Some scratches of the head regarding touted e-discovery costs by big US companies

The Wall Str. J, Nov. 23, 2010 at B6, cites data from a research and consulting firm regarding expenditures by the 1,000 biggest US companies on e-discovery. They are expected to spend about $1.3 billion in 2010. According to the cited report, that expenditure equals 7.1 percent of their litigation spending, up from 5.2 percent five years ago (a rise of one third, or something like 4-5% a year).

Being methodologically prissy, I wonder how many law departments keep track of e-discovery as a line item. Or are the metrics submitted based on guesses, impressionistic and influenced by the roar of industry hype?

Might it also be that the rise reflects a proportionate rise in how many documents are available electronically? In other words, the increase may match the workload, but spending on non-electronic discovery of hard-copy documents may have dropped off.

Second, on average for the thousand companies that means $1.3 million per year on e-discovery. Given the size of the companies, probably more than $2 billion in revenue at the small end, the figure doesn’t shock the conscience of the court. The median spend likely comes in below $1.3 million.

Third, even if documents are in electronic format, someone has to review some of them. Documents had to be reviewed way back in prehistoric days when only hard copy existed. My point is that we should focus on incremental spending costs spurred by electronic stores and tools not on total costs, some of which might have been borne pre-ED.

The point of the article is that software and techniques exist that tame the burgeoning bulk of electronic files (See my post of Sept. 8, 2010: costs of e-discovery with 11 references.).