Study reveals the real categories of eDiscovery costs

With Legal Tech New York right around the corner, proportionality for discovery or as some people like to call it the proportionality doctrine will be top of mind of many in attendance.  Sky-rocketed costs associated with eDiscovery expenses from service providers have garnered poor press with many firms avoiding third-party service providers at all costs. However, while some of this bad blood might be generated by those service providers that take advantage of a very lucrative opportunity, the majority of the issue might be a lack of knowledge among customers where the money goes.

Trusted litigation solutions providers will be transparent and work as collaboratively with in-house counsel as any other resource. This way, where the money is going, as well as proportionality in total litigation expenses, will become clearer as the professional relationship matures.

New study reveals proportionality

The Rand Corporation recently published the results of a study that sought to investigate and break down the common costs of eDiscovery production. The firm’s findings were surprising given the widespread belief that all litigation solutions providers will simply bleed as much expenditure as possible in an either negligent or incendiary fashion.

According to the report, collection costs accounted for roughly 8 percent of total eDiscovery expenditure in the cases studied, while processing accounted for another 19 percent. The overwhelming majority of costs related to this process were comprised of review, which took up 73 percent of total expenditure. Doing the math, it is clear that 100 percent of the costs in the cases studied were directly related to the tasks at hand.

The firm also found that outside counsel generally consumed just fewer than three-quarters of eDiscovery production expenditure, while internal spending was at 4 percent and vendor costs were 26 percent. The Rand Corporation identified the main financial dilemma of eDiscovery proceedings as being traditionally approached reviews, which make it nearly impossible to reduce the bulk of expenditures.

As a solution, the organization felt that computer-categorized document review techniques were the best way to reduce costs, as this can cut down on the single most expensive component of most eDiscovery proceedings. This includes predictive coding, which represents similar risks of inconsistency – and many times decreased – than traditional eyes-on review.

Enter predictive coding

Reliable predictive coding and computer-assisted review software, managed by a proven litigation solutions provider, can reduce costs and inaccuracies dramatically when compared to traditional reviews. This study revealed that the real budget-draining processes in eDiscovery proceedings might be the result of in-house counsel’s unwillingness to use new technology for traditional processes.

As the industry continues to grow and software providers create new and improved solutions to manage the costs and responsibilities of eDiscovery proceedings, businesses will need to adapt to the current models of discovery requests or reach a competitive disadvantage.