3 Unexpected Challenges with Bringing eDiscovery In-House

This post explains three unforeseen challenges with bringing eDiscovery in-house such as hidden costs, supporting the software, and difficulty of implementation.

There is little debate that eDiscovery can be a daunting and expensive endeavor. Even small matters can involve scouring through terabytes of data. For some companies, litigation is one of the many costs of doing business. That cost, and specifically eDiscovery costs, can be one area that companies look to reduce as budgets shrink and companies look to identify cost savings.

Bringing a part or all of the eDiscovery process in-house is the right move for many organizations. There have been incredible advances in eDiscovery technology in the past few years. The industry has also created many talented individuals that can run and manage the process. However, it’s not a quick and easy decision. There can be a number of unforeseen and unexpected costs and hassles associated with bringing eDiscovery in-house that can quickly mitigate the savings and streamlining you hoped to achieve.

Things to Watch Out For

Reducing costs with your own in-house eDiscovery department sounds like a practical approach for a large company that already employs many lawyers, paralegals and litigation support personnel. If the company has its own server farm and a world-class IT department, it should be a simple exercise – in theory.

There can be a number of unforeseen and unexpected costs and hassles associated with bringing eDiscovery in-house that can quickly mitigate the savings and streamlining you hoped to achieve.

Just assess the software options, pick the right software, buy the software, throw it on some servers, create a process, have the right people run it and then voila: instant savings! While it might appear to be that easy, there are many obstacles that can derail your project. Most of them fall into the category of hidden costs, additional staffing and training requirements, and the investment of time and energy needed to complete the transition.

1. Hidden and Unexpected Costs

First, there is the cost of the software itself.

Do you intend to own the software, or will it be subscription based? Is it a volume based model? Each pricing model has its own hidden costs. There are certainly pros and cons to each model, just as there are pros and cons to leasing versus buying a car. For example, volume based pricing makes it difficult to budget and can certainly dissuade one from the using the tool if there is too much data.

Next, there is the investment in robust hardware.

Many software applications require dedicated, powerful, and expensive servers. They also may require separate storage devices. If your company does not have a server that is adequate to run the new eDiscovery software, then one may need to be purchased. Due to security concerns, it may not be possible to use an existing corporate server. In that case, a separate server may need to be purchased. Many software applications may run just fine on a really powerful desktop, but most software developers will tell you that to run their software properly, it needs to be on a robust machine. Assume a nice server costs $25,000. On top of this, additional not-so-little “extras” include the cost of reviewing ESI, data storage, installation and maintenance. These costs can quickly add up to tens of thousands of dollars just to get you up and running.

2. Staffing and Training Challenges

Do you need to hire more people to run the software?

If so, how many? In a recent survey, conducted by Litigation Support Today magazine (source: Litigation Support Today May/July 2011 “2nd Annual Salary Survey”), the average salary for a litigation support professional is around $70,000 per year. If your company is on the East Coast or in a major city, expect to spend more money. In many organizations there will be a need for at least two people in the litigation support role.

Don’t forget about the IT department.

Consideration must be given to the number of FTE’s needed to support not only the software, but the hardware as well. Most eDiscovery software applications are beefy and require serious hardware to run properly. Additionally, most applications use SQL or Oracle database architecture on the back-end. Both of these facts necessitate having at least half of an IT FTE equivalent available for proper support. Realistically, it’s a full time job for someone. Assume the average salary for a person in this role is $75,000 a year. What about training costs? Some software providers offer free installation and training, but others may charge a fee. Training, if it is included, is usually very basic. Many vendors offer training, but it is used as another means for the software company to make money. ‘Buy my product and then you can get certified in the application for $4,000.’ Add that cost to the cost of travel and consider the fact that you will be out of the office for five straight days. While the training sessions with the software makers are very helpful and informative, it is another cost to consider.

3. Implementation and Time Investment

Bringing eDiscovery in-house can take months (or years) to fully implement. A common mistake is to buy a piece of software and then try to build a process around the software. That recipe is doomed to fail and you will find yourself in a worse position than when you began the journey. It takes a lot of time, money, and energy to come up with the right process, find the right software, purchase the right hardware, and train the right people. There is no one piece of software that can do everything you want it to do, and it will take a great deal of planning to make all the pieces fit together to meet your particular needs and wants.

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