Calculating the total exact costs incurred for eDiscovery each year in the United States is no more possible than knowing exactly how many french fries Americans consume.
But assume you could gather information on potato crop yields to the ton, the percentage of potatoes likely to be fried, and statistics on how much food Americans tossed out each year. Now you're getting somewhere.
What follows is an attempt to ballpark the average annual cost of eDiscovery in the US based on a compilation of academic studies conducted over the last five years, caseloads reported by US courts, and assumptions about if and how much discovery occurs in different types of legal matters.
Note that these estimates are a) very general projections in some instances, but b) don't account for the significant "soft" costs associated with discovery (e.g. business disruption); evidence gathering and handling that isn't related to litigation (e.g. internal investigations); liability incurred from mishandling discovery (e.g. legal sanctions, disgorgment of fees); dispute-related fees; or preservation. Indeed, some estimates peg preservation costs alone for large companies to be upward of $2 million per year. General counsel for Eli Lilly recently reported spending $40 million for an email archiving system for preservation purposes.
For the purposes of this exercise — and to be clear, it is just an exercise — we will set those costs aside as rounding buffers. Also, eDiscovery and discovery are used interchangeably.
Let's first review what we know, and then make some calculated guesses.
Note: Author assumes these cases are more likely to involve discovery.
Note: For the purposes of these calculations, we will assume discovery represents 20% of total litigation costs — the low end of some estimates.
Civil discovery costs
Federal: 303,000 cases x $35,000 per case x 60% of cases = $6.36 billion
State: 19 million cases x ($35,000/2) per case x 60% of cases = $19.95 billion
Note: Assumes state cases are half as costly as federal cases, and that discovery occurs in 60% of all civil cases.
Criminal discovery costs
Federal: 86,700 cases x ($35,000/10) per case x 60% of cases = $182.07 million
State: 21 million x (($35,000/2)/10) per case x 10% of cases = $3.67 billion
Note: Assumes state cases are half as costly as federal cases; criminal discovery is one-tenth the cost of civil discovery; and discovery occurs in 10% of criminal state cases and 60% of criminal federal cases.
Total: $30.162 billion
Fortune 500: $210 billion x 20% = $42 billion
Note: Assumes discovery costs are 20% of total litigation costs.
Non-Fortune 500: ($17.7 trillion - $12.1 trillion)/2 x 1.7% of total GDP x 20% = $9.52 billion
Note: This equation represents discovery costs incurred by Non-Fortune 500 US organizations, assuming that Non-Fortune 500 organizations incur half as much litigation cost as Fortune 500 companies; that litigation costs are equal to 1.7% of total revenue for all organizations on average; and that discovery costs are 20% of all litigation costs.
Total = $51.5 billion
All Civil Litigation (State and Federal): $200 billion x 20% = $40 billion
Note: Assumes discovery costs are 20% of total litigation costs and civil litigation cost the US $200 billion.
All Criminal Litigation:
Federal: 86,700 cases x $408 per case = $353.3 million
State: 21,000,000 cases x $204 per case = $4.284 billion
Note: Assumes that the average cost of discovery in a state case is half the cost of discovery in a federal case and that discovery in criminal cases is one-tenth the cost of discovery in civil cases.
Discovery in federal civil cases is twice as expensive as discovery in state civil cases and the total cost of discovery in all cases is equal to $40 billion when discovery in the average federal case is $4,080 and discovery in the average state case is $2,040, assuming 303,000 federal civil filings and 19,000,000 state civil filing.
Thus, discovery in the average criminal federal case is assumed to be $408 and discovery in the average state criminal case is assumed to be $204.
Total = $44.64 billion
The average of these three estimates is $42.1 billion. To put this in perspective, if US eDiscovery was its own economic nation, it would rank 90th out of 189 countries.
90. US eDiscovery
Robert Hilson is a director at Logikcull. He can be reached at firstname.lastname@example.org