This monograph provides a richly detailed account of the resources required by a diverse set of very large companies operating in different industries to comply with what they described as typical electronic-discovery requests and suggests ways to reduce those costs, as well as address concerns about duties to preserve data in anticipation of litigation.

Cover: Where the Money Goes
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Where the Money Goes

Understanding Litigant Expenditures for Producing Electronic Discovery

by Nicholas M. Pace, Laura Zakaras

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Research Questions

  1. What are the costs associated with different phases of e-discovery production?
  2. How are these costs distributed across internal and external sources of labor, resources, and services?
  3. How can these costs be reduced without compromising the quality of the discovery process?
  4. What do litigants perceive to be the key challenges of preserving electronic information?

Pretrial discovery procedures are designed to encourage an exchange of information that will help narrow the issues being litigated, eliminate surprise at trial, and achieve substantial justice. But, in recent years, some have claimed that the societal shift from paper documents to electronically stored information (ESI) has led to sharper increases in discovery costs than in the overall cost of litigation. The authors employed a case-study method to gather cost data for 57 large-volume e-discovery productions, including those in traditional lawsuits and regulatory investigations; collected information from extensive interviews with key legal personnel from the responding companies; and reviewed the legal and technical literature on e-discovery, with emphasis on the intersection of information-retrieval science and the law. Although the results cannot be generalized to all litigants or even large corporations in particular, the monograph provides a richly detailed account of the resources required by a diverse set of very large companies operating in different industries to comply with what they described as typical e-discovery requests. The monograph also suggests ways to reduce those costs as well as address concerns over duties to preserve data in anticipation of litigation.

Key Findings

Review Makes Up the Largest Percentage of E-Discovery Production Costs

  • Review typically consumed about 73 percent of all production costs.
  • Collection consumed about 8 percent of expenditures for the cases in our study.
  • Costs for processing consumed about 19 percent in typical cases.

Outside Counsel Makes Up the Largest Percentage of E-Discovery Expenditures

  • They typically consumed about 70 percent of total e-discovery production costs.
  • Internal expenditures were generally around 4 percent of the total; vendor expenditures were around 26 percent.
  • Vendors played the dominant role in collection and processing, while review was largely the domain of outside counsel.

Review Costs Are Difficult to Reduce Significantly If Conducted in the Traditional Manner

  • Significant reduction in current labor costs is unlikely.
  • Increasing the speed of review has its limits.
  • Techniques for grouping documents would probably not foster sufficiently dramatic improvements in review speed for most large-scale reviews.
  • Human reviewers are highly inconsistent.

Computer-Categorized Document Review Techniques May Be a Solution

  • Computer-categorized document review techniques such as predictive coding identify at least as many documents of interest as traditional eyes-on review with about the same level of inconsistency, but with the potential of reducing the hours attorneys must spend by about three-quarters.
  • Despite the potential advantages, litigants may be unsure whether they can identify all potentially responsive documents while avoiding any overproduction, reliably identify privileged information, flag smoking guns and other crucial documents, and categorize highly technical documents.
  • A lack of clear signals from the bench that computer-categorized document review techniques are defensible contributes to the low levels of acceptance among the bar.

Preserving Electronic Information in Anticipation of Litigation Presents Additional Challenges

  • Companies are not tracking the costs of preservation, but the expenses are reportedly significant.
  • There is no consistent, transjurisdictional legal authority on the question of preservation scope, process, and sanctionable behavior.
  • The lack of standard guidance in this area may be leading to costly overpreservation.

Recommendations

  • Innovative litigants should take the bold step of using, publicly and transparently, computer-categorized document review techniques for large-scale e-discovery efforts.
  • Rule changes are needed to bring certainty to legal authority on the subject of preservation.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Production Expenditures, by Task

  • Chapter Three

    Sources of Expenditures

  • Chapter Four

    Reducing the Cost of Traditional Eyes-On Review

  • Chapter Five

    Moving Beyond Eyes-On Review: The Promise of Computer-Categorized Review

  • Chapter Six

    Barriers to Computer-Categorized Reviews

  • Chapter Seven

    The Challenges of Preservation

  • Chapter Eight

    Conclusions and Recommendations

  • Appendix A

    Supplemental Tables

  • Appendix B

    Recall, Precision, and Other Performance Measures

This research was conducted by the RAND Institute for Civil Justice, a research institute within RAND Law, Business, and Regulation, a division of the RAND Corporation.

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