E-discovery is big business: according to the 2007 Socha-Gelbmann survey it is anticipated that spending on e-discovery will reach $2.45 billion in 2007 and grow at a rate of around 30 percent annually. Although this is a reality that most corporate counsel have been desperately attempting to address for a few years, this issue is just now appearing on the radars of many c-level executives and boards of directors who are wondering how it has come to pass that companies are spending so much on discovery. Not surprisingly, there is enormous pressure from the corporations to reduce these skyrocketing costs.
How Did We Get Here?
The responsibility of corporate counsel in the discovery process has not changed in the past eight years since the federal courts first started addressing electronic discovery issues - the paramount concern is still to have a firm grasp on the company's information that could be potentially relevant in a particular legal matter. What has changed is that nearly 99 percent of all information is now completely electronic. And on its face, this should make things easier since technology has created incredible tools to store and search electronic data, which were never available with paper. The problem is that the same technological advances that have enabled the shift to a near-paperless business world have also resulted in extraordinary increases in the sheer volume of data. For example: in testimony before a committee of the Judicial Conference considering amendments to FRCP, it was stated that one competitor sued Microsoft twice - in 1998 and 2003 - on the same topic. In the second case the amount of e-mail to be considered was seven times the size of the amount involved in the earlier case.
Because corporate counsel has no choice but to ensure an accurate and thorough discovery process, many have had to make sacrifices in costs and efficiencies. Initially, most companies relied solely upon outside counsel to manage discovery for individual matters. But individual matters can often snowball into multiple matters where the key custodians appear over and over again. And unfortunately, using outside counsel to manage data for an individual case meant that the expense of reviewing documents could not be leveraged across multiple matters. It seemed nearly impossible to leverage prior work product. As a result, a large portion of the annual expenses forecasted in the Socha-Gelbmann survey are likely for paying to do the same work over and over.
Corporate Counsel: Re-Take Control Of First-Level Review
Arguably, the single largest expense of the discovery process is for attorney review. While there may come a day when technology can automate a full review, that day is not quite here - manual review is still required to protect confidential and privileged business information. Just ask Tokyo Kikai Seisakusho, a manufacturer of newspaper printing presses, that recently received a $19 million settlement from its outside counsel for allegedly handing over a privileged document to the opposing party in an underlying suit. Parties therefore want it all - to keep costs down, while also protecting and preserving important business information. With the cost of document review projects often dwarfing attorneys' fees, the pressure is tremendous.
A significant trend in the past 12-18 months has been for corporate counsel to re-insert themselves into the document review process. And as counsel become more familiar with technology, some best practices have emerged. The practice with the greatest impact on efficiency and cost-savings has been for companies to manage and control the first-level review holistically across the entire universe of their electronically stored information and then to leverage that work across multiple matters. This is accomplished through direct relationships with top tier service providers that can provide greater cost predictability, budget certainty, and more reliable work product across matters. And a new generation of service providers joining forces with corporations are offering just that.
Where We Are Going: Bundled Pricing Online Review Applications And Attorney Review Time
In a market full of imitators, the pressure to give some type of cost predictability has kept some vendors ahead of the pack. E-discovery service providers that have been most successful have been able to give their clients budget certainty though inclusionary pricing. And now corporate counsel is able to leverage providers that have taken advances in cost predictability in discovery projects one step further-by bundling e-discovery services such as processing and online review with document review by top tier and regional staffing firms. Corporations pay one price for the processing and review of documents - no more separate pricing. Once a corporation knows how much data it has, it then knows the price for discovery. It's that simple.
These unprecedented partnerships are a win-win, as they provide counsel with the following benefits:
Budget certainty: Parties pay one price per page for the document processing, upload to an online review application and review all the way though production.
More efficient review: Top tier and regional staffing firms partner with online review application service providers so that their reviewers have virtually no learning curve. Staffing firms can become certified in a particular online review application.
Better quality control: Because there is no need for continuous training on the online review application, review occurs much more efficiently and with better control. Faster first reviews also leave time for quality control checks and second tier reviews.
Managed Workflow: Because the e-discovery service provider and the staffing company work together, documents can be batched and reviewed in a methodical, efficient manner, with no need for a middleman.
These partnerships, though, are only as good as the individual providers themselves. That is why counsel considering any type of bundled option should vet both service providers with care. Some considerations when vetting the online review application are:
Ease of Use: Does the online review application have any easy-to-use interface that allows for attorneys to be up-and-running with simple training? Does the application contain litigation-specific capabilities including: annotations, redaction, customizable document folders, automated Bates numbering, document branding, keeping email in context with associated attachments?
Quality Assurance: What functionality is available to monitor the quality, accuracy and efficiency during the document review process? How can the online review application be leveraged to make changes in the review strategy if necessary?
Repository: Does the online review application offer a repository to manage: serial litigation to allow for re-use of documents for multiple matters? Multi-party litigation? Multi-level review? Multiple productions?
Control: Does the application focus on the elements of document review most important to the needs of first-level review, such as speed and turnaround times, case and document context, and user control?
Searching and Filtering: Does the application utilize the latest search and filtering functionality for logical review of discovery documents?
Security: Has the provider been through rigorous security screening?
Volume of Data Capacity: What is the capacity of the online review application? Will it be able to accommodate the addition of data created by the business on an ongoing basis?
Number of Users: What is the capacity for concurrent users?
The Road Ahead
E-discovery is here to stay, that is clear. And although overall costs are not going to go down anytime soon, corporations that are strategic about their service providers will find ways to control how much they have to spend. By leveraging prior work product, master service agreements, and e-discovery/ staffing company alliances. corporate counsel can find tremendous efficiencies and budget certainty. More importantly, they can ensure they are meeting their discovery obligations without having their case sidetracked by discovery issues. And the corporation as a whole can continue to focus on business without getting sidetracked by enormous costs.
Published December 1, 2007.
