by Drew Macaulay, managing director, Consilio

Drew Profile PictureIn recent years financial services organisations across the globe have been highly visible targets for regulatory scrutiny. The upheaval of 2008 has been followed by lengthy, highly complex investigations and huge fines as regulators probed the causes of the financial crisis. There is no sign that this scrutiny is easing. Outside the financial services industry the picture is not quite as bleak, but major industrials, pharmaceutical companies and technology giants are regularly involved in high profile litigation and investigations that involve budgets running into the millions of pounds.

A range of different costs make up the budget for a major litigation or investigation, including external legal advice, expert witness or forensic accountancy services, document review, translation and digital forensics and electronic discovery/disclosure services. The human labour costs involved in large scale document review exercises are often the largest of these cost categories, and can be very difficult to predict, leading to difficulties in managing corporate legal budgets.

The primary cost driver in a disclosure exercise is the number of documents that need to be reviewed, so a good starting point in the quest to control litigation or investigation costs is in reducing the amount of data held by the corporation that is no longer required for operational purposes. While it is true that some organisations will need to hold specific types of document for defined periods of time for regulatory or litigation purposes, there is a vast quantity of information that is retained for no reason other than that it is easier to store it than to undergo an exercise of deleting unnecessary data.

A concerted effort involving stakeholders from various company departments including Legal, Records Management and IT will be required to identify the categories of data that can be safely deleted from the corporate network and to create a policy and workflow that helps employees understand which documents should be retained and which should be deleted going forward.

There are various stages during a document collection, review and production exercise at which cost control measures can be taken, but equally where poor decisions can lead to significant additional cost. It is therefore of vital importance that those involved in the project have a clear understanding of the process at each stage. This may be achieved by the involvement of experienced project managers, either internal or externally sourced, who have the experience to identify these cost control opportunities and avoid costly errors. In projects involving multiple jurisdictions this experience is all the more vital. Dealing with data collection in multiple countries, translation of documents in multiple languages or finding solutions to the inevitable data privacy challenges can rapidly result in an escalation of cost.

At the start of the matter when considering the sources from which potentially relevant data may be preserved and collected, casting the net relatively widely can avoid the need to repeat data collection exercises at a later date.

The next stage involves processing the collected data to make it searchable. Various search criteria are then applied to the mass of documents to identify those that may be worthy of review. Taking some time at this stage to try different combinations of search terms and sample the results can yield significant reductions in the volume of documents to be reviewed. In situations where terms are agreed or stipulated by other parties the statistics obtained from this sampling exercise can be used to help negotiate changes to the terms to avoid overly inclusive search criteria and the unnecessary review of plainly irrelevant documents.

At the review stage itself there are a number of cost control options to consider. In some cases, it may be possible to split the review into “levels”, where “first level” is a basic review for relevance, privilege or the high level issues to which the document relates.

In recent years the use of technology has been proposed as an alternative to human review of every document. Variously called “predictive coding” or “technology assisted review” this process uses an iterative sampling workflow to allow a subject matter expert (usually a senior lawyer) to “teach” the system what a relevant document looks like. The system then takes this knowledge and applies it against the remaining documents to apply a percentage score for relevance. This scoring can be used to prioritise human review of the most relevant documents, or to avoid the review of documents deemed irrelevant altogether.

The continuing and rapid increase in the volumes of electronic documents generated and stored by companies means this problem is not going to go away. The only solution is to devote precious time and resources to tackling the problem at both strategic and tactical levels, using a combination of expert advice, strategic outsourcing and appropriate technology.

• Consilio is an international eDiscovery and managed review provider with extensive experience in litigation, antitrust, second requests, and internal and external investigations.