- David Galbenski, EVP of Strategic Initiatives
Envision the legal industry as a pie. From year to year, the pie may get bigger or smaller. What is most interesting to observe is how the pie gets sliced. In years past, the pie, which represents the total available amount of legal work, was virtually one huge slice representing work sent to traditional law firms.
More recently, slices representing alternative legal service providers (“ALSPs”) and growing in-house legal departments have grown significantly. In today’s market, regardless of demand, the mix of those providing the supply of legal services is evolving and diversifying.
While the increasingly varied allocation of legal work across the legal supply chain is a macro trend that has been accelerating during the COVID-19 pandemic, micro-trends within the legal marketplace drive that change.
A few such trends were recently highlighted in BTI Consulting’s article “9 Trends Driving the 2021 Litigation Market.” Three that caught our attention include:
- Only 15% of companies plan to cut litigation spending. Put another way, 85% of companies plan to increase, or at least hold the line, on spending in 2021.
- Nine of eighteen industries tracked by BTI expect to pay higher rates and increase litigation spending in 2021.
- Employment law litigation is “surging” faster than all other areas of litigation, and complex commercial litigation is up in nine industries.
What is clear from this analysis is that, despite downturns in demand for certain legal services such as energy, litigation is likely to be up in 2021. And while corporate legal departments will continue to explore ways to increase efficiencies and decrease costs, they have no choice but to prepare for a robust litigation environment in the year to come.
Insourcing E-Discovery with an Assist from ALSPs
Among the steps that corporate legal departments are taking to address litigation, demands are the insourcing of e-discovery tasks. That’s one of the insights drawn from a recent installment in Law.com’s ongoing series, “Breaking Tradition: How New Law is Challenging Big Law,” which examines the impact ALSPs are having in the legal marketplace. In “Why Corporate E-Discovery Insourcing isn’t Keeping ALSPs Up at Night,” Law.com’s reporting found that “corporate legal departments have brought more e-discovery services in-house to drive down costs and improve efficiencies.” Fifty percent of legal departments have built e-discovery capabilities, according to “The State of E-Discovery 2020” report cited in the article.
Insourcing of e-discovery is a trend we have observed as well in connection with the execution of our document review services. Corporate legal departments’ insourcing efforts are driven by three primary objectives:
- Technology: Gaining control of their preferred e-discovery technology platform, and developing capabilities and processes around it.
- Cost Savings: Reducing technology and manpower spending with law firms and other vendors.
- Resource Allocation: Building in-house capabilities with key people who really understand the e-discovery process, who can then manage external resources more effectively.
In short, the corporate legal department’s insourcing efforts are intended to allow them to more effectively manage e-discovery in-house, but they’re not building capabilities to deal with surges in demand driven by big projects. And that, as the Law.com article addresses, is where ALSPs come into the picture. ALSPs are integral to supporting in-house e-discovery efforts because “technology isn’t at the point of drastically reducing project hours,” and therefore, “scalable personnel is still needed to complete large-scale matters.”
We, too, have found that our corporate clients are increasingly turning to us to provide scalable solutions in the form of our people and processes. Legal departments aren’t interested in staffing up internally to the point where they can handle peak e-discovery demand. They want a trusted partner they can turn to when there is a need for more resources.
However, just as the motivation to insource e-discovery is driven by a desire for more control and consistency in the process, corporate legal departments desire the same attributes in their outsourced ALSP relationships. It is common for legal departments to have two e-discovery consultants on their lists of preferred providers who they can work with over time. This allows them to obtain consistency of processes across projects and build institutional knowledge across teams.
To put those assertions into perspective, consider our experience supporting the e-discovery demands of a large healthcare organization that has been a long-time Lumen Legal client. The client, for the reasons stated above, decided to take control of a lower cost e-discovery technology platform, which allowed it to internally handle the collection of electronic data and manage information.
We work with the client to help scale up its internal capabilities for e-discovery associated with employment law litigation. While employment cases tend not to be document-intensive, the client relies on our team to process the information it gathers. Because we have a dedicated team in place to support the client, the people, and protocols for each project are the same. The institutional knowledge that has been established over years of working together leads to positive results and cost savings for the client.
This type of symbiotic relationship between corporate legal departments and ALSPs will become increasingly common throughout 2021, as trends in litigation and e-discovery insourcing accelerate. As the Law.com headline suggests, these trends aren’t keeping ALSPs like Lumen Legal “up at night.” In fact, they are creating opportunities and value for all parties involved as the evolution in the delivery of legal services continues to unfold.
About the Author
David Galbenski is the EVP of Strategic Initiatives at Lumen Legal (now Lexitas). Dave founded Lumen Legal 27 years ago. He enjoys providing his thoughtful, creative, and innovative counsel to law firms and corporate law departments looking to solve problems and reduce costs. He also enjoys staying abreast of all developments in the legal industry and has contributed to the dialogue with two books: Legal Visionaries and Unbound: How Entrepreneurship is Dramatically Transforming Legal Services Today. He is a frequent speaker at conferences.