How to Make the Case for E-Discovery Software

Melissa Tatham, the Vice President of Marketing for Zapproved, has helped grow Zapproved into a leading cloud-based software provider for corporate legal teams. Melissa discusses a hybrid approach to In-House E-Discovery, making the case at your organization for E-Discovery Software, and what to look for in E-Discovery software.

It’s a story we hear often: the disconnect between corporate legal professionals and those responsible for allocating budget. The legal professionals are in the trenches, creating and carrying out defensible legal processes to ensure that the company is not at risk. Yet, they don’t always feel empowered to advocate for the tools they need, even when having these tools will save time, reduce risk and even lower the company’s legal spend.

One of our customers in manufacturing summarized it well: “The first time you are forced to defend your process in a class-action lawsuit rather than defending the case on the merits, you will be paying for your decision not to have the right software in place.”

In short, legal professionals get it. They understand the risk of using a manual or outdated process in situations where there’s no room for error. So why is it that time and time again, projects get pushed back, budgets can’t be allocated, and it seems impossible to gain support for critical technology purchases?

It’s no secret that e-discovery is a significant portion of the corporate legal budget, and it is only going to increase as data volumes increase and data sources diversify. This trend will accelerate as remote or hybrid workplaces become the norm.

Legal teams must also factor in the time-cost of administrative tasks around e-discovery, such as sending and managing litigation holds, preservations, data collections, and performing manual e-discovery tasks for small matters that are not typically outsourced, such as internal investigations.

Historically, e-discovery tools were not designed with corporate e-discovery use cases in mind and were too complex for most in-house legal teams to justify the high internal investment in both staff and technology to use it effectively.

Outsourcing worked for a long time. Why isn’t it scalable anymore?

The pricing model for e-discovery service providers is still primarily based on data volumes. An e-discovery strategy that relies solely on service providers is not built to scale for an increasingly digital world with an increasingly diverse set of collection channels.

It requires you to make a hard tradeoff between risk and expense.

  • High Expense: If you choose to outsource 100 percent of your e-discovery to service providers, even routine matters that could easily be handled in-house require a slice of the legal budget.
  • High Risk: If you over-rely on manual processes to reduce cost, you are exposing yourself to more risk, as manual processes are harder to defend and there is a greater chance of missing relevant documents. Additionally, without adequate technology, e-discovery work is time-consuming, requiring hours of staff time for even simple tasks.

User-friendly e-discovery software changes the game

As more approachable e-discovery software becomes available, you can now bring more e-discovery in-house without overburdening your team or hiring a host of dedicated e-discovery experts. Incorporating in-house software allows you to take a hybrid approach, utilizing a combination of both software and outside services to appropriately balance cost and risk on a case-by-case basis.

The Hybrid Approach to In-House E-discovery

In-house e-discovery isn’t an all-or-nothing prospect, and e-discovery software will never replace the need for outside counsel for higher risk or highly complex cases. It simply doesn’t make sense to handle every matter in-house. Instead, legal teams can leverage outside counsel’s surgical expertise when needed, while handling the bulk of routine matters in-house to save time and reduce overall spend.

A hybrid model means you:

  • Choose the right mix of in-house technology and outside providers for each matter
  • Maintain defensibility
  • Improve team efficiency and responsiveness
  • Proactively manage costs as data volumes increase
  • Still get the benefit of outside counsel’s specialized expertise

When Should You Evaluate an Investment in E-discovery Technology?

There are certain inflection points that can indicate that now may be the ideal time to reevaluate your strategy towards e-discovery. Any of these factors indicate that you should consider bringing software in-house and/or start automating some of the more manual processes involved in e-discovery. Here are a few:

  1. Your business is growing. For example, your revenue or number of employees is increasing. This is an indicator that litigation volumes or data may be expanding as well.
  2. The number of cases per year is increasing. This could be a result of a growing business, or a response to another factor, such as an increase in COVID-related employment matters.
  3. Changes in regulation. For example, new regulations like GDPR could increase the number of information requests you receive or increase your risk if your processes are poorly defined.
  4. Increase in risk. If you are in a highly regulated industry, there may be reasons why risk might be higher than normal, such as a highly publicized case at a similar company.
  5. Changes in technology. More companies are adopting more communication channels outside of email, such as Slack and Microsoft Teams, which may increase data volumes or require better organization. Another example is more data produced as a result of an increase in remote work.
  6. Company-wide initiatives around digital transformation or security. If your company is already carrying out a major technology initiative, such as migrating the workforce to the cloud, it could be a great opportunity to pitch cloud-based e-discovery as a highly aligned project that will modernize legal operations and reduce IT burden. In addition, company initiatives to reduce risk are also well aligned, since SOC2 Type 2-certified software like ZDiscovery provides enterprise-class data security practices.

While the benefit of e-discovery software might be obvious to you, if you’re not the one holding the purse strings, then you need to make a compelling business case as to why it’s a good investment!

A solid business case will help make it clear to anyone, even someone who is not in the legal department, the value that the software will deliver. Focus on the two most important benefits of in-house e-discovery software: cost reduction and risk reduction.

Breaking Down Your Costs

It’s helpful to think about costs in two ways.

The first is “hard” costs. This is the amount that shows up on your bill from your service provider. Most e-discovery service providers charge for processing by the gigabyte (GB), production by the page, and a recurring fee for hosting. Given that, here are a couple of examples of hard cost savings that you will realize by adopting e-discovery software in-house:

  • Example 1
    By pre-processing and reducing the amount of data sent out for review, you will directly save on review fees. Most of our customers report that they reduce their data volumes by 50 percent or more.
  • Example 2
    For every matter that you choose to bring entirely in-house, rather than send out, you are saving money on outside counsel.

Second, as we all know, time is money! If you can make your team more efficient, there are cost savings to be gained from productivity improvements. For example:

  • Example 1
    Your paralegal spends 16 hours per week manually tracking responses for legal hold notifications and following up with custodians. You know that automated legal hold software would reduce the amount of time spent managing holds by 80 percent. Based on the salary of your paralegal staff, you can calculate the savings you would derive from an automated solution.
  • Example 2
    E-discovery for internal investigations is currently handled manually. You have, on average, 45 internal investigations per year, and each investigation takes 1-2 weeks per matter to review. If you know that you can reduce your time spent on review by 50 percent, you can start to quantify your cost savings.
  • Example 3
    Members of the IT team receive about 80 requests per month to preserve and collect data. Each request requires about two hours. By setting up automated preservations and collections in Microsoft 365 from your legal hold software, you estimate that you can reduce the total amount of time to preserve and collect data by 80 percent and remove the burden from the IT department.

It’s essential to account for your team’s workload because this is time that could be spent on other high-value tasks. Though harder to quantify, there is always an opportunity cost in addition to the cost in the form of salary.

Quantifying Your Cost Assessment

Using these two views of costs, you can start to quantify how much you are currently spending on e-discovery, including service fees as well as operating costs.

  1. Understand how much you are currently spending on e-discovery. This includes hard costs as well as the cost of time spent. Summarize your average cost per matter for the past few years.
  2. Analyze key trends. Is the amount of data per matter increasing? Are the number of litigation events increasing? What about the number of information requests, or subpoena requests?
  3. Outline your expected cost savings associated with in-house e-discovery software. For example, how much could you reduce your data volumes by pre-processing? How many matters are currently sent to outside counsel that could feasibly be taken in-house? What time-savings can you expect with automated legal hold software? Your prospective e-discovery vendors can provide you with benchmarks and case studies to help you validate these hypotheses.
  4. Once the software is selected and a quote is given, you can perform an ROI analysis to determine the payback time on investment. This is the primary resource that you will use to justify the investment with decision-makers in the finance department.

Analyzing Risk

Legal teams are tasked with the challenging job of making sure their companies control legal risks and stay protected from lawsuits. Again, it may be clear to you how technology can help you achieve this, but you need to communicate this to stakeholders outside of your team.

To do this, we recommend performing a risk assessment. This is a well-established process that project managers from many disciplines have been using for years, and your company may even have preferred frameworks or project managers that specialize in this area.

A risk assessment consists of two parts:

  1. Identify what could go wrong. For example, how easily could you defend your practices if called upon?
  2. Analyze the likelihood that each risk will occur, as well as the consequences linked to each risk. You should also use this section to make a recommendation as to how to mitigate these risks.

Remember, the goal of a hybrid approach is not to bring 100 percent of your matters in-house but to achieve the right balance between technology and outside providers to allow you to optimize for cost and risk. Therefore, the most important quality to look for in e-discovery software is ease of use.

There is no limit to the number of e-discovery software solutions out there

Do not prioritize more features at the expense of simplicity! As long as your software is powerful enough to process large data volumes, and will cover 80-90 percent of simple use cases, the solution that is the easiest for your team to pick up and use is going to be far more useful than software that is over-engineered and too complex.

Look for in-house tools that are:

  • Designed specifically for corporate e-discovery
  • Simple enough that anyone on the team can learn and use it
  • Full featured enough to cover 80-90 percent of routine use cases
  • Flexible to integrate with your existing enterprise systems
  • Cloud-based to comply with enterprise-level security requirements
  • Built to reduce the maintenance burden on IT

As a final recommendation, we’ll leave you with this: No matter how amazing you are (and we’re sure you’re pretty amazing), you can’t complete a project like this all by yourself. The decision to bring more e-discovery in-house is one that affects more than just the legal team!

So before you even begin, start to identify and gain buy-in from your stakeholders, especially those in other departments. To do this, you need to understand not just how you can benefit from their help, but how they can benefit from this project as well. This starts with understanding the primary needs and functions of their roles.

Here are some key stakeholders that are most likely to be involved in this purchase, along with some questions to ask yourself to help you determine ways they might benefit from this initiative:

Information Technology (IT)

  • How is the IT department involved in the current process? For instance, do you need to call upon them for help with preservations and collections?
  • Is there a way for this project to reduce the amount of time their team spends on this activity?
  • How does this align with any ongoing digital transformation initiatives that they may be leading?

Security

  • What are the security benchmarks that need to be met?
  • Are there any security vulnerabilities with your current process?

Finance

  • Will this project result in lower operating costs for the legal department? What is the return on investment for this software purchase?

Human Resources

  • Will an investment in software help with their processes, such as internal investigations?

General Counsel

  • How will this project support their objectives to lower the company’s legal risk profile, as well as reduce the expenses of the legal department?

Paralegals and Legal Assistants

  • How can the paralegal staff help you identify opportunities for efficiency improvements?
  • Can they help you quantify the amount of time spent on repetitive tasks?
  • By identifying opportunities for better processes and automation, you can help make their day-to-day work easier.

While making the case for software purchases may not be something that you do every day, the good news is that, as a member of the legal department, you are intimately familiar with the challenges associated with e-discovery. That’s half of the journey!

Our goal, as always, is to partner with corporate legal teams to help you reduce costs, manage risks, and solve problems. And part of this partnership is helping you make a compelling business case that will resonate with your stakeholders and help you gain priority and budget. So what are you waiting for?

To learn more about ZDiscovery, head to www.zapproved.com and take a product tour or sign up for a demo today.

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