Since the Federal Rules of Civil Procedure were overhauled in 2006 to address the complicated issues of electronic discovery in civil litigation, the number of e-discovery vendors has more than quadrupled. But not all vendors—while ready and willing—can fit every client’s unique needs.
“The first thing you want to do is figure out what you’re trying to accomplish,” says George Socha of Socha Consulting. The vendor a company ultimately chooses “very much depends on your specific circumstance,” he says. “You will probably have to go to more than one place to get the software that you need.”
Socha
For example, a company may need more help managing the litigation-hold process at the start of a lawsuit, or perhaps in collecting data once discovery is underway. “Right away, those quite possibly are very different software providers and very different services providers,” Socha says.
Also important is staying aware of the latest thinking in e-discovery, which is still an emerging phenomenon in legal practice that has plenty of unanswered questions. (To hear a podcast on the challenges of determining appropriate search terms for electronic discovery—one of the latest issues to end up before a judge—please see the Related Resources bar at right.) That means compliance and legal officers should keep up with the case law, attend the CLE conferences, and read the trade journals per usual.
Gathering information from others can also prevent possible conflict-of-interest situations. For example, Socha says, if a vendor your company wants to use is already working with another party in some piece of litigation against you, your company should probably look elsewhere. There is also the risk that a small vendor could go out of business and leave customers scrambling with no support.
“The theme for hiring vendors in 2009 is going to be due diligence … you don’t want to end up hiring a company that’s going to be distressed or out of business,” says Mark Yacano of litigation services firm Wright Robinson Osthimer Tatum.
“The theme for hiring vendors in 2009 is going to be due diligence.”
— Mark Yacano,
Principal,
Wright Robinson Osthimer Tatum
He advises companies to do a rigorous financial analysis of the vendor. If it’s a small outfit—and many software businesses are—inquire about how many rounds of financing it has received; if the answer is three or four, that could mean the vendor isn’t generating much revenue from business customers.
Yacano
The best way to gauge the stability and qualifications of a potential vendor is a face-to-face meeting. “Have them come in and do presentations, so you can get at least a visual glimpse of their product,” Yacano says.
After the sales pitch, however, do more follow-up to confirm whatever the vendor was saying. “Just because they say they can do it, that doesn’t mean they can. Just because they say they’ve done it doesn’t mean they have,” Socha says.
And even for well-established software vendors, e-discovery is a fairly new line of business. “In most industries, five or six years [of experience] means you’re still new. In this industry, three or four years of experience gives you bragging rights,” Socha says. “This is still a new area, so we do not have clearly defined procedures. We do not have clearly defined standards.”
Red Flags
Still, there are some blatant warning signs any company should watch for when choosing a vendor. One is failure to deliver an actual product—and yes, that does really happen. “When they can’t produce a technical version, when they come to a demonstration and they just rely on the sales guys, to me that’s a red flag,” Yacano says. Also beware of vendors that can give a demonstration of their software, but not any customers willing to act as references.
Socha warns companies to steer clear of vendors that don’t have anyone in their organization who’s been there for more than six months. “If those people are turning over that quickly, what’s going to happen to the support of your work?” he asks.
THE RIGHT QUESTIONS
Asking a few basic questions as part of the vendor due diligence process is an effective way to quickly weed out the amateur e-discovery vendors from the tried and true.
George Socha of Socha Consulting, and Mark Yacano of litigation services firm Wright Robinson Osthimer Tatum offer a list of questions companies should ask. They include:
How long has the company been providing e-discovery services?
Do they have experience in the specific area that you are seeking?
Do they have references that they can provide?
How well do they handle problems of large scale (i.e., if they suddenly can’t work on a project)?
How efficiently can they deliver large volumes of work under tight deadlines?
Have they met standards for IT security in terms of their ability to be hacked?
What is the background of their staff? How many technical people do they have?
How much of their services do they sub-contract?
Are they in between versions? If so, when are they coming out with their next version?
What are their prices compared to similar vendors?
Lastly, don’t fall for the jack-of-all-trades vendor that claims it can do everything for a client. “There is absolutely no way that there is one approach, one tool, one provider who can fit everyone’s needs,” Socha says. “Even the largest services provider can become overwhelmed.”
These best practices are not anything new, Socha admits, “but what I see is that the people who ought to know better tend to forget about them, because you’ve thrown ‘electronic’ in front of ‘discovery.’”
And after you’ve chosen a reliable vendor? Focus on putting together a collaborative team in your company, since e-discovery can pose difficult cross-disciplinary challenges to the usual corporate functions.
“This is where there gets to be some disconnect between IT, legal, and sometimes records management,” Yacano says. The legal department should not be making decisions on its own, especially if the vendor needs to work closely with the IT and records management departments (which it probably will).
“This really needs to be a collaborative, and not an abstract, exercise,” Yacano says.
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