Overcoming Budget Hurdles Overcoming Budget Hurdles Due to Covid-19 Litigation

E-Discovery

Overcoming Budget Hurdles Due to Covid-19 Litigation

By Mike Hamilton

Back in March — prior to the proliferation of widespread Covid-19 preventative measures — Exterro took a closer look at how in-house legal departments are planning to manage their spend over the next year. The 4th Annual Study of Effective Legal Spend Management identified a number of budgetary plans and hurdles that in-house departments are working to reconcile, which reflected their strategies and expectations for 2020.

Now three months into a global pandemic, it’s fair to say that expectations for many organizations have changed.

“I absolutely think budgets change now,” says Linda Luperchio, Director of Information Lifecycle Governance & E-Discovery at The Hanover Insurance. Luperchio expects litigation expenses to increase globally due to Covid-19 and the disruptions it is causing with employee movement — not to mention potential class-action suits. “We have a small [litigation] lull right now, but I think it’s going to hit with a vengeance,” says Luperchio. “There’s going to be worker’s comp [suits], there’s going to be all sorts of different claims that no one has ever experienced before, and there’s just no way around it, it’s going to hit e-discovery, because e-discovery fits with just about every lawsuit now.”

Survey data from the Legal Spend Management report showed that only 19 percent of in-house legal departments expected an increase in their budgets as a whole heading into 2020 — but 51 percent acknowledged that litigation ranked as the highest risk for increased legal costs, followed by compliance at 22 percent. The specter of increased litigation has, for many, become a fullblown fear.

“I don’t think it’s avoidable,” adds Luperchio. “I think we’re going to see an uptick that we couldn’t have planned for when we did the budgets because nobody knew Covid-19 was coming our way.”

Heading into 2020, in-house legal departments were, by and large, already looking to reduce risks and costs, and increase operational efficiency through technology adoption. Given the reduction in manpower that some departments are facing, technology will play a key role in the many e-discovery and regulatory compliance tasks that legal teams must deal with. And given that litigation costs are likely to increase, saving money elsewhere makes sense.

Technology adoption is just one of the ways to reduce e-discovery spend, as the survey data shows, and it creates a cascading effect that helps cut costs across the board:

• using e-discovery technology to create time and cost savings, which allows …

• … in-house teams to utilize that technology to do more work in-house, which cuts costs for …

• … third-party services, for which in-house teams are now relying on single preferred providers to complete (if the work is outsourced at all).

For years, technology adoption in legal departments has been a challenge — in part due to the learning curve involved — but that may be changing as well. According to the Association of Corporate Counsel’s Chief Legal Officer’s Survey, more than half of legal department leaders are planning to adopt a new legal technology or have done so recently.

“We have a small litigation lull right now, but I think it’s going to hit with a vengeance.”

Data from Exterro’s 2020 E-Discovery Maturity Analysis, which surveyed more than 600 businesses of all sizes across more than 20 different industries, indicates that in-house e-discovery training is improving as well — meaning that legal associates involved in the regular preservation, collection and review steps are doing their part to adopt better, more efficient processes.

Overall organizational e-discovery training maturity scores increased from 2019 to 2020, from 2.55 (out of 5) to a score of 2.73, according to the E-Discovery Maturity Analysis. It’s an improvement that may seem marginal, but continually building on process maturity year over year generally means more efficient operations and technology use.

“You need to have top-notch people on your team,” says Connie Brenton, Senior Director of Legal Operations for NetApp, about the importance of ensuring that legal associates are well trained for their positions. “Then process — you have to redesign your process — and then you can generally throw any technology over the process. If you have a lousy process, and you throw a technology over the top, you will just have a very fast lousy process.”

Given the advantages that some enterprises have over others, it’s likely to be a longer road to recovery for some in-house legal teams; but there are ways to work around tighter budgets to ensure better collaboration and teamwork.

“The need to reduce spend is acute right now,” says Brad Blickstein, principal of the Blickstein Group. Blickstein says a comprehensive legal spend strategy that spans organizational units reporting to the general GC/CLO, and that includes any outside vendors, is another way to keep day-to-day operations strong. “Such a strategic approach will be much more effective in the long term. It also may be easier than it seems to implement, if you work with firms that have bought in.”

Mike Hamilton is the Director of Marketing at Exterro. He works with legal departments to identify cost-effective solutions for e-discovery and privacy practices. He is a 2010 graduate of the University of Oregon School of Law. michael.hamilton@exterro.com