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Monday, November 5, 2007

Advice For Service Providers: Leverage Technology To Swim Upstream

As companies use Clearwell’s e-discovery solution on more and more cases, I often find myself speaking to their litigation support service providers. Other than being in the same industry, these service providers have nothing in common: they vary from small shops to large, national companies; from unprofessional cowboys to highly principled professionals. But despite these differences, they all say the same thing: theirs is a very tough industry.

Perhaps everyone says that, but in their case there are good reasons for believing it to be true. It is very hard to differentiate litigation support services, other than by price; law firms make for demanding customers; barriers to entry are low so there’s constant price pressure from new entrants; and, it can take a long time to get paid, given that you are at the end of a long chain (enterprises must first pay law firms who then pay service providers).

That led me to wonder, “What would I do, if I were in their shoes?” The answer is that I would seek to differentiate my service by leveraging technology to swim upstream.

Neither of these ideas (leveraging technology, moving upstream) is original in its own right. Every litigation support service provider leverages technology in some way or other, and many have even built their own in-house review platforms. The larger ones have also sought in one way or another to swim upstream, meaning sell to their customer’s customer (the enterprise) directly rather than to law firms who then sell their services to enterprises.

But what service providers historically have not done is combine the two ideas: i.e., use technology as the means by which they can more easily sell to the enterprise. To paraphrase what the bright, forward-looking CEO of one service provider recently told me: “If I can get technology into the enterprise behind the firewall, then that makes my corporate accounts more “sticky”. It makes it easier for them to export data into my review platform and more likely they will use my services on any given case.” This technology does not have to be developed in-house; service providers can partner and integrate with providers of corporate e-discovery solutions to achieve the same effect.

My respect for litigation support service providers has only increased as I have come to appreciate the severe market pressures under which they operate. So has my excitement for the opportunity before them. Litigation support services is a large, fragmented, growing industry –- a level playing field in which service providers who innovate can see large returns.

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