Reeling in Skyrocketing Litigation Costs

A New Era of Managing Pre-Litigation Costs

By Alan Tse

When I joined LG Electronics MobileComm U.S.A. five years ago, the practice of e-discovery was just beginning to percolate. But we could see the writing on the wall: create a comprehensive set of cost management solutions or watch litigation budgets skyrocket out of control. The entire process took more than 18 months but the pay off continues to be immense. We used to pay law firms up to $350 per hour to review documents; our cost-per-document now under $1. How did we do it?

First we don’t just manage budgets, we manage the case with an eye towards the overall costs. We put a cross-sectional team in place that included custodians, IT personnel, and representatives from other related departments as well as our sister companies. We mapped out locations of all documents and set up an email vault to protect them against deletion through our normal document management process.

Then we asked ourselves some tough but critical questions. Were we paying lawyers from major law firms to do relatively simple tasks like identifying search semantics and culling when we could be using other types of vendors? Are there any internal processes we could automate? Could we put out RFPs even when they go to only one firm? Would that encourage competitive bidding? Could we manage costs by identifying vendors who offer the most efficiency on specific tasks? Can we create a standard vendor contract to reduce nickel and diming? The answer to all these questions were yes.

But, one of the biggest cost drivers of e-discovery isn’t automated processes but the people behind them. Effective communication therefore represents vast opportunities for reducing pre-litigation costs. We all know the meet and confer stage can runaway like a freight train. We ask for everything and the opposing side follows suit. But, there’s a difference between perceived needs and entitlements. For that reason, we insist an experienced counselor be part of all meet and confers, and we choose what we ask for and what we agree to carefully.

Saving money by improving communication doesn’t stop there. As lawyers we’re trained to win. But at what cost? Reducing costs in early case assessment requires some tough decisions: indentifying how strong the case truly is, what motivations exist behind it and how internal goals will be affected. Before presenting proposals to the CEO or board, we make sure everyone is on the same page. At LG we also determine a clear understanding of the true cost of litigation considering the impact on our customers, suppliers and our reputation.

The cost of e-discovery won’t be any less astronomical next year than it is today, even with emerging technologies aimed at saving costs being announced almost daily. If you’re worried about pre-litigation costs, you’ve got two choices: replace the traditional model with a comprehensive set of solutions, or get lost on the proverbial runaway train.