Top ten tips to combat the hidden costs of discovery

Edward Sohn, Esq., Assistant Vice President, Pangea3

Discovery continues to comprise up to 80% of litigation costs, and sometimes the discovery war of attrition can force a corporation's hand, even if it has favorable odds at summary judgment or trial. In-house legal departments have taken some steps to reduce these costs, but cost control in discovery requires vigilance at every stage, as hidden costs incurred in one phase can erase the savings realized in another. Do not let discovery hold your litigation goals hostage! Combat the hidden costs lurking in discovery with these ten tips:

1. Invest in getting preservation and collection of big data exactly right
   Insufficient, irrelevant or overbroad data collection is one serious hidden cost in discovery, and resolving data preservation issues could result in dramatic cost savings. Using solutions like Thomson Reuters Concourse Legal Hold and setting straightforward preservation policies will help reduce your "Big Data", saving considerable time and money in the long run. For serial litigants, you may want to consider an enterprise-level data management tool. An extra degree of attention at this stage will prevent costly spoliation allegations down the line, a common basis of discovery sanctions up to and including default judgment.
2. Narrow the scope of collection before processing
   Pre-processing culling remains one of the biggest ways to save money in ediscovery. A substantial amount of the cost comes by sending files to an ediscovery vendor who, in turn, will immediately exclude them upon processing and charge you for it. Focus on user-generated content, like emails and shared spaces of loose electronic files, and take the time to interview custodians for the most likely locations of discoverable evidence. But be careful not to overly rely upon custodian self-collections, as they are increasingly found insufficient by courts.
3. Beware of hidden costs in ediscovery data hosting platforms
   When looking at an ediscovery price sheet, the number of line items can be staggering. Create an Excel model with an eye towards the bottom line and alter the assumptions for a variety of scenarios for the litigation. For instance, introducing data on a rolling basis may reduce the amount of time data is hosted. Exporting pertinent data so it is available on your in-house litigation management tool (like West Case Notebook) may reduce hosting time and fees. And always watch out for hosting and production costs, especially the imaging of data, which can be deceptively priced—$5 per GB here or one cent per page there quickly adds up to tens of thousands of dollars.
4. Explore pricing options for subscription or fixed-fee arrangements for cost control and predictability
   Fixed fee pricing, either for an entire matter or on a per document basis, encourages efficiency from all of your providers. Alternatively, subscription pricing (a monthly or annual fee entitling you to a specific quantity of technology or services) may be a way to introduce predictability to your discovery processes. If an all-in solution encompassing technology and review is offered, deeper discounts are likely available.
5. Leverage high volumes in a master agreement with outside counsel and discovery partners
   If you are a serial litigant, leverage high volumes to drive deeper discounts with your providers. This will give you simplified, uniform processes at every stage of the discovery process. If you do not have serial litigation, consider partnership with a managed review provider that can aggregate your data with other high volume clients to drive discounts on technology costs, or vice versa.
6. Utilize appropriate technology effectively
   Technology-assisted review and predictive coding in particular are the hot topics of the last few years. Today, advanced analytics and predictive coding are included with many ediscovery technology offerings, but inexpert deployment lurks as a hidden discovery cost. Be sure that your review provider and outside counsel possess the necessary process expertise to know how and when to use predictive coding effectively. For instance, predictive coding that is deployed after you have been charged for all the data processing already will have minimal cost savings, while predictive coding employed in a pre-processing environment will filter the documents before you incur substantial costs. There are also scenarios where predictive coding may not be effective, like scanned paper documents with OCR, documents with substantial handwriting, or structured data in massive spreadsheets or Access databases. Predictive coding can yield serious benefits, but it is a tool that requires the proper process expertise.
7. Maximize cost-effective managed review
   Recent studies have highlighted the "dramatic reordering" of legal services from "disruptive forces" like non-traditional service providers. In ediscovery, review costs continue to be the biggest part of the bill, but managed review providers like Pangea3 allow a new option, reducing costs by as much as 80% as compared to law firms. Managed review providers with committed, full-time professionals create an unprecedented combination of cost-efficiency, subject-matter knowledge, process expertise and quality that was previously unachievable. Beyond review, Pangea3 and others have experience with higher level services, like factfinding, legal research, and deposition or trial preparation. Get to know the capabilities of your review providers and see if they can help you disaggregate more than just document review, driving value as high as possible. This way, your outside counsel can focus on what you really pay them for—their expert, substantive legal practice.
8. Organize and document all discovery processes
   One of the most devastating hidden costs in discovery is sanctions from spoliation or other discovery misconduct. Courts typically give substantial flexibility on the scope of discovery, as long as there is agreement between the parties. However, the best safeguard against discovery misconduct is to meticulously document every process.
   • Memorialize every chain of custody record, every step taken in the forensic collection and preservation of data, and signed affidavits from custodians detailing their compliance with legal holds.
   • Maintain a history of data treatment, including review workflows, what search terms were applied to filter the data, and evidence of the level of supervision provided to document review teams.
   • Finally, for the purposes of Rule 502, make certain that reasonable steps were taken to withhold privileged documents, and put into writing all steps taken to claw back inadvertently produced privileged documents, as courts have looked at the totality of facts and timing in claw back disputes.
   Organized, standardized documentation for providers and outside counsel can save a lot in sanctions and legal exposure in the long run.
9. Consider creative alternatives to the discovery process to defray costs
   There are increasingly popular alternatives to the normal course of data exchange. Consider using a shared production environment, especially in government investigations, where both parties have access to – and share the costs of – a single document hosting environment. With proper precautions, you can "produce" documents to the opposing party by placing them in a shared virtual location. You should set it up in a way that none of your internal work product is visible, but the document is made available (essentially responsive and non-privileged documents) to the other side. This cuts out production costs and can halve your hosting costs as well, depending on the terms of your agreement.
   
   Another money waster is the dreaded privilege log, a cost-intensive task that rarely advances privilege assertions for either party's purposes. Explore an alternative to the document-by-document privilege logging process. Two leading voices in ediscovery proposed that parties agree on categories of presumptively privileged documents and agree to provide more detail only on a small subset of documents where the assertion of privilege is in dispute. These strategies and other tools contemplate the new normal of massive data volumes but still satisfy discovery obligations.
10. Minimize your legal expenses to achieve more favorable litigation outcomes
    One of the hidden costs of discovery is how complex and unwieldy document productions increase exposure to legal costs, forcing the premature election of an unfavorable outcome. Therefore, limiting discovery costs enables a more aggressive position to achieve favorable financial outcomes, whether at pre-trial, trial, or in mediation. Defense counsel can be bolder in the face of frivolous lawsuits and broad subpoenas or requests, knowing that ediscovery costs are more manageable. Plaintiff's counsel may be more impervious to "document dumps" if advanced process and technology assistance can identify the most important 30 documents from a production of 500,000 documents. Either way, take advantage of your cost savings in discovery to more forcefully litigate the merits.

About the author

Edward Sohn, Esq., Assistant Vice President, Pangea3 is charged with the responsibility of the legal review teams that provide high-value document review and analysis services to the Fortune 500 and the Am Law 100. He also regularly consults with clients on complex ediscovery issues, including technology-assisted review and predictive coding.

Reprinted with permission from the Association of Corporate Counsel 2014 All Rights Reserved www.acc.com.

¹ See National Day Laborer Organizing Network v. United States Immigration and Customs Enforcement Agency, 2012 WL 2878130 (S.D.N.Y. July 13, 2012) (ruling from J. Scheindlin holding that "most custodians cannot be trusted to run effective searches because designing legally sufficient electronic searches... is not part of their daily responsibilities").

² See Thomson Reuters Peer Monitor and the Center for the Study of the Legal Profession at the Georgetown University Law Center, "2014 Report on the State of the Legal Market", available at https://peermonitor.thomsonreuters.com/wp-content/uploads/2014/01/2014_PM_GT_Report.pdf (last accessed February 7, 2014).

³ See Facciola, Hon. John M., and Redgrave, Jonathan, "Asserting and Challenging Privilege Claims in Modern Litigation: the Facciola-Redgrave Framework", 2009 Fed. Cts. L.. Rev. 4 at 40 (2009) ("there is nothing in the rules to forbid grouping documents together where the privilege claimed and the rationale behind the claim are the same").

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