Why Corporate Legal Is Pushing Harder for E-Discovery

Has your corporate legal department been pushing for greater use of e-discovery? If so, you’re not alone. And if not — stay tuned. A tougher legal and regulatory landscape, the looming threat of COVID-related lawsuits and a shrinking budget for attorney fees are forcing many legal departments to do more with less.

In response, corporate legal is looking to e-discovery to improve efficiencies and trim costs. Let’s explore why.

Corporations Face a Tougher Legal Landscape

Even before the COVID pandemic began, corporate counsels perceived an increased risk of legal and regulatory action. The Norton Rose Fulbright 2019 Litigation Trends Annual Survey[1] found that:

• More than half of respondents feel there is greater exposure to cybersecurity and data protection issues. Among the reasons cited for the increase were more stringent laws, greater creativity by cyber criminals and a growing volume of data to be protected.
• More than a third feel regulators are intervening more often. Respondents noted that regulators’ attention is more specific and direct, that they face different regulations in many jurisdictions, and that regulators are seeking more data than they did before. Respondents also expressed concern that regulatory action has the potential to damage corporate reputations.
• Over a third also expect to face a higher volume of legal disputes; that’s more than double the number who expected that just three years earlier.

The evolving regulatory landscape is also making things harder. Almost two-thirds (62%) of  the survey’s respondents say they now must balance cross-border discovery with data protection rules that vary from one jurisdiction to another.

And then came COVID. Mike Quartararo, president of the Association of Certified E-Discovery Specialists, notes that “it seems fair to say that there is a simmering cauldron of litigation out there,” pointing to workplace safety (particularly as people return to office spaces), commercial real estate, and travel and hospitality as areas that “seem ripe for disputes.”[2]

Corporate Data Governance is Falling Short

To cope with this rising tide of litigation and compliance requires effective information governance, another top of mind concern for corporate counsels. This is reflected in a 2020 report by Osterman Research, which concludes that good information governance “is an essential best practice for any organization,” even as it acknowledges that proper governance “is becoming more difficult to address over time.”[3]

The Osterman white paper points to several issues that effective governance can help better address:

• The growing volume of information, often referred to as storage bloat.
• Uncertainty about what data to keep and what to discard. Awash in data, only 25% of the legal professionals interviewed by Osterman said they knew exactly what information they need to keep and for how long.
• Increased regulatory compliance. Although data retention is more heavily regulated in some industries than others — airlines, for instance, must keep records of every tarmac delay of more than three hours for a period of two years — owing to new laws such as the California Consumer Privacy Act, virtually every company in every industry is now regulated to some degree.
• Lost productivity. Owing to the above, Osterman finds that during a typical week, employees spend an average of 71 minutes hunting for information that has been stored but is difficult to locate. That adds up to several days per person per year.

Yet despite these issues, Osterman reports that one out of three of the organizations they surveyed do not currently have an information governance program in place. Given the central role that archiving plays in any governance effort, it is probably not a coincidence that a similar number acknowledge that their current archiving system falls short of their needs to retain data for regulatory purposes. And nearly half of the survey respondents (47%) do not regard their current system as cost effective.

The COVID pandemic, in the meantime, has pushed many archiving systems to the breaking point. With so many employees now working from home, data is being generated in far more locations, stored on more devices and shared using more tools than ever before. As a result, more than four out of ten (41%) of the survey respondents say their organization can no longer archive all of its data and one out of 10 aren’t archiving any data at all. This leads Osterman to conclude that inadequate archiving is “very likely” to exacerbate legal and compliance problems going forward.

Budget Cuts Create Additional Pressures

In the wake of the pandemic, revenue has fallen for many companies and descended into freefall at others. This has led to widespread budget cutbacks and corporate legal has not been spared. A recent survey of in-house corporate attorneys found that for 57% of the respondents, economic pressures are their greatest concern.[4] Says Colin McCarthy, who heads a community of legal operations professionals, “We are seeing extremely talented people across the legal landscape being let go.”[5]

To ease the pressure on their legal budget, many corporate legal departments are also seeking to limit their use of outside counsel. A survey by LegalBillReview.com and In The House found that 73% of general counsels were looking to reduce their external legal fees.[6] But bringing more work in-house is challenging when there are fewer attorneys on staff to do the work… unless, of course, some of that work can be automated.

e-Discovery Can Improve Efficiencies and Reduce Costs

All this has led to a renewed interest in e-discovery and a push to apply it more broadly. Used effectively, e-discovery offers many benefits in the current environment:

• Dramatic savings. An e-discovery solution can be used to locate and eliminate duplicate, outdated or unimportant data. That not only reduces storage bloat, it frees in-house attorneys and their corporate clients to zero in on the data that actually matters. The improved efficiencies can reduce legal discovery costs by as much as 43%.[7] And less data to archive also means less spending on hosting, storage and data processing.
• Wide-ranging versatility. Beyond litigation, e-discovery can also be used in HR investigations to respond to Freedom of Information Act (FOIA) requests and to ensure data privacy compliance — all of which are placing greater demands on in-house counsel.
• Improved data governance and reduced risk. More efficient archiving and consistent storage rules makes good data governance an easier proposition. And by reducing the need for external counsel, e-discovery allows companies to maintain greater control over their data. This in turn reduces their security and compliance risk, since every time data is duplicated and shared there is the possibility of a security breach or privacy violation.
• Better collaboration. E-discovery workflow tools and shared dashboards allow for more effective communications and greater productivity.

The Bottom Line           

A tougher legal and compliance landscape, budget cuts and COVID-era uncertainty are forcing corporate legal departments to do more with less. To reduce their costs and improve their efficiencies, in-house counsel is seeking to expand its use of e-discovery and the wide range of applications it supports.

[1] “2019 Litigation Trends Annual Survey,” Norton Rose Fullbright

[2] “The State Of E-Discovery 2020,” Norton Rose Fulbright

[3] “Archiving As a Key Element of Good Information Governance,” Osterman Research

[4] “2020 In-House Legal Benchmarking Report,” Exterro

[5] “The State of E-Discovery 2020,” Above The Law

[6] “Reducing Legal Spending: A Survey of In-House Attorneys,” Legal Bill Review

[7] “Demonstrating ROI for In-House Legal Teams: Three Simple Calculations,” Logikcull