Reports that Microsoft has signed a letter of intent to acquire Equivio, a small provider of search and analytics software for use in litigation, for $200 million may be the latest indicator that technology is poised to significantly change the way that companies deal with what has become the most costly, and an increasingly problematic, aspect of litigation—the review and production of documents.
Our flooded email inboxes, the increasing popularity of text messaging, and the proliferation of mobile devices are testaments to the exponential increase in digital communications and content that we’ve all experienced first-hand. Not surprisingly, this dramatic growth in document volumes often impacts litigation by substantially increasing costs and risk.
Studies of large companies’ litigation expenditures, including a 2012 RAND report entitled Where the Money Goes: Understanding Litigant Expenditures for Producing Electronic Discovery, have shown that, on average, an organization can spend more than 70% of its entire legal budget on litigation and regulatory actions, the discovery phase can represent more than 50% of total litigation costs, and more than 70% of those can consist of the costs of reviewing documents. It stands to reason, therefore, that controlling review costs can have a big impact on overall legal expenditures.
There’s been an evolution over the past three decades in how documents are searched and reviewed for litigation. Before the societal shift away from paper documents to electronically stored information, it was common for junior lawyers to gather in conference rooms armed with post-it notes to review boxes of documents pulled from company file cabinets.
Of course, that was before the introduction of PCs, emails and texts, which increased document volumes significantly. Soon, simple electronic searches using “key words” and connectors became the norm, with junior lawyers reviewing the documents that the searches uncovered. The same basic search methodology remains the norm today. But ever-increasing volumes have led to changes in who reviews the documents.
Law firms initially retained lower-cost “contract” lawyers to review documents. Then, further increases in document volumes gave rise to outsourcing to “managed review” companies able to furnish and supervise large numbers of low-cost lawyers for review. Some particularly large lawsuits and investigations can involve hundreds of such reviewers.
But the traditional methodology for searching and reviewing documents is increasingly straining to handle what were previously unthinkable numbers of documents. As anyone involved in document review has seen, even the best key word searches tend to yield large numbers of irrelevant documents in addition to relevant documents.
It takes a lot of time and money to review those irrelevant documents, and courts are becoming less tolerant of delays.
Enter Equivio and other providers of search and review technologies for use in litigation. Using data analytics and statistical methodologies, such as predictive coding, they promise to make the document review process much more efficient. Predictive coding extrapolates to the entire document population lawyers’ relevance decisions on a small subset. It can be more effective than using key word searches to eliminate irrelevant documents, leaving fewer documents requiring review.
Predictive coding has been available for use in litigation for several years. For much of that time, it did not appear to be gaining much adoption. There are now indications of increased use, if word of mouth of those regularly involved in e-discovery is to be believed, buttressed by a recent uptick in judicial opinions about the use of predictive coding. Time will tell whether predictive coding gains significant traction, but the pressures created by increased document volumes appear to make it more likely than not. Microsoft certainly appears to think so.
Gareth Evans is a partner at Gibson Dunn. He specializes in complex commercial litigation and also assists clients with electronic discovery, information governance, and litigation preparedness. Contact: GEvans@gibsondunn.com.