Most legal departments are looking to slash external e-discovery spending and bring such operations in-house, according to the 3rd annual Study of Effective Legal Spend Management conducted by the Blickstein Group and Exterro Inc. The study surveyed legal directors, in-house attorneys and e-discovery and legal operations professional at 69 small to large U.S. organizations across a variety of industries, including technology, financial service, manufacturing and energy.

The study found that a majority of responding organizations, 57%, budgeted $1 million or less on e-discovery in 2019. On the high end, 8% budgeted over $5 million. For one-third of companies, this year's budget remained flat from last year, compared to the 30% that said it deceased and 39% for whom it increased.

Law firms accounted for 23% of overall e-discovery spend, while 33% was directed to third-party service providers. Around half of all organizations spent less than $500,000 on that outside e-discovery spend, while 20% spent over $5 million.

While budget realities differed among the respondents, a wide majority, 72%, agreed that reducing external e-discovery spend was a major initiative for their legal departments in 2019.  Over half, 57%, said this was driven by overall cost initiatives in-house, while a quarter cited executive or in-house counsel demands.

Tim Rollins, content marketing manager at Exterro, said that cutting external spend ties into legal departments' desire to move more e-discovery operations in-house to elicit greater efficiencies. “Organizations gain all the benefits of transparency and direct budget management. You see what is working well and what isn't. You have the ability to measure, manage and optimize the process.”

To be sure, slightly over 60% of respondents said bringing more e-discovery work in-house was a “highly effective” way to manage their e-discovery spend. A similar amount of respondents also said the same of having litigation executive oversight and utilizing e-discovery technology.

Respondent ranked document-review technology as the most effective tool at controlling e-discovery spend followed by early case assessment and data collection and processing platforms.

Unsurprisingly, respondents also ranked document review and data collection as the two top areas where they were looking to reduce e-discovery spend.

“Collection is a logical target for savings because the costs of hosting [and] retaining essentially duplicate data are purely lost costs,” Rollins said. “If you can do a better job targeting data for collection using early case assessment, you can collect less and drive down costs. Alternatively, if you can lock data down and preserve it in place without collecting it, you can effectively minimize those costs.”