Why is Litigation so Expensive?
Those of us who spend time in litigation have often heard clients question why litigation has become so expensive. For some clients, it is, in part, because they were not ready for it. It is difficult to prepare for litigation when little has been done to control the explosion of information that occurs in the digitally driven modern workplace in which we live.
I have seen email inboxes with thousands of unread emails. I have had clients discover rooms full of documents months after discovery was completed in cases. I have seen clients struggle to explain why some documents no longer exist despite the client having no policy that would explain their destruction or deletion. Inversely, there are clients who never delete or destroy anything even though their policies clearly establish that they should. Situations like these make it hard to resist saying: “You weren’t ready.” Every company needs some sort of records management policy and should apply that policy to prevent the accumulation of data which drives up discovery costs that could have otherwise been avoided.
But even with fantastic policies in place, the increasing amount of data created every day is daunting. Now we have companies trying to cope with this explosion of information by signing multi-million dollar contracts with third parties to store and manage and analyze their data from the time of its creation to the time of its archive or destruction. We can see trouble brewing here. On too many occasions, the IT departments of clients have made decisions related to software purchases (like Office 365 or Google’s business suite or various content management systems) without any input from the company’s legal department or its Records Management Officer (RMO). At times, this has caused significant problems when litigation occurred and discovery of information now housed in that software or system was necessary. (Do you know where those files actually live – are they still in the U.S.? Do we have support for getting OUR data out of THEIR systems?) This lack of communication translates into lost opportunities to ease litigation burden. For example, had interdepartmental communications been better, the IT department might have activated certain elements of that software, or purchased a different level of license, which would have greatly assisted in eventual litigation discovery.
We expect most companies will change how they manage electronic information over the next few years. If done right, such changes can result in better control and more savings on the litigation and discovery front. When data is controlled from the BEGINNING of its lifecycle, it becomes easier to quickly identify and retrieve the truly important files needed to tell your story in litigation, which means that less will be spent on litigation overall
Before you go any further in big software deals, involve your IT and legal departments and RMO in the purchase process by discussing how new products can reduce discovery costs. If you don’t have an RMO or an equivalent, you have bigger issues and it is time to implement a record retention program, including the creation of an RMO position.
Much of the cost of litigation discovery is preordained by how a company handles its documents, including electronic information in the years before the litigation begins. Decisions about document management — including creating an RMO position — and choosing the right software elements can help control these costs.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.