Buying it is Cheaper and Safer than Renting It

According to industry analysts, a company with more than 10 legal matters a year should evaluate the acquisition of an electronic discovery solution. Besides the potential financial savings, a company can achieve the peace of mind of controlling their own data.

A dollar saved is a dollar earned. The costs of third-party technical and legal experts add up and the potential impact to the business is sizable, with the sky being the limit. See Sean M. McNee, Productivity as a metric for visual analytics: reflections on e-discovery. It is important to realize that the costs of getting, saving, searching and producing vary respective to the number of documents at issue. See J DeBono. Preventing And Reducing Costs And Burdens Associated With E-Discovery: The 2006 Amendments To The Federal Rules Of Civil Procedure, 59 Mercer Law Review 963 (Spring 2008). This means that if a company implements a solution in-house, one that synchronizes the document retention schedules with the systems, achieving control of the information that is stored and archived, the costs can fall as far as the number of documents retained.

Buying and executing an in-house solution is not always a simple feat. It requires collaboration and energy from the legal, technology, and business stakeholders to be successful. However, buying it certainly gives a company substantially more control over the costs associated with responding to a regulatory investigation, judicial case, or any document intensive production process.

While it is important not to discount the utility of outsourced solutions, when the proverbial fact pattern of the case requires, such solutions can be costly and result in a dependency on the vendor and a relinquishment of control over information and legal-business autonomy for an organization. Of course, bringing eDiscovery in-house requires an investment, but looking past a single quarter of earnings, an in-house solution can provide organizations with substantial tangible benefits year-after-year.

Renting a house is simply not as cost effective as buying it (discussing the tax benefits of buying a house v. renting are beyond the scope o this discussion). The technology benefits realized by buying instead of renting eDiscovery solutions vary by company. The benefits might include reduction in storage costs and/or better implementation of strategic storage initiatives; increase in data security; better responsiveness to requests for electronic information and possibly even happier workers. The savings, while difficult to quantify in a general way, can range from the thousands to the millions annually.

I welcome any comments or additional discussion or points around this benefit v. burden of buying a solution and brining the functionality in-house.

One other key point is how often do you obtain a great deal when the seller knows the buyer has a pressing timeline? When you have the functionality in-house, the costs around the eDiscovery process are certainly more predictable. For example, a company that does not have an in-house solution might find itself paying a substantial premium because the supply of competent document review companies cannot meet the demand, skewing the price curve for the point in time. A company that has an in-house solution can predictably control the costs and scale up and down as appropriate without paying substantial premiums. A services vendor who has already made commitments to other customers is in no position to cut you a better pricewhen you’re under tight time constraints.