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By Matthew Gillis and Steven Berrent
For those of us who are trying to look down the road and see where the litigation technology industry is headed, it might be instructive to take a look back in time to an unlikely example: the law firm mailroom.
Virtually every law firm started out with a small area somewhere in the office for managing the outgoing and incoming mail, package shipments and other related support services. For many firms, at some point in their growth trajectory, the mailroom became a resource-intensive operation that was often inefficient for them to manage themselves with the limited resources allocated to the function. For those firms, they eventually hit an inflection point where they found it made good business sense to ask a basic question: Should we increase our internal investments in order to operate this mailroom professionally with our own staff and equipment, or should we look at options for outsourcing the mailroom operations to a specialty provider?
In our discussions with law firm CIOs, litigation support managers and other technology specialists at law firms, we're finding that a similar conversation is taking shape right now with respect to litigation data management. Virtually all law firms started out storing and maintaining their electronic information - from robust software applications to massive electronic case files - on their own IT networks. It was just a logical and natural progression from the service they provided to their clients. But for many firms, the time has come to ask a similar question about litigation data that they asked about the mailroom: Should we step up our infrastructure investments to host all of our own software tools and client matter files, or should we explore alternative options for outsourcing this crucial function?
There are a wide range of industry developments fueling the need for this discussion, but we find four key drivers come up time and again in our interactions with clients and colleagues.
1. Explosion of Data
At one point in the not too distant past, a 50 GB matter was considered a big electronic file to manage. This is now considered a medium-sized matter and not a driver of infrastructure expansion. The sheer volume of electronic data discovery in modern litigation requires instant scalability to handle the intake of new matters. Indeed, the need to effectively store, process and retrieve litigation data is greater than ever before - and shows no signs of reversing course. According to the McKinsey Global Institute's 2011 report, "Big Data: The Next Frontier for Innovation, Competition and Productivity," the volume of global data is expected to grow at a staggering 40% annual rate, while the rate of spending on global IT resources is expected to grow at just 5% per year. (Find the report at http://bit.ly/KGS3vj.)
2. Sophisticated Software
In order to help law firms and their clients manage this avalanche of litigation data, legal technology companies have developed increasingly robust litigation management tools. These sophisticated software products often require sizable infrastructure investments to simply host the applications themselves. Moreover, in order to properly "care for and feed" these sophisticated tools, it is often necessary to make additional investments in personnel with the necessary technical skills to manage these systems.
3. Need for Security and Expertise
It's also becoming more important to have a process in place that supports on-demand data storage and retrieval that can be scaled up and down quickly - all in an environment that assures data security. In addition to the security factor, we've learned that the technical expertise of the specialists actually "handling" the data is also a key consideration. It's crucial that these professionals understand the specific requirements of managing litigation data.
4. Shrinking Timelines
While the volume of data has exploded over the past years, the amount of time allocated to discovery has remained constant. As a result, law firms are expected to do much more in a limited amount of time. Sometimes, the ability to expand capacity to meet these pressures runs up against the laws of physics - it may not be possible to TIFF and Bates label one million pages in a single day.
These four drivers have been working at warp speed - and in concurrent trend lines - to push our industry to the inflection point of exploring whether it makes more sense to "insource" or "outsource" litigation data management. Regardless of which direction a law firm chooses to move, the destination for that data appears to be inevitable.
The promise of cloud computing includes the potential for a new way of delivering IT software and services by simplifying technology. Broadly speaking, the idea is that the end-user no longer needs to worry about issues like back-up, high-availability, performance or security. Instead, cloud computing provides the means through which everything previously run on a PC or computer network can be delivered to users as a service - whenever and wherever it's needed.
As relates to litigation data management specifically, cloud computing has all of us very energized about the potential opportunities. Rather than the law firm's applications and data being held on their own premises, they are hosted and often delivered from state-ofthe-art data centers in the cloud.
The obvious and immediate benefit of moving to the cloud is the reduction in capital investment. By utilizing cloud computing, law firms are able to take advantage of new technology and have easy access to both their applications and data without having to invest valuable capital in hardware or personnel. Other benefits that law firms may find if they move to the cloud include:
Increased productivity. Allows firms to keep employees focused on serving clients and growing the business, rather than supporting large applications and data files;
Costs fixed to needs. Most cloud service providers allow law firms to only pay for what they need and for as long as they need it, so firms are able to more accurately budget and manage IT costs in relation to their daily requirements; the firm can choose to only host the infrastructure or choose to host the entirety of the application and user support;
Greater agility. Cloud computing enables law firms to rapidly respond to growing client demands by taking advantage of the best available resources, regardless of location and without taking on expensive new assets (both in terms of technology and staff); and
Flexible software model. Given how quickly the electronic discovery space is evolving and software tools are advancing, moving to the cloud allows a law firm to "rent" or even "trial" the latest software without having to make a major investment in software licenses and tailored hardware to support a new software installation.
Law firm CIOs and IT managers are all too aware that a secure and robust IT infrastructure - whether internal or outsourced - is no longer a discretionary item; it's now a mandatory condition of practicing litigation. Perhaps this is why cloud computing has taken off in just the past two years.
Gartner Research reports that the adoption of cloud infrastructure as a service (IaaS) is gaining traction and estimated the worldwide cloud computing market at $3.7 billion in 2011. Gartner is projecting it to exceed $10 billion by 2014.
Cloud Options for Law Firms
For law firm IT professionals who have begun to explore the "insource or outsource" question as relating to litigation data management, there are two different scenarios they may want to think about in considering the approach that is best for their firms.
They should note that any decision needs to be made after confirmation that the cloud computing arrangement is consistent with applicable rules of professional responsibility and data privacy laws.
The first scenario is "Total Outsourcing." The idea here is to move the hosting of all data and applications to a third-party provider that manages all of the electronic information on the cloud. This makes sense for some firms as it allows them to achieve all of the benefits of outsourcing and focus on the delivery of legal services, but might be a bridge too far for some firms that have strategic reasons to hang on to at least some of that data management responsibility.
The second scenario is "Partial Outsourcing." The firm would essentially create a "relief valve" so that it can scale up rapidly to take on a large new matter, or perhaps to manage unexpected system demands when the firm is running out of capacity and has an immediate need. This makes sense for those firms that aren't prepared or interested in the total outsourcing model, but recognize the prudence of having an IT arrangement in place for an occasion when it is needed with limited advance notice.
If a law firm decides to go to the cloud, there are two primary options it will need to study and consider.
The Private Cloud
This refers to the dedicated hosting of the law firm's litigation data and software applications at a specific server facility that has been mutually selected by the firm and the service provider. This option provides law firms with more control over where their data resides and greater access to the physical hardware hosting that highly sensitive data, as well as service level agreements that spell out server availability, server administration, data back-up and storage procedures.
The Public Cloud
This involves the hosting of the law firm's electronic information with a service that is available to the general public over the Internet. The principal advantages of this option are that it is less expensive to use and can be set up almost instantly by the end user.
As with any tough IT decision, this one will require extensive due diligence in order to determine which cloud option makes the most sense for the firm.
Think back to what happened in our industry as each law firm hit the inflection point at which it questioned whether to increase its internal investments in order to operate its mailrooms with its own trained staff and equipment or to outsource the mailroom operations to a specialty provider. Many of them decided to go the outsourcing route, others decided to make the internal investments to accommodate the needs, and still others routinely re-evaluate the question each year.
The same principle holds true with the question of litigation data management. The fact is there is no single solution for every law firm of every size. The wise course of action here is to assess specific business objectives in relation to client sensitivities, IT budget, staff resources, technology infrastructure, enterprise software applications and other considerations that are unique to each particular firm.
Moreover, it's important to recognize that there is no need for an "all or nothing" approach when it comes to whether a firm is ready to move to the cloud. A law firm may choose to start small by just selecting one or two applications for hosting, or perhaps experimenting with a couple of smaller litigation matters that it may want to send to a cloud services provider for data management.
Similarly, a law firm may choose to either outsource the operation and support of the infrastructure but continue to provide software and user support itself, or outsource the entirety of the operation. If a firm is impressed by the cost savings and workflow efficiencies that cloud computing offers, it can chart out a path for extending the transition to the cloud at a pace that is comfortable for that firm.
The next steps will be different for each firm. But our challenge to law firm IT professionals is to at least start by asking the question: Is it time for us to move our litigation data to the cloud?
Matthew Gillis (email@example.com) is Vice President and Managing Director of the Litigation Tools & Professional Services business at LexisNexis. Steven Berrent (firstname.lastname@example.org) is Managing Director at WilmerHale DiscoverySolutions, a division of WilmerHale.
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