Three Ways In-House Attorneys Are Using eDiscovery Software to Reduce Legal Spend

Three Ways In-House Attorneys Are Using eDiscovery Software to Reduce Legal Spend

Document review is not exactly an enticing activity: late nights, mangled DVDs, and unending piles of unread files. Add in clunky legacy software, and it’s enough to make even the most seasoned attorney consider calling in sick.

Don’t get us wrong—this bad reputation is earned. For decades, document review, especially in the context of eDiscovery, was expensive, tedious, and incredibly risky. Not exactly a winning combination.

But as technology continues to advance, the process of gathering and sorting electronic information is finally starting to shift. Recent advancements, like self-serve eDiscovery software, make arduous tasks like doc review less painful on an individual level.

They also have many companies rethinking how their legal spend is allocated on a larger scale. Rather than reflexively outsource work to outside counsel, corporate legal teams are leveraging technology to recapture a range of legal processes, thereby reducing outside spend, increasing data security, and simplifying administrative procedures—without having to spend a fortune.

Three areas provide fertile ground for such innovation and cost reduction: early case assessment, internal investigations, and third-party subpoenas. Here’s how innovative in-house professionals are tackling these issues.

Taking Control of Litigation Early On

Because of the cloud, businesses of any size, from the smallest mom-and-pop shop to the Fortune 500, can access incredibly sophisticated legal technology. And when it comes to using this new technology, reducing litigation costs is first on the list.

In 2017, the average American company fielded 11.5 disputes per $100 million in revenue. For large companies, that means a constant stream of litigation and potentially thousands of discrete disputes a year, from slip-and-fall claims to class action lawsuits.

At the same time, although these corporate legal departments handle a high volume of cases, their staffing strategy tends to be “lean and mean.” As of 2018, American companies employ an average of only three lawyers per $1 billion in revenue, opting to spend the lion’s share (63 percent) of their legal budget on third-party firms and vendors, while allocating just 30 percent for in-house work.

A decade ago, when building an in-house discovery process cost nearly seven figures, this outsourcing model made good fiscal sense. A large company might engage hundreds of law firms and still come out ahead. Sure, the vendor rates were high—to the tune of $550 an hour for metadata extraction or $235 for simple project management—but they paled in comparison to the cost of installing and maintaining your own servers, and companies were willing to pay to ensure electronic information was handled correctly. Of course, corporations have always known that outsourcing carries risks; relinquishing control can easily lead to cost overruns and missed deadlines, not to mention the ever-present threat of a data breach. But most in-house departments weren’t in a position to challenge the status quo.

Over the past ten years, however, this cost-benefit analysis has flipped. Self-serve software, which attorneys can use to upload, process, and review documents on their desktop, tablet, or phone, has driven down the costs associated with discovery, while the risks associated third-party vendors have grown more acute. Law firms are increasingly vulnerable to cyberattacks, and high-profile data breach incidents have made attorneys more aware of the dangers of handing their confidential data over to strangers. Additionally, recent amendments to Federal Rule of Civil Procedure 37(e), which governs sanctions for the spoliation of electronic evidence, have reduced the likelihood that legal teams will be punished for honest mistakes they commit during discovery, easing the pressure of in-house work.  

Today, leading companies are in-housing significant portions of their discovery process. For example, cloud-based technologies make it easy for a company to handle much of the document review required for early case assessment in house. Files can be gathered, uploaded to a platform like Logikcull, and within minutes in-house teams can begin review, searching for key documents and culling out unnecessary files. The result is a significant reduction of files needing outside counsel review—often reducing data sizes by well over 30 percent. That means 30 percent less spent on outside counsel document review which can equate to savings of tens of thousands of dollars per matter.

In addition to cost savings, this approach comes with a significant added benefit: simplicity. Unlike black-box technologies where few users understand what is really going on behind the data or even how to make use of the most complex features, self-serve document review platforms like Logikcull give you instant insight into your documents (without requiring a doctorate in statistics). The platform is specifically designed to be easy to use and learn. Advanced search works as easily as Google and allows you the cull out irrelevant documents, leading to a significant reduction in the size of the data set. You can get up to speed in minutes, drag documents directly into the platform, and start a new project with the click of a button.

Cloud platforms can also slip seamlessly into an existing workflow, helping companies optimize their internal and external legal spend. In-house counsel can perform initial document review and culling, then invite their outside counsel into the platform. This allows outside counsel to focus on their true value add—expertise—rather than low-level document review.

Even for companies without a steady litigation docket, savings from insourcing can stack up quickly—and they are certainly significant enough to justify giving an in-house eDiscovery platform a try.

Conducting Speedy, Cost-Effective Internal Investigations

Although document review is commonly associated with litigation, internal investigations also require sorting through massive piles of data, leading many organizations to embrace eDiscovery software for their internal investigations.

And those investigations can require significant resources—or, with the right tool, significant opportunities for cost reductions. According to a recent NAVEX Global report, compliance incidents are on the rise. In 2018, the number of internal ethics and compliance reports reached a record high, with a median of 1.4 reports per 100 employees. This means that the average 500-person company now faces around seven compliance events per year, each of which requires an investigation—often at tremendous cost. Between outside counsel fees, document management, and time costs, investigations can easily reach six or seven figures before litigation even begins.

Employee and corporate misconduct can occur in many forms. Lucky for investigators, however, there is often a single-prong method to wrongdoing. That is, employees tend to use similar avenues to facilitate bad behavior (i.e. email or secret files on company computers). And ironically, as the sheer amount of evidence—emails, IMs, Slack messages, etc.—investigators need to sort through continues to increase, companies actually have an opportunity to cut the cost of investigations by fighting fire with fire. That is, using technology to catalog a mounting pile of digital evidence.  

With the right tools, investigators can use straightforward strategies, such as keyword searching, to sort through information quickly, identify serious violations, and save money in the process.

Take an email monitoring program, for example. Suppose a mid-sized investment firm periodically monitors outgoing employee email for potentially damaging activity. During one of these searches, an employee’s inbox flags an unusual keyword, which suggests that the employee is engaged in some suspicious activity, such as potential insider trading. Let’s assume that the employee has 50,000 emails in his inbox (this is far above the corporate average, but maybe this guy is really anti #inboxzero) and that each email is roughly 75kb. That means the company needs to sort through 4GB of data—and fast, before the employee can cause any more damage.

At this point, the company has three options. Investigators can go through the emails one by one, rendering the PDFs in a doc viewer like Adobe Acrobat. This would take hours and rack up thousands in labor costs, depending on who they assign to review the documents. Alternatively, they could send all that data out to a vendor, who would charge them through the nose for collection and processing. For data processing and metadata extraction alone, investigating that inbox could easily cost over $2,700. Or, they could export the employee’s email inbox themselves, and drag-and-drop it into a cloud platform, like Logikcull.

With Logikcull, ingestion is automated. The emails would go through more than 3,000 processing steps, including OCR’ing, virus scanning, and embedded file extraction, to become searchable in minutes. From there, investigators could easily access email metadata, such as date sent or date received, track email domains, and look for content patterns using keyword search. The whole thing would cost about $200.

In investigations, time and defensibility are key. Companies need to identify misconduct quickly, so they can sort the situation out or escalate it through proper channels. Additionally, they need to meticulously document the process, so if a regulator or other authority comes knocking, they can demonstrate the steps they took to investigate the potential misconduct. Just as in litigation, eDiscovery software allows investigators to accomplish these goals in house, to reduce legal spend, without ceding sensitive data to outsiders—or breaking the bank on technology and personnel hours.

Reducing the Burden of Third-Party Subpoena Response

Even when not party to a civil lawsuit, companies can face significant discovery obligations. That’s because corporations are routinely served with subpoenas for litigation in which they are not parties, and responding to these subpoenas can require significant time and money, making them perfect targets for legal innovation.

In these instances, the company rarely has a stake in the outcome of the case. However, they may still be obligated to produce a large amount of digital information. Non-parties can try to quash or reduce the scope of a subpoena, but this is far from a sure bet. And because collecting ESI is so expensive, banking on the court to refund discovery costs can be risky. Federal Rule of Civil Procedure 45, which governs discovery of non-parties in federal litigation, allows for cost shifting if a subpoena “subjects a person [or entity] to undue burden,” but this is generally left up to the court’s discretion, and non-parties often end up footing part of the bill.

In traditional discovery, litigants at least have an opportunity to formally negotiate the scope of discovery with the opposing party through the meet-and-confer conference. But as a non-party, companies can be on the hook for a broad swath of information. In In re Fannie Mae Securities Litigation, 555 F.3d 814 (D.C. Cir. 2009), for example, the court found that a non-party discovery order “gave [the] defendants sole discretion to specify [search] terms and imposed no limits on permissible terms.” The defendants submitted over 400 search terms, which captured around 66GB of information. And although the responding party took “extensive efforts” (and spent more than $6 million) to collect all the evidence, the court still found their collection attempt unsatisfactory.

Just as early case assessment can reduce the cost associated with discovery in litigation in which the company is directly involved, the use of cost-effective eDiscovery software can drastically reduce the burden of third-party subpoena response. By in-housing and updating their subpoena response process, companies can quickly upload data, cull out irrelevant or privileged files, and produce their documents quickly and securely.

Investing in In-house Processes Can Yield Significant Savings

American companies spend billions of dollars reviewing documents every year—defending themselves from lawsuits, identifying employee misconduct, and responding to third-party subpoenas. The corporate legal teams who handle this work are built with efficiency in mind, yet research on legal spend suggests that many companies are chronically underestimating how much of this work can be accomplished in-house.

For their recent Litigation Trends Annual Survey, Norton Rose Fulbright found that litigation and investigation costs were significantly lower when corporations spent more than 40 percent of their budget internally. Yet many companies spend far less than that on their in-house work.

This data suggests that beefing up internal processes can help companies improve their bottom line. But as the researchers are careful to point out, not all insourcing is created equal. Saving money is not, for instance, simply a matter of personnel. Hiring an army of contract lawyers is going to cost you, regardless of whether those attorneys have an official desk at corporate headquarters. Instead, creating a cost-effective in-house workflow comes down to selecting the appropriate technology.

Thankfully, a new generation of eDiscovery software is available to reduce massive doc review spend. Instant discovery can’t get rid of litigation and investigation costs entirely, but it can slice them significantly, reducing the number of eyes on your data and providing substantial savings. For companies looking to shake up their approach to legal work, in-housing a greater portion of their spend is low-hanging fruit—and with the right technology, a relatively easy win.

Want to see Logikcull in action? 

Let us show you how to make Logikcull can help you save thousands in discovery.

Want to see Logikcull in action? Let's chat.

Our team of product specialists will show you how to make Logikcull work for your specific needs and help you save thousands in records requests, subpoenas, and general discovery.