More than $60 billion spent in the US to prepare documents for discovery?

“America’s 1,000 largest corporations spend more than $60 billion, or 50 percent of their total legal operating budgets on average, to prepare documents for litigation, which is the single largest legal operating expense for most corporations. The growth of electronically stored information, which is the key driver of this expense, is rising rapidly. It’s as much as 60 percent annually according to one study. At this rate, $60 billion will become more than $500 billion dollars in five years, absent a change in the rules or the way this work is done. That’s unsustainable.” Catch your breath, grab your wallet, but bring out the calculator.

Raymond Bayley, CEO of Novus Law, offered these shockers in Met. Corp. Counsel, Vol. 17, Nov. 2009 at 47. Dubious, I asked him about their source and he wrote back:

They are “estimates based on aggregating and cross referencing data from several sources, including the 2008 Fortune 1000 list, American Lawyer analysis/description of the Am Law 200, Altman Weil surveys, several miscellaneous industry articles (e.g., Mark Chandler at Cisco purports to spend 60 basis points of revenue on legal operating costs), work of process and quality management professionals (e.g., Michael George), and our own analysis and experience. In other words, not a terribly straight forward calculation, but one that is understandable, reasonable and in the ball park.” Readers, what do you think?

Bayley adds that “Today, more than $30 billion of the $60 billion or more that is spent by America’s 1,000 largest corporations to prepare documents for litigation is wasted: more than $15 billion as a result of inefficient work processes, $9 billion because of poor quality and $6 billion due to a lack of effective knowledge management and collaboration.” I find this breakdown even harder to credit than the broad estimate first mentioned about total spend.

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