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What are the costs associated with different phases of
e-discovery production? How are these costs distributed across
internal and external sources of labour, resources, and services?
And how can these costs be reduced without compromising quality?
The Rand Institute for Civil Justice's April monograph,
"Where the Money Goes: Understanding Litigant
Expenditures for Producing Electronic Discovery" explores
these issues, highlights the main challenges related to preserving
electronic information and provides some recommendations on how to
address complaints of excessive costs and uncertainty.
In the Rand study, the researchers collected data from eight
major corporations across 57 cases and interviewed key legal
personnel from these companies. The companies represented in the
study include one in each of the communications, electronics,
energy, household care product and insurance fields, as well as
three from the pharmaceutical/biotechnology/medical device
field.
Although the researchers cautioned that their case study
approach did not permit them to draw generalizations that would
apply to all corporate litigants or all discovery productions,
their findings still provide a detailed account of the resources
required by a diverse set of very large companies to comply with
e-discovery requests.
Findings
The researchers found:
The review of documents for relevance, responsiveness and
privilege was the major cost component one-discovery production,
typically about 73%
Collection consumed about 8% of e-discovery expenditures
Processing costs consumed 19%
These costs broke down into the following, by source:
Expenditures for the services of outside counsel consumed 70%
of the total e-discovery production costs
Internal expenditures were 4% of the total (even adjusting for
under-reporting)
Vendor expenditures were 26%
In terms of potential avenues for cost reduction, the
researchers observed that although significant reduction in current
labour costs is unlikely and that increasing the rate of review has
its limitations, they were cautiously optimistic that computer-assisted categorization of documents
may assist in reducing costs:
Finally, some important generalizations emerged regarding the
main challenges faced by corporate counsel related to preserving
electronic information in anticipation of litigation. In
particular:
Companies are not tracking the costs of preservation
Preservation expenditures are significant
There are complaints about the absence of clear legal authority
about what strategies are defensible for preservation
Recommendations
To address the complaints of excessive costs and uncertainty,
the researchers recommended:
Adopt computer-assisted document categorization (predictive
coding) to reduce the costs of review in large scale e-discovery
efforts
Improve tracking of costs of production and preservation
Bring certainty to legal authority concerning preservation
Our Experience
Our observations are consistent with the conclusions in the Rand
Report. We have found that, historically, the greatest proportion
of costs was attributable to document review, even where this was
contracted out to external document review entities. However,
recently we have seen some developments that have lowered the
overall cost of electronic document production including the cost
of review.
Companies have invested in information systems and record
retention protocols, which result in the rapid and effective
identification of potentially relevant documentation. As a
consequence, there are fewer examples of over-collection, and the
corresponding costs of processing and review
Technology for identifying relevant documents at source has
improved dramatically in the past four years. This technology now
also permits greater, and cheaper, de-duplication of files,
reducing overall volume for review
The increase use of technology within the document review phase
is increasing the speed and accuracy of the review, while assisting
in the identification of wholly irrelevant documents without the
need for human review
We remain cautiously optimistic that computer-assisted review
will lower the overall cost of pre-disclosure document review.
However, computer-assisted review is not a substitution for human
involvement in process design, including for the careful direction
in the preservation and collection of records, the analysis of the
issues involved in a dispute, and a co-ordination of document
management with the overall litigation strategy. A number of
factors can improve outcomes and lower costs, and each of these
should be evaluated and applied in every case.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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