The swelling cost of electronic discovery is a pressing issue for businesses everywhere, and many GCs are now resigned to spending ever-larger shares of their companies' budgets on managing and producing massive amounts of electronically stored information (ESI). Yet, even amid the rolling waves of e-mails, text messages, spreadsheets and other digital documents that wash into and out of just about any company during the average workday, proper management of ESI need not translate into a budget-busting nightmare. Indeed, by taking an informed and systematic approach to the problem, many businesses stand to dramatically lower their e-discovery costs.
For most companies, the biggest expense in this area comes in the form of billable hours for document-review attorneys. These teams of specialists are tasked with sifting through digital files for information that could be relevant to ongoing legal matters. Sometimes, the reviews center on oceans of ones and zeros—volumes of data so vast they are measured in terabytes. (One terabyte equals 1,000 gigabytes, or a trillion bytes.) Naturally, an overarching goal of any e-discovery cost-reduction effort should be to figure out how to tighten this review process. Is it possible for attorneys to be given fewer documents to review from the outset? Are there ways in which the review process itself could be sped up without sacrificing accuracy?
A logical place to start is the data in hand—all of the information stored on servers, hard drives, back-up tapes and the like in systems old and new. Despite the high cost of its painstaking preservation and storage, much of this data will never be relevant to any legal case. (Think of those ubiquitous e-mails with the likes of "Happy Birthday, Jan!" or "Super-cute YouTube baby!" in the subject line.) Indeed, according to a 2009 survey by Framingham, Mass.-based IDC, 60 to 80 percent of the information retained by corporations in America has no value from a business or legal perspective.
And as all of us know from firsthand experience, the sheer amount of ESI continues to mushroom. In particular, the volume of time-consuming e-mail is growing at a rate that borders on the absurd. Archiving solutions, which essentially capture all of the e-mail coming into or going out of a company, can reduce some of this clutter through redundancy-targeting methodologies like de-duplication (for example, if an e-mail goes out to 1,000 people, it sits in the archive as a single item rather than as 1,000 copies). But these programs, while useful, are nonetheless imperfect. They also tend to be expensive, frequently costing hundreds of thousands of dollars. Rather than relying on e-mail-archiving or data-filtration software alone, then, the best approach for many companies is to get serious about cleaning up their information environments. By "taking out the trash" in a major way, companies stand to make big cuts in their annual data-storage bills, which can also run into the six figures. This also enables them to more quickly and more accurately identify potentially relevant information for the attorneys to sift through during a review process, potentially lowering their legal bills.
Particularly at older businesses, there are usually obvious candidates for this initial housecleaning. These include not just voluminous collections of employees' daily e-mails, but the likes of backup tapes from legacy computer systems that are no longer in use. Typically, this data has yet to be discarded for only one reason: Company lawyers were afraid to throw it away. Of course, it is a good idea to be cautious (deleting a digital document is no different than shredding a paper one). But by involving either in-house or outside attorneys in the housecleaning, companies can do much to avoid disposal mistakes that could expose them to risk. The bottom line is this: It is still much cheaper to work with consultants and legal experts to get rid of irrelevant information up front than to pay a team of document-review attorneys to slog through junk (possibly a few terabytes' worth) later on.
If shrinking the overall haystack of data is the first step in managing e-discovery costs, the second is to take a systematic approach to finding all of the needles—i.e., the truly relevant information buried in all that data. For historical reasons, this can be easier said than done. Back in the old days of paper record-keeping, employees simply put files and folders into numbered boxes, indexed them, and sent them off to the warehouse for safekeeping. This low-tech system worked remarkably well. Information technology departments, by contrast, evolved primarily as service organizations. The focus of IT was not to pinpoint the latitudes and longitudes of all relevant pieces of information on meticulously created maps. Rather, it was to make sure employees had functional access to ESI, wherever and however it happened to be stored. As a result, most companies now have multiple repositories of heterogeneous data scattered helter-skelter amid different systems and locations. This content is a lot harder to manage, or even find, because it is literally all mixed up.
Data-mapping offers a way to solve this problem. The basic idea is to create a master index that spells out exactly where content is stored. Surprisingly, many companies have never taken this critical information-management step. This makes them a bit like libraries that opted to wing it rather than adopt the Dewey Decimal System.
However, not all data needs to be mapped for litigation purposes. In most companies, only a fraction of the information systems in use will ever be implicated in discovery. Thus, for practical reasons, it is advisable to create a litigation-centric data map that includes those data repositories likely to contain information required to respond to discovery or regulatory requests. Naturally, specific data-mapping needs and strategies will vary from business to business. A manufacturer, for example, might carefully index all of the content related to particular products, with a view toward fending off product-liability claims. A financial services company might map its data with a view toward mounting a sharp defense against allegations of breach of fiduciary duty.
For all organizations, however, the data-mapping process requires a thorough understanding of the record types, computer systems and archiving practices in play. In what format is the data stored? Is it kept indefinitely or periodically overwritten? Where are the backup tapes? The answers to these and other questions should shape the effort from the outset.
In the course of carrying out e-discovery for an ongoing legal matter, data-mapping is a retroactive process aimed at locating relevant information. Ideally, however, companies will proactively integrate data-mapping into their information management and discovery response protocols and thereby better position themselves for the future. In addition, companies may be able to leverage new indexing technologies that have made it possible to thoroughly catalogue the contents of payroll systems, shared network drives, e-mail and other important data repositories. As a result, they can be more targeted about the data they collect during the e-discovery process: Instead of going after, say, all of John Smith's e-mail and the entire content of his laptop hard drive, they can winnow the search and save money by reducing the amount of data sent to document-review attorneys.
Still, data-collection is as much an art as it is a science. Misspellings, slang terms, abbreviations, vague language—all have the potential to confound a search. Since the goal is to leave no irrelevant information behind, it is usually necessary to cast a wide net that brings in a bit more data than might be considered ideal. Human intelligence can also be invaluable in the data-collection process. In many cases, the best approach is to simply sit at the computer with John Smith and get him to show you where he drags his e-mails and folders, how he stores things and whether he uses idiosyncratic abbreviations. This can greatly reduce the amount of information collected and reviewed. Naturally, it is important to intelligently balance the costs and risks here: If the employee is suspected of a heinous act of workplace violence or a major financial crime, it's probably better to just seize the laptop. In either case, the important factor is the legal judgment applied to determine what and how to collect.
Another simple step is to open a dialogue with IT. These days, e-discovery vendors are calling up corporations left and right and trying to sell them archiving and indexing solutions of every type. And yet, many companies can take a smarter approach to data-collection by leveraging the full potential of their existing technologies. The key is to get IT actively involved. In other cases, newer tools can be used to improve indexing and recovery capabilities, particularly of older technologies like backup tape systems—a much cheaper alternative to buying brand-new data infrastructure from a vendor.
Taking a critical look at vendor relationships is another good way to save money on e-discovery. According to case law, your e-discovery response should be proportional in cost and effort to the value of the case and the significance of the issues at stake. And yet some companies routinely hire blue-chip ESI-processing and hosting vendors when second-tier providers would have sufficed. Companies should also look for opportunities to leverage volume business for preferred pricing. All vendors love repeat customers and will provide substantial incentives to forge an ongoing relationship.
Sometimes, companies inadequately scrutinize how vendors determine their fees. Some vendors, for example, will charge a flat fee based on gigabytes of data. If that vendor initially receives the data in compressed form, however, the data volume could mushroom dramatically once those files are "exploded" to their true size. Is the vendor's fee based on the exploded or the compressed volume? Some vendors layer on additional costs for the likes of de-duplication, e-mail threading or data hosting. Others charge higher rates for data once it is out of its native format and is in the review application.
In choosing one vendor bid over another, then, companies should be careful not to engage in apples-to-oranges comparisons on price. Intangible factors also can make a big difference. How good is the vendor's project-management or client service? Will the vendor be available if the system goes down in the middle of the night during that big review?
Rather than looking at documents in their native formats, attorneys typically use specially designed ESI-review software. The strengths and weakness of these tools, however, vary widely and must be carefully weighed. What document types will be reviewed? Will there be foreign-language content, such as Asian characters that can be handled by some applications but not others? Can the software efficiently group documents according to content? Does the application make it easy to find and label privileged files? During the vendor-procurement process, companies or their representatives should be knowledgeable enough to make sure all such relevant questions are answered. This can help them zero in on the best—and most cost-effective—review applications for their needs.
When it comes to the document-review vendor, up-front analysis also can yield significant savings. While the process must be overseen by an attorney, in some cases it is appropriate to enlist well-trained non-attorneys, whose services cost far less, to actually review the documents. In other cases, it is critical to hire a more sophisticated operation, up to and including a team of veteran document-review attorneys. Questions companies should ask include: What is your experience with document review? Where do you get your pool of reviewers? How do you screen them to make sure none of them are, say, felons, who might steal corporate information? Do your reviewers actually have experience in our industry? How secure is the review facility itself? What procedures are in place to make sure the review rates and accuracy are optimal?
Ideally, as they take cost-saving steps such as those outlined above, companies will develop a defined, documented, predictable process for handling e-discovery. No system is fail safe, of course, but having this clear process in place does more than save money. It stands to reduce the risk of sanctions by unambiguously demonstrating the company's reasonableness and good faith on ESI.