National e-Discovery Counsel and the 98% Rule

U.S. from SpaceThe faculty of judges, in-house counsel and attorneys at the BNA conference yesterday observed a new trend in legal practice, national e-discovery counsel.  Here one attorney or law firm serves as a corporation’s national counsel to handle or supervise the electronic discovery aspects of all of its cases around the country.  The corporation’s various local counsel handle all other aspects of the case.  The faculty said they are seeing this new model now more and more.  All agreed that it makes good sense, especially in view of the tremendous time and effort it takes for an attorney to learn the complexities of today’s typical IT environment.  It is far too expensive to try to educate all of a corporation’s various outside counsel.  Besides, most of them would not be up to the task.  The panelists noted that there are not that many lawyers with an IT background capable of learning these complex systems.  Most of the lawyers like that have already formed their own speciality IT firms, or have been hired by e-discovery vendors, which is now a Two Billion Dollar a year industry.

The panelists all agreed that there appears to be a sea shift going on in the litigation world, where the importance of discovery is coming to be recognized.  Merrill Lynch’s Jonathan Eisenberg noted that, for all practical purposes, discovery today means electronic discovery.  This is consistent with his experience, and is also consistent with recent studies of business practices indicating that 98% of all records today are ESI. 

The 98% statistic comes up again in the world of federal litigation.  The panel of judges noted that only 2% of their cases ever go to trial.  An astounding 98% of all cases in federal court settle.  The settlements occur after sufficient discovery has been conducted to allow the parties to assess their relative positions, and evaluate the strengths and weaknesses of their case. Therefore, most of the attorney fees and costs of litigation today are for discovery to evaluate and narrow the issues, and only a small amount to actually try the issues.  Litigators are, like it or not, not really trial lawyers at all; they are discovery lawyers, negotiators and mediators.  This means that the task of discovery, which used to be assigned to new associates, and was considered unimportant, is in reality the key task of litigation.  It is also the task that consumes the bulk of the attorney fees and costs.  

Clients are starting to realize this and to understand the importance of attorneys who specialize in and understand electronic discovery. Merrill Lynch and Halliburton are two good examples, but there are several others, including Verizon, WalMart and Pfizer.  Since 98% of the evidence today is in electronic form, and 98% of all cases settle, corporations need a national e-counsel to evaluate settlement on a cost efficient basis.  They are in the best position to address the client’s need for economic resolution of disputes. 

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