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Print articleA Multidimensional Solution to the Problems of Runaway Discovery
June, 2010 -
In 2010, the legal services industry—and for
that matter almost every industry—faces a new
landscape that requires not only a different way
of thinking but also a different way of doing
business to ensure short-term survival and longterm
success. The body of survey and industry
data developed in the past six to 12 months suggests
that the traditional legal service delivery
model for litigation needs to be reworked.
Three key overarching considerations in
2010 for corporations are:
1. Maximizing value received from every
legal task performed;
2. Applying a “lean” process-efficient manufacturing
mentality to legal services; and
3. Moving away from the single-firm model
and retaining the most efficient outside counsel
and other vendors to handle separate
portions of processes, particularly litigation
Although corporations are focused on
reducing legal expenses, survey and industry
data all point to the same conclusion: 2010 will
be an increasingly litigious environment. The
most recent data compiled by BTI Consulting
predicts a 2.3 percent increase over 2009.
The economic turmoil of 2008 and 2009
will continue in 2010 to drive demand in both
bankruptcy and labor/employment litigation.
With changes in the regulatory environment
and anticipated GDP growth, we can also
expect an uptick in antitrust, securities, and
intellectual property litigation. Finally, class
action litigation is expected to increase in the
coming year as well.
Discovery Trends
Litigation costs and risks have increased
along with the sheer amount of litigation.
Litigation spend typically comprises twothirds
of the overall outside legal spend for
most corporations, and discovery can comprise
nearly two-thirds of these litigation costs.
As such, discovery costs dominate case
budgets and are often the single largest line
item in a law department’s budget. These
costs figure not only in cases that are tried
but also in the 95 percent of cases that never
see an opening argument at trial.
There are many causes for the pileup of
discovery costs. First, computerized data
is proliferating. Everyone now has at least
one computer. And, computer storage is so
inexpensive that no one thinks about deleting
anything until big litigation hits and every
one of those tens of thousands of items must
be processed, filtered, and reviewed.
Email is another reason for cost increases.
Email is now the primary mode of business
communication. Email is often carelessly
drafted and sent to multiple recipients who
then forward their copies to other parties.
Now, what was once a single letter (and perhaps
a file copy), can balloon into hundreds
of versions and thousands of copies.
Another factor is that new modes of communication
are surfacing every few months.
Discovery in
one case in today’s environmentcould encompass email, chat rooms, instant
messaging, text messaging, blogs, Facebook,
LinkedIn, and tweets. No one knows what
else will be next. It is all difficult to control,
delete, and review.
The federalization of discovery is yet
another factor. An evolving and confusing
jurisprudence has been developed by distinguished
jurists who themselves aren’t even
comfortable with floppy disks. Many judges
Of Counsel,
Vol. 29, No. 6 13cling to the very flawed assumption that, just
because something is electronic, it can be
produced and searched instantly.
Notwithstanding the attempt by some
courts to control the cost of modern-day
discovery, courts simply cannot be relied
on to control costs. Most discovery matters
are handled by judges and magistrates who
are reluctant to deny all but the most excessive
discovery requests, despite the potential
burden.
Many judges and magistrates also underestimate
the difficulties associated with
electronic data. Moreover, unlike the case
where parties can point to hundreds of boxes
of paper documents, litigants today are often
unable to determine the full burden of electronic
discovery without spending tens of
thousands of dollars just to put electronic
discovery in a reviewable format.
The cost of discovery is beginning to
surpass loss exposure as a strategic consideration
in litigation. Indeed, some parties
are using the prospect of discovery costs to
extort settlements in weak cases. Some commentators
have suggested that these costs
even threaten to bring about the demise of
the right to trial.
Additionally, many litigants are attempting
to create claims of discovery abuse, failure to
implement litigation holds, and spoliation.
They are seeking Rule 37 sanctions, default
judgments, adverse inferences, and punitive
damages. Most corporate legal departments
surveyed agree that actively managing discovery
is the best way to move the focus back
to the merits of the case.
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