Sophie Ross of FTI wrote recently that “many analysts estimate that the cost of legal review comprises about 70 to 80 percent of total e-discovery costs.” This is from Met. Corp. Counsel, Dec. 2011 at 15. email@example.com Earlier, she states that Fulbright & Jaworski found recently that “on average a corporation spends $3 million per legal case.” The quote about review costs follows, implying that about 75 percent of the average $3 million case goes to document review, or something over $2 million per case. Clearly, the implied and extrapolated conclusion is unsupportable.
The Eighth Annual Litigation Trends Survey Report of F&J (at 21) found that 47 percent of the 275 U.S. companies it surveyed spent less than $1 million on litigation annually. After all, as seen on page 5 of the report, one third of the respondents had only 1-5 lawsuits in 2010 and another quarter had 6 to 20. Only about one-half of the companies had revenues greater than $1 billion. Thus, at typical figures of a half percent of revenue going to legal expenses, the other half of the survey population would have been unlikely to spend in total more than $5-6 million, of which two-thirds or so went to external counsel and vendors. So half the survey population came nowhere near spending $3 million per lawsuit.
Moreover, the most common causes of litigation pending against U.S. companies (at page 11), were disputes over contracts (about 44%), labor and employment (46%), and personal injury (23%). Few suits of those kinds incur costs in the millions of dollars.