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Fibs your e-discovery vendor and law firm may tell you—Part 1

Abundant misinformation in a changing market

The e-discovery services market in the U.S. is estimated to exceed $3 billion this year. In the face of tectonic shifts in in-house e-discovery technologies and fierce price competition, many outside law firms and e-discovery vendors are anxious to maintain these revenues and provide many arguments on why companies should continue to outsource their discovery. The problem is that some of these arguments are either misleading or simply not true. (Full disclosure: Contoural does not provide matter-specific e-discovery services; it is sometimes hired to evaluate these providers on behalf of our clients.)

The e-discovery market is seeing some significant changes. Corporations are increasingly scrutinizing litigation costs. Some discovery is moving offshore, providing additional downward price pressure on all providers. Perhaps most important, discovery technologies that were once customized systems only available to outside vendors are now commercially available and finding their way in-house, which is cutting into e-discovery services revenue streams. All of these changes are pushing some vendors’ backs against the wall.

In this environment of desperation vendors make statements that may not always ring true:

“A lot of companies are facing sanctions for spoliation.”  Listen to enough webinars and one is likely to believe that courts are sanctioning companies right and left. Judge Scheindlin is out to get you, they will tell you. It is true that there are newer preservation and notification requirements, and opposing counsel often do wield the threat of sanctions to drive settlements. Yet the actual number of sanctions in federal courts remains very low. According to a report from the Federal Judicial Center, of more than 130,000 cases filed, requests for sanctions were made in only 197 cases, and granted in only 35 cases. Only a quarter of these involved preservation issues, and therefore sanctions based on preservation conduct were granted in only .00675 percent of cases. Not exactly an epidemic of sanctions.

“You can’t do this by yourself.”  Many vendors make the argument that it is foolhardy for companies to attempt discovery themselves, inferring that this is a specialized black art. But many medium to large companies have successfully developed their own in-house discovery capabilities for handling everything from employment to product liability litigation, proving their internal processes to be both defensible and less expensive. They may still retain outside firms for extremely large or complex matters, but are perfectly capable of doing the day-to-day litigation themselves.

“You shouldn’t do this by yourself.”  Law firms warn that discovery should only be handled by a “disinterested” third party. Yet using a third party does not relieve in-house counsel’s responsibilities to ensure that discovery is done properly. There are a number of cases where companies delegated the discovery to outside vendors or law firms only to find themselves on the hook when the provider’s efforts were later found to be incomplete. Regardless of who does discovery, in-house counsel continue to be held responsible, and these risks cannot be passed off to a third party.

“The best way to discover is to depend on backup tapes”  Using backup tapes for discovery remains a common practice, yet it would be hard to find a more inefficient medium. Backup tapes were originally designed for protection to recover data in the event of a disk or system failure. While good at protecting data, backup tapes are simply awful at searching and retrieving specific information, the type of access required in discovery. Furthermore, two given backup sets of the same system can have as much as 98 percent redundant data, all of which must be searched. If a technologist were looking to develop the most ineffective discovery medium, she might come up with something like today’s tapes. Nevertheless, many law firms and vendors promote an ongoing discovery strategy centered on backup tapes. There is a better way. Centralized archiving systems can store the data much more efficiently making identification and review much easier, increasing the speed, and reducing the costs and risks of discovery. Rarely, however, will you hear an outside discovery vendor promoting a better method than backup tapes. I recently spoke to a company that had an email archiving system installed capable of implementing legal holds, but their e-discovery vendor had insisted they use backup tapes.


Key Takeaways

  • Changes in the e-discovery marketplace are generating misinformation
  • While organizations may face the threat of sanctions around improper discovery, the actual incidence of sanctions is extremely low
  • Many companies have successfully set up their own, internal discovery processes that are defensible


Legal Information Is Not Legal Advice

Contoural provides information regarding business, compliance and litigation trends and issues for educational and planning purposes. However, legal information is not the same as legal advice -- the application of law to an individual or organization's specific circumstances. Contoural and its consultants do not provide legal advice. Readers should consult with competent legal counsel for professional assurance that our information, and any interpretation of it, is appropriate to each reader’s particular situation. Copyright © Contoural, Inc. 2013

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Mark Diamond

Mark Diamond, Founder & CEO of Contoural, Inc., is a regular contributor to Inside Counsel on Litigation Readiness and Records Information Management. You can e-mail...

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