Four Areas to Reduce Legal Hold and Collection Spend

With organizations allocating up to 50 percent of their legal spend to litigation, savvy legal teams are seeking new ways reduce their e-discovery costs. Improving legal hold management and collection is one place to start.

In this blog post, I will highlight the costliest areas of legal hold and collection per matter for organizations relying on a combination of vendors and firms to help manage the process. I will then compare the costs of these tasks to the costs of using automated cloud-based legal hold and collection software that offers a flat-fee enterprise license for unlimited custodians, holds and data collection.

1. In-Person Custodian Interviews

The touchstone of a good legal hold process is to focus on key custodians and others managing potentially relevant information. These are the individuals who can preserve data subject of the hold and help prevent losses due to routine business operations. Once you determine there is a duty to preserve, the organization should begin to identify information to be preserved. In many cases, the sources of potentially relevant information are obvious: Joe Smith’s email box and document files, for example. In other cases, the identification of relevant information is more difficult—data could reside on home computers, emails in a personal account, social media, mobile devices, cloud business applications or a host of other storage systems.

Typically, legal departments rely on outside counsel to conduct in-person interviews with potential custodians to get employees thinking about what types of records they keep and where files are saved. Another purpose is to identify department file share sites, databases and other repositories that are accessed by multiple custodians.

Let’s say that a legal department needs to interview 25 potential custodians. At several hours per interview plus analysis, that can quickly become a $40,000 legal bill.

You can eliminate custodian interview costs, and simultaneously get responses and track acknowledgements more quickly and efficiently, using automated legal hold software. In-house legal professionals can use this software to build and send customized questionnaires from templates and standardized court-vetted questions using drag-and-drop editors. Good legal hold software also automatically generates reminders and auditable quality control reports, tasks that otherwise might fall to outside counsel and further increase costs. The process also maximizes employee productivity, since responding to automated questions via a web browser take up less time than attending meetings with attorneys.

2. Third-Party Data Collection Fees

Once potentially relevant ESI is identified, it needs to be collected from user work environments, loaded, processed and stored for review. Many corporate legal departments rely on outside vendors or forensics experts, along with in-house IT professionals, to perform these tasks.

Most data collection vendors charge by the device or by the hour. Assuming the collection process takes at least two hours per device, the time and materials costs become high very quickly. For example, a small case with just a few custodians can take days of IT time and costs thousands of dollars in outside vendor costs with each data collection required; a larger collection with 100 custodians could cost upwards of $32,500. (We assume that collections rates average $325 per device or $125 per hour. The latter would be $25,000 in fees.)

Collection fees can be reduced or eliminated altogether by using legal hold and collection software. A good platform will provide direct collection functionality to collect data and documents from custodians located anywhere in the world, from enterprise email, drives or storage networks–all taking place behind-the-scenes so there is no disruption to employee productivity.

3. Vendor Processing Fees

Once data is gathered, organizations typically incur fees for processing and loading data into a document review tool—an additional set of tasks that is often outsourced to vendors. Given an average cost of $200 per gigabyte for data processing and $75 per GB for data loading, this translates into $.05 per document. Since it’s not unheard of to have tens of thousands, hundreds of thousands or even millions of documents per matter, the costs can become astronomical. Under a traditional cost model, e-discovery processing costs alone can reach upwards of $500,000 for just one medium size case.

Mature legal hold and collection software will automatically process and index data as part of the system, and allow for the automated promotion of relevant documents for review, eliminating processing fees as well as data export and loading fees.

4. Office 365 Enterprise Licenses

There are still more ways organizations can save on costs associated with legal hold and collection activities. Microsoft Office 365 (O365) enterprise licenses, though often overlooked as a source of expense related to e-discovery tasks, is one area to shave costs, especially for organizations using higher-tier—and higher cost–E3 or E5 O365 Security & Compliance Center licenses. If an organization combines mature legal hold and collection software with lower-tier Office 365 licenses, they can realize significant savings.

Many organizations are moving to the public cloud, and are using Microsoft of Google too manage email and other productivity-related files. In-house lawyers often turn to enterprise platform user accounts to locate common types of ESI—but very few of these user licenses are designed to support even basic archiving.  Further, legal hold functionality offered in enterprise systems such as O365 Security & Compliance Center is geared towards the IT side of the process—rather than the needs of lawyers–and few meet the full range of legal hold needs such as integrating with HR, Active Directory or other company identification systems, managing notices, facilitating questionnaires, tracking responses and providing reporting on custodian status.

Take O365 as an example. Although Security & Compliance Center can archive data for later identification and collection, only the E3 and E5 licenses offer legal hold support. Like other enterprise platforms, organizations using lowest-tier O365 licenses often do not have access to these features, which means that they could run the risk of inadvertently losing evidence if they downgrade from an E3 or E5 user license to an E1 subscription.

Take the example of a 1,000-employee organization. At a per user license cost of $420 per employee per year, the organization would pay $420,000 total just to ensure their corporate data is properly archived.

Automated legal hold and collection technology easily addresses both the costs and limited functionality. Core functions of a good technology will include direct connectors to access corporate data systems for information lookup (e.g., Active Directory and HR systems) and be able to collect data in a forensically or legally defensible manner. Direct connectors provide the technology and ability for automated programs to directly access any type of enterprise user account through scripting, allowing legal department professionals to automate collection and suspend auto-deletion without burdening IT or slowing down the process.

By using mature legal hold and collection software with O365, organizations will limit significant cost and IT energy—and be in a strong, legally defensible position.

Here are two scenarios that illustrate cost-savings of combining legal hold software with lower-tier O365 licenses. In the first scenario, this same 1,000-employee company downgrades from E5 to E3 licenses across all of its user accounts. (At $240 per user per year it’s an annual cost of $240,000). It then pairs them with an automated legal hold platform costing approximately $25,000 per year. The maximum spend from pairing E3 licenses with automated legal hold technology is $265,000 per year.

In the second scenario, an organization downgrades to E1 licenses at $96 per user per year ($96,000 total). Annual enterprise licenses and automated legal hold software costs would be reduced further to $121,000 per year.

Cost savings isn’t the only benefit. At the same time, legal and IT departments can use more advanced legal hold, preservation, collection and reporting features to streamline processes that would otherwise be manual, ensure synchronization between IT and legal processes, deliver employee-facing and legal administrator workflows, and collect and preserve data from a wide range of data sources, not just Exchange and supported O365 applications.

In Sum

If your organization is using multiple vendors and enterprise platforms for e-discovery tasks such as custodian interviews, collection and processing, you are paying too much.

To walk through a 15-minute ROI analysis on using legal hold and collection software, contact us.
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About Alon Israely

A lawyer and data collection and preservation expert, Alon is a co-founder of New York-based legal services company, Business Intelligence Associates Inc., a legal technology consulting and solutions firm. In 2015, the company’s software and technology division, based in Seattle, was spun-out as its own company and Alon was tapped to lead it. TotalDiscovery provides a legal compliance platform to corporations, governments and law firms. Alon also works with corporations and government entities as an expert witness and consultant on legal compliance, e-discovery and information security and privacy related issues.

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