Most people have heard the term Long Tail, a statistics model adapted to the business strategy “of selling many unique items with relatively small quantities sold of each (the long tail)—usually in addition to selling fewer popular items in large quantities (the head).” So, are small law firms the “long tail” of eDiscovery? Let’s take a look.
In basic terms, the idea is to ignore the most popular aspect of a market and focus on capturing all the rest. Book publishing was an early example of this theory. The books on the best seller list are a small percentage of all the books published in a given year. The large publishing houses try to focus on capturing the best sellers, but smaller independent publishers may capture large swaths of a particular niche market, where sales of individual books might be small, but taken in aggregate, they equal quite a take. Coupled with technological advances in on-demand publishing and digital distribution, and the Long Tail effect created a new market.
So, what does this have to do with eDiscovery?
There’s no doubt that the legal technology industry is at some sort of a turning point. There has been immense growth in the industry in the last 10 years, with many new startups coming on the scene, more investment firms getting involved, and a growing number of mergers and acquisitions. There are also a growing number of technological advancements with Artificial Intelligence and analytics, which make handling large datasets easier and more efficient.
But most of this activity seems to be focused on large civil suits and the corporate legal teams and large law firms involved with them. This segment would be the “head” in front of the “long tail.” So, what does that leave? Small law firms as the long tail of eDiscovery.
In fact, in the 2019 State of U.S. Small Law Firms Report published by Thomson Reuters, only 19% of smaller law firms were investing in eDiscovery technology and only 2% planned to do so in 2020. And with many firms holding off on large spending and investment during the uncertain times of the pandemic, it’s safe to say, that number probably hasn’t grown. Which means that 80% of small law firms aren’t investing in eDiscovery.
It’s likely these firms aren’t looking for the latest high powered eDiscovery software with all the bells and whistles available (and it’s likely they don’t have the budget for those applications). But even in the most basic of civil cases, such as divorce and bankruptcy, there is still a discovery phase and most of what is discoverable will be electronically stored information (ESI). Emails, electronic documents in PDF, even chat and social media data could come into play. And yet, you hear time and again of small law firms receiving these documents electronically, usually by email from their clients, and then those electronic documents will be printed out, put into binders, and run through the same manual processes that have been around for decades.
These small law firms need straightforward technology and workflows to intake, manage, review, and produce these documents electronically, without breaking the bank. That’s an approach I’ve heard Brad Blickstein of Blickstein Group call, “Good enough eDiscovery.”
This isn’t to say there aren’t options currently on the market, but most of these are stripped down versions of enterprise software, or legacy systems that are still using technology circa 2011. The key here is ROI – return on investment – and with 80% of the market still not investing in eDiscovery, my guess is that’s the issue.
I can’t help but think of when barcode scanners first hit the supermarkets and big box stores and electronic inventory management changed their way of doing business, while at the same time, small shops still did inventory by hand and rang up sales on paper receipts with carbon copies stuck on a nail. At some point, technology became affordable and applicable for those small markets to make the switch.
I see small law firm eDiscovery as a long tail opportunity in this market and the solution as something created with the small firm in mind (not legacy or enterprise software trying to fill the gap). Small firms have unique needs, but they aren’t unfamiliar. Data still must be collected, processed, reviewed, redacted, and produced. There are also matter and case management challenges, as well as timekeeping.
It may not be as high profile as the corporate and AmLaw 200 markets, but for the smaller law firms who have adapted technology and updated workflows, they have found great success with the ability to take on larger cases without adding headcount while passing on cost savings to clients. I only see this growing in the next 5-10 years, particularly with the shift in how business is done post-pandemic.
So, what do you think? Is there an opportunity for someone to grab onto the small law firm long tail of eDiscovery? Please share any comments you might have or if you’d like to know more about a particular topic.
Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.