Shakespeare wrote, “The first thing we do, let's kill all the lawyers.” That sounds like a condemnation of the legal profession, but these words came out of the mouth of the villain, Dick the Butcher. When villains plot revolution and destruction, they start by eliminating the protectors of the law. Today, the greatest threat to the legal system is not common criminals like Dick, the political machinations of the powerful or even cyber threats from foreign governments. The greatest threat to our legal rights is simply the rising cost of litigation, a cost that is climbing so steeply that we may soon lose our right to a day in court.
The United states is the most litigious country in the world, with the highest cost of litigation. According to the US Department of Commerce, the cost of litigation was $265 billion in 2010, or 1.8% of GDP. With 1.2 million practitioners, the US has more lawyers numerically and as a percentage of population than any country in the world.
Since the days of ancient Greece, authors have complained about the cost of lawyers. The cost today is not only high, it is also rising at an alarming rate. One industry review states that the cost of litigation rose $166 billion to $281 billion, between 1998 and 2011. The rise in cost is largely due to technology. In most fields, technology has dramatically reduced costs, but because of the conservative nature of lawyers, technology has had the opposite effect on legal costs.
Before 1990, most documents were paper based, which meant that the legal “discovery” process focused on filing cabinets, boxes in warehouses, and requests to archiving services. There was an occasional lawsuit with software company that would request digital data, but it wasn't a part of mainstream legal work. Corporations moved heavily into digital documents only when the PC arrived in the 80s.
It wasn't until the 90s that courts started to recognize that paper documents were becoming digital documents, and being ignored by the lawsuit. When email was added to the mix, the number of documents exploded as employees learned to "cc" and use distribution lists. Emails containing attached documents, could be modified and sent on. Unlike paper mail, email could be tracked through an infinite number of recipients. The complexity and cost of eDiscovery dwarfs the process needed for paper document discovery.
When documents were paper, a corporation’s storage was limited by space. When all of your filing cabinets were full, you either threw out old files, or you archived documents to services such as Iron Mountain. But digital storage, hard drives and servers, cost dramatically less every year. In the early 90s employees who had email, might have been given a few megabytes (MB) of storage space.
Today, users have gigabytes (GB) of space, keeping in mind that a GB is 1,000 MBs. Storage is so cheap that for less than $200 you can buy a 3 terabyte (TB= 1,000 GB) hard drive. To understand how much storage this provides, printed it would fill 12,000 reams of paper, or 12,000 boxes. That’s enough to fill up 2 average American homes with boxes of paper. While the technology for making and storing documents has dramatically improved, legal firms continue to rely on a process that is very old, and very inefficient… LINEAR review. In linear review, you basically need to manually read every document. Here’s how these factors have come together into modern eDsicovery…
PLANNING: In 2010, Duke Law School presented findings from their survey of litigation in Fortune 200 firms. A typical case reviews 5,000,000 pages, identifying just 5,000 pages that are considered relevant to the case.. That’s just one page for every 1,000 reviewed. The lawyers performing these reviews are very expensive, with bigger firms usually charging higher fees. In small to medium-sized firms, a lawyer charges $250 to $350 per hour. Over the last decade, legal firms have been moving some of this work to outsourced and offshored eDiscovery services, which typically charge 10% to 20% of a lawyers' billing rate. While the quantity of outsourced work is increasing, the total size of the outsourced eDiscovery market is $3 billion, or just 1% of the total spend on litigation. The review process, the identification of documents that will be provided to the court, averages over 70% of the total cost of the eDiscovery process. There is a lot more room for outsourcing, especially in the initial identification of relevant documents, which would go a long way towards managing costs.
METHODOLOGY: In the days of paper discovery, documents were read manually, page by page. Since there are many different formats for digital documents (Word, Excel, JPGs, other images, plain text, email, etc.), early eDiscovery tools focused on providing one application that allowed you to read and interact with different types of documents. The next innovation was to identify and eliminate duplicate documents (de-duping), such as an email sent to 10 people. Since the documents were digital, these tools allowed you to search for documents containing key words such as: the name of a worker or client, email address, name of a competing firm, or any other word or term related to a case. And these tools track which documents have been reviewed, who did the review, how fast documents are reviewed, and who is making mistakes. This describes the typical linear review, which hasn't changed much in 10 years.
The state of the art is TAR, or Technology Assisted Review. Every TAR tool is different. At a minimum, they automatically organize and categorize your documents, making review much faster. With more sophisticated tools, you provided examples of the documents you want and the tool returns documents. You then inform the system of which documents truly met your criteria and which did not, and the TAR tool learns and improves. This is very similar to the instructions and feedback you provide to the human reviewers. The difference, however, is that human review is far less accurate and far more costly than TAR. Because law firms are conservative, most reviews are still linear.
COST: The 2008 Sacha Gelbman Survey, a benchmark US legal survey, stated that the cost of collecting and reviewing documentation is $1.8 million per case. Duke Law School’s 2010 report quoted an average per case cost of discovery of $600,000 to $3,000,000, with some cases costing as much as $10,000,000 (for Fortune 200 firms). If you’re going to spend millions of dollars to produce these documents, presumably the cost of losing the case is even higher. Therefore, the greatest cost of all for eDiscovery is the cost of producing a poor-quality review. In fact, because instructions can (and often do) change during a review, a typical review involved re-doing some or all of the review… often more than once. Of course, last-minute changes create other quality problems that in turn require more reworking, which is one reason why the cost is so high.
As the number of pages in a review continues to rise, linear review will continue to rise as well. Also, in large reviews, the number of mangers increases, lawyers may work in multiple shifts, in multiple locations. This either increases management overhead, or it creates quality issues as different groups of lawyers receive slightly different instructions. When law firms perform the review themselves, they try to utilize whatever space they have, to keep costs low. But that makes the management of reviewers problematic. A dedicated eDiscovery outsourcer will have space designed for a legal review, and as well as their own tools for managing the reviewers and scheduling review events. These vendors will also have more knowledge about the use of TAR tools than most law firms.
QUALITY: Linear review is considered to be the gold standard. Lawyers, who are conservative by nature, understand that linear is slow and expensive, but believe that it provides the highest quality results. However, in study after study, linear review always provides a lower-quality product than TAR. People just aren't very good at reading large amounts of text to find specific words or patterns. Some people, such as professional proofreaders, are better at this task, but are automatically excluded from document review because they do not have a legal background. Computers are incredibly good at finding words and patterns, and always perform better than human beings, but lawyers have been waiting for the courts to approve the use of TAR, which is unlikely to happen. Even the simple word searches used in linear review were never approved by courts, they just happened because it was so convenient.
There are different ways to measure quality, but the simplest is overlap: if two lawyers look at the same documents, how often will they identify them as - responsive (matches criteria), unresponsive (does not match criteria) and privileged (matches the criteria, but is exempted from reporting). One study found less than 50% overlap. Typically, law firms believe that their reviews have 90-95% overlap. These law firms are managing their legal reviews based on incorrect assumptions, and outdated information.
Where do we go from here? The 2011 Socha Gelbman survey shows that between 2002 and 2010, the outsourced eDiscovery market grew from .3 to 3.3 billion, and will grow to $10 billion by 2017. That’s a good start, but not enough to halt the growth in legal costs. The Duke study showed a 78% increase in eDiscovery costs between 2000 and 2008, even with work going to low-cost outsourcers. If TAR replaces linear review, the cost of the review can be reduced by 50% to 75%. The combined efficiencies of outsourcing and TAR can stop the rise in costs, but only if we make use of these tools.
Unlike Dick the Butcher, we don't need to "kill the lawyers", but we do need to get our lawyers and legal departments to kill linear review, use the latest technology and start working with the vendors who know how to effectively use TAR. We have everything we need, we just need to make 21 century law use 21st century tools!