June 17, 2011

The ROI of eDiscovery? Why not just calculate the ROI of a good night's sleep

I have seen so many articles that attempt to sell the purchase of large eDiscovery tools with a Return On Investment analysis. The resulting magic formula always shows just how much money a customer can save in an average legal matter. And yet the ROI cannot be very compelling. With the exception of one General Counsel of an international enterprise software provider (kudos Kim), I have never been hired by a company that had not already been “tagged” in a litigation matter for big bucks. And, by tagged, I mean that they were sanctioned for discovery failures or, they realized they could not collect their data to mount a defense and had to settle the case. So, my argument is, it may be more effective and productive to calculate the ROI of a good night's sleep. Let me explain.

The ROI for eDiscovery all have some formula for calculating the average number of gigabytes of data that is collected and reviewed in the average case. Then they chart them against costs of in-house legal, outside counsel, and/or third party processors. They may also scare you with the potential for million dollar discovery sanctions. The ROI analysis for Records and Information Management are frequently less exact. These studies attmept to examine and quantify the average cost of the time that somebody spends searching for information before and after RIM enhancements. I sincerely believe these studies are not wrong. However, they may be too abstract and nebulous to be compelling.

Similarly, the ROI analysis of sleep has shortcomings. What is an extra hour of good sleep worth to you? Most studies show sleep is valuable for clarity of thinking, health, and productivity. But, do we know how much sleep is optimal for everybody everyday? The same unknowns exist for eDiscovery and litigation matters. What costs can you really save? Is it the same for big cases and small cases? And for routine cases or exceptions? If you are a big company or a small-sized one? Lots of litigation or almost none? We don't really understand in a compelling fashion because there are too many unknown variables. And yet, there is real value to knowing that no matter what type of case comes your way, you are prepared to respond quickly and effectively. Knowing that the tools and policies you have employed provide your company with a more organized and productive way to use your computer data, and find it when you need it for eDiscovery, is extremely valuable. And this is true regardless of whether an actual ROI can be formulated.

I recently was complimented by a client who had to test their eDiscovery process with a real matter. They were very happy because they had tools, training and checklists to help prepare them and guide them through the process. The result was that a stressful situation was less stressful. What is the ROI on that? Ultimately, it may just mean your General Counsel, CEO, CFO, CTO, and employees sleep better at night...

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