Senior Counsel
February 18, 2025
In high-stakes dispute resolution, document review is a critical process that shapes case strategy, identifies key evidence, and ensures compliance with disclosure obligations. Outsourcing this task is often practical, but the decision between law firms and document review companies carries significant implications. While document review companies may appear to offer a cost-effective alternative, litigators and clients should be aware of several nuanced risks and misunderstandings that often accompany the use of these services.
Licensing and the Nature of Services Provided
Many document review companies advertise that they employ licensed lawyers to conduct reviews. While this may be the case, it is essential to understand that in Canada, these licensed lawyers are not providing legal services in the course of their document review work, as they are legally not permitted to practice law through non-law firm vehicles. This distinction is rarely clarified by the companies themselves, and clients may mistakenly assume that the reviews are covered under the umbrella protections provided by regulated legal services. In reality, these reviewers are engaged in a non-legal capacity and do so without the protections and assurances that clients might reasonably expect, such as solicitor-client privilege, fiduciary duties and mandatory professional legal liability insurance.
Even when some reviewers carry personal insurance (which requires confirmation), as these companies do not provide legal services (and are not permitted to do so), services provided through them do not attract solicitor client privilege and will not be insured under professional indemnity policies.
In addition to not being insured by professional indemnity insurance, contracts with companies for outsourced document review typically limit liability, shifting accountability and risk to the client and law firm.
The different nature of the contract creates risks that need to be considered. This subtle yet critical difference should prompt litigators and their clients to consider whether such arrangements align with the complexities and risks of their cases.
Conflicts of Interest: A Blind Spot in Document Review Companies
Another key concern with document review companies is their approach – or lack thereof – to conflicts of interest. Unlike law firms, which are required to conduct comprehensive conflict checks to ensure that no adverse party relationships or other conflicts exist, most document review companies are unlikely to perform in-depth checks, or any checks for legal conflicts.
This omission can lead to reviewers unknowingly working on matters involving parties they have previously represented or that may be adverse in interest to current or past clients. The only exception tends to be professional firms undertaking document review that also provide audit services, which may conduct limited conflict checks – but only to confirm that a potential client is not an existing audit client.
For anyone involved in litigation, investigations or regulatory disputes, this is a crucial consideration. Conflict issues can jeopardize the integrity of the review process, lead to embarrassing disclosures, necessitate costly rework, and has led to dismissal of an action in extreme cases. Yet, many litigators remain unaware of this gap in conflict check management until it becomes a significant issue.
Why Law Firms are the Safer Choice
When outsourcing document review to a law firm, clients benefit from legal and professional safeguards that document review companies simply cannot provide. Law firms are bound by ethical, professional and legal obligations, including mandatory conflict checks, professional liability insurance and a fiduciary relationship with their clients. They also ensure that all work is not only supervised by licensed, practicing lawyers but is conducted by those who are actively engaged and insured in providing legal services.
Additionally, law firms can integrate document review seamlessly into the broader litigation strategy, providing a level of insight, defensibility and accountability that is often absent in standalone review companies. This alignment with case strategy ensures not only accuracy but also that critical legal judgments are made with the appropriate context in mind.
A Call for Strategic Decision-Making
The choice of where to outsource document review is not just a logistical decision; it is a strategic one. Litigators must weigh the perceived convenience of document review companies against the long-term risks of inadequate conflict checks, lack of legal service protections, and limited accountability.
While document review companies may have a role in certain types of cases, high-stakes dispute resolution demands the safeguards, oversight, and expertise that only law firms can provide. Understanding these distinctions is essential to protecting client interests and ensuring the success of the process.
