On average, e-discovery costs $1,332 per gigabyte to collect, $2,793 per gigabyte to process, and $22,480 per gigabyte to review, according to a 2012 study by the Rand Institute for Civil Justice. Given the increasingly digital nature of business, those costs add up fast in litigation—so quickly that they can outweigh the merits of a case, forcing parties with solid defenses to settle. These implications were apparent to Norman Jetmundsen, vice president and associate GC of Vulcan Materials, so he decided to do something about it.
In the span of legal history, e-discovery is a fairly recent phenomenon. Fifteen to 20 years ago, you wouldn’t have heard the term. It came on the scene as advances in computer technology exploded, and while the cost to review and produce electronic documents has skyrocketed, many of its stewards (particularly, companies with ever-increasing caches of data) have been slower to respond.
Magnetic tape was first used to record computer data in the 1950s. When Vulcan made its initial e-mail record-keeping assessment around 2007, it discovered thousands of backup tapes across the company, which were being kept as an additional and unnecessary filing system.
Jetmundsen had heard horror stories of companies mandated by courts to maintain such tapes, even when the technology was so outdated that companies no longer had the ability to utilize them. Originally intended as a disaster recovery solution, the tapes had become a liability.
With no formal e-mail-retention policy, the company was also vulnerable in litigation because of the potentially huge expense to retrieve, review, and produce a voluminous amount of e-mails. The costliest process in e-discovery is document review. Even at average contract attorney staffing rates of $42 per hour, review of 3.9 million documents (the average number of pages in an e-discovery review database according to Kroll Ontrack) could cost upward of $2 million.
In addition, there were concerns about having an adequate litigation-hold process in place to avoid spoliation issues. “If a lawsuit came in,” says Jetmundsen, “we’d try to find the employees involved and send them an e-mail, but we had no way to track the hold.”
Further complicating the matter, files and e-mails saved by employees in business records folders in Microsoft Outlook were being saved as locally stored personal storage table files or PSTs. “We had hundreds of employees with their own PST files, which would require us to go to each individual computer in order to review e-mails,” says Jetmundsen.
The inefficiency of having to review the e-mails locally was exacerbated by the fact that Vulcan’s e-mail data set was difficult to search, which created litigation discovery issues. Because of the way the system was set up, after the legal department retrieved all the information, it had to review the data manually in order to find relevant material, as well as to segregate any privileged communications.
Jetmundsen went to Vulcan leadership with a hypothetical situation: Suppose the company got a broad document request requiring companywide e-discovery retrieval, review, and production. “The cost could be astronomical,” said Jetmundsen. Senior management’s reply: “Fix it.”
Jetmundsen admits that when he set out on this project, e-discovery was all new to him, so his first move to rein in e-discovery was to create a task force. He assembled a small in-house group consisting of his paralegal, Trudy Woods, and IT employees Robin Nix and Brad Graham. Before coming to Vulcan, Jetmundsen had been a partner for Bradley Arant Rose & White (now Bradley Arant Boult Cummings). The full-service Birmingham law firm provided him outside counsel, first in Paul Sykes and later in e-discovery expert, David Deusner, who brought a critical combination of legal expertise and technical knowledge—a valuable asset for collaborating with Nix, Vulcan’s director of IT. “Because our outside counsel could speak IT’s language, they could translate the legal needs to our IT people,” says Jetmundsen. “If you don’t have that ability in-house, I think you should consider bringing in someone with that expertise. It’s critical to dealing with e-discovery.”
The team quickly began updating Vulcan’s systems and procedures. Their first policy was an absolute: no more PST files. IT got to work collecting the existing PSTs, moving the data to the mail servers, and then putting in place the appropriate controls so that employees could no longer create them. Next, the team agreed that e-mail needed a formal retention policy within the greater document retention policy. It was decided that all e-mails would be deleted after one year unless they were put into a business records folder (or subject to a legal preservation), which meant the e-mail was designated as a business record of the company. Jetmundsen sent a memo to all of Vulcan’s employees informing them of the policy, and IT stepped up as auditor to ensure compliance. Later, the e-mail retention period was shortened. Though the e-mail policy could potentially remove material relevant to future litigation, Jetmundsen says the pros of the deletion policy outweigh the cons. “The excessive cost of reviewing those e-mails, had we kept them, plus the chance that they might hurt us more than help us, was enough for us to make that call,” he says.
The company converted its several computer systems over to one central server in the interim before its final leap to cloud-based storage. The data that makes it there is cleaner than ever, thanks to a robust antispam capability built in by the IT team. In addition, all backup tapes were gradually eliminated, and the company went to a true disaster-recovery-only system, which did not require the use and retention of backup tapes.
Finally, Vulcan implemented an automated litigation-hold system with vendor Jordan Lawrence. Now, when the legal department needs to conduct document preservation and retrieval, a targeted e-mail is sent to the employees who may have pertinent files, and they must respond “yes” or “no” if they have relevant documents. Then the legal department can pull and hold e-mails from “yes” respondents without employees having to do anything.
While e-mails continue to constitute the bulk of data preserved by Vulcan, working with Deusner, the team has added further refinements to its legal-hold process to ensure a holistic approach to data preservation, not just e-mail.
The next step is to engage e-discovery vendor Kroll Ontrack to allow Vulcan to gather, store, and utilize advanced searches for relevant e-mails, which will allow for an even more efficient and cost-effective approach to e-discovery.
Although Jetmundsen has not yet quantified the savings, other outside attorneys he’s spoken to say Vulcan is ahead of the curve while many other companies continue to struggle with a solution to e-discovery. The procedures he and the task force have implemented have cut costs by bringing back in-house parts of the process that once had to be outsourced to private firms.
Looking back on litigation the company faced four to five years ago, he says the difference in cost of data production is significant. “We have a documented, consistent system that provides us the ability to describe how we preserve and produce information in court, which is comforting,” says Jetmundsen. “I don’t wake up at night nearly as much as I used to worrying about e-discovery.”