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Pressure Points for Achieving E-Discovery Cost Effectiveness

The technology for identifying duplicate electronic records has been public record since 1992,[1] yet a survey last year of leading e-discovery providers showed that consolidating duplicate electronic records across custodians was done in only half the cases. This caused the volume of records reviewed for relevance or privilege purposes to be 27 percent higher on average than the volume achieved by deduping within individual custodians.[2] Furthermore, the duplicative reviews caused by this approach exposed corporations to risks of sanctions or waiver of privilege because of inconsistent decisions made on different copies of the same records by different reviewers.[3] Duplicate consolidation is a litmus test of sorts for cost effectiveness--if firms aren't using this basic technology, they are most likely not using other proven technologies such as deNISTing, email threading, domain name analysis or concept clustering, technologies that when used together could reduce legal review bills by as much as 90 percent.

While the slow adoption rate could be caused by a lack of technical competence, the role of economics should not be ignored. Jeffrey Carr, VP, General Counsel and Secretary of FMC Technologies Inc., co-authored an article that claimed that when a company spends $100,000 in legal fees with a firm, the relationship partner is personally impacted by at least $35,000.[4] In other words, in the short term a partner that implements the technology to lower review bills by 90 percent would be significantly reducing his or her personal income from that engagement.

Assuming that lawyers will become technically competent when it is to their financial advantage to do so, the question becomes how to motivate or incentivize lawyers to find and implement cost-effective ways of processing electronic discovery? Implementing a full-blown alternative fee system can require a lot of time and attention from already busy in-house counsel, but there are steps short of that that can be very effective.

The simplest way to start exerting pressure on law firms is to ask them what technologies or processes they are using and to ask them to provide metrics on what savings they are obtaining by the use of that technology. Let them know you'll be using those metrics as benchmarks when evaluating various firms.

Another approach would be to take advantage of the trend of cross-selling by law firms, in which engagement partners encourage corporate clients to use more of a firm's services to put pressure on litigators to modernize their approach. Corporations could turn the tables and use "cross-buying" or at least "cross-shopping" to involve more partners at a firm in taking a look at how e-discovery is handled. To implement this, send letters or e-mails to firms that are providing some services to your corporation, and tell them you're interested in broadening the types of services provided by firms. Invite them to tell you about how they'd service you in a range of areas, but ask them to specifically address their use of technology and processes in handling e-discovery. The hope here is that if other partners think that their chances of providing their services are being hurt by the litigation partner's failure to modernize, there will be substantial pressure to implement effective technologies. If that fails, the corporation could always try insourcing or a full-blown AFA program.



[1] See MD5 hash specification at http://www.faqs.org/rfcs/rfc1321.html.

[2] "Report on Kershaw-Howie Survey of E-Discovery Providers Pertaining to Deduping Strategies," available on the website of the eDiscovery Institute, www.ediscoveryinstitute.org.

[3] For example, if one reviewer marks one copy as privileged while a second reviewer produces another copy as responsive while a third person redacts and produces a third copy, has privilege been waived?

[4] "The Disruptive But Inevitable Move to Alternate Fees," by Jeffrey Carr, Edwin B. Reeser, Patrick Lamb and Patrick J. McKenna.

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