E-Discovery Costs and Benefits, Part 5 of 6: Indirect Costs of eDiscovery Managed Poorly

Part 5 of 6: Indirect Costs of eDiscovery Managed Poorly

Although the impact of e-discovery on the business mission is difficult to quantify, the diversion of internal resources to address e-discovery requests can cause loss of business revenue, decreased job satisfaction and diminished stature in the marketplace.

For example, one Fortune 500 company that became entangled in litigation did not have any in-house capabilities to respond to an e-discovery request. Nor did it have established document retention policies that were aligned with its technology investments. The total cost of responding to the e-discovery request — beyond the $1.2 million dollars spent on document review — also included a substantial decline in revenue relative to its competitors. Because this company was unprepared, it suffered a substantial resource diversion from revenue generating activities and a loss of skilled employees because of job dissatisfaction.

The nature and extent of the actual impact of an e-discovery request will hinge in part on the strategic approach your organization chooses to handle such requests. If an organization views e-discovery requests as unplanned events that can only be addressed in an ad hoc manner, the organization will surely experience high recurring costs from outsourcing most of the effort. In addition, with no internal learning curve, indirect costs will impose additional cost burdens over time with no prospect of improvement.

The alternative approach assumes that e-discovery requests are inevitable and must be addressed as one of several requirements for a comprehensive information management system for an organization. By establishing effective internal policies, business processes and supporting technologies, your organization can then reap the cost savings when it efficiently responds to e-discovery requests and minimizes disruption to the business mission. More importantly—by internalizing key steps—continued refinement is possible over time. Guided by experience, an organization can lower the cost impact of unwelcome e-discovery requests, while increasing the benefits of information assets for business success.

The starting point for weighing possible solutions for managing e-discovery requests is quantifying and gauging relevant cost factors. But the decision is multi-dimensional. For example:
• What are the potential legal risks?
• How complete are policies for records management and how well are they implemented?
• What is the strategic plan (if any) for managing enterprise content?
• What information technologies are deployed and what future investments are planned?
The best e-discovery solution for an organization must consider all these elements. E-discovery is not simply a legal issue but a business challenge. Outsourcing all responsibility for e-discovery requests can prove problematical over time, success hinges largely on the details. In-house management of enterprise content can not only lower e-discovery costs in the long run, but give an organization effective command over its information. Efficient identification of truly relevant documents markedly lowers the cost of downstream review and analysis in e-discovery disputes while simultaneously
demonstrating an organization’s ability to strategically manage and exploit its information assets.

That is why a blended solution is a worthy goal for most organizations, with outsourcing targeted for expertise and/or resources not available in-house.

** This is the fifth part in a six-part series which comprise an abridged version of the article “eDiscovery Costs and Benefits,” written by Daniel Garrie and published in the Los Angeles Daily Journal.