
While there has been commoditization in the e-Discovery market, the services most affected are those not requiring legal expertise.
Opportunity exists for law firms to provide high value professional services by combining industry domain expertise with advanced
analytical tools.
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Q: In 2014, how did the revenue generated from e-Discovery services compare to expectations?
Revenue
Expectations
Revenue from eDiscovery services
met or exceeded
expectations for
93% of firms.
7%
Far Below Expectations
Below Expectations
57%
Met Expectations
29%
Above Expectations
7%
Far Above Expectations
0%
10%
20%
30%
40%
50%
60%
HBR Insights
During a year that brought declining revenue for e-Discovery service providers, firms realized revenue levels that met or exceeded
expectations. The survey did not gather pricing details for the e-Discovery services provided by the firms. As such, information
cannot be gleaned as to the delineation of services charged per unit (e.g., per GB) versus those charged hourly. Nonetheless, the
participating firms are seeing a positive revenue trend with 64% of firms reporting increasing revenue over prior years and 33%
indicating static revenue.
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Q: What will be the level of focus for spending on e-Discovery investments in 2015?
Spending Focus
50.0%
43%
Spending on e-Discovery will be a high,
essential or medium priority for 71% of
firms.
40.0%
30.0%
21%
21%
20.0%
10.0%
7%
7%
0.0%
High Priority Essential
Medium
Low
Not a Priority
HBR Insights
Where e-Discovery spending is a high or essential priority, firms intend to invest in an expansion of resources in several roles,
implement new or enhanced technology across multiple phases of the lifecycle, and add multiple areas of new services.
Firms reporting e-Discovery spending as a medium priority indicate plans to invest in specific roles within the team and/or technology
for specific aspects of the lifecycle but not as far-reaching as the firms with a higher priority on spending in 2015. That said, firms in
this subset intend to add multiple areas of new services but perhaps intend to do so without a capital investment.
Firms indicating that e-Discovery spending is a not a priority, or is a low priority in 2015, fall into two buckets: 1) firms that have
mature e-Discovery practices with technology already implemented and an established team, or 2) firms that do not plan to invest in
e-Discovery as a service offering. The latter is the minority with only one firm indicating no plans to offer e-Discovery services.
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Based on the majority responding firms, 2015 will be a year of e-Discovery investments in the forms of expanding teams and/or new
or upgraded technology.
E-Discovery Technology
Technology Assisted Review, Legal
Hold and enhancing or upgrading
traditional Document Review tools
top the list of 2015 technology
initiatives.
Technology Assisted Review
Traditional Document Review
Processing
Collection
Legal Hold Management
0%
10%
No plans for internal acquisition
Implemented; plans to enhance/upgrade
Considering purchasing in the next 1-2 years
20%
30%
40%
50%
Implemented; no change expected
Implementation in Process
HBR Insights
The vast majority of firms maintain processing capabilities despite a large percentage of the firms reportedly relying upon third-party
vendors for processing services. This is typical given the fluid and unpredictable nature of litigation demands. The responses to the
survey indicate that one third of the firms are either currently in the process of upgrading or enhancing processing technology or plan
to do so in 2015. The survey did not gather information related to internal processing capacity.
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60%
The responding firms are unanimous in providing legal hold management services to clients. Firms that have not already
implemented supporting technology will do so in 2015 with only 21% of firms considering purchasing associated technology next year
or thereafter. Sixty-one percent of the firms have implemented, are in the process, or plan to enhance/upgrade the supporting
technology. This is an area that may overlap with the traditional roles of in-house counsel personnel. Firms with the ability to provide
the management and supporting technology in this area position themselves well to manage downstream e-Discovery processes to
be more informed earlier. This is an area that requires a low technology investment but strategically warrants building the capability
in order to insert the firm into the process in the early stages of the lifecycle.
Law firms are fully embracing TAR as reflected in the vast majority, 84%, indicating that they have implemented, plan to
enhance/upgrade or are in the process of implementing TAR. Traditional document review tools are also being refreshed with over
40% of the firms indicating plans to enhance or upgrade. It’s common for document review applications to include both traditional
review functionality, as well as technology assisted review capabilities. The strong response from the participants indicating plans to
implement or enhance tools that support traditional review and TAR may reflect that firms are considering or implementing tools with
dual functionality. Nonetheless, 2015 will find firms armed with new or improved technology to support document review.
Ultimately, the benefits of employing accelerated review will result in advantages to clients but may also bring challenges to firms as
they traverse the learning curve of implementing advanced technology. To lessen the learning curve, firms may seek external
expertise to assist with defining appropriate workflows and processes.
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Conclusion
The following themes surfaced in the responses to the survey:
 E-Discovery will remain a strong area of spending focus this year by adding services, technology and resources
 Revenue performance is strong and trending upward
-
93% of the participating firms reporting revenue that met or exceeded expectations
 Firms are maintaining full-service e-discovery capabilities in-house
-
Firms are offering the full lifecycle of e-discovery services to clients with processing and data hosting services being
supported by vendors for the minority of firms
Collection services are sourced externally for the majority of firms
 2015 is a time for elevating the sophistication and expanding the scope of e-Discovery services provided by law firms
-
Areas of growth in service offerings will focus on providing perceived higher value advisory services to include:
 advising clients in the defensible use of TAR
 assisting clients with Information Governance challenges
 managing the preservation / legal hold process
-
Technology initiatives will include:
 Enhancing or upgrading traditional document review technology
 Implementing Technology Assisted Review
 Legal Hold Management technology
Adoption of a firm’s e-discovery services is an area of challenge as an increasing number of clients are directing the use of specific
providers of services and/or technology in an effort to reduce costs. Additionally, internal adoption by the firms’ attorneys is an area
of opportunity for some firms.
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Priority initiatives for 2015 directly reflect a concentration on adding perceived high value services while improving internal
operations. Recognizing that corporate clients are struggling with the implications of excessive data surfacing in e-Discovery, firms
are positioning themselves as advisors in the areas of Information Governance and the application of TAR. Not unrelated is the
ability to analyze and present information about the client’s data to inform decision making and for use as a diagnostic tool to identify
areas of concern or opportunities for improvement. Evidence of the shifting focus is demonstrated by firms forming specialized teams
to focus on “big data,” Information Governance, data analytic SWAT teams for early case assessment and other emerging practices
within innovative firms.
Secondarily, firms plan to focus on opportunities to improve the operations and (presumably) profitability of the e-Discovery function
as indicated by initiatives to refresh technology and revise fee structures, staffing models, and preferred provider relationships with
vendors.
The journey to reduce the costs and compress the time it takes to isolate key documents in ever-growing document populations has
been akin to running in front of a train – exhausting and futile. Efforts to automate processes, reduce the rates of document reviewers
and apply process improvement disciplines (Six Sigma, etc.) have helped, but the perennial business problem persists: discovery
costs too much and takes too long. Clients are unwilling to bear the financial burden and are taking alternative measures when
possible.
TAR has emerged as the latest perceived silver bullet. The survey responses reflect that firms are embracing and investing in TAR
capabilities. Applying TAR to the e-discovery conundrum brings its share of trade-offs to be managed. Additionally, not all TAR
applications have the same trade-offs. Care must be taken to fully understand the benefits and disadvantages and define a
thoughtful strategy that balances the benefits while mitigating the risks as much as possible. Technology is not the final answer. After
all, every firm has access to the same technology choices.
The key to capitalizing on the complexity in this post-commoditized marketplace, is to tailor the firm’s value proposition to focus on
the unique expertise of its professionals, coupled with enabling technologies, to deliver meaningful high-value services.
Firms that orient new or innovative offerings to address client needs to contain costs, manage risk, capitalize on reusability of data
and work product, provide cross-matter reporting and analysis, and facilitate upstream data reduction will emerge as trusted
advisors.
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Contact Bobbi Basile to receive a complete copy of the survey report, including survey findings relating to:







Future E-Discovery Services + Responsibility
Adoption of the Firm’s E-Discovery Services: Clients Directing Acquisition of Services
Adoption of the Firm’s E-Discovery Services: Attorneys Option to Engage External Service Providers
Current E-Discovery Staffing
Future E-Discovery Staffing
Revenue: Write-Offs
2015 Initiatives
Bobbi Basile
[email protected]
312.953.9352
About The Survey
HBR CONSULTING conducted a survey with law firms in March 2015 to elicit information pertaining to electronic discovery (“eDiscovery”) services, including staffing, technology, revenue and strategy. Firms were individually invited to participate and required
to submit responses via electronic submission to ensure consistency in the form of the responses. HBR has normalized the
information provided by the individual firms to protect the anonymity and confidentiality of the participants. Fifty-five firms were invited
to participate and 15 firms completed the survey, including 11 Am Law 100 and 9 Global 100 firms.
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About HBR Consulting
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