Indirect Costs of eDiscovery: Diverting of Resources and Personnel

by Daniel B. Garrie

The full cost impact of an e-discovery request for an organization is hard to estimate because of the underlying, multi-faceted cost points. E-discovery has become a cost-center for businesses, as it can drain significant funds without generating any in return. The idea of not keeping information that is not legally mandated or generates revenue for the company rarely rears its head in the e-discovery discussion, as most organizations tend to be reactive rather than proactive.

Companies should attempt to quantify the e-discovery costs today to determine the true costs of e-discovery tomorrow. In performing this calculation, it is critical to factor in the people burden, especially the indirect costs that result from the loss of business revenue or decreased job satisfaction, as well as the costs of diverting critical resources for a particular case. Employees involved in the e-discovery production, review or analysis process in an as-needed basis, will clearly limit the time and energy they can invest in their core duties. In some cases, companies have implemented in-house e-discovery teams, yet frequently the team is not provided with the necessary recourses to deliver real savings to the company.

Generally an e-discovery solution hinges on a common sense approach to defining a strategy, factoring in the technology, business and legal needs of a company. A company that is able to establish internal policies and business processes with the requisite technologies can reap substantial cost savings .

A company that can efficiently and effectively respond to e-discovery requests is minimizing the disruption to the business mission. Even though e-discovery is becoming the cost of doing business, the amount it costs varies greatly on these and other factors.

Although it is not necessary to get it 100% right the first time, it is key to get the ball moving and iterate, in order to learn from your own mistakes and those of your peers. The end result is that a company can lower the cost impact of unwelcome e-discovery requests and be assured that the focus is on making money.

Companies that are e-discovery prepared are rewarded. For example, many e-discovery and forensic firms charge substantial fees for a “rush job”. Furthermore, prepared companies avoid the internal e-Discovery learning cost curve.
Given the American legal mantra, the better you do in business, the more likely it is you get sued, and, the modified CCP to address e-discovery, it is more likely than not that a US company will face the e-discovery cost conundrum sometime in the near future – in State or Federal court.

Companies that fail to face these e-discovery issues can incur substantial expenses to their company or, in the case of outside counsel, to their client. Adjoining the additional costs is the reality that counsel can potentially endanger a case, irrespective of the underlying merits, which is reflect at both the State and Federal level.