Litigation Business Case: Hosted vs. Internal Data Management

by | Nov 5, 2015

The Litigation Business Case Hosted vs. Internal Data Management

Note: The following is a guest post from Daryn Teague, who provides support to the litigation software product line within the LexisNexis software division.

Many law firms and corporate legal departments alike are wrestling with the decision about whether to partner with an outside service provider to host their litigation data and litigation software applications or to stick with internal resources for this important litigation support.

The more conventional model is to handle all litigation data management with in-house staff and technology systems. The idea behind the hosted litigation solutions model is that a customer (an in-house legal department, law firm or litigation service bureau) contracts with a technology company to obtain an environment for securely hosting litigation and discovery data.

The hosting services provider takes responsibility for providing 24/7 access to all software applications and litigation data – the best providers will do so with a “private cloud” delivery system – and integrates with any application you use, regardless of the product or software vendor.

A central consideration for any organization confronting this decision is, of course, the business case associated with whichever model they choose. Unfortunately, there is no “one size fits all” approach, so numbers that may make sense for one management team may be off the mark for another one.

Also see these related posts:
Dimensions of eDiscovery: Insource, Outsource and Hybrid
Walmart AGC:  Keys to “Insourcing” Early Case Assessment
How to Outsource eDiscovery: The Three-Legged Stool

In an excellent article by Teresa McMahonYour Place or Mine? In-House eDiscovery Platform vs. Software as a Service – presented last year at the annual meeting of the ABA Section of Litigation, she lays out several key budget considerations and proposes a spreadsheet format to calculate those items.

Here are the primary cost factors that will contribute to your decision:

  • Hardware – take stock of the capital expenditures you will need to allocate in order to procure the right computers, servers, etc.
  • Software – make sure to budget for application licenses, annual maintenance costs and any third-party licenses you’ll need to operate the systems, such as databases.
  • Subscription fees – any fees required by vendors, information services, etc.
  • Network/IT costs – project additional expenses to build out computer networks or other IT infrastructure.
  • Personnel costs – this is an easy-to-overlook but important factor to account for the people you’ll need to manage and execute your preferred workflow.
  • Corporate allocations – don’t forget to consider rent and overhead charges that you’ll be expected to absorb.

To be sure, there are a wide range of cost factors that are more difficult to quantify but should also be a part of your internal decision-making – such as cyber liability insurance costs if you host your own data. But these six cost factors are a good starting point for you to begin to take stock of the hard costs involved with each model under consideration.

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Photo credit: Flickr, JERRYANG, Oceans of skyscrapers (CC BY-ND 2.0)

Contributing Writer

Contributing Writer

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