The High Cost of the Litigation Process
Information Management: The First Step in the Right Direction

According to a recent analysis of litigation cost data by the Searle Center on Law, Regulation and Economic Growth at the Northwestern University School of Law, litigation costs between 2000 and 2008 have increased at an average rate of 9%, and this trend shows no evidence of slowing.¹ In a follow-up analysis of the data, the Searle Civil Justice Institute determined that companies spent, on average, 16 to 24 cents on US litigation for each dollar of profit earned in 2008. In light of figures like these, the legal community has begun to examine the current litigation system and how best to tackle the enormous costs and inefficiencies associated with bringing and defending legal actions in the United States.

While most litigators and judges agree that it is high time to address the inequities of our current system and productive steps are being taken to do so, this type of change will necessarily take time to thoughtfully devise and implement. In the meantime, what’s an organization to do today when dealing with discovery and regulatory requests for information that tie up employees, disrupt business practices and create significant cost to the organization? No matter the size or the industry, the first step for every organization should be to develop an information management strategy that addresses the creation and retention of information. This proactive step will make the eventual discovery of information more efficient and less costly.

Information Management—Get Control
Symantec, with the help of an independent research and analysis firm, recently conducted an “Information Management Health Check” survey of 1,680 organizations in 26 different countries to determine the best—and worst—practices in the area of information management. In every company surveyed, both IT management and legal staff were polled to get a 360-degree view of how they managed their information. The results indicate that while most organizations know where they want to go with respect to information management, many are unsure how to get there.

To many organizations, the survey results may sound familiar. 87% of survey respondents believed that an information management strategy should allow for the deletion of unnecessary information. However, despite this overwhelming consensus, only 46% of organizations actually had some kind of information management strategy in place. For those organizations that do not yet have an information management strategy, the potential impact of a discovery request may be severe, as the effort to identify, search and preserve relevant information from vast amounts of data is extremely disruptive, time-consuming and costly.

It was also clear from the survey that many organizations are over-retaining information. In lieu of an information management plan, companies are keeping everything “just in case” they may need it down the road. In addition, when a litigation matter arises, organizations preserve information broadly in order to comply with legal requirements, but this information may then be retained indefinitely. Often, the information continues to be preserved even after the legal matter has concluded because the organization does not have a good method of tracking legal holds.

When it comes to backup tapes, many organizations are retaining backups by default as part of their preservation process. For example, 75% of the Information Management survey respondents said their backups had an infinite retention or were on legal hold. Of that retained and backed-up data, 40% of it was not even relevant to the legal matter for which it was being held, and 25% of that data was not needed at all for business, legal or regulatory purposes and should not have been retained.

While some may say storage is cheap, the risks and potential discovery costs associated with keeping all of this unnecessary information far outweigh the status quo of simply buying more storage. Ask any organization that has undergone a significant e-discovery event and they will tell you: the less data you have, the better.

Delete Confidently
So why is it so hard for organizations to delete information? For many organizations there is a cultural aversion to actively deleting information—in essence, these organizations are afraid they will lose information that is important to the business or required for some legal or regulatory purpose. While it is imperative that end users are able to access the information they need to do their jobs, retaining too much information can overwhelm an organization’s systems and increase risk in the event of litigation or regulatory scrutiny. As a fundamental matter, the organization needs to evaluate its requirements—both from a business perspective and with respect to any legal and regulatory requirements that may be applicable. Once requirements have been identified, the organization can develop retention policies around those requirements. Generally speaking, the process of determining appropriate retention policies will require the input of business unit leaders, the IT team, as well as stakeholders from legal and records management.

Implementing technology, such as an archiving tool, can provide the foundation to support an organization’s information management policies by providing greater control over the information being created and retained. Once retention policies have been established, these policies can be applied within the archive to enable an automated and repeatable expiration process, removing the need for ad hoc retention decisions. Starting the discovery process with a smaller corpus of data is the first step to reducing costs and the time and disruption associated with responding to requests.

Discover Efficiently
According to the Searle Center’s analysis, for the years 2006-2008, companies paid an average per-case discovery cost of approximately $622,000 to $3 million. These types of discovery spends can usually be directly tied back to the amount of information that must be sifted through, searched and reviewed in order to arrive at the data relevant to a particular matter. The Searle study found that in 2008, an average of approximately 5 million pages of documents were produced in discovery in large cases that went to trial, but only 5,000 exhibit pages were actually marked (and thus potentially used at trial). Clearly, the “find-the-needle-in-the-haystack” approach has inflated discovery expenditures and contributed to the legal community’s desire to see system improvements.