How much DOES discovery cost?

Litigation can be expensive and one of the largest expenses of any litigation is finding information. Of those dollars devoted to discovery and investigation costs, producing electronically stored information (ESI) alone can comprise 60-80% of those costs. Drilling down into those costs and taking a closer look at what it costs to produce ESI, according to the Rand Institute for Civil Justice, reviewing these documents for relevancy and privilege comprises 73% of these production costs. A common industry benchmark for document review costs is a dollar a document, which doesn’t sound like a lot until you realize that it is easy to amass thousands of documents just for one person. Although there are various techniques and software solutions to help lower a number of documents needing review, you can see how costs can quickly spiral out of control if you have a lot of electronic data to review and produce.

In my experience, as in-house counsel, executives are generally very gung ho to litigate so that they can prove they are right. This feeling of needing to prove how right they are and the related directive to litigate until the bitter end usually persists until the first few legal bills covering investigation and discovery start trickling in. Only then do the second-guessing and rethinking seeds start to germinate… “Does it really cost this much to litigate?” “What if we don’t collect so much data?” What if we don’t take so many depositions?” “Do I really have to be deposed?” “Do I really have to turn over all of my emails?”

The estimated costs to produce ESI don’t even include lawyer’s time, expert’s time, or the hidden costs of having executives’ attention drawn away from the business to focus on litigation demands, depositions, interviews, or litigation strategy sessions. These costs also don’t include the lost opportunity cost where executives and other business people could be doing something more productive, like running the business, rather than litigating.

Usually the heart of litigation or resolving a matter boils down to a handful of dispositive documents (usually a contract or emails or other documents) but finding those few documents through the document review process can be extremely costly, driving total litigation costs through the roof.

 

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