As I have mentioned before, one barrier to law firm innovation is the failure of clients to demand it. If a new OpenText survey is any indication, though, that may be changing.
OpenText is an enterprise information management (EIM) business. Among other things, it offers a variety of eDiscovery tools to law firms and companies. It recently released the results of a third annual survey directed at the eDiscovery practices of large corporations.
The critical take way: in house legal departments are consolidating their eDiscovery providers. Meaning that law firms no longer have free rein to decide who the eDiscovery provider will be in any given matter.
That may not sound all that innovative or significant. But as mentioned in Mary O’Carroll’s recent keynote on which I recently reported, law firms are less and less the central player in the legal realm. Instead, they are becoming part of an overall ecosystem controlled more by in house legal than themselves.
Here are some details of the survey, the results of which were released on February 7 of this year. It was conducted between July 9, 2019, and August 15, 2019, by Ari Kaplan Advisors. (Vendor surveys are often criticized, some rightfully so, as designed to show just what the vendor wants to confirm. I know Ari Kaplan, though. He’s a straight shooter who calls it as he sees it.) Kaplan interviewed 35 legal ops leaders from a variety of corporations. Most of these corporations had annual revenues over $10 billion and over 10,000 employees. The survey asked about law department innovation, the influence of legal operations, the use of the cloud, audits of outside counsel’s technological competency, and the use of artificial intelligence (AI). It also queried the participants about the use of alternative legal services, data management and approaches to document review.
Some key findings:
- 62% of the respondents say their departments are innovative and becoming increasingly so all the time.
- 71% of the respondents say they consolidate their eDiscovery vendors. Only 43% reported consolidation efforts in 2015.
- 51% say they have no plans to audit the technological competency of outside counsel. This sounds like a lot. But as recently as last year, some 80% of the respondents had no such plans.
- 80% say they use the cloud for a variety of legal needs. This percentage has roughly stayed the same over several years, probably due to heightened security concerns.
While I was at LegalWeek earlier this year, I got to talk about the results of the survey with Adam Kuhn, a Principal Solution Consultant at OpenText. I’ve known Adam for a while and find him one of the more interesting and insightful people in the EIM space. When you talk to Adam, though, it’s easy to get sidetracked and talk about Adam’s main hobby. He’s a race car driver! (He and I spent a fair amount of time discussing the accuracy of the portrayals in the movie Ford v. Ferrari, which we both like. Adam thought it was an accurate portrayal of auto racing and the auto racing world.
Clients are taking more control of eDiscovery and the overall eDiscovery process
Adam agreed that its significant that some 71% of the respondents say they consolidate eDiscovery providers. He told me that like me, he thinks this indicates clients are taking more control of eDiscovery and the overall eDiscovery process. He added that in house departments are also in sourcing more eDiscovery work and then just shipping the results to outside counsel. Many in house counsel believe they can get a better and faster result this way.
These efforts are borne out by more specific survey results:
- 77% of the respondents contract directly with eDiscovery vendors,
- 74% control which eDiscovery vendors their outside counsel uses,
- 71% have adopted a centralized approach to managing eDiscovery data and
- 42% have adopted a single-vendor model.
And the increased use of auditing also suggests clients are getting more proactive and controlling of their outside firms and demanding more technological competence and efficiency.
What happens in the eDiscovery world is important because it often foreshadows a change in the overall legal profession. That clients are getting more demanding and rigorous in the management of the eDiscovery process likely means the imposition of similar discipline across the board for all sorts of corporate legal services. This new discipline will force law firms to accept and endorse change if they want to be competitive.
And there’s nothing like a little competition to force wholesale change.