What if Facts Got a Whole Lot Cheaper? (Perspective)

Editor’s Note: This post is written by a director of a global legal services firm who works with in-house legal teams to adjust process and reduce costs in litigation, investigations and other document-intensive matters. 

By Dan Currell, Director, Client Solutions at Novus Law LLC

Expensive justice often means no justice. Defendants suffer when plaintiffs leverage the high cost of litigation to extract larger settlements. Would-be plaintiffs suffer when meritorious claims are never pursued because it’s just too expensive. In both cases, an expensive legal system imposes real social costs — and the legal system is more expensive than ever before.

Why is law increasingly expensive? Part of the answer lies in the labor market for lawyers; I won’t address that here. Another part of the answer is the growing factual complexity of legal matters themselves. A contract dispute between two companies in 1980 might have involved a few hundred, or at most a few thousand, pages of material exchanged in the course of discovery. Lawyers would read that material, sort it for its evidentiary potential, and use it to form the fact base in the litigation.

The same contract dispute between two companies in 2016 is sure to involve thousands, and possibly millions, of pages and additional electronic material, exchanged in discovery. So part of the answer to why law got more expensive is that it didn’t — facts got more expensive. Since the explosion of documents in large lawsuits, fact discovery alone now typically accounts for half or more of the total legal fees.

Law firms got big on this trend — the unprecedented growth of firms in the two decades leading up to 2008 was driven by massive expansions at the bottom of the staffing pyramid. Those lawyers were focused on wrangling the millions of documents generated by their clients and reconciling increasingly complex fact sets to governing law.

Then things changed. Since 2009 the market has moved increasingly towards specialty providers and away from law firm associates to do this kind of work. Many of these firms reduce the cost of fact analysis by applying process enhancements to make better use of both people and machines. Facts are still expensive — but they are rapidly getting cheaper.

It’s about time. Across the 1990s, Westlaw and LexisNexis digitized the law itself, expanded search and sorting functionality, and put precedents in the palm of every lawyer’s hand. Disruptive providers like Fastcase took these developments and made them so affordable that access to written law, cases and codes, once expensive, is now nearly free.

But, the facts that underpin legal matters are still cumbersome. While they are usually digital, facts are still not indexed, easily stored and retrieved, nor readily available to a litigation team in the same ways as case law. Sifting the fact haystack to find the needle is very slow, and time is money — as evidenced by the billable hour. This is why facts are still so costly.

It doesn’t have to be this way. All facts — including outside the legal industry — used to be expensive — until Google, Wikipedia and others wiped out nearly all the consumer cost of acquiring many facts. What does it cost now to learn who won the 1956 World Series? Or to retrieve the precise specifications and part number for a broken part in your dishwasher? To determine the market price of your house? Or find out how many kilometers of road lie between Chicago and Detroit? A great many facts are now nearly free.

The facts in a lawsuit may never be free, but they can certainly be a lot cheaper than they are now. Our work and data analysis at Novus Law suggest that the application of good process and technology can reduce the cost of facts by at least 50 percent even today, and further enhancements to process and technology would take those costs down even more.

So — what if facts become really cheap? It will save clients money, and not only that. It will change litigation strategy by changing the incentives and behavior of the parties. If facts get really cheap, here are three thoughts on what we might expect to see:

First, cheap facts would remove the “cost anvil” that plaintiffs have used for the last three decades to pound out their cases against defendants in document-intensive matters. When facts are expensive, defendants have an incentive to settle even meritless cases. If facts are cheaper, then defendants will be less likely to settle such matters. This in turn will change the plaintiff calculus, making them less likely to bring questionable lawsuits.

Second, when something gets cheaper — in this case, litigation — people will normally consume more of it. We should expect to see more lawsuits initiated where the claims do have merit because the cost of justice is lower. Similarly, it could be that judges will regard discovery as decreasingly burdensome and therefore allow more of it.

A third and final thought: Cheap facts might well change how we communicate. Much of the fact base in a lawsuit these days is electronic communication — specifically, email. While general counsel have been talking up the “New York Times” rule for years — i.e. Don’t write anything in an email that you don’t want to see on the front page — it hasn’t really changed the behavior of individuals. Employees continue to pump out more email every year, and they keep writing down the darnedest things. This is at least in part because most emails are locked in a very big haystack of data, and far from being on the front page of a newspaper, they are never seen by anyone because of the prohibitive cost of retrieval.

What if by 2020 it becomes as easy to find out what a CIO said in an email as it is now to find out who won the 1956 World Series? At that point, the CIO’s attitude towards email would probably change.

It has been standard practice for many years that corporate directors do not preserve their handwritten meeting notes because they are so likely to end up in litigation. If it becomes as easy to retrieve, order and make sense of millions of emails as it is to find and read a director’s meeting notes, we might finally see a shift away from email. Perhaps Snapchat, the disappearing pictures app, can build a corporate platform?

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