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Infrastructure and Operations

How Big Data is Blowing Up Legal Costs

E-discovery costs are going up, and in-house legal counsel needs to adjust to digital disruption to make them sustainable

Digital transformation has sparked a boom in enterprise data. Processes reinvigorated with new technology—including automated platforms, IoT devices, artificial intelligence, and more—are both fueled by and create massive volumes of data. All that new data adds enormous value to the business, but it’s also causing unintended consequences in the legal department. A new study from professional services firm BDO shows that corporate counsel is spending more than ever on e-discovery.

“A combination of too much data, too little time and heavier workloads has made following traditional approaches to e-discovery virtually impossible for the modern legal department,” George Socha, EDRM co-founder and managing director in BDO’s Forensic Technology Services practice, said in a statement about the report’s findings.

Conducted by Rabin Research Company among senior in-house counsel at leading U.S. corporations, BDO’s 2019 Inside E-Discovery & Beyond Survey showed 78% of large organizations plan to spend more on e-discovery in the next year. The top three e-discovery issues named by counsel as having the biggest impact on the business—and likely driving increased costs of discovery—were big data, dark data, and data disposal issues. Approximately 61% of those surveyed reported that big data stands as the number one issue.

Socha explained that legal teams must strike a difficult balance between the retention and disposal of data.

“Dispose of too much data and you risk losing valuable content or even spoliating evidence,” he said. “Preserve redundant, obsolete, and trivial (ROT) data, and you risk squandering resources storing and working with content unlikely ever to be of value to you, while making it much harder and expensive to discover what matters most.”

Not to mention that more data means more risk of a data breach. And the survey showed that at large organizations 57% of the experts believe that data breaches are still the number one legal risk with respect to data today.

The study found that most in-house legal experts believe the only way to keep up with digital disruption and the big data problem is to digitally transform their departments the way their colleagues in the business are doing. More than nine in 10 of those surveyed at large organizations say that they’re considering leveraging technology and/or best practices to streamline legal operations in the next year.

And in the last year, approximately 65% of large organizations have added or switched to cloud-based storage and 74% have adopted tools and technologies to improve in-house data processing, collection, and preservation capabilities. Advanced e-discovery technologies have still not reached a tipping point at large organizations, however. Just under half of large organizations are using technology-assisted review or data visualization technology to streamline e-discovery.

E-discovery is just one facet of how the in-house counsel needs to adapt to digital disruption. Last December, analysts with Gartner found that 81% of organizations do not have “digital ready” legal departments that are poised to support digital business efforts.

“Existing legal and compliance practices are incompatible with the speed at which digital business operates,” Abbott Martin, research vice president at Gartner, explained at the time. “Most attempts we have seen to remedy this don’t strike the right balance between responsiveness and appropriate risk management; few legal departments have developed a comprehensive framework for digitalization.”

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