Is a Lucrative Legal Franchise Under Assault?

A specialist in electronic discovery says he's not surprised insurance carriers and brokers would take the step of trying to provide e-discovery services on their own to cut costs for themselves and their clients.

But whether they will be a force in the marketplace is another matter.

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"In the past what I have seen is that insurers have been a little ahead of the wave in terms of addressing and dealing with the cost of e-discovery because, obviously, in some instances they are covering that for their insured," says Jonathan Sablone, a partner in the Boston office of Nixon Peabody.

"What they have been very aggressive in doing, along with lots of other corporations and law firms, including mine, is going out there and trying to get essentially bulk discounts: preferred relationships and other pricing concessions from many of the vendors that are out there," he says.

But so far, Sablone says he has not seen a big impact in the e-discovery marketplace from the services that the insurance companies have invested so much in offering.

"I would say so far that the impact of that decision to go out there and do it themselves has not made a giant splash in terms of competition in the area."

One reason for that may be because of the sheer size of the market for e-discovery services.

"The marketplace is so broad that you have to be very careful about looking at the various players and what they do," says Sablone.

"I mean, there are consulting firms that do exactly that, they just give consulting. There are vendors out there that provide hosting services and production services and conversion services," he continues.

"There are law firms that give legal advice and that assist in large national cases that involve electronically stored information or ESI. And then there are law firms and consulting groups and others that try to do it all to some extent," he adds.

Sablone also says insurers are a part of that service mix but aren't making a ripple yet as a service provider

But the lines between what kinds of services the different sectors of the e-discovery market provide are becoming blurred.

"The vendors, their core competency may be processing and hosting of data, but you'll see them out there doing consulting too," he says.

"You'll see consulting firms, that's what they do well, but now they're getting involved in the hosting game because they think that's profitable. You'll see law firms, obviously, we give legal advice, we're out there doing a little of this ourselves as well, and I suspect you're starting to see the same with the insurers," he says.

May 1, 2008

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