Insourcing eDiscovery and Legal Services. Should Corporations Do It More? Are They?: eDiscovery Trends

A few days ago, a colleague of mine asked me about the status of corporate insourcing eDiscovery and legal services in terms of trends that would indicate why corporations would do it more and whether they are actually doing it more, as well as what that means for outsourced providers. Here’s what I found.

Stats That Point to a Need for Insourcing and How Corporations Are Responding

These stats are more about general legal services, but I think they’re applicable to eDiscovery services as well.  Here are four stats that point out why corporations should consider more insourcing eDiscovery and legal services:

  • The average all-in cost of a law firm lawyer is $840K vs. $280k for an in-house lawyer (Source)
  • Law firm expenses make up 93.5% of a legal department’s outside spend (Source)
  • Legal insourcing can result in a reduction of around 41 to 60% in staffing costs (Source)
  • Lower-cost legal departments allocate about 55% of their legal budgets in-house, on average, compared to higher-cost legal departments that allocate about 47% in-house (Source)

Here are two stats that indicates why the pressure for corporate legal departments to be more efficient continues to be higher:

  • According to estimates, the volume of business data worldwide, across all companies, doubles every 1.2 years. (Source)
  • 76% of in-house legal teams cited ‘controlling outside counsel costs’ as their biggest priority (Source)

How can standardization, technology and automation play a role? Here are a few stats on that:

  • 63% of in-house legal work is routine or can be standardized (Source)
  • By 2025, legal departments will increase their spend on legal technology threefold (Source)

Three Trends Evident from the Stats

I could continue to be “stat-happy” with this post (and I welcome any stats in the comments that you all have seen!), but it’s what you do with the stats that is important. So, here are three observations that I have regarding current insourcing eDiscovery and legal services trends:

  • Corporations Are Becoming More “Enterprising”: By “enterprising”, I mean that it is becoming vitally important for solutions (especially eDiscovery solutions) to integrate with a corporation’s enterprise solutions to automate the transfer of data to support legal use cases. Integration with Office solutions like M365 and G-Suite and collaboration platforms like Slack, Teams and Zoom have become paramount.
  • Workflow Automation is Imperative to Efficient and Cost-Effective eDiscovery: It seems that legal departments are getting that, based on the “3x spend on technology” stat above. Workflows for eDiscovery can involve as many as 145 steps or more(!), so the ability to automate those standardizable steps can make a huge difference in managing eDiscovery costs.
  • Training is Key to Efficiency: Lower-cost legal departments spend nearly twice as much of their budgets on training as higher-cost legal departments do. That’s an important key to effectively leveraging the technology to apply standardization to legal and eDiscovery tasks.

Does this mean outsourcing is dead or dying? Of course not. There will always be a need for outsourcing services at some level, especially for matters that are more complex to support. But outsourcing providers will need to adapt to the trends toward efficiency to continue to work with their corporate clients. Those that match the corporate needs for efficiency will continue to get more work; those who don’t will struggle.

So, what do you think? Do you believe corporate insourcing eDiscovery and legal services is going up? If so, let me know why you think that! 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.

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