Managing Electronic Discovery Costs | Is Buying it is Cheaper and Safer than Renting It?
March 3, 2010| Law & Forensics
Part 1 of 1
Daniel B. Garrie, is the Senior Managing Partner at Law & Forensics LLC and works out of the Seattle, Los Angeles, and New York offices. He focuses on e-discovery, digital forensics, cyber security and warfare, data privacy, and predicitive coding working with law firms, governments, companies, and non-profits globally.
According to industry analysts, a company with more than 10 legal matters a year should evaluate the acquisition of an electronic discovery solution. Besides the potential financial savings, a company can achieve the peace of mind of controlling their own data.
A dollar saved is a dollar earned. The costs of third-party technical and legal experts add up and the potential impact to the business is sizable, with the sky being the limit. See Sean M. McNee, Productivity as a metric for visual analytics: reflections on e-discovery. It is important to realize that the costs of getting, saving, searching and producing vary respective to the number of documents at issue. See J DeBono. Preventing And Reducing Costs And Burdens Associated With E-Discovery: The 2006 Amendments To The Federal Rules Of Civil Procedure, 59 Mercer Law Review 963 (Spring 2008). This means that if a company implements a solution in-house, one that synchronizes the document retention schedules with the systems, achieving control of the information that is stored and archived, the costs can fall as far as the number of documents retained.
Buying and executing an in-house solution is not always a simple feat. It requires collaboration and energy from the legal, technology, and business stakeholders to be successful. However, buying it certainly gives a company substantially more control over the costs associated with responding to a regulatory investigation, judicial case, or any document intensive production process.
While it is important not to discount the utility of outsourced solutions, when the proverbial fact pattern of the case requires, such solutions can be costly and result in a dependency on the vendor and a relinquishment of control over information and legal-business autonomy for an organization. Of course, bringing electronic discovery in-house requires an investment, but looking past a single quarter of earnings, an in-house solution can provide organizations with substantial tangible benefits year-after-year.
Renting a house is simply not as cost effective as buying it (discussing the tax benefits of buying a house v. renting are beyond the scope o this discussion). The technology benefits realized by buying instead of renting electronic discovery solutions vary by company. The benefits might include reduction in storage costs and/or better implementation of strategic storage initiatives; increase in data security; better responsiveness to requests for electronic information and possibly even happier workers. The savings, while difficult to quantify in a general way, can range from the thousands to the millions annually.
One other key point is how often do you obtain a great deal when the seller knows the buyer has a pressing timeline? When you have the functionality in-house, the costs around the electronic discovery process are certainly more predictable. For example, a company that does not have an in-house solution might find itself paying a substantial premium because the supply of competent document review companies cannot meet the demand, skewing the price curve for the point in time. A company that has an in-house solution can predictably control the costs and scale up and down as appropriate without paying substantial premiums. A services vendor who has already made commitments to other customers is in no position to cut you a better price, so keep this all in mind when you are under tight time constraints.
I welcome any comments or additional discussion or points around this benefit v. burden of buying a solution and brining the functionality in-house.
How to calculate the total cost of electronic discovery?
Companies seeking to deploy electronic discovery (electronic discovery) solutions could benefit substantially by gaining visibility into the cost associated with the life of an email message–from an individual’s machine to the courthouse. This visibility into the cost can provide companies with concrete dollar values to quantify the specific value proposition respective to deploying electronic discovery technologies that address e-mail discovery, of course an organization can expand this calculation beyond email.
Recently, I presented at a CIO Round Table, hosted by Comport Consulting (http://www.comport.com). It was evident that enterprises have minimal visibility into the discovery legal-technology cost structure. No one in the attendee group was able to provide actual dollar costs of email from birth to trial. I wager that this is not unique.
Many vendors claim that their solution delivers substantial savings but, I think that the complexity of the people, process and technologies each company deploys makes these saving projections circumspect. Some vendors offer rudimentary cost assessments at no charge, but generally the models they deploy are simplistic. Arguably, these free assessments dilute the value of the complex mathematical models that calculate discovery cost metrics.
Organizations that acquire visibility into the cradle to court cost breakdown arm themselves with invaluable data with which they can measure the effectiveness and cost-benefit of technologies, which can then be used to assist IT, legal and business stakeholders to ascertain the business value of investment in technologies that support their internal electronic discovery.
How to lower your legal operation costs by owning your data and applying common sense?
Stephen Breyer, a justice on America’s Supreme Court, recently expressed concern that, with ordinary cases costing millions just in e-discovery work, “you’re going to drive out of the litigation system a lot of people who ought to be there” so that “justice is determined by wealth, not by the merits of the case.” While the common American citizen arguably will be priced out of the justice system, I think that many corporations both big and small face similar problems.
The costs of discovery are high and technology might lower some of the costs, but the real solution requires action before litigation. A real solution mandates that companies control the information they create and responsibly manage it from inception to termination. Most companies lack strong information management process and underlying technologies. Corporations that have the technology and process still must transform the behavior of the employee.
What do I mean? Well, if an employee has no reason to think before sending an e-mail, why would they think? Imagine, if you audited a dozen (12) of your employees for compliance with the signed digital information management policies set-forth in your handbook and then circulate an e-mail firm wide stating that x%, which I would wager that over 50% failed, you would see a direct connection made between what I send and my job. It seems to me that it is not really the legal system that is growing out of control, but rather the ancillary costs around litigation are making it so costly, which are driven in part by a failure to take information management responsibility.
Organizations that calculate the total cost of review per-litigation matter, I believe will realize rapidly that the legal operation costs fall largely in having to manage the deluge of digital information. Hopefully, this realization sets off a chain reaction where they realize that less information equals less costs, and begin to actively engage technology, legal, business, and risk stakeholders to come up with a pragmatic solution. What is a good business reason to pay a third-party company to search, preserve, and produce information that your IT team maintains, secures, stores, and manages on a daily basis? Run the numbers! What if you had less information to review? What if you had an internal team to search, preserve, and produce the information to outside counsel? Calculate these savings internal to your company.
Google https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=116574&sessionid=1&key=7D0FA59A44C3BDDBFFFA3C077EADB033&partnerref=web&sourcepage=register Of course, the average litigant seeking justice confront serious fiscal imbalance any time they are looking at litigation, and these additional costs certainly will not make it any more equitable.
Daniel B. Garrie, Esq. has a B.A. and M.A. in computer science and is an e-discovery neutral and special master with Alternative Resolution Centers, available internationally. He can be reached at firstname.lastname@example.org