Corporate Counsel, CIOs, and Litigation Support Managers need no convincing that the costs of eDiscovery are increasing dramatically. And if you work in one of the aforementioned positions, it is likely you are well aware that bringing part or all of the eDiscovery process in-house may lead to considerable cost-savings and allow you to regain control over your eDiscovery budgets.
The challenge comes in building a successful business case which persuades the Board to invest in eDiscovery software and technology that gives project teams the tools to get the job done in a way that is legally defensible, leaves a thorough audit trail, and allows for strict cost-controls.
To build a successful business case, it is vital to understand the hidden costs of eDiscovery and how taking direct control of the process can alleviate or even eliminate these.
The more data, the higher the cost
eDiscovery is like apples, you pay by the pound. The more data you have, the more your eDiscovery process will cost. And with almost every employee now walking around with the equivalent of a 1990s supercomputer in their pocket (in the form of a mobile phone), the amount of data related to an average eDiscovery project has exploded.
Estimates vary, but the average cost per gigabyte of data is around $US30,000. And Moore’s law generally applies to external legal fees – meaning they double every 18 months or so. However, this only represents the obvious costs of eDiscovery. It is the costs that are not immediately visible which can cause the most damage to an organization’s balance sheet. These include:
- Reputational damage – the reputation damage caused by negative media which can be borne out of an eDiscovery exercise can be costly. It can put off consumers, investors, and potential employees, all of which can result in revenue decline.
- Legal costs – if an external legal team is faced with a challenge, their usual answer is to engage more lawyers in the task. This does not mean the matter will be resolved any faster, but it will mean your bill will be higher.
- Process costs – the overhead of collating and centralizing data contained on multiple platforms with a backdrop of poor communication between legal, IT, and the eDiscovery project team can cause significant delays in eDiscovery, leading to skyrocketing budgets and missed deadlines. In addition, internal stakeholders often want to work more closely with external Counsel – a challenging goal if you do not have the technology and software in place to manage internal workflows.
- Technology costs – many companies still have legacy data repositories and file formats floating around, and once an eDiscovery process is underway these must be investigated and managed. Not having the correct tools or relying exclusively on third-party providers can lead to the risk of lawsuits and/or court sanctions due to data not being collected in a forensically defensible way or relevant data not being handed over.
- Data costs – in some cases over 80% of data held by corporations is duplicated. This is due to the explosion in places where data is now held; from mobiles to social media, videos, and even drones. Having the ability to cull duplication in-house prior to handing over data to external Counsel can massively decrease costs.
- Review costs – not having in-house technology and software to manage the document and data review process can dramatically increase costs. It is difficult to prioritize and automate the process (some Counsel are still performing manual reviews which is extremely expensive).
The end of huge legal bills
CFOs and Boards are no longer accepting that huge legal bills are simply part and parcel of eDiscovery for litigation, M&As, and regulatory investigations when it is clear there is now software and technology available to reduce external legal costs.
eDiscovery is an incident-related cost; therefore, payment normally comes directly from profit. Perhaps the best argument for bringing part or all of the process in-house is that the cost savings will go directly back to the bottom line, resulting in shareholder, consumer, and investor confidence. With modern-day Software-as-a-Service payment models, taking advantage of eDiscovery technology no longer means a large upfront investment, allowing you to pay for usage instead.
To find out more about the points discussed in this article, you can listen to our webinar in which Jeffrey Wolff, eDiscovery Director at ZyLAB, Mary Mack, Executive Director ACEDS, and Johannes Scholtes, CSO at ZyLAB talk about the hidden costs of eDiscovery.