In-house legal teams are desperate to reduce the amount spent on outside counsel, according to a new survey by LegalBillReview.com and In The House. Seventy-three percent of general counsel were concerned about overspending on OC, according to the survey, which was based on responses from 167 in-house legal professionals. More than half of the surveyed legal departments had made it a priority to reduce outside spend in 2020.
Concerns over outside counsel cost appear to be consistent whether general counsel were spending $500,000 or less per year on OC, as 42% of respondents were, or $20 million and up, as 10% of respondents did.
This shouldn’t come as a surprise, of course. Reducing OC spend is the in-house equivalent of pledging to lose ten pounds every New Year—everyone says they want to do it, but not everyone gets it done. Indeed, though nearly three-quarters of respondents said they felt overcharged, only half of them were focused on doing anything about it. Another quarter seems content to let the problem linger.
These results might make you think that reducing OC cost is a terribly difficult task—and it certainly can be, particularly for mature legal departments who have already taken the lead in driving their legal process and have established strict guidelines for outside partners. But for most in-house legal teams, there is plenty of low hanging fruit, where cost reductions can be realized quickly. We’ll focus on eDiscovery here, since that’s our area of expertise.
One of the best ways to control outside counsel spend is simply to bring more work in house. Here, it is entirely under your control, costs become much more predictable, and ROI is much easier to measure.
Repeatable, commoditized legal tasks like those associated with discovery and investigations offer an easy entry-point. Data processing and culling can be performed in house through tools like Logikcull which automate these processes.
Imagine, for example, a discovery request involving 100 gigabytes of data that needed processing and review. That data can be uploaded into a cloud-based eDiscovery platform and automatically processed and prepared for review. In the process, that data will be deduplicated, meaning that identical documents won’t be reviewed multiple times, and resulting in a reduction of the review set by up to 43% in a typical matter. Even for in-house legal teams that are highly dependent on outside vendors and review teams, that means an immediate 43% reduction in the data your vendor will charge for, in the documents your reviewers will code, and in the hosting fees you might incur—if your partners still employ a broken per-GB hosting fee pricing model.
To get those savings, all an in-house team has to do is drag and drop their data. That’s it. With a bit of extra work in house, through the application of culling filters and simple keyword search to further narrow down the review set, the amount of data and the costs associated with it can be even further reduced. Through a pairing of in-house processing and deduplication plus a little bit of early case assessment, data reductions north of 90% are not unusual.
The availability of powerfully simple software and pay-as-you-go pricing models means the tools to achieve these reductions are increasingly accessible. In-house teams don’t need annual subscriptions, lengthy RFPs, or highly technical expertise to begin reducing their outside spend. They can simply start using these tools, as needed, today.
This is why more and more corporate legal teams are bringing work like eDiscovery in house. In Logikcull’s 2020 Corporate In-Housing Survey, respondents from in-house legal departments said that nearly two-thirds of their discovery work was done internally today and that trend is expected to accelerate in the coming years. Surveyed companies handle 63% of their discovery process in house on average, a number that is expected to grow significantly in the next five years.
If in-house legal teams want to control outside spend, the biggest successes can be achieved through data reduction. Whether processing costs, hosting fees, or review costs, it all comes down to data.
It’s no wonder, then, that data reduction strategies are both one of the most commonly employed cost-reduction measures by in-house legal teams in our 2020 Corporate In-Housing Survey and the most effective. According to respondents, the cost of document review was the most important factor when evaluating discovery costs. Review costs were also the most common of pushback on outside counsel bills, cited by 41% of respondents.
Review costs, of course, are where the vast majority of discovery costs arise. And review hours are directly proportional to the amount of data being sent to outside counsel. Reduce the data in house and you’ve reduced the cost of review.
Thankfully, the vast majority of respondents to the 2020 Corporate In-Housing Survey were already pursuing internal data reduction efforts. Eighty-eight percent of respondents performed data collection in house, 78% culled that data through data filtering and keyword search, 63% deduped data in house, and 53% performed some in-house document review. Internal data reduction strategies were much more common than cost reduction efforts that depended on third parties. Reducing legal spend through law firm bulk discounts or preferred vendor agreements was used by just 34% of respondents, while mandating discovery tools and instituting billing limits on discovery work were used by just 25 and 16% of respondents, respectively.
Interestingly, in-house data reduction efforts were also rated as the most effective. However, some strategies, such as deduplication, appear to be underutilized. Deduplication was ranked as the third most effective cost control strategy. In fact, 24% of respondents ranked deduplication as their number-one most effective strategy. Yet just under two-thirds of respondents deduped data in house, meaning over one-third of in-house legal teams could be missing out of significant cost savings.
For in-house legal teams taking cost control seriously, discovery is no longer an area where corporations fear to tread. Most would do more but for lack of bandwidth. The cloud of risk that once hung over the discovery process has largely dissipated. Indeed in the 2020 Corporate In-Housing Survey, fewer than 10% of respondents cited perceived risk as a reason for not in-housing work.
For law firms, too, these shifts present an opportunity. Eighty-four percent of respondents to the In-housing Survey indicated that there was significant room for improvement in their outside counsel performance. Law firms and third-party providers who focus on client satisfaction and embrace a more efficient, effective approach to discovery are in a good place to set themselves apart from the rest of the profession. Outside partners who master these will be well-positioned to thrive in a changing legal landscape.
For corporate legal departments, more and more in-house legal professionals are finding that they can do more, for less—on their own and even with relatively small corporate teams. The message is clear: significant cost reductions can be achieved by bringing more of the discovery process in house—and there’s little to stand in the way.
To learn more about how corporate legal teams are controlling costs and bringing legal work in house, download your copy of Logikcull’s 2020 Corporate In-Housing Survey here.