For the next three days, I will be covering a concept that most companies do not even think about strategically sourcing or using an eSourcing tool to coordinate. These companies are potentially making VERY COSTLY mistakes. If you are ever going to really think about new ways to approach cost savings and will consider taking on corporate “sacred cows”, you will want to bookmark this and understand it. For the last year, we have been assisting our clients with sourcing the service of e-Discovery, defined below.
Litigation discovery, the process of collecting evidence and information necessary to all litigation, once meant thumbing through a finite volume of readily identifiable paper information in search of information relevant to proving or disproving liability. The volumes of relevant information were manageable using manual organization and search techniques, and file cabinets were the likely repositories of the information. In recent years, the everyday use of e-mail and other forms of electronically stored information (“ESI”) has radically changed the discovery process, materially increasing its scope, complexity, and expense. Electronic discovery (or “E-Discovery”) has mushroomed into a multi-billion dollar a year industry. Further, amendments to the Federal Rules of Civil Procedure, effective 12/01/06, (for example – see) move the adversarial discussion of E-Discovery right up to the preliminary stages of these cases. One emerging byproduct of this clarity from the Courts is the potential for E-Discovery costs to almost immediately dwarf the cost of whatever it is that is in dispute. Needless to say, this is quite troubling for corporate legal departments which can potentially have thousands of these cases going on at any point in time. (See Fulbright Survey)
That is a good start to understanding what e-discovery is, but in the context of sourcing, it is a category that is so plump and juicy for savings that it shames traditional high value targets like office supplies, stampings and various other indirect items.
To understand the problem, it is important to build the knowledge base of the origins and current landscape:
- There is an historical prejudice when it comes to the law department’s view of procurement and sourcing professionals. This is similar to marketing departments that “protect their turf” and claim that procurement could never comprehend the intricacies of this category.
- Services can, and usually are, more complicated to procure than goods/products with finely detailed specifications. Much preparation is necessary to capture all the information that will be needed to effectively source the legal category and procurement must understand the risks involved and their impact on the decision.
- A number of environmental factors have merged into an opportunity for sourcing and procurement professionals to help end this fruitless Cold War.
o First, the explosive growth of electronically stored information (“ESI”)
o Second, the organizational risks presented by this dynamic, and rapidly evolving ESI matrix and the resulting operational and financial burdens these risks place on those tasked with defending the institution in the legal and regulatory environments.
It is this second factor that drives this post and discovers the opportunity.
- Electronic discovery (“E-Discovery”) is a major workload burden.
- With the advent of the new Federal Rules – corporate defendants will now inevitably find themselves in the position where fighting a particular case may not be worth the cost once one goes down the E-Discovery rabbit hole, which presents a tremendous opportunity for creative and agile sourcing deliverables which will earn procurement a lot of new friends inside legal.
- Innovative law departments are beginning to blaze the trail and build the business case.
Tomorrow, I will lay out a case study of how sound sourcing and procurement disciplines, if leveraged properly, deliver significant tangible savings deliverables that will keep you on Legal’s shortlist.