Kelly Twigger, ESI AttorneysKarl Schieneman, Jurinnov

August 18, 2010

E-Discovery Outsourcing and In-sourcing:

Pros, Cons and Ethical Considerations

Presenters

Karl Schieneman, Esq./MBA

Director of Legal Analytics and Review, Jurinnov

Creator and Host of ESIBytes.com, largest e-discovery podcast series with over 90 shows recordedFounder and former owner of Legal Network, a legal staffing company2004 Ernst & Young Entrepreneur of the Year 2008 Vestige Most Innovative Use of ESI awardFrequent speaker and author on E-Discovery and Information Management.

Presenters

Kelly Twigger, Esq.

Owner and Founder of ESI Attorneys LLC, a boutique e-discovery law firm

National e-discovery counsel

Former litigation partner with Quarles & Brady in Milwaukee, WI

Member of ARMA, Women in E-discovery, Sedona Conference Working Group 1

Frequent speaker on e-discovery and information management

Founded Q&B’s Records Retention and E-discovery practice in 2005 and the firm’s first blog E-discovery Bytes

Agenda

Risks and rewards for outsourcing vs. in-houseIn-source or out-source? What to considerPricing challenges (is it really more profitable

to handle e-discovery in-house)Technology considerationsBest practices for supervising outsourced non-

attorneys

Law Firm Risks of In-sourcing

Bandwidth – what does your team look like?Ability to make good decisions

Legal skill set – are you an e-discovery lawyer?Technical expertise

Partnership support – purse stringsOverhead/financial risk

Law Firm Risks of In-sourcing

Sense of marketplace directionMalpractice risks – Bray v. GillespieBecoming a witnessClient involvement Retention of personnel – IT legal support life

cycle

In-Source or Out-source?

Size of the case – 5GB (78955 documents)Number of personnel devoted to processing,

review and other tasksAbility to evaluate constantly changing

technology and negotiate with vendors

In-Source or Out-source?

Size of the case – 5GB (78955 documents)Number of personnel devoted to processing,

review and other tasksAbility to evaluate constantly changing

technology and negotiate with vendorsHow much expertise can you develop? What are your clients buying?

Ethical Issues in In-sourcing

Upcharging clients for review, processing, hosting, production, etc.

Locally hosted systems much slower/more expensive

Can you charge for paralegal hourly rate in addition to processing costs?

Are you qualified to manage this for clients?

ESI Review Costs

*Based on median value of 15,791 for files per GB provided by EDRM benchmark at http://www.edrm.net**Assumes review rate of 350 documents per hour

Cost of Review = Number of Review Hours

XHourly Rate

Average Review Rates:

Using Concordance/Summation – 40-60 docs/hourUsing online review platform with advanced features – 100-150 docs/hourUsing concept clustering tools – 300 docs/hour

70% faster review rates with concept clustering, near de-duplication and email thread grouping

ESI Review Costs

Examples: Cost for 2GB Review (31,562 documents*)Using Summation/Concordance

*Based on median value of 15,791 for files per GB provided by EDRM benchmark at http://www.edrm.net**Assumes review rate of 50 documents per hour ^Assumes review rate of 110 documents per hour“Assumes review rate of 300 documents per hour

631 hours ** X $200 = $126,200Using web-based review platform

287 hours ^ X $200 = $57,400

Using concept analytics, near de-duplication and email thread grouping

105 hours” X $200 = $21,000

ESI Review Costs

Examples:Cost for 57.7GB Review (911,140 documents*)Using Summation/Concordance

*Based on median value of 15,791 for files per GB provided by EDRM benchmark at http://www.edrm.net**Assumes review rate of 50 documents per hour ^Assumes review rate of 110 documents per hour“Assumes review rate of 300 documents per hour

22,778 hours ** X $200 = $4,555,703Using web-based review platform

8283 hours ^ X $200 = $1,656,618Using concept analytics, near de-duplication and email thread grouping

3037” X $200 = $607,426

Pricing Challenges

Directly tied to ability to sell – much easier with first time clients

Pricing constantly changingDifferent pricing models fit different casesIs this really the business of a law firm?

Rewards

Potentially simpler pricing modelsMake a profit while still saving clients $$

WARNING: These advantages are short-lived and you will inevitably go back to the risks.

Technology Considerations

Constant changing technology -- how do you keep up? Constantly updating, how do you staff that?

Annual budgets for initiatives, may never meet ROI based on updates, and may alienate clients

Need to provide the most up to date for clients -- who is constantly looking at the technology to make that determination?

Best Practices for Supervising

Understand legal obligations -- who's on the hook -- can you mark up services?

Understand what is they are doing for you and how are they charging you

Challenging vendor to make you understand process What level of expertise are you requiring and how do

you know if qualified? Need to provide input on case value and guidance on

proportionality; draft key search terms

Additional Resources

http://www.esibytes.com/?p=1170 Law firms insourcing and outsourcing E-Discovery (Stephanie Maw- Keating Muething & Klekamp and Chris Olsson – Cricket Legal Technologies).The Control Pendulum Show: Craig Ball, Allisa Vermillion (Mayer Brown) and Michael Scott (Formerly Alcoa).http://www.esibytes.com/?p=951. Legal Malpractice in E-Discovery. Ron Hedges (former NJ Judge & David Kramer – Oswald Ins Co.)http://www.esibytes.com/?p=992. Data Mismanagement by E-Discovery pioneer and technologist Quin Gregor.

Broadcasts to look for:

Questions ??

Kelly TwiggerESI Attorneys LLC

ktwigger@esiattorneys.comp: 414.375.2015

Karl SchienemanJurinnov

kas@jurinnov.comp: 412.486.8606