Litigation and 'Software as a Service' (SaaS):
The Perfect Marriage?

Small and medium-sized firms benefit most from fast deployment, less onerous IT demands and sophisticated access to case data

Software as a service, or 'SaaS', refers to web-native software that the service provider both develops and supports. Customers do not buy the software but rather pay to use it, usually on a monthly basis.  SaaS applications have become popular in a number of industries because of its ability to provide robust functionality while not requiring from the user an upfront investment for hardware or software, or ongoing support.

While the SaaS acronym is new, the idea is not.  Lexis and Westlaw pioneered the online delivery of legal research in the 1980s.  What is new about SaaS is how it's done, with new applications designed from the ground up to work over the internet. Both established and new companies have begun offering litigation SaaS applications and promise law firms the ability to manage their litigation matters anywhere from a web browser.

This lititech article will discuss why firms might want to consider using a SaaS litigation support application, benefits of the SaaS approach for small and medium-sized firms, and what a firm should expect from a SaaS provider.

Need for Computerized Litigation Support
The continued expansion of discovery is changing the modern litigation practice.  Only a few years ago computerized litigation management was needed in only a relatively small percentage of cases.  Management of litigation through computerized systems has become increasingly indispensable for most litigators.  While it is still possible to competently handle some small cases without computerized litigation support, the types of cases for which this still works are declining and a 'paper only' approach is increasingly anachronistic. 

The incredible increase in electronic documents and other media that are potentially relevant in any case is the reason for this change.  The computer age originally promised that the volume of paper documents would decrease, but the opposite occurred and we now deal with more paper records than ever.  Many cases involve so many paper documents that they must be scanned (becoming electronic) and made searchable though optical character recognition (OCR), for litigation teams to be able to efficiently review them.  Additionally, litigation increasingly involves vast amounts of electronic documents that have never been printed: email and other electronic documents (electronically stored information, or ESI) where much of the relevant case information resides.


Bigger Drives = More Discovery The increase in hard disk drive capacity on personal computers is a good proxy for the explosive growth of e-discovery.  When hard disk drives were first added to early personal computers and workstations in the mid-1980s, the capacity was merely 10 MB (.01 GB).   This capacity has expanded 100,000-fold in the last 30 years to the 1 TB drives available today.  There is no end in site in this capacity growth.  Computer manufacturers predict 4 TB drives on the desktop in 2011 and 80 TB drives in 2020.(1)  You can bet that these larger drives will mean more potentially discoverable information stored.  This will include not only traditional documents and email, but new types of information including chat transcripts, text-messaging, stored voice mail and new types of stored communications.  The research firm IDC predicts continued rapid growth of electronic information, estimating that the  'digital universe' (information that is either created, captured, or replicated in digital form) will expand ten-fold between 2007 and 2011.(2)  

Other factors drive the need for computerized litigation management as well, including increased importance of email as often critical evidence, litigation team members who increasingly want or need to work from home or from remote locations, new federal and state procedural rules recognizing and encouraging e-Discovery, increased familiarity of judges and lawyers with electronic documents, use of remote coders, and advances in search technology.

But upfront hardware and software acquisition costs may be too overwhelming for small and mid-sized litigation firms to absorb.  Worse, the computer hardware and software that must be purchased is only the beginning of the total cost of ownership that a firm will bear.  These mission-critical applications need to be closely monitored to make sure they are continuously available.  Members of litigation teams work odd hours and systems need to be supported when litigation team members are working.  This typically requires dedicated IT support and may require hiring of additional staff.  Studies in other industries have suggested that the initial cost of hardware and software may only represent 25% of the total cost of a computer application over time.(3)

High acquisition costs and upkeep requirements have been the cost of admission to sophisticated litigation systems, which is why larger law firms traditionally have enjoyed the edge over smaller firms in more rapidly implementing and offering the benefits of sophisticated applications to their attorneys and staff.  SaaS promises to level the technology playing field between larger and smaller firms, and help law firms that struggle to implement the new technology and infrastructure needed to competitively conduct modern litigation. 

This is where litigation SaaS applications hold promise.   At its best, SaaS provides access to sophisticated litigation tools from any web-connected computer for a fraction of the total cost that a firm might spend to buy and management a similar service itself.

SaaS v. ASP
One might question if SaaS is one more acronym that can be safely ignored for a few years until a new one displaces it.  That certainly seems to be the fate of SaaS' predecessor, ASP.  ASP (application service provider) is a technology from the 1990s that promised to revolutionize the way software was delivered by offering traditional software applications over the internet.  An ASP provider would take a traditional desktop or LAN-based applications not originally designed to operate over the internet, and make it accessible over the internet using terminal services or similar technologies.  In an ASP set-up the developer of the software application is usually different from the company making the application accessible over the internet.

This can internet-enable software, but often the architecture was not true 'multiuser' and would have to be operated on a time-shared basis.  Time-sharing can lead to a number of problems, including database corruption, and is not a preferred way to provide database access over the internet.  This approach also can create a 'software Frankenstein' as the software and internet communication features are pieced together and operating in an environment different from originally designed.  If complications ensue, the user often must look to the software provider and the ASP provider to determine who is responsible for and can fix the problem.  A number of applications rolled out in the 1990s but have had problems with high cost to the user, and poor end-user performance.

SaaS may be more successful than ASP.  SaaS applications are developed from the ground up to be internet-based, so they are better able to operate effectively in an internet environment.  As an example, they are developed with 'multitenancy' to effectively work with many concurrent client organizations and users.  The SaaS-based provider is also a one-stop vendor of the application: internet access, service and support.  This avoids the 'he said, she said' responsibility issues that can be involved with ASP architectures.  If the user has a problem, it is the SaaS providers' responsibility to fix it, without the user needing to worry about the licensing technicalities of multiple hardware, software and service vendors.

As SaaS has become popular, the term 'SaaS' has been misused by some vendors to refer to any hosted application that can be accessed through the Internet.  However, this is incorrect according to Ben Pring, of Gartner research: “Some vendors are relabeling as SaaS more traditional application outsourcing approaches, and that runs the risk of both confusing and antagonizing buyers. SaaS has a distinct meaning that’s essential to understanding its buyers."(4)  Unlike traditional programs offered online with ASP, with SaaS there is just one code base for the application, known as a multi-tenant architecture.  This means that any enhancements made by the SaaS provider benefit all customers.  The SaaS provider therefore spends less time managing and maintaining multiple versions of the application than does a traditional software vendor, and can theoretically provide the SaaS application at a lower cost than would be required in a traditional software distribution model.

SaaS Popularity in Other Industries
SaaS has also become popular in other industries and this should encourage acceptance in the legal industry as well.  The most famous SaaS application is Salesforce.com™, which has become the largest customer relationship management (CRM) application, with annual revenues of $750 Million.  SaaS applications have also become important for human resources, procurement, document management, finance and compliance in a number of industries.  The popular Quickbooks™ has released a SaaS application called Quickbooks™ Online, which allows companies to manage books from a web browser, with all company financial information maintained on Quickbooks' servers.

But most lawyers' and paralegals' introduction to SaaS is web-based email from Google™, Yahoo™ or MSN™.  Additionally, Google now offers a set of office SaaS productivity applications (word processing, spreadsheet, and presentation) called Google Docs and compatible with the ubiquitous Microsoft Office™.  Google offers free versions of these programs and also pay versions with higher support levels and other features.  

SaaS Benefits to Small and Medium-Sized Firms
SaaS litigation support applications offer a number of benefits to small and medium firms that may be difficult or expensive to obtain in non-SaaS environments.

Fast Implementation.  Firms often will find that they need a more capable litigation management application with little warning as a new case comes in, an existing case expands beyond what was originally anticipated, or remote staff access becomes paramount.  Specing, buying and setting up a traditional software program on the firm's servers and end-users desktops and laptops can easily take months.  SaaS applications, on the other hand, usually can be up and running in days, if not hours.

Less Onerous IT Demands. Traditional litigation support software applications require the dedicated resources of IT professionals to set-up and maintain.  Lawyers and staff work at all hours, so a litigation support application needs to have continuous support, which few law firm IT departments are set up and staffed to embrace.  Litigation SaaS applications allow a firm's IT staff to focus on more strategic issues.
 
Allow Litigation Teams to be Productive from Multiple Locations.
The SaaS dream: work from anywhere Most law firms want to make it as easy as possible for lawyers, paralegals and staff to work on a matter.  Once fixed costs of a law firm are covered, incremental revenue is almost entirely profit.  Requiring that lawyers, paralegals and staff work on an ill-designed software system, or worse, only while in the office, is not conducive with good client service or with maximum profitability.  A well-designed, SaaS litigation management system allows lawyers and paralegals and staff to work on files wherever and whenever they need to or want to.  This increased work flexibility can enhance firm morale.

Encourage Collaboration. Modern litigation is a team endeavor, and the best results come from a working environment and firm culture that encourages collaboration.  SaaS applications are usually designed with collaboration in mind and make sharing of ideas and work product easier than with other methods.

Industrial Strength Search. As the number of documents involved in litigation has increased beyond what can be easily reviewed manually, search functionality has become more important. Many firms keep files on a shared drive on their LAN.  Search is often done through various desktop applications that are not designed for litigation uses and are slow.  Modern SaaS litigation applications usually include specialized, indexed search tools that are designed to enable attorneys, paralegals and staff to conduct fast, accurate and comprehensive searches of litigation files.

Avoid Upfront Capital Expenses. SaaS allow firms to obtain the benefits of a sophisticated, powerful litigation support system without the substantial outlay of capital required for hardware, software and license fees required for traditional software systems.

Regular Upgrades without Disruption. Traditional software is usually upgraded only every 3-5 years.  This means that that users of traditional software may wait a long time to see new features and functionality.  This 3-5 year cycle exists for traditional software vendors for a couple of reasons.  First, the traditional software vendor relies on upgrade fees for a substantial part of revenue, and so must hold and bunch new features and functionality to encourage upgrade purchases.  Secondly, getting customers to upgrade database systems can be complicated and require special attention. Users naturally wish to avoid the disruption of frequent upgrades.  SaaS systems, on the other hand, are usually enhanced and upgraded on a more constant basis, with no user disruption.  This can bring new features and functionality to users years before they are implemented in traditional software systems.    

Ability to Pass Along Costs to Client. Computer hardware and traditional software can rarely be passed along to clients and must instead be absorbed as firm overhead.  SaaS litigation access instead is often separately billed by case and may be passed along to clients as reimbursable expenses.  Clients often are happy to see that law firms are using modern computerized systems.  Most industries are more computerized than law, and hence clients often understand the gains in effectiveness and efficiencies that come from using good computerized systems better than do their lawyers.

Backup and Security Handled. Regular backups and state-of-the-art security for web-access for attorneys and staff requires investment, personnel and expertise.  A litigation SaaS application enables a firm to outsource this function to a SaaS firm that specializes in maintaining continuity as part of its service.   

Security
SaaS takes a firm's litigation files, notes and work-product out of the law office, holds it off-site on the SaaS provider's servers, and enables access to the firm's authorized users over the internet. Security is a valid and critical consideration in determining to use SaaS for litigation management and which SaaS provider to use. There are several related aspects to data security, discussed below. For all issues, a firm should also honestly assess how it is or would address these same issues with an internal non-SaaS architecture in which the firm manages security itself, and compare its infrastructure and redundancy with what a firm can obtain from a good litigation SaaS. 

Physical Security. This refers to where servers are located and who has access.  A SaaS provider should use only high-security datacenters, with floor access limited to authorized service technicians, and 24-7 network operating center monitoring.

Server Security. SaaS providers should make use of up-to-date firewalls, anti-virus protection, and encryption, to ensure that client data can only be seen by authorized users. 

Privilege Maintenance. Litigation SaaS systems will usually include attorney-client communications and attorney work product.  Precautions should be taken to ensure that a privilege is not waived.  The ABA addresses confidentiality and privilege in a 1995 opinion and states that a lawyer may retain an outside service provider to maintain confidential documents so long as the lawyer takes reasonable efforts to assure that the service provider will not make unauthorized disclosures of client information. This can be established through a service provider's representation of reasonable procedures to protect the confidentiality of information to which it gains access, and that the service provider understands its confidentiality obligations. The ABA suggests that an attorney obtain along with or apart from any written contract for services that might exist, a written statement of the service provider's assurance of confidentiality.(5)  A user of a litigation SaaS should check that the provider's service agreement meets the requirements of the ABA opinion or any applicable state opinions in order to maintain confidentiality and privilege.

Backup and Data Redundancy. Another security consideration is backing up files. A SaaS provider should have redundancy built into its network.   It should replicate copies of client files on two geographically distinct servers to avoid consequences of a total data center failure.  Backups only within one datacenter or single location is not the best practice, as it allows for data loss from a single failure event (like a fire) that can destroy both original and backed-up copies of data.

It is a rare small and medium size firm that has the expertise and resources to provide this level of security.  More often, lawyers in small firms live in dread that a system will crash that hasn't been backed up in a long time.  Firms often handle data portability by allowing client files and work product off-site in the form of unencrypted laptops, portable hard drives and USB keys, that are taken out of the office regularly with minimal security precautions.  A SaaS system run by experts in data security often provides better protection than a firm is able to do itself.

Other Things to Look For
What else should you expect from a litigation SaaS application?  Different vendors have taken different approaches, so you will find significant differences in features and service philosophies.  You will need to do some research to find the best fit between the user's needs and the SaaS provider's offerings. Here are some of the issues to consider:

Ubiquitous Web-Based Access.  All SaaS providers will offer browser-based access to their application.  For some, this means that the SaaS application will work with only a web-browser, and not require the download and installation of any other program.  Other SaaS applications require some local program installation.   Sometimes this is an 'Active X' component, but this effectively limits the browser to Microsoft Explorer, the only browser to natively support Active X components.  Because browser support varies with SaaS providers, it's good to determine which browsers you wish to use with the application and test them.

Native File Support.  With the promulgation of the new federal e-Discovery rules, and similar rules in many states, discovery productions including at least some files in native file format (e.g., Word, Excel and Outlook) have become more common.  Lawyers conducting discovery often specifically request native format because of higher quality searchability and inclusion of file metadata. A modern SaaS litigation support application should include robust support for files for viewing and working with files in native format.  Some older litigation support programs work best only with documents that have been converted to the older TIFF image file format.(6)

Service Level Agreement. In a SaaS environment, the user depends upon the quality of service of the SaaS provider.  You should look to the provider's service level agreement (SLA) to see a high level of service provision guarantee: 99.5% or above, and understand what steps a SaaS provider takes to meet its guarantee.

Free Trial.  Most litigation SaaS providers will offer a free trial so you can try the application before you commit.  These trials often are fully functional, any you may be able to begin using the SaaS application immediately. 

Ease of Use.  Hopefully all software programs, SaaS or traditional, strive to be easy to use.  A lot don't succeed and usability is in the eye of the beholder.  You should seek a litigation support application in which the developer has successfully made the complex simple through good design and an understanding of the specific jobs that users will do with the application.  You will benefit many times over in increased efficiency, more effective use of the software, and staff satisfaction.  

Help and Training.  While SaaS applications are often intuitive and easy to learn, some help or training may be helpful or required to get the most out of the application.  SaaS applications should have good online help and other materials to allow the user to easily do his or her job without the need for extensive training.  Training, however, is sometimes needed or helpful.  Some SaaS providers provide a certain amount of training for free, and others charge for all training.  Third party consultants may also offer their own training programs for popular applications.

Particular SaaS Cost Structures
SaaS is usually a less expensive way for a firm to use higher-end features of litigation support technology, as compared with traditional software.  SaaS takes all the costs that would be required to maintain a software system such as hardware costs, software licensing, installation costs, software upgrade fees, software maintenance fees and IT support, and rolls them into one comprehensive monthly fee.  SaaS fees are usually calculated on a 'per user per' per month basis, but may also be structured based on the amount of storage space used or the number of cases maintained, without separate user fees.  When a firm totals all the costs it will incur to install, upgrade, maintain and support a litigation support application itself, a SaaS approach will often be less expensive.   

SaaS pricing should be transparent and understandable.  A disadvantage of traditional software purchasing of litigation databases is that pricing has often been hard to obtain and understand.  SaaS providers often present their pricing on their website so you can see what an application would cost to use before you get too involved with a product that doesn't fit your needs or your client's budget. 

Conclusion
More and more cases today require a computerized litigation management system to allow attorneys, paralegals and staff to competently handle the matter. When combined with the need to work on cases over the internet, a litigation SaaS may be the best solution for small and medium sized firms.

Footnotes
1) History of Hard Disk Drives, available 4/14/08, at http://en.wikipedia.org/wiki/History_of_hard_disk_drives; Historical Notes About the Cost of Hard Drive Storage Space, available 4/14/08 at http://www.littletechshoppe.com/ns1625/winchest.html; Hitachi Scoffs Solid State, Building 4TB Hard Disk, available 4/14/08 at http://www.slipperybrick.com/2007/10/hitachi-4tb-hard-disk-drive; Hey, Buddy! Wanna Buy Some Storage?, available 4/14/08 at http://www.byteandswitch.com/document.asp?doc_id=132253

2) IDC, The Diverse and Exploding Digital Universe, An Updated Forecast of Worldwide Information Growth Through 2011 (March 2008), available April 15, 2008, at http://www.ifap.ru/library/book268.pdf

3) Timothy Chou, The End of Software, SAMS Publishing (2005), at 6.

4) Gruman, The Truth About Software as a Service (SaaS), COI Magazine (May 21, 2007), available 4/11/08, at  http://www.cio.com/article/print/109706

5) Formal Opinion 95-398, Access of Non-lawyers to a Lawyer’s Data Base (October 27, 1995), available 4/9/08 at http://www.abanet.org/cpr/nosearch/95_398.pdf  

6) TIFF stands for 'tagged image file format' and is an older image-based file format that does not include text as part of the file.