WHY MUST YOU CHANGE
The Legal Services market has 6 potential players which drive the business lifecycle. They are as follows:
Government Bodies: With stricter regulations across the board, government regulatory agencies like FTC, SEC and DOJ have become or will become more demanding with corporations to comply with regulations. What this means for small to mid-size corporations are that the probability for them to get litigated due to non-conformation to ever tightening regulations is certainly going to be higher.
Corporations: Corporations who get litigated on a regular basis are going to bring or have already brought functions like records management, preservation, electronic discovery processes and review in-house. For those corporations who haven’t yet or have no plans in the near future are demanding of law firms to work on fixed pricing models for the entire lifecycle of litigation services.
LAW Firms: Up until now, law firms had no control on electronic discovery costs and were at a loss managing the entire discovery process because of a lack of understanding of management of data from raw to review to trial. This led to a boom period for legal service providers with a higher price per GB model and higher hourly charges. Today as more and more law firms bring discovery management in-house to control the cost of services they provide to corporations, the landscape for small to mid-tier legal services providers has changed towards the negative.
Software Companies: With more cutting edge software making in-roads into the electronic discovery market, the irreversible commoditization in the legal services space has already begun. This rise in technological advances has lowered the threshold to become a legal service provider and anybody with reasonable amount of money and with a limited understanding of the bigger picture can enter this space very easily. Software giants such as Microsoft and IBM are also introducing products that address information management and this makes it even tougher electronic discovery service providers.
Consulting Companies have a different angle to their approach to providing electronic discovery as a service. Organizations like FTI, Navigant, KPMG, Ernst & Young, Huron and PWC mostly sell legal services as an off-chute to the primary consulting services they offer. These services would range from financial, human resources to other business process management services. Their high price points are justified by the value proposition they are able to sell to corporations. But they too in today’s highly competitive market feel the ever increasing demand in lowering their costs. Their diversification in different industry verticals, various business processes and technology solutions makes them virtually invincible.
EDD Service(s) Providers: So what is in it for electronic discovery service providers? What is their differentiating factor? Why should anybody use their services except for trivial low cost EDD solutions? More and more EDD service providers are finding themselves in a situation where they have to reinvent themselves because if they don’t they are going to wither away. Many find a niche by handling specific data types, many claim to be technology agnostic by integrating various software and providing a customized solution, many have started to diversify. I have known a service provider who had to resort to selling eDiscovery T-Shirts. Funny, but not quite for them.
WHAT SHOULD YOUR BUSINESS DO / NOT DO
Given the factors as they stand today, there are various ways in which you can mitigate your business risk, increase the valuation of your business and be prepared for the future.
- Diversify, Diversify in the right direction, Diversify to mitigate your risks.
- Focus on what you are good at and do it well.
- Partner with Technology companies. Not one, but many.
- Effectively manage you partnerships through appropriate contractual agreements and technical know-how.
- Convince your partners to allow you to rebrand their product as if it were yours.
- Hire a technical client services team to service those product lines.
- Do not just offer software but instead listen carefully to your client’s requirements and offer solutions. A solution could comprise of multiple different products, procedures, protocols, etc…
- Do not impose your own software or solution to all projects.
- Become your client’s problem solver.
HOW TO CHANGE (Food for Thought)
1. Revolutionary ideas
- Build Electronic Discovery Kiosks and install them at Law firms. Use credit card processing methodology so that you get paid automatically. When your overheads are low, you can offer low cost service. Lit Support teams can plug-in their hard drives, select wizard driven processing options and get their data discovered in front of them. This idea is absolutely achievable.
2. Traditional ideas
- Strengthen your internal business processes around technologies such as sharepoint, joomla, drupal, etc… Use this opportunity to learn these technologies and offer this solution to other vendors there by expanding your client base to not only law firms and corporations but also to vendors and software companies. Associating with such technologies allows you to latch on to business process management across the EDD space and increase the chances of getting large projects.
- Build niche applications like discovery of difficult data-types such as Bloomberg, Lotus Notes, Groupwise, etc… to demonstrate the ability to handle niche data-types and show value.
- As an EDD Vendor, partner with other vendors and build on each others strengths.
CONCLUSION
To survive in this ever shifting landscape you must change. Not changing is not an option. By offering reasonable priced services and diversifying along the lines of technology will allow you greater reach and better valuation of your company. Bring in new talent. People who can work effectively with different kinds of tools and procedures to provide superlative, value added services. Elevate your company from being looked upon as a vendor to being addressed as a partner. Make a decision and make it now!
Posted on March 21, 2010
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