The Prevailing Corporate E-Discovery Trends of 2015

A cursory analysis of the legal surveys published this year reveals clear themes in how corporate legal departments approach the challenges associated with electronic discovery and other data-intensive operations. Presented below is a summary of the commonalities that emerge.

Of the surveys considered, two — Norton Rose Fulbright’s annual Litigation Trends survey and Altman Weil’s annual report of Chief Legal Officers — are industry bellwethers, possessing both the track record and breadth of respondents to be true reflections of how corporate legal departments are evolving. The others — smaller-scale reports from Recommind, FTI, Guidance Software, Robert Half, BDO and others — should be taken with a grain of salt given their respondents likely pull from the ranks of those providers’ own clients. But they are included here for the sake of thoroughness, and because they generally draw the same conclusions despite the differences in products and services that those respective providers offer.

In aggregate, the findings below speak to the prevailing attitudes, practices, and concerns of more than 1,500 legal professionals, two-thirds of which work within the Fortune 1000 or organizations of comparable size. Consider this a cheat sheet into the world of what corporate legal departments really care about.


1. Corporate is turning the screws on outside counsel to control costs 

Highlights

  • Altman Weil:
    – 42% of respondents are shifting work from law firm partners to in-house staff
    – 68% of respondents report receiving discounts from law firms
    – 44% of respondents decreased outside counsel budget year-over-year vs. 32% increased
    – 39% of respondents sent less work to outside counsel to reduce cost
    – 51% of respondents are increasing internal budgets vs. 25% decreasing
    – 50% of respondents sought “greater cost reduction” from outside counsel when asked about service improvements
    – 40% of respondents expect to decrease spend on outside counsel over the next 12 months (vs. 20% increase)
    – 76% of respondents who expect to decrease outside counsel spend will funnel that work to in-house staff (vs. 13% to vendors)
  • Norton Rose Fulbright:
    – 76% of respondents with departments of 20+ lawyers said it was important that law firms demonstrate cost-effective sourcing of legal services
    – 66% of respondents have reduced the number of law firms they use for disputes over the last 12 months
    – 95% of respondents expect the number of in-house lawyers who manage disputes to rise or stay the same
  • Recommind:
    – 28% of respondents feel they have enough insight into discovery practices of outside counsel
    – 0% of respondents rate e-discovery reports/metrics received from outside counsel as “very effective”

Representative Quotes

“With the economy sputtering, we are being asked to hold costs flat and absorb headwinds. This becomes very difficult to achieve without help from our outside firms.” (Altman Weil)

“The company is beginning to bring more of the processes in house; it is beginning to reevaluate its costs.” (Recommind)

“We were not happy with the way it was working with outside counsel so we are now doing it internally.” (Recommind)

But also consider… 

Only 7% of respondents to the Altman Weil survey selected “technology efficiencies” as among the three service improvements they’d most like to see from outside counsel. And this.

2. Demand is rising for predictable fee structures and costs

Highlights

AFA’s are on the rise

  • Altman Weil:
    – 60% of respondents use alternative or fixed fee arrangements to reduce costs
  • Norton Rose Fulbright
    – 56% of all respondents use alternative fee arrangements
    – 62% of all US-based based use alternative fee arrangements
    – 78% of all respondents find use of fixed fee arrangements to be effective or very effective
    – 98% of all respondents expect use of alternative fee arrangements to rise or stay the same over the next 12 months
  • Recommind:
    – 44% of respondents say their legal team’s litigation strategy is challenged by cost of review
  • Robert Half:
    – 72% of general counsel say they use alternative fee arrangements

Will and ability to track costs internally is growing

  • Recommind:
    – 57% of respondents track overall e-discovery spend
    – 32% of respondents track per GB/TB spend
  • FTI:
    – 58% of respondents reuse coding decisions used on documents in previous matters
    – 68% of respondents can quantify total yearly e-discovery spend
  • BDO:
    -32% of respondents say ability to predict e-discovery cost early in case is highly important
  • Guidance:
    – 33% of respondents reuse prior collections

Representative Quote 

“We struggle with outside counsel; they are very good about submitting invoices, but not on case status reports. Outside counsel provides some direction and a ballpark, but it is rarely highly predictive. It tends to be inaccurate.” ~ Recommind

But also consider…

According to Reccomind, only 30% of companies track efficiency of document review, often considered the biggest driver of discovery costs.

2. Discovery work — and work in general — is moving in-house

Highlights

  • Altman Weil:
    – 60% of respondents have employed greater use of technology to try to increase efficiency in the last 12 months
  • Norton Rose Fulbright:
    – Of the companies that don’t rely on self-preservation, only 22% rely on a discovery vendor to collect data (majority rely on internal IT department)
  • Recommind:
    – “Companies are already beginning to lower their discovery costs by shifting responsibility away from their outside lawyers.”
  • Guidance:
    – 72% of respondents are using e-discovery software internally
    – 55% of respondents perform internal review on more than half of their cases internally
    – 33% of respondents perform internal review on between 75% and 100% of matters internally

Representative Quotes

“The concern was that once we recouped the investment, the tool would be out-of-date, which is why ‘renting’ a preferred vendor’s technology makes more sense.” (Recommind)

3. Data security is an unrivaled concern

Highlights

  • Altman Weil:
    – Cyber-security is identified as among top concerns of legal department management
  • Recommind:
    – 72% of respondents have data security concerns around distributing ESI to multiple vendors and/or law firms
  • FTI:
    – 77% of respondents have data security requirements for outside vendors
  • Guidance:
    – 65% of respondents say their legal and security teams are meeting more regularly
    – 47% of supplier agreements now include security provisions
  • Robert Half:
    – 80%+ of chief legal officers and GCs cited data breach risks as one of their top concerns
    – 20% of chief legal officers and GCs reported experiencing a data breach over the last two years

Representative Quotes

“[From a security perspective] in a perfect world, the company would deliver raw electronically stored information in a SaaS solution to which outside counsel has access.” (Recommind)

But also consider…

48% of respondents to the FTI survey said they do not have security requirements for outside law firms, and 48% of respondents to the Recommind survey said they do not audit the technology competence or systems of outside counsel.

4. Legal departments prefer toolboxes, not a specific hammer

Highlights

  • Norton Rose Fulbright:
    – 57% of respondents have not used predictive coding
    – 58% of respondents who do use predictive coding use it for less than half of all cases
  • FTI:
    – 42% of respondents have not used predictive coding; most of those who have use a hybrid approach
  • BDO:
    – 30% of middle market respondents say they have used predictive coding
    – 47% of organizations with revenues of $1 billion+ say they have used predictive coding
  • Recommind:
    – 92% of respondents said they’d use advanced analytics if cost were not an issue
    – 84% of respondents are open to implementing cloud solutions
  • Guidance:
    – 46% of respondents have more than e-discovery software solution

Representative Quotes

“Technology reduces manual effort and can reduce the volume of data into something more manageable; we are very pro technology so anything we could do to have a machine do the heavy lifting, we would do.” ~ Recommind

“I did not find predictive coding was very good. The case was a highly technical con-struction power plant matter with many acronyms and twists/turns for the potential solution…. At the end of the day the lawyers had to review the entire set anyway.” ~ FTI

But also consider…

38% of respondents to the BDO survey said they did not employ “any recent e-discovery technological advances,” and only 5.4% identify themselves as early adopters of advanced technology.

5. Data volume is the main obstacle to defensibility, cost control and efficiency

Highlights

  • Norton Rose Fulbright:
    – 62% of US respondents were required to preserve and collect mobile data over the last 12 months
  • BDO:
    – 49% of respondents said volume, variety and velocity of disparate data will have the biggest e-discovery impact on their organization in the future (the top answer)
  • Guidance:
    – 44% of respondents need to collect ESI from the cloud
  • Exterro:
    – 36% of respondents say locating potentially responsive data is their top discovery challenge (the top answer)
  • Robert Half:
    – 25% of 350 in-house and law firm attorneys surveyed rank data volume as highest discovery concern, the number one answer
    – 34% of attorneys think emerging technology will change the practice of law more than any other factor over the next five years

But also consider…

Volume schmolume. Have you not heard of Google?


Sources

Norton Rose Fulbright – “2015 Litigation Trends Annual Survey” | 803 global corporate counsel | Link

Altman Weil – “Chief Legal Officer Survey” | 258 corporate and law firm counsel | Link

FTI – “Measuring Your E-Discovery Program Against Industry” | Survey of 31 corporate counsel from Fortune 1000 | Link

Recommind – “2015 Corporate Legal Survey” | 25 corporate legal operations leaders | Link

BDO – “Inside E-Discovery: The State of E-Discovery According to Corporate Counsel” | 140 senior corporate counsel | Link

Guidance Software – “Corporations Take Control of E-Discovery” | 100 in-house counsel and legal service providers | Link

Robert Half Legal – “Future Law Office 2020” | Compilation of various surveys of corporate counsel | Link

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