Preventing the high costs of eDiscovery in litigation, audits, and internal investigations

Companies today are receiving pressure from all sides, exacerbating the costs of an already expensive process – eDiscovery. Rising pressure from the increased use of data, domestic and international regulations, globalization, changing business models, more educated thus demanding clients and employees, and changing data protection and privacy laws have resulted in many in-house legal teams feeling overwhelmed when faced with cases necessitating eDiscovery.

Fortunately, technology has developed to allow companies to bring eDiscovery in-house. This is important as reviewing just a gigabyte of data could cost upwards of $30,000 in legal fees. Ten years ago, eDiscovery had to be outsourced. Nowadays, the systems have become much more user-friendly meaning with adequate training, much of the process can be done in-house, saving thousands of dollars, thereby reducing an organization’s exposure to risk.

What is eDiscovery?

Discovery, (known as Disclosure in the UK), emerged in English law in the 1830s. It describes the process required in common law jurisdictions of requiring both parties to a litigation to hand over relevant documents to each other. It is based on the idea that if each party knows the information the other will use against them, early settlement is more likely.

Since the advent of computers and email, discovery has moved on to embrace eDiscovery, which includes the identifying, collecting, processing, reviewing, and presenting of Electronically Stored Information (ESI) to the other party, whether it be in a litigation or arbitration, audit, regulatory requests, internal investigation, or merger & acquisition activity: today this is all named eDiscovery.

If your organization becomes involved in a dispute, and you know (or should know) litigation may be a possibility, you have a duty to preserve any data which may relate to the matter. This duty can arise before a formal Litigation Hold is placed. Although Legal Hold is a strict US obligation, the same principle to prevent data spoliation emerges in other jurisdictions as well.

The penalties for data spoliation are significant, adding further pressure to organizations and their in-house teams and on their eDiscovery methodology.

Why are the costs of eDiscovery so high?

Data is everywhere. eDiscovery specialists are now being asked to pull data from drones, mobile phones, and social media. Deadlines are usually extremely tight, and due to the drive towards early settlement, most companies leave the process to the last minute, hoping litigation will not eventuate. This leaves no time for undertaking a competitive procurement process, training staff, and/or acquiring the resources needed to undertake an eDiscovery project. In addition, the crux of eDiscovery is filtering through information, deciding what is and what is not relevant. However, any material that is discarded must be done so with a justifiable reason, and a note must be kept of where the information is now being held. This is known as the ‘chain of custody’.

The process of delivering the data in a forensically defensible manner also adds to the cost of eDiscovery. One’s first instinct is to simply copy and paste information from the original source; however, this changes the date on the file. Special software is needed to extract relevant data once it is identified and protect its forensic credibility upon delivery.

Bringing eDiscovery in-house to manage costs

Every dollar or euro spent on eDiscovery early can be worth $20-$30 dollars later on. This is because allowing machine-learning to identify and filter out irrelevant data as far as possible before it is passed onto an external legal team can save thousands of dollar in legal fees. The more you can do at the beginning of a matter to prepare for eDiscovery, the cheaper it will be in the long-term.

Final words

In-house counsel have repeatedly stated they want to work closer with all parties, including IT teams and external lawyers, allowing them to be more prepared when it comes to eDiscovery, and thereby minimizing costly disruption.

The ROI in bringing part of the eDiscovery process in-house is remarkably high. This is because the amount of data provided to an external eDiscovery project team can be dramatically reduced through filtering and de-duplicating the initial collection of documents prior to handing them over to the lawyers.

It all comes down to a simple premise - the less information put in front of an attorney to read, the lower their final bill.