Technology Shifts Threatening to Upend the Legal Industry Part 2: E-Discovery

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No one’s claiming the legal industry has been quick to innovate. But, despite its copious regulation and risk-averse actors, law is changing. Part one described how market forces and advances in machine learning and computing power are creating the conditions necessary for rapid, sweeping changes in the way law is practiced.

e-discovery

These changes include the rise of online referral services, DIY law, and research alternatives.

It would be difficult to think of an area of law more radically changed by technology than discovery. Or more important. This part will zoom in on the current state of e-discovery, along with changes on the horizon.

Data volume

In a 2013 professional malpractice case, District Court Judge James D. Whittemore found $3.1 million dollars a reasonable fee for an e-discovery vendor for processing and hosting 2.7 million documents. It was 10% of the total value of the case. That Whittemore didn’t balk makes sense, considering discovery often eats up 20% of the total cost for a case, according to one 2012 study.

Copious server space has brought down the cost of storage, and raised the amount people want to save. Data doubles every two to three years, and while decreasing storage costs have made most things cheaper, the cost of discovery is only climbing. Strict rules around document retention incentivize companies to hoard massive amounts of data. Lawyers can easily rake in almost $200,000 combing through 500 gigabytes.

E-discovery company Exterro asked federal judges/magistrates whether “the amount of ESI in the cases presented before them has substantially grown.” The vast majority, 77%, said they “completely agree” or “somewhat agree.” And 45% said attorneys need to work on their data preservation practices the most.

From 1994 to 2000, the White House saved 32 million emails. Director of Litigation for the US National Archives, Jason R. Baron projects the Obama White House could end up preserving one billion electronic messages.

Data diversity

According to Inside Counsel, “One of the biggest issues facing organizations is not in as much volume, but rather the diversity of data that has to be handled, a challenge that will continue to plague businesses now and in the future.”

Mark Chandler, General Counsel of Cisco, explained that at the same time that Cisco’s volume of data was increasing exponentially, they started rolling out Macs, a bring your own device to work/mobile devices program, and taking on an increasing number of foreign language cases.

It’s a problem hardly unique to Cisco. Federal judges/magistrates answered that the technologies which will have the most impact on e-discovery in the future were social media (33%), cloud storage (29%), and BYOD (24%).

And It’s a problem unlikely to abate. Going forward, the “Internet of Things” means soon every smart object will emit data that must be captured, stored, and later analyzed.

What businesses need

“Corporations can’t continue down this path,” Zapproved’s CEO Monica Enand told Legal Technology News. “We need a new approach to achieve the goals of Rule 1: a ‘just, speedy and inexpensive’ resolution to civil litigation.”

To meet compliance requirements while staying lean, companies need to figure out how to utilize tech to efficiently sort, store, and search their copious data.

Storage

Cisco’s Chandler was dealing with massive amounts, and increasing kinds, of information, due in part to increasing IP-based cases. This is typical for corporate counsel in the era of Big Data. Everyone needs to organize data volumes, increase efficiencies, and reduce costs.

“If we have to search through millions or billions of emails, we need to have powerful search tools,” Baron thought when he was appointed to the National Archives as the first Litigation Director in 2000. Thus began a project with Richard Braman — a multi-year research project called TREC (Text Retrieval Conference) Legal Track. The goal was to review the research, while testing and evaluating different methods for recall, precision, quality control, iteration and sampling. This helped bring about widespread acceptance of technology assisted review.

The need for a better way to sort, store, and organize massive amounts of data is spawning a new field: Information Governance. According to the Information Governance Initiative, IG is “the activities and technologies that organizations employ to maximize the value of their information while minimizing associated risks and costs.”

Timothy Dix, CEO, Xpriori, LLC, describes e-discovery as a subset of IG. “Strong IG practice starts with a classification that will facilitate review of information in smaller bites.” What that means is that information should be classified according to content and type, to make it easier to search later. “To avoid false positives, avoid searching on vast quantities. Searches work better on sets of documents that are organized to a degree of homogeneity.”

The question is how to do this. “Proportionality and cooperation can only be achieved if lawyers understand how and when to apply technology to find the facts and contain the scope prior to entering into negotiations,” David Horrigan, an analyst at 451 Research, told Inside Counsel. He urges teams to partner with IT and outside counsel. “This type of change is not easy, but it’s essential to meet judicial requirements and protect client interests.”

Law Technology Today has helpful tips for legal teams and IT departments to work better together to establish data storage best practices.

Software

Cisco had outgrown the tools they were working with. Chandler found himself in need of sophisticated discovery tools that could deal with copious amounts of both structured and unstructured data, along with global data-collection requirements. Staying in compliance with data-retention rules and requirements during the eDiscovery process helps departments prepare to face litigation.

“While the existing program represented significant savings in collection and culling costs, they were still shipping data off to hosting vendors and outside counsel to complete the final review and production of documents, which from my perspective, no longer made sense,” Chandler said.

They, like many legal departments, needed to store a variety of data types in their native formats. They wanted the data stored behind their firewall, no volume limits on processing, and the option to host e-discovery on the cloud.

Software can automatically cluster data according to text and visual similarity.

“The only way Chief Litigation Officers (CLOs) can assure they have all the information necessary for litigation discovery is to deploy technology that automates consideration of all documents and identifies those that contain little or no useful content,” Dix said.

Automating to the fullest extent possible tasks like identifying all potentially relevant information, dealing with potential risks, implementing defensible culling, and setting aside potentially usable information can significantly reduce review time.

There is a lot of demand for this technology. For instance, Zapproved Inc.’s new Z-Discovery Platform recently received a $15 million round of funding from partner K1 Investment Management. The cloud-based software uses algorithms to collect required data, then shrinks it down as much as possible.

Lighthouse eDiscovery recently raised $30 million. It cuts discovery costs by scanning legal documents for personally identifiable information such as phone numbers, credit card numbers, or addresses so they can be easily redacted.

Doing research into their competitors, I found Ringtail, whose differentiating factor is the way it presents information for review. Competitor iConect Xera is similar, for instance thumbnail view saves loading time. Internal emails with links to documents prevent rogue copies of documents from circulating. And the ability to print docs with the highlights created during initial review saves time.

It’s important, and difficult, for firms and in-house counsel to keep up with what’s happening in E-discovery. Resources like E-discovery team  can help make it easier.

Why it matters

New rules are scheduled to go into effect December 2015 which are aimed at reducing costs and incentivizing cooperation. In the wake of the new rules, “It’s going to become even more critical that counsel is knowledgeable about the capabilities of information technology and electronically stored information,” Rhonda Ferguson, Vice President, Corporate Secretary and Chief Ethics Officer at FirstEnergy Corp told Inside Counsel.

After implementing a new e-discovery platform Cisco went from processing two to three terabytes of data to in 2009 to 27 in 2014. Last year Cisco saved approximately $21 million on the e-discovery side alone.

Cutting down on the costs of discovery helps businesses stay profitable. But it also has the added benefit of making the judicial system fairer. Expensive discovery favors the wealthier side when it enables parties to engage in a war of attrition.

Conclusion

The needs are growing. ESI is exploding, in volume and diversity. More data in more formats mean legal departments must work with IT to develop solid IG practices and procedures. And they need to incorporate dedicated software.

Check out Capterra’s e-discovery software options. What are your tips for e-discovery best practices? Let us know in the comments!

Looking for Law Practice Management software? Check out Capterra's list of the best Law Practice Management software solutions.

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Cathy Reisenwitz

Cathy Reisenwitz is a former Capterra analyst.

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