Doing more with less is something we have all had to reconcile at one time or another. For corporate legal departments, meeting service demands at some level through external service providers is simple math. Servicing the company/internal client needs equals X, existing resource capabilities equals Y and the delta equals Z.

This article is the second in a series addressing corporate global litigation and investigation needs with a focus on when and how to most effectively fulfill the delta between internal capabilities and those available from outside service providers to create an "extension" of the corporate legal department while maintaining the proper balance of interest alignment and cost avoidance/spend reduction.

Assuming we have conducted a litigation spend analysis to define/understand the real components of our actual spend and modeled our litigation/investigation consumption, it's time to gauge options. (See "Reaching Critical Mass in the Land of Build, Buy or Rent" and "Seat at the Table").

Beauty Contests While Staring Into the Sun

A standard approach to a corporate services market need has been to hold a beauty contest, otherwise known as a request for information (RFI) or request for proposals (RFP). Before we go down that path, it's critical to first know what you're looking for (other than unit rate analysis) to avoided being blinded by a shell game without achieving the right match for your actual needs.

Why not just put everyone in the room and have them compete for the lowest unit rates? The answer is simple for litigation and investigational e-discovery: in an area dominated by unit rates (usually charged on an hourly and/or a per gigabyte basis), most legal service providers providing e-discovery services are actually incentivized to act less efficiently in order to have more data hosted (traditionally yielding the highest margin) and reviewed (traditionally the highest cost in discovery). See "Skin in the Game," Corporate Counsel

Now that we know basing service provider decisions solely upon unit rate analysis can disincentivize good behavior, we can flip the script by incorporating process efficiency and spend reduction metrics into our operational agreements. It's not enough to recite those "must haves" in contract language alone, those must be operationalized to include reporting obligations that evolve with the corporation's changing needs through the entire litigation and investigational lifecycle.

Aligning Interests

Assuming we did the leg work preceding an RFI/RFP to know our true spend/total cost of ownership, modeled our litigation and investigational landscape and have identified a finite group of leading legal service providers with whom we can prospectively partner, how do we shape the process to align interests?

Exploring legal service provider capabilities should include much more than how much they charge for a given service, tiered levels of services or all-in model. It begins by assessing their understanding of your organization and vertical. While litigation and investigation workflows vary by matter type, jurisdiction/venue and other considerations, a one-size-fits-all approach from a service provider to these is a red flag. There's no substitute to a legal service provider having done significant due diligence on your company and vertical and their having successful experience in the latter, at a minimum. This threshold qualification ensures you are not paying for someone else to learn at your expense.

Next, determine how the legal service provider shares exposure in terms of spend containment and process efficiency. Do they cap total matter spend based upon a complete scoping of project metrics? E-Discovery total project spend, for example, is heavily influenced by defensible data cull (reduction) prior to hosting and document review. Legal service providers who share this exposure, by guaranteeing you will not pay for data promotion over a 90% data cull rate accomplish this need.

At this time, it's critical to target what processes the legal department can internalize and which ones are best suited for partnering with an external legal services provider. Can we defensibly collect data and provide some level of data searching, culling or early case assessment (ECA) prior to a legal service provider adding further value? Keep in mind that if your cull of data is too extensive in-house, you may have to redo this work if search terms change during the course of the downstream efforts. Shaping search term strategy, for example, should ideally be an exercise paired between your outside counsel and a reputable legal service provider search term subject matter expert. The former will know the issue elements needing to be proven or disproven and the latter will know how to most efficiently structure the search to find the same.

Drafting a Game Plan

It's a pretty well settled concept that repeating consistent processes yields similar results. For this reason (and to ensure spend control across your entire litigation and investigation portfolio), it is critical to develop a best practices playbook of your e-discovery and document review processes, protocols around the same and defined roles in the respective processes. By codifying these into a playbook, you now control what can be done by whom and at what juncture and this will have a profound effect on spend control of e-discovery and managed document review (the latter of which usually equates to nearly 80% to 90% of discovery spend).

You will also find that an effective playbook manages outside counsel expectations from left-side EDRM work (identification of data custodians and forensically sound collections of the same) in preparation for meet and confer meetings through matter completion and enables legal service providers to do their job (which may include collecting, ingesting, processing, searching, hosting, reviewing and producing the relevant nonprivileged data) with documented consistency.

The playbook should ideally be an evolving comprehensive document of best practices and procedures from the left to the right of the EDRM spectrum developed in coordination with a reputable legal service provider. The playbook also serves as rules-of-the-road guidelines for outside counsel and legal service providers alike so everyone knows their swim lane and how to play well in the pool together. This emplaces critical spend controls, such as no greater than 10% outside counsel document review quality control (QC) re-review absent rare exception based upon prior written authorization. At the same time, QC will be utilized both by the legal service provider and outside counsel to ensure privilege is maintained and issue coding is done properly. Finally, include reporting obligations from your legal service provider as to data volumes, cull rates, and document review productivity to get a running pulse of how the legal service provider, outside counsel and your e-discovery program is performing.

Emissaries of the Crown

Now that you've selected your outside counsel for legal representation, advice/strategy and tactical execution and your legal service provider to scope, design and implement the e-discovery/document review components for the particular matter need, each should be empowered to deliver according to the playbook. Absent a unicorn matter (being so small/not involving sensitive data), reputable legal service providers are generally both more cost efficient and possess superior capabilities to outside counsel in terms of required data security infrastructure/architecture and e-discovery/managed document review core competencies.

That said, the corporate legal department must empower both its outside counsel and legal service provider to carry out their respective aspects of the playbook and ensure each is protected in their delivery of the same. These are your shuttle diplomats who both carry out the matter objectives and act on your behalf.

Next Steps

It should go without saying, you don't want your first project with any new outside counsel or legal service provider to be a bet-the-company litigation or investigation. Pick a reasonable-sized matter to work out the kinks of your new relationship and the modifications to your living playbook. Look for the demonstrable gains you expected from the relationship in terms of cost control, communications and ease of partnering. If all goes well, celebrate the win and carry on!

Dan Panitz, UnitedLex VP, Enterprise Legal Solutions, is an attorney based in New York with more than 25 years of combined legal, technology and corporate advisory experience. Having worked with SEC Enforcement and NASD (now FINRA) Arbitration, Panitz also holds anti-bribery and corruption specialty certifications for the PRC, U.K. and the United States.

Bruce (HB) Gordon, is the manager of e-discovery in the Office of the General Counsel for the Vanguard Group. Gordon's career spans over 20 years of ESI response management and as an IT manager/liaison to legal departments including Teva Pharmaceuticals, AmerisourceBergen Corp. and the Rohm and Haas Co.