Posted by & filed under Cost Containment, Document Review, Predictive Review.

Anyone who has managed a litigation budget would agree that controlling the cost of litigation often seems like an impossible endeavor. Litigation budgeting has always been challenging because of the unpredictable nature of cases and the inescapable fact that you cannot control the burdens imposed by your adversary or the court (and sometimes your own client).

The volume and nature of data produced by companies today has added a whole new set of challenges to controlling litigation costs. The risks associated with the preservation and collection phase of e-discovery often drives process decisions that increase cost. And, tight deadlines involved in litigation frequently heighten a litigator’s historic resistance to the adoption of new technology solutions and meaningful process improvements.

It is not surprising that the frustration with the cost of litigation has reached the boiling point. The documents submitted in support of the 2010 Conference on Civil Litigation (aka “Duke Conference”) contain many interesting points that the e-discovery industry and the legal profession should not ignore.

One report titled “A Survey of Chief Legal Officers and General Counsel” (Report) found that a majority of general counsel think that outside counsel do not “embrace measures to make e-discovery more efficient,” and over 70% believe that litigators do not “know how to obtain necessary information without undue cost and delay.”

Another report titled “Litigation Cost Survey of Major Companies” (Report) is based upon survey responses from 37 of the Fortune 200 companies. The 37 companies reported spending in the aggregate $4.1 billion dollars annually on litigation expenses. The surveyed companies reported incurring an average of $115 million dollars in litigation costs in 2008, up from $66 million in 2000. The survey also found that “discovery costs for attorney review alone were roughly one-fourth of the total outside legal fees.”

The findings are consistent with other published analyst reports. In their April 2009 market commentary, VRA Partners noted that the “cost of review is estimated to be approximately $5 to every $1 of EDD processing, which would estimate the total market for review services (in 2008) to be in excess of $10 billion.”

We all recognize that market size predictions are merely estimates and the true numbers can vary widely. However, the important take away is that the cost of legal document review is huge and constitutes by far the largest portion of the expense of the e-discovery process.

Although the cost of legal document review dwarfs the cost of e-discovery processing, legal document review is often the “elephant in the room” that is not discussed. You can’t miss an elephant in a room; nor can an e-discovery professional miss the fact that the bulk of e-discovery costs are in the legal document review phase. Yet, time and time again, cost containment discussions tend to focus on the cost of e-discovery processing as opposed to the technology and process options that can reduce the crushing cost of document review.

While the quest to rein in litigation costs should look at all aspects of the e-discovery process, a company that ignores the cost of legal document review from its cost-containment analysis is destined to fail miserably in its attempt to contain e-discovery costs. Indeed, e-discovery cost containment should instead focus on strategies that can influence the cost of document review at every stage of the e-discovery process.

Technology advances such as Servient’s Predictive Review truly moves the needle of cost containment. Use of advanced technology alone, however, is not a silver bullet that will reduce document review costs in isolation. Incorporating advanced learning technology into an iterative analysis and review process and pursuing new avenues of advocacy that the new technology provides are necessary to achieving the cost containment that clients expect and deserve.

In the coming blog posts, we will take a closer look at the challenges involved with containing document review costs and examine technology and process options that deliver substantial cost savings.

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