Karsten's Blog

With litigation on the rise and enterprise information stores overflowing with unstructured content, many large and mid-sized companies are slashing legal costs by reclaiming data search responsibilities related to E-Discovery and Early Case Assessment. Such tasks, specifically those that seek to accurately identify, collect, and then preserve Electronically Stored Information (ESI) pertaining to active or anticipated lawsuits, have traditionally been handled by the same external law firm engaged to argue or arbitrate the legal matter in question. However, as challenges tied to system diversity and runaway data growth have driven search costs through the roof, an entire industry of specialized E-Discovery technologies and methodologies has matured. The rapidly expanding percentage of mildly-litigious organizations investing in these tools is proof that, by in-sourcing legal search tasks, E-Discovery and Early Case Assessment costs can be controlled, and in most cases, dramatically reduced.

In addition, early adopters have proven that cost-reduction is not the only reason to look inward – some of the same tools and approaches also excel at once-insurmountable data management challenges linked to compliance and retention drivers. Best of all, the capital investment required to procure and install the necessary technology seems to be coming straight out of the legal budget, which stands to see future reductions in operational expenses. So, when the right tool is selected, both IT and Legal can post simultaneous wins. Although, as is the case with most technical investments, the key to this dual victory lies in product selection - for this reason, IT departments should determine what E-Discovery and Early Case Assessment is actually costing their companies, and then, if warranted, lead the charge to bring these tasks in-house.

In the legal sense, the Discovery process occurs during the pre-trial phase of a lawsuit and provides a means by which parties can request documents and evidence from each other. For most of the history of our legal system, the process has been centered on paper records and other physical items. However, as the world changes, so do the Federal Rules of Civil Procedure, which, in 2006, were updated with specific provisions to support the preservation and collection of electronic data including email messages, Microsoft Office documents, and Instant Messaging (IM) exchanges. In short, anything electronic is now completely Discoverable and organizations are required to produce all data even remotely related to concepts or persons described within a legal complaint as part of Discovery. The process of identifying, retrieving and producing relevant electronic data related to Discovery is called Electronic-Discovery, or E-Discovery.

The practice of estimating the chances of successfully prosecuting or defending a legal matter through internally-focused Discovery efforts is called Early Case Assessment. Knowing that approximately 90% of all cases are settled before trial, Legal departments often perform Early Case Assessment in order to set a monetary break-even point for settlement. Throughout this process, while searching through their own electronic and non-electronic records, organizations keep an eye out for overtly incriminating evidence (called smoking guns in the legal world),to which opposing council will eventually be privy. With E-Discovery being a large and growing component of Discovery, it is a major component and input to the Early Case Assessment process.

Whether needed for pre-trial analysis or Early Case Assessment, getting data related to a specific person, issue or lawsuit (called responsive data in the legal world) out of source systems, document repositories and offline media can be time-consuming and technically challenging due to factors related to the way that we store and utilize information in business environments. While online search engines propagate the perception that keyword search technology is accurate, fast and easy to use, on most corporate networks, this is simply not the case. In the enterprise, electronic evidence can be scattered across multiple backup tapes, document archives, messaging hosts, and file shares. The distributed nature of our corporate networks further complicates this challenge – various versions of the same document are often stored on different workstations, laptops, removable drives and even cell phones. Email and IM conversations can sprawl out into many hundreds of related threads…solving the riddle of “who” said “what” to “whom” and “when” can quickly become a science!

For this reason, primitive E-Discovery and Early Case Assessment search efforts tend to gravitate toward a common pattern: initial collections performed by those familiar with technology (the “technologists”) are often done with a strong liberal bias, so as to not discount any potentially responsive data. This population is then reviewed manually, by those familiar with the details of the case (paralegals and attorneys), who read each document, organize documents according to relevancy, black line unrelated data within responsive documents (called redaction in the legal world), and, in general, gradually reduce the amount of data that will be used by lawyers to argue the case.

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Combined with the compressed timelines associated with most legal actions, the largely manual nature of this work generally demands staff augmentation. Thus, the second group is almost always comprised mainly of consultants and contractors that charge by the hour (or by the page reviewed). As a result, related expenses fall in direct proportion to the amount of data gathered by the “technologists”. As it has become commonplace for the second group to be supplied by the external legal firm representing the organization in question, the exact cost of this effort may not be reported as an explicit line item. Regardless, the monetary costs of E-Discovery are traditionally the budgetary responsibility of Legal departments, which have, until just recently, benefitted from deep pockets and were rarely challenged on decisions to spend. Graphically, the relationship between data volume, relevancy and cost is represented as illustrated below:

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To put some numbers around the concept, the technology research firm Gartner says that outsourced data search and processing costs add up to $16,000 - $18,000 per GB. Considering that mid-sized cases typically require an inspection of over 100GB of data, it’s easy to see why even mildly-litigious companies should be interested in identifying and implementing alternatives to traditional E-Discovery approaches. To those in the know, the hundreds of thousands (or millions) of outsourced search and process dollars being spent by busy Legal departments comprise some of the lowest-hanging expense-reducing fruit imaginable!

Besides the benefits that come with being viewed as cost-reducing heroes, IT Departments that lead the charge to bring E-Discovery and Early Case Assessment tasks in-house can win access to cutting-edge data search and classification technology…on the Legal Department’s dime! The key to reaping these benefits lies in not being late to the party. If the project is inevitably going to happen, IT should be the champion - by initiating the conversation, and then driving the product selection process, IT can avoid being asked to support a system that was selected based solely on criteria linked to marketing and sales prowess. Conversely, proactive IT departments that take a hold of the E-Discovery steering wheel can be sure that ancillary compliance and retention requirements will be satisfied in lockstep.

If this sounds interesting, read my next post. There, I’ll explain what it takes to bring E-Discovery and Early Case Assessment search tasks in-house. After that, look for posts focused on the underlying business case as well as several that outline the ancillary features of select E-Discovery products.