Legal Costs Increase with Digital Discovery

Sept. 9, 2008 - PRLog -- With the mountains of data being stored and collected by corporations it is becomes a herculean task to find information pertinent to cases during discovery.  That increase in time and energy to search numerous databases has led to an increase of costs to lawyers which is passed directly onto their clients.  In some instances cases that would normally have merit to go to trial or whose award potentially is not large enough are settled immediately or not taken.

This study was funded by the American College of Trial Lawyers and the Institute for the Advancement of the American Legal System, a Denver think tank for the civil justice system.  The study questioned 1,400 lawyers who are members of the American College of Trial Lawyers.  Of the respondents, 87% said that electronic discovery is too costly and driving up the price of litigation.

Unfortunately (or fortunately depending on who you ask) the United States business environment is one that incurs litigation.  It has become a standard cost in doing business in America.  Yet companies are still not in the habit of retaining and organizing their documents in a logical structure.  This is not due to their lack of concern for the nature of the marketplace; it is more from a reactionary model as opposed to a proactive one.  The last thing a board meeting wants to discuss is the exciting world of document retention.  Yet, that is exactly what the board should be talking about because once litigation is started all documents that are part of that litigation must be retained.  Immediately a new cost has entered into the equation.  Without a proactive approach to retaining and organizing their electronic documentation, the company has just grown that litigation cost exponentially.

In looking at the findings above, a few questions have to be asked by the Chief Legal Officer.  First, what is the storage structure of the information?  Second, how easily can the information be searched?  Third, what retention policies add to the costs?

Answer 1:  If a company does not have a formal organization or stringent document control system the costs to litigate have immediately increased.  The company is caught in an electronic paper chase to find emails, policies, procedures, memorandums, and manuals that relate to the case.  Multiple file shares and file repositories make the retention a nightmare.  The company can open itself up to other pitfalls that can threaten certification and other regulatory sanctions due to their lack of document control.

Answer 2:   If a company does have an organized electronic database for document retention, a document control software platform, or even a central repository the ability to quickly search for items part of the litigation is a money saver.  Software that allows lawyers to perform a detailed search using document criteria and content simply saves both parties money.  If a company is being proactive to defend against a litigious business environment, the need for such search technology is imperative.  A Google-like search tool is not enough for it allows too broad a query eats up time, which is money.  (Type the word document in Google and half a billion hits is not uncommon.)  The ability to quickly search all the documents is a must.

Answer 3:   The legal retention rules state that once a company has been served they must retain all documents related to the litigation.  Instantly a company is incurring costs for the safe storage of all its documentation until trial the trial ends.  If a company is proactive and has a retention policy in place, this immediate “save everything” cost has been factored into the daily business costs and practices of the organization.  If a company is considering an electronic document management/control system, then one that meets their retention criteria or better should be high on their list to purchase.

It used to be said that two things are certain in life: death and taxes.  In modern business there are three certain costs: taxes, litigation, and supplies.  While a company cannot control taxes, it can control the costs of its supplies and manage the costs of litigation.  A proactive approach to document retention can help a company contain some of the costs during discovery.  A reactive approach only keeps a company in a vulnerable costly position.

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Mystic Management Systems, Inc. is a leading provider of quality software solutions, document control, product lifecycle management, specification management and corrective and preventative and training management solution. Founded in 1984.