Cloud-based storage and the ubiquity of smart phones and tablets are pushing legal teams in charge of e-discovery to the limit.
Two separate surveys released this month indicate that the legal department is falling behind on managing electronic discovery. The studies also reveal a significant lack of communication and collaboration between legal, IT, records management, and other business units.
According to research conducted by consulting firm Lexakos, for example, 90 percent of 111 chief legal officers polled said they had a written records and information management policy in place—yet only 22 percent said that they are “very satisfied” with the training that employees receive on such policies, and 55 percent said they are only “somewhat satisfied.”
According to Rick Wolf, founder of Lexakos, companies need more collaboration and interdisciplinary teams. “You can't manage information from a pedestal,” says Wolf. “You need to get buy-in and support across the organization. Success requires change-management techniques and a business case where each individual sees the benefit of managing their information with better guidance.”
The Lexakos study also revealed room for improvement on records management procedures. Half of respondents said they are only “somewhat satisfied” with their company's records management processes, including the enforcement of policies for electronic records and e-mail use.
The survey also identified gaps in priorities between legal and IT. Eighty-eight percent of chief legal officers noted that the ability to preserve, review, and extract data for litigation purposes should be a standard requirement when the company acquires, customizes, or configures technology. Yet, 43 percent said their law departments do not participate in the evaluation of new technology to determine if it increases litigation risk.
In-house legal departments are working, however, to broaden the list of skills they have on staff, including data management and e-discovery abilities. In a study of e-discovery trends conducted by FTI Consulting, in-house counsel respondents said they anticipate a rise in the number of legal professionals who will have e-discovery in their title.
According to the FTI report, these legal professionals will work directly with records management and IT to ensure their companies address the legal department's interests in data retention or deletion. In addition to legal and technology skills, respondents said that experience with statistics, accounting, and project management will also be essential skills in the near future.
Cutting Costs Creatively
Then there is the issue of cost. Fifty-eight percent of chief legal officers polled by Lexakos said their overall operating budgets are expected to remain flat, even as many reported increased litigation, putting a strain on resources.
The good news is that corporate legal departments are continually coming up with creative ways to cut costs and increase efficiency. According to the Lexakos survey, for example, 58 percent of law departments used a centralized litigation group in 2013, up steadily since 2008.
“Some kind of comparative analysis needs to be done to see which risks require the most attention. This is an area where law departments are looking for the most help.”
—Rick Wolf,
Founder,
Lexakos
Companies are also showing improvements in their ability to audit e-discovery processes. Fifty-one percent of respondents to the Lexakos survey said they have auditing standards, up from 44 percent in 2010.
Both surveys also observed that corporate legal departments expect to work more collaboratively with outside counsel and service providers, while 73 percent of respondents in the FTI survey said they expect to work more closely with outside council over the next couple of years. Similarly, respondents of the Lexakos survey ranked “aligning and communicating better with outside counsel” as an important initiative for 2013.
With budgets flat, in-house legal departments haven't been able to cut back on the work they leave to outside law firms by doing more work themselves, Wolf says. According to the Lexakos study, 69 percent of respondents said they do not anticipate increasing overall spend on internal litigation support. In fact, spending on the internal legal department has “pretty much gone down every year,” he says.
As legal departments assess their operating budgets, one effective measure for allocating limited time and resources is to conduct a legal risk assessment, advises Wolf. “Some kind of comparative analysis needs to be done to see which risks require the most attention,” he says. “Not surprisingly, this is an area where law departments are looking for the most help.”
e-Discovery in the Cloud
The advent of e-discovery in the cloud is another reason why legal departments say they will need service providers to play a larger role, according to the FTI survey. Thirty-seven percent of respondents, for example, are currently evaluating the use of a legal review tool in the cloud, compared to last year, when the majority of respondents said they were merely thinking about using one.
When it comes down to actually selecting a service provider, corporate legal departments increasingly prefer tools they can integrate with existing applications, which 57 percent of respondents to the FTI survey said was an important issue. That's a major change in attitude from 2010, when 28 percent of respondents said it was an important issue. “People are trying to find creative ways to use their existing resources to maximize the investments that they're making,” said Ari Kaplan, principal of Ari Kaplan Advisors, which conducted the FTI study.
E-DISCOVERY CHANGES IN 2015
According to 90 percent of respondents, e-discovery will be different in 2015. Seven key reasons emerged from FTI interviews with counsel:
1.“Predictive coding will have a dramatic impact.”
2.“The more (skills) they can bring to bear, the better they will be.”
3.“I don't think you can ever do it purely in-house.”
4.“Legal review in the cloud is inevitable.”
5.“The lack of control that corporations are going to have on their information and knowing where to find it will be the biggest issue.”
6.“If you don't have a process and you are not constantly streamlining, costs will increase.”
7.“I expect e-discovery will be easier as we get more technologically savvy and the courts provide additional guidance.”
Source: FTI.
Additionally, corporate legal departments also expressed an interest in using advanced technologies—such as analytics and predictive coding—to achieve cost savings and more effectively manage electronic information.
More than half of respondents to the FTI survey believe that predictive coding will improve e-discovery and be a mainstream tactic by 2015. At the present time, however, many in-house counsel are fearful about using predictive coding, said Renee Meisel, a legal director specializing in litigation and e-discovery for computer technology corporation Dell, who also participated in the Webcast.
With predictive coding, you're essentially allowing a computer, as opposed to a highly trained individual, to filter data and decide what information is most relative to a legal case. “There is something scary about sending a bunch of documents out the door that you haven't seen,” she said.
Fifty-seven percent of respondents to the FTI survey also cited the re-use of coding decisions as another cost-saving technique. When managing repeat or related litigation—such as patent matters—you can often preserve the basic coding by creating a master set of data.
“We've seen great success and great savings both in cost and time in re-using coding decisions,” said Meisel. Where you get the “biggest bang for your buck,” she said, is when you have overlapping cases with similar themes, including the same custodians and subject matter.
Still, Wolf says corporate legal departments could be doing more to embrace technology. “That's one of the findings that surprised me the most, that law departments aren't really using technology to their advantage yet,” he says.
E-DISCOVERY FORECASTS
Based upon the FTI survey responses, it is possible to forecast coming trends that e-discovery teams should be aware of, such as:
In-house counsel will begin conducting more predictive coding pilots with experienced service providers. While predictive coding is growing in acceptance, corporations indicate a preference to use trusted and proven service providers to handle the complexity and defensibility of predictive coding.
An increasing number of professionals, with backgrounds in statistics and economics, will enter into the e-discovery industry. As predictive coding and analytics play a bigger role in e-discovery, those with legal, IT and mathematical skills will be in great demand.
Data security in the cloud will be a key component of any RFP process for cloud-based tools. Cost-conscious companies are evaluating cloud-based tools because they can reduce IT spend and often provide flexible subscription billing models, yet adoption has been slow to date because of data security concerns. Providers will need to ensure both cost savings and data security in order to help adoption grow.
More corporations will develop their own “privilege coding repositories” to more efficiently store and re-use privilege coding decisions made in previous matters. As legal teams grow more knowledgeable about their e-discovery costs, privilege coding will likely be a key target for efficiencies because of its expense. The ability to store and re-use coding decisions made in previous matters will enable legal teams to quickly reduce costs and focus on important information faster.
Source: FTI.
In the Lexakos study, for example, 72 percent said they do not use a matter management system to track litigation holds. A matter management system is a centralized repository for keeping track of a company's litigation profile and managing communications with outside counsel.
If a company doesn't know what litigation it has pending at any given time, it becomes impossible to delete electronically stored information without facing some legal risk, says Wolf. As a result, companies continue to accumulate massive amounts of unnecessary data, he says.
The FTI study similarly highlighted the challenges of data overload. More than half (64 percent) of the 30 in-house legal professionals who were interviewed for the survey said the effect of Big Data on e-discovery requests will be the overwhelming challenge for the future, followed at 32 percent by both “social media and data in the cloud,” and the “emergence of the ‘bring your own device' environment becoming a workplace norm.”
“A lot of traditional sources of data, such as e-mail, are now found in the cloud,” said Kaplan. This indicates that the way legal departments manage their information has “changed quite a bit in just the last couple of years,” he said.
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