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With companies allocating roughly 20 to 50 percent of their legal spend to litigation, it's especially important for them to find ways to reduce their e-discovery budgets. Improving legal hold management can be a good place to start. Organizations reviewing their internal procedures for 2018 should be exploring alternative ways to bolster the defensibility of their legal hold management workflows. Automating these processes in-house can make a significant difference, dramatically reducing costs when compared to the standard, vendor-outsourced approach.

Let's crunch some numbers in four of the most costly areas of legal hold management to see how automated software can improve your bottom line.

Reducing Fees for In-Person Interviews

As more companies use e-mail systems, file-sharing platforms and content management applications to share and store data, it's inevitable that corporate legal departments will need help from key personnel to locate electronically-stored evidence. Many organizations, however, rely on outside counsel to do this by having them conduct in-person interviews with potential custodians.

How outside counsel fees add up: Let's say that an in-house corporate department is investigating a legal matter and needs to interview roughly 60 potential custodians. One hour per custodian multiplied by 60 billable hours at an average rate of $400 is $24,000 spent on custodian interviews alone.

You can get custodian responses more quickly and efficiently—and eliminate interview costs entirely—by using automated legal hold software. In-house attorneys can use this software to build customized questionnaires from preformatted templates and standardized court-vetted questions using drag-and-drop editors to ensure that interviews yield optimal results. This software can also be configured to automatically generate reminders and auditable quality control reports, tasks that otherwise might fall to outside counsel and further increase costs. It makes little sense to assign these basic functions to lawyers.

Reducing Fees on Collections, Processing and Loading

Once potentially relevant ESI is identified, it needs to be collected from user work environments, loaded, processed and stored for review. Again, many corporate legal departments rely on outside vendors to perform these tasks.  

How vendor fees add up: Let's assume data collection vendors charge by the device or by the hour, and the collection process takes at least two hours per device.  If collection rates average $325 per device or $125 per hour, and a company collects data from 100 custodians, the company would spend $32,500 under the cost-per-device model or $25,000 under the hourly model.  

In addition, organizations would incur fees for processing and loading this data into document review tools.  Most companies also outsource these tasks to vendors. Say an average cost of $200 per gigabyte for data processing and $75 per GB for data loading. This translates into $645,000 in data processing and loading fees, assuming each of the 100 devices contains just 30 GB of data, and an 80% cull rate from initial processing and keyword searches.   

These activities can add up to more than $670,00. But, they can be avoided by using automated legal hold platforms that include these functions under enterprise-wide licensing fees. This offers companies additional built-in savings and allows them to allocate the time, cost and expenses they would have otherwise incurred from outsourcing these tasks to other components of their legal budgets.

 

Reducing Fees on User Licenses for Enterprise Systems

Since most organizations use enterprise platforms, in-house attorneys often turn to enterprise platform user accounts to locate common types of electronically-stored information such as e-mails, PDFs and images.  Not all of these user licenses, however, are designed to support even basic archiving. Consider, for example, the user license offerings for Office 365. While Office 365's Security & Compliance Center can help considerably with archiving data for later identification and collection, only the Office Enterprise E3 and E5 licenses offer Security & Compliance support. Just as with other enterprise platforms, organizations using lowest-tier O365 licenses often do not have access to these features, meaning companies could inadvertently lose evidence if they downgrade an E3 or E5 user license to an E1 subscription. This means that an organization with 1,000 employees would need to dole out $420 annually per employee—$420,000 total—to ensure their corporate data is properly archived.  

Automated legal hold platforms can easily address this problem. Attorneys can use legal hold platforms with direct connectors to access corporate data systems for information lookup and preservation needs – such as collecting and gathering data in a forensically or legally defensible manner.  This is because direct connectors provide the technology and ability for automated programs to directly access any type of enterprise user account through scripting, allowing attorneys to automate collection and suspend auto-deletion without being handcuffed to IT.  By pairing lower-tiered licenses with third-party programs to boost their legal hold management features, companies can reduce spoliation risks from downgrading licenses and using inconsistent archiving and collection practices across user accounts.

How enterprise licenses paired with legal hold technology save costs: Here are two scenarios. In the first scenario, this same 1,000-employee company downgrades from E5 to E3 licenses across all of its user accounts. (At $240 per user per year it's an annual cost of $240,000),. It then pairs them with an automated legal hold platform costing approximately $25,000 per year. The maximum spend from pairing E3 licenses with automated legal hold technology is $265,000 per year.

In the second scenario, say the organization downgrades to E1 licenses at $96 per user per year ($96,000 total). Its annual enterprise licenses and automated legal hold software costs would be reduced further to $121,000 per year.

But cost savings, from $155,000 to nearly $300,000 per year, isn't the only benefit. At the same time, legal and IT departments can use more advanced legal hold, preservation, collection, and reporting features to streamline processes that would otherwise be manual. For example, legal hold platforms can automate tasks such as generating legal hold questionnaires, reporting on and response tracking notices so that in-house lawyers can avoid doing these tasks manually.

Reducing Overall Litigation Costs

Finally, automated legal hold software can greatly reduce unnecessary costs during litigation.  Under FRCP Rule 37(e), companies that inadvertently lose evidence could be required to partially reimburse opponents' legal fees or face adverse jury instructions.  Since companies are doling out about $70,000 in per court-tried matter in total expenditures already, companies could face mounting unnecessary legal costs if they use disorganized, spreadsheet-driven tracking that require IT and other in-house staff testimony to explain.  Companies using automated legal hold software won't need to worry about these problems or waste money on unnecessary motion practice.  Since parties are required to take reasonable steps to preserve potentially-relevant evidence, courts will generally excuse companies for losing relevant evidence if they can show that they tried using industry-vetted methods to preserve it.  Since these programs provide quality control reporting and legal hold response tracking features, judges can use these reports to easily follow and analyze the defensibility of companies' legal hold management approaches.  This, in the end, can help your organization defeat spoliation motions and keep an organization's IT staff off the witness stand.  

These are just a few examples in which automated processes for executing legal holds can render manual processes obsolete. As we head into 2018, any organization that has not yet embraced legal hold automation should carefully consider how inefficient workflows dependent on outside counsel, third-party vendors and manual processes will hold up in light of what courts now demand. They should also analyze the costs they are incurring and calculate the return they can achieve by investing in what is now a proven technology.

 

Alon Israely has over seventeen years of experience in a variety of advanced computing-related technologies. Alon is a co-founder of NYC based legal services company, Business Intelligence Associates, Inc., a highly respected and successful legal technology consulting and solutions firm. In 2015, the company's software and technology division, based in Seattle, WA was spun-out as its own company and Alon was tapped to lead it. Alon now leads TotalDiscovery, an early-stage enterprise SaaS company that provides a legal compliance platform to corporations, government and law firms.