A Revolution in E-Discovery

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KPMG FORENSIC

A Revolution in e-Discovery
The Persuasive Economics of the Document Analytic Approach

A DV I S O RY

“The cost of e-discovery — probably the largest single cost in litigation today — poses an economic threat to any company facing litigation. In cases with large volumes of potentially relevant documents, document analytics can be an effective and strategic tool for managing costs and meeting electronic discovery challenges. ”
— Stephanie Mendelsohn, Partner, Reed Smith Regulatory Litigation Group, e-Discovery & Records Management Team, and The Sedona Conference Working Group on Electronic Document Retention and Production

© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

Foreword
The use of electronic media in business has led to a massive explosion of digital documents, especially e-mail. E-discovery—discovery of digital documents—by traditional means is grossly unsuited to handling the growing volume. In this case, “traditional” refers to using either paper or “e-paper. Those organizations that have a traditional ” mindset toward e-discovery are seeing their costs soar.

However, law firms now have the technological capability to easily manage e-discovery by using sophisticated “document analytics” in a purely electronic environment, and more effectively and efficiently than paper- or e-paper-based approaches allow. Because of this breakthrough, law firms have the opportunity to provide more competitive, costefficient services to their clients, and corporate counsel are enabled to drastically reduce litigation costs for their organizations. Unfortunately, the persuasive economics driving this new method remains widely unknown.

This paper provides an apples-to-apples comparison of traditional and nontraditional e-discovery approaches to help law firms and corporate counsel evaluate their options. Using our KPMG ForensicSM engagement experience with dozens of companies, we break down each approach into process components and analyze these in terms of
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

cost, time, and effectiveness. Based on the assumptions we have used for this study (e.g., document review rates, attorney hourly rates, photocopy rates), we calculate that the document analytic approach can be nearly 10 times more cost-effective than traditional approaches. We offer our template as an analytical tool to help the reader arrive at an independent conclusion based on his or her own cost assumptions.

CONTENTS Background e-Discovery Approaches Hard Copy Approach “Imaged” Hard Copy Approach e-Paper Approach Document Analytic Approach Comparing the Approaches Cost and Time Comparisons Transition to the Document Analytic Approach Document Analytic Success Story Conclusion

1 2
2 3 5 5 6

7

12 13 14
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

Background
We’re concerned with e-discovery in the first place because as much as 92 percent of information produced each year is stored in digital format, according to a 2003 study 1 by the University of California, Berkeley. Businesses are far more prolific in generating digital data than paper documents. Any e-discovery approach needs to deal with a large—and rising—volume of unstructured digital data, particularly in e-mail format. Additionally, this study concluded that fewer than 10 billion e-mails were sent per day worldwide in the year 2000. Researchers expect this number to increase to 61 billion by 2006, with spam accounting for as much as one third. One reason for the growing volume of stored e-mail is the precipitous decline in the cost of digital storage, thanks to commoditization and lower-priced, high capacity drives making it to market. For example, compare the $193 price per megabyte of storage in 1980 with today’s price of less than $0.01 per megabyte. Volume isn’t the only challenge for e-discovery. According to Law Technology News (January 2004), as much as 70 percent of e-mails and corporate documents are duplicates. Extraneous and repetitive data escalates costs at every stage of any e-discovery process. An effective e-discovery approach must be able to separate the wheat from the chaff as early as possible to avoid incurring exorbitant costs. Since the essence of discovery is sharing of documents, the issues concerning volume and redundancy, as well as file size (gigabytes) and ease of transmission, become particularly acute when companies face multiproduction matters or multijurisdictional litigation, both of which require coordinating discovery among widely dispersed legal support teams. Law firms need to compare the cost and staffing requirements associated with printing, packing, and trucking documents to Web-based file sharing, for example. All e-discovery approaches have two major types of components: (1) document review implement “production. Since document review is performed by an attorney or paralegal ” and is highly labor intensive, this aspect of e-discovery is extremely costly. Mechanical (nonreview) processes are less so, although highly inefficient methods can drive up costs. Any approach that emphasizes mechanical processes (the more computerized the better) and contains billable hours by attorneys will tend to prevail.
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

and (2) various mechanical processes needed to prepare documents for review and to

1

www.sims.berkeley.edu/research/projects/how-much-info-2003/

A Revolution in e-Discovery 1

e-Discovery Approaches
We present four different approaches to handling one hypothetical set of electronic documents in a typical discovery matter. In the first approach, we apply a traditional hard copy methodology (digital to print), which results in tremendous effort and costs. In the second approach, we force a hard copy methodology (digital to print to digital) onto the electronic review environment. In the third approach, we present what we refer to as a “first generation” e-discovery process. While the software and data standards differ somewhat from the paper discovery environment (digital to TIFF PDF or HTML), the approach is essentially the same. , , Finally, we present the “document analytic” approach, which keeps documents native2 to limit conversion costs and applies concept clustering and mapping technology to group related documents and expedite the review. The first phase in all e-discovery approaches is preserving the electronic data. We will refer to the resulting data file as the “corpus. How quickly each e-discovery approach can ” reduce the size of the corpus has everything to do with its ultimate effectiveness. The following graphics indicate the phases for each approach—preserve, pare (in some cases), process, produce—as well as the sequential steps within each phase. Each step represents a line item on the e-discovery bill to corporate counsel. The height of each “arrow” roughly corresponds to the phased reduction of the size of the corpus, which directly correlates to the dollar amount of the bill. Hard Copy Approach In the hard copy approach, the electronic evidence is first preserved and a copy is made available to the review team. This working copy is then printed to paper. Next, the pages are serially “Bates” numbered for reference and several working photocopies are made. form their reviews—on a document-by-document or page-by-page basis. Those documents deemed responsive to the case are then flagged (via a coding sheet, document flag notes, or color indicator markings), which assigns metadata and intelligence to the document. Finally, the responsive set is photocopied for production.
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

Only after the review sets have been Bates numbered and copied can the attorneys per-

PRESERVE

PROCESS

PRODUCE

Preserve

Print

Bates Numbering

Copy

Document Review & Coding

Copy Responsive

Deliver

The height of each “arrow” roughly corresponds to the phased reduction of the size of the corpus.

2

For definitions of technical terms, please see the e-Discovery Glossary on page 4.

2 A Revolution in e-Discovery

Printing everything to hard copy casts a wide net over the population of documents and assures that the corpus excludes nothing in the early phase that could be relevant to the case. However, by maximizing the size of the corpus, this approach increases the risk of omitting important documents during review due to paper mishandling or simple error. Attorneys and paralegals often use page decisions or document decisions per hour metrics to measure the progress of their matters and the review team’s efficiency. These rates are at their lowest in the hard copy approach relative to other approaches.3 “Imaged” Hard Copy Approach Similar to the hard copy approach, the “imaged” hard copy approach preserves the electronic evidence and proceeds to print the data to paper. From the working hard copy, the documents are unitized to reflect document breaks and scanned to image. An OCR engine is run on the scanned images to enable full text keyword searches, and the documents are coded manually to capture specific, predefined metadata (author, date, cc, bcc, etc.). Once imaged, the documents are loaded to a repository on a discovery management software platform. Attorneys can then perform the document review, collaborate on the documents, and manage production sets.

PRESERVE

PROCESS

PRODUCE

Preserve

Print

Prep & Scan

OCR

Code

Load to Repository

Document Review

Deliver

The height of each “arrow” roughly corresponds to the phased reduction of the size of the corpus.
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

Counterintuitive as this approach may seem—data to paper and then back to data—it is performed by a considerable number of law firms and e-discovery organizations.

3

Many professionals are under the false impression that they can review pages faster by flipping them in the traditional way than by using a computer and a mouse (see e-paper and document analytic approaches below). In fact, the physical activity of flipping pages does not equate to speed or effectiveness. That’s because the paper review approach does not efficiently and accurately capture useful information about the documents and make that information quickly available to the discovery team.

A Revolution in e-Discovery 3

e-Discovery Glossary

Bates number Bates numbering goes back to the 1890s, when Bates Manufacturing Company in New York invested in an automatic handheld numbering machine. “Bates Stamping” is the process of placing sequential numbers on a page. corpus The complete data file(s) subject to e-discovery. The size of the corpus is reduced through the various phases of e-discovery. custodian An individual whose e-mail and data are subject to review. Custodians are also potential witnesses. dedupe Short for deduplicate. This is the process of suppressing exact binary duplicates for purposes of review.

pare Usually the second phase of e-discovery. Eliminate nonresponsive, duplicative, and irrelevant data by applying such criteria as date, custodian, file type, key words, and native file review technologies, such as document analytics. PDF Portable document format. A file format developed by Adobe Systems that makes it possible to send formatted documents and have them appear on the recipient’s monitor and printer as they were intended. preserve The first phase of e-discovery. Creating a duplicate of potentially relevant and responsive data to prevent loss and establish a full “chain of custody. ” process Usually the third phase of e-discovery.

document analytics For purposes of an investigation or litigation, KPMG defines document analytics as the emerging practice of applying algorithms and technology to identify relationships and relevance of documents within a group. e-paper Short for electronic paper as viewed in a static, rastered image, such as a TIFF or PDF file format. metadata Literally, data about data. Metadata describes how, when, and by whom a particular set of data was collected, and how the data is formatted. In the legal context, metadata contains document creation and/or modified date, author, file paths, and similar information. native file Refers to a file in the original or default file format of a specific software application. OCR Optical character recognition. The branch of computer science that involves reading text from paper and translating the images into a form that the computer can manipulate.

Mechanically or electronically prepare the corpus for production, often by converting documents to TIFF or PDF file formats. produce, production Usually the fourth phase of e-discovery. Includes reviewing documents for privilege, redacting privileged and/or confidential information, assigning production numbers, and transferring documents to appropriate media for delivery to opposing parties. This is often performed by using discovery management software. raster To print an image to a static, bitmap file, such as a TIFF . responsive Relevant to the matter that is the subject of discovery or e-discovery. TIFF Tagged image file format. One of the most widely supported file formats for storing bitmapped images on personal computers. unitize To separate or classify into units, such as “documents. ”
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

Note: Some definitions sourced from merriamwebster.com and webopedia.com.

4 A Revolution in e-Discovery

e-Paper Approach The e-paper approach is used by most of today’s service providers. Upon preservation, data is kept in its native electronic format where duplicates are suppressed and data is culled by keywords and metadata, such as date ranges, file types, and so on. The resulting dataset is rastered into static TIFF PDF or HTML images, which are then loaded along , , with their associated metadata to an online discovery management software platform. Attorneys can then perform the document review, collaborate on the documents, and manage production sets.

PRESERVE

PA R E

PROCESS

PRODUCE

Preserve

Dedupe & Cull

Extract & Raster

Load to Repository

Document Review

Deliver

The height of each “arrow” roughly corresponds to the phased reduction of the size of the corpus.

Document Analytic Approach Given the challenges and costs of dealing with today’s large discovery matters, as well as the inherent limitations and risks of keyword searching, companies and service providers are beginning to establish more sophisticated criteria in their initial culling and rastering of data. Hence, the emergence of document analytics.

PRESERVE

PA R E

PROCESS

PRODUCE

Preserve

Dedupe & Cull

Native Review

Extract & Raster

Load to Document Repository Preparation

Deliver

The height of each “arrow” roughly corresponds to the phased reduction of the size of the corpus.

For purposes of an investigation or litigation, KPMG defines document analytics as the emerging practice of applying algorithms and technology to identify relationships and relevance of documents within a group. Using document analytics, “like” documents are clustered based on the co-occurrence of their respective noun or noun phrases in a native review environment. For example, documents related to accounting will likely contain words such as income statement, balance sheet, cash flow, or reconciliation, whereas documents related to personal e-mail may include nouns such as football game, dinner plan, or spouse’s name. Accordingly, the technology is able to distinguish between the two categories of documents and cluster them separately.
A Revolution in e-Discovery 5

© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

Document analytics takes e-discovery automation beyond simple deduping and culling. It also assists in the document review by enabling the attorney or paralegal to digitally highlight and explore clusters and complete the review function many times more quickly than earlier approaches (see example of screen at left). After this native review, the responsive set of documents—much smaller than in the e-paper approach—is rastered and loaded to a discovery management platform where further redaction and quality control take place. Comparing the Approaches The hard copy approach suffers by (1) capturing documents with obsolete processes and (2) casting the widest possible net. With this approach, no paring occurs prior to review, as indicated in the table below. The same is true of the imaged hard copy approach. However, the main advantage here is that review can be done with a computer and Boolean and keyword searches rather than with stacks of paper documents. The e-paper approach provides the first significant improvement in the e-discovery process by removing duplicates and culling by keywords and metadata early on, thereby drastically reducing volume and the cost and time required for subsequent steps. However, the e-paper approach, like the hard copy approach, is still unable to put language and other data into any type of context from one document to the next. Finally, the analytic approach revolutionizes e-discovery by categorizing and relationally sorting documents according to content, thereby facilitating drastic time-savings in document review.
C O M PA R I S O N O F A P P R O A C H E S
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

HARD COPY

IMAGED HARD COPY

E-PAPER

DOCUMENT ANALYTIC

Preserve Pare

Preserve

Preserve

Preserve Dedupe and cull

Preserve Dedupe and cull Attorney native document review Extract and raster Repository load Document prep

Process

Print Bates number Copy

Print Prep and scan OCR Code Repository load

Extract and raster Repository load

Produce

Attorney document review and coding Photocopy responsive documents Deliver

Attorney document review Deliver

Attorney document review Deliver

TIFF review Deliver

6 A Revolution in e-Discovery

Cost and Time Comparisons
A Hypothetical Case Applying the four approaches to a hypothetical case provides an apples-to-apples cost comparison. We use a scenario of a small to midsized e-discovery case that requires a production to a government agency or an adversary in a litigation context. The scope of the case is as follows: • 15 custodians = 15 hard drives • Assume an average of 2 gigabytes (GB) of data per custodian (1 GB = 1.024 billion bytes) • Total estimated data size = 30 GB • Assume 50,000 pages per GB (if printed out or imaged) • Total page estimate = 1.5 million pages • Assuming 2,000 pages per box if printed, total boxes = 750 boxes Cost Calculations Using KPMG Forensic Pricing Assumptions The following tables provide cost calculations for each approach using “standard” rates. The reader may wish to substitute different rates. Again, we view each approach in terms of activities that are performed on the corpus: preserve, pare, process, and produce. Note that the first two (traditional) approaches skip the “paring” phase.

A Revolution in e-Discovery 7

© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

HARD COPY APPROACH

QUANTITY

RATE

COST ($)

Preserve Pare Process Print: 30 GBs of data x 50,000 pages/GB = Bates number Copy: create two sets (client copy and law firm working copy) = Produce Document review and issue coding: 1.5 million pages @ 100 page decisions per hour Photocopy responsive documents: assume 10% of paper is responsive x 1.5 million pages = Total

15 hard drives NA 1.5 million pages 1.5 million pages 3 million pages

$800 ea NA $0.06 ea $0.02 ea $0.06 ea

12,000 NA 90,000 30,000 180,000

15,000 hours

$200/hr

3,000,000*

150,000 pages

$0.06 ea

9,000 $3,321,000

*This cost does not reflect facilities and support for managing 750 boxes of paper.

“I M A G E D” H A R D C O P Y A P P R O A C H

QUANTITY

RATE

COST ($)

Preserve Pare Process Print: 30 GBs of data x 50,000 page/GB = Prepare and scan: prepare and unitize the pages by document, then scan OCR scan Objective coding: 1.5 million pages @ 4 pages per document = Repository load: load 1.5 million TIFF images (approx. 88 GBs) = Produce* Document review: 1.5 million pages @ 200 page decisions per hour Delivery: assume 10% of pages are responsive x 1.5 million pages = Total

15 hard drives NA 1.5 million pages 1.5 million pages 1.5 million pages 375,000 docs 6 months hosting

$800 ea NA $0.06 ea $0.18 ea $0.06 ea $1.50 ea $6,500/mo

12,000 NA 90,000 270,000 90,000 562,500 39,000
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

,500 hours 7 150,000 pages

$200/hr $0.04 ea

1,500,000 6,000 $2,569,500

*Given keyword search capabilities (via OCR) and bibliographic search capabilities (via objective coding), we assume the review team can review 200 pages per hour versus hard copy at 100 pages per hour.

8 A Revolution in e-Discovery

E - PA P E R A P P R O A C H

QUANTITY

RATE

COST ($)

Preserve Pare Dedupe & cull 1.5 million pages Typically billed with extract & raster in the Process phase, not as a separate item
1

15 hard drives

$800 ea

12,000

Process Extract & raster: assume 50% of the 1.5 million pages are suppressed via deduping, keyword, and other metadata filtering Repository load: 750,000 TIFF or PDF images (approximately 44 GBs when rastered) Produce Review: 750,000 pages @ 200 page decisions per hour =
2

750,000 pages

$0.15 ea

112,500

6 months

$3,500/mo

21,000

3,750 hours 150,000 pages

$200/hr $0.04 ea

750,000 6,000 $901,500

Deliver: assume 20% of e-paper is responsive (net of duplicates) x 750,000 = Total
1 2

Paring here includes keyword searching and deduping, but does not include native file review as in document analytics. Given keyword search capabilities (via OCR) and bibliographic search capabilities (via objective coding), we assume the review team can review 200 pages per hour versus hard copy at 100 pages per hour.

D O C U M E N T A N A LY T I C A P P R O A C H

QUANTITY

RATE

COST ($)

Preserve Pare Original GB: dedupe and keyword searching Load data for native review Native file review for responsiveness: 15 GBs x 50,000 pages/GB = 750,000 pages 750,000 pages @ 1,000 pages/hour =

15 hard drives 30 gigabytes 15 gigabytes

$800 ea $1,000/GB $3,500/GB

12,000 30,720 53,760
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

750 hours

$200/hr

150,000

Process Extract & raster: assume 20% of data reviewed is deemed responsive after native review 20% of 15 GBs = 3 GBs x 50,000 pages/GB = 150,000 pages Repository Load: 150,000 TIFF images Produce TIFF review for privilege, redaction, and production: 150,000 pages @ 400 page decisions per hour = Deliver Total 6 months

$0.15 ea $1,000/mo

22,500 6,000

375 hours 150,000 pages

$200/hr $0.04 ea

75,000 6,000 $355,980

A Revolution in e-Discovery 9

Nonreview and Review Cost Comparison Review costs represent the largest single “nut” of the total costs in all approaches. The hard copy approach uses rudimentary processes, which necessitate extensive review hours. The “imaged” hard copy approach halves the review cost but triples nonreview costs.

NONREVIEW VERSUS REVIEW COSTS

APPROACH

NONREVIEW

REVIEW

PERCENTAGE REVIEW

Hard copy “Imaged” hard copy e-Paper Document analytic

$ 321,000 1,069,500 151,500 130,980

$3,000,000 1,500,000 750,000 225,000

90% 58% 83% 63%

The e-paper approach substantially reduces nonreview costs by using a digital environment to perform deduping and culling tasks. The major breakthrough occurs with the document analytic approach, which drastically reduces review time as we have noted above. Nonreview and Review Time Comparison The corpus size and review speed contribute directly to the time required for completing the e-discovery process. Differences in time required are apparent even between the e-paper approach and document analytics, as shown in the graphs on page 11. Although the e-paper approach includes a deduping function, it takes longer at every stage to reduce the corpus.
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

10 A Revolution in e-Discovery

E-PAPER APPROACH

CORPUS SIZE

PRESERVE

TIME & EXPENSE

DOCUMENT ANALYTIC APPROACH

PARE

PROCESS

CORPUS SIZE

PROCESS

PRESERVE

PARE

PRODUCE

PRODUCE

TIME & EXPENSE SAVINGS

TIME & EXPENSE

Review Analysis Review costs have a significant impact on total e-discovery costs because of the high the factors that contribute to review costs, namely page quantities (the corpus) and review speed.
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

hourly rate of attorneys ($200/hour in the sample). It is therefore useful to isolate

REVIEW TIME = CORPUS X REVIEW SPEED

APPROACH

PAGES IN CORPUS

REVIEW SPEED

Hard copy “Imaged” hard copy e-Paper Document analytic

1.5 million 1.5 million 750,000 750,000

100 pages/hour 200 pages/hour 200 pages/hour 1,000 pages/hour

A Revolution in e-Discovery 11

Transition to the Document Analytic Approach
A law firm may have little incentive to upgrade its e-discovery approach if it is already successfully billing for traditional services. Corporate counsel may be unaware of potential cost savings in the discovery phase of litigation, or it may have limited ability to engineer these savings through its law firm. Needless to say, what “works” in the short term— potentially “overcharging” clients—may not work in the long term since both vendors and buyers will need to stay competitive. Inevitably, market pressures will assert themselves, especially when the transition to “modern” e-discovery is so painless. Modern e-discovery is a “buy, not “build, proposition. That’s because few organizations ” ” can afford the investment required to build an efficient e-discovery infrastructure. Nor do they need to. The economics of the document analytics approach to e-discovery means that a law firm can outsource the entire document management process to a dedicated e-discovery provider and still come out ahead. With outsourcing, the law firm gets out of the document management business—photocopying, coding, imaging, rastering, boxing, shipping, and so on—enabling it to reduce or reallocate support staff. With the review phase highly streamlined, attorneys can spend more time on higher-value strategic issues of the case, thereby offering better service to their clients. Modernized e-discovery offers the potential for both higher profit margins for law firms and reduced bills for corporate counsel. Change management issues are minimal when a law firm outsources document management to a professional. These may include: • Staffing changes • Training in document sharing and review technology • New vendor oversight responsibilities • New cost accounting. For some organizations a myth persists that introducing new technology results in “loss ” of control. In reality, new technology can offer different and better controls. In the case of document analytics and Web-based document sharing, law firms and clients have the ability to assess exposure quickly with “snapshot” reviews, obtain automated audit trails and status reporting, find documents quickly and in proper context, view the matter as a whole or in parts, and leverage past work.
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

12 A Revolution in e-Discovery

Document Analytic Success Story
An e-discovery service provider assisted a client’s corporate and outside counsel during the course of an SEC investigation of suspected accounting irregularities related to revenue recognition. The scope of the investigation included 21 “high-interest” employees and their preserved e-mail, shared network files, and local hard drives. The service provider performed the services described in the table below, using a document analytic approach.

S E C I N V E S T I G AT I O N C A S E

ACTIVITY

TIME REQUIRED

DERIVED RATE

Preserve Identified and preserved 168 GBs (3,829,000 pages) based on custodian & date range Pare Suppressed 62.5% of the 3,829,000 pages (duplicate and e-mail threads) to arrive at a review set of 1,438,500 pages Ran two 12-hour shifts of 30 reviewers for 3 days; reviewed 1,438,500 pages; identified 2,625 responsive pages (<.01%) Process Produce Total
1

192 hours1

19,943 pages/hour

96 hours

39,885 pages/hour

2,160 hours 12 hours2 48 hours 2,508 hours

666 pages/hour 219 pages/hour NA3

Convert responsive set to TIFF images. Apply redaction and Bates numbering. Delivered 2,625 pages via compact disc

” “Hours” in this and the following table refer to “people hours. Assuming 2 million TIFF images or fewer, 12 hours is the minimum and includes setup, quality control, and data validation. Production is process driven, rather than page driven.

2

3

This SEC case provides a concrete example of activity rates and total time required for each phase of e-discovery, from preservation to production. If we apply the same rates to the hypothetical case (except where we have already included a rate), we obtain the following:
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 ,

HYPOTHETICAL CASE

ACTIVITY

APPLIED RATE

ESTIMATED TIME

Preserve Identified and preserved 1.5 million pages Pare Suppressed 50% of the 1.5 million pages to arrive at a review set of 750,000 pages Reviewed 750,000 pages, identifying 150,000 responsive pages (20%) Process Produce Total
1

19,943 pages/hour 39,885 pages/hour 1,000 pages/hour1 NA NA

75 hours 38 hours 750 hours 12 hours2 8 hours 883 hours3

Convert responsive set to TIFF images. Apply redaction and Bates numbering. 150,000 pages

Uses the assigned rate of the hypothetical case. Using the rate of the SEC case (666 pages/hour) would yield a total of 1,126 hours required for the e-discovery. Assuming 2 million TIFF images or fewer, 12 hours is the minimum and includes setup, quality control, and data validation. Using the review rate of the SEC case (666 pages/hour) the total would be 1,259 hours.

2

3

A Revolution in e-Discovery 13

Conclusion
By looking at four e-discovery approaches applied to one scenario, we see that e-discovery efficiency depends on the efficiency of the review component, which in turn depends on the efficiency of the mechanical processes that prepare the discoverable material (the corpus) for review. Time is money. Photocopiers, computerized imaging, computerized deduping and culling, Internet-based document sharing, and document analytics have successively streamlined the process. Content relationships are now at the fingertips of the document reviewer. There is little doubt that the review itself will become further automated. Law firms and corporate counsel need to consider the ease and potential cost savings of the outsourcing option, the efficacy of document analytics, and long-term competitive pressures to realize cost savings. KPMG Forensic’s template may serve as a useful tool for validating one approach over another, depending on expense rates and other marketplace variables. Our hypothetical sample results show document analytics to be 2.53 times more cost effective than e-paper, 7 times more cost effective than “imaged” .22 hard copy, and 9.33 times more cost effective than traditional hard copy. These findings, our common-sense analysis of each approach, and empirical evidence from the SEC case all argue strongly for e-discovery modernization. For further information about this white paper or KPMG Forensic, please contact: Chris Paskach Partner in Charge Forensic Technology Services [email protected] Vince Walden Manager Forensic Technology Services 714-934-5429 [email protected]
© 2005 KPMG LLP the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. 050117 , KPMG and the KPMG logo are registered trademakrs of KPMG International. KPMG Forensic is a service mark of KPMG International.

714-934-5442

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For additional news and information, please access KPMG LLP’s Web site at http://www.us.kpmg.com.
14 A Revolution in e-Discovery

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