Following Judge Peck’s decision on predictive coding in February of 2012, yet another Judge has gone in the same direction. In Global Aerospace Inc., et al, v. Landow Aviation, L.P. dba Dulles Jet Center, et al (April 23, 2012), Judge Chamblin, a state judge in the 20th Judicial Circuit of Virginia’s Loudoun Circuit Court, wrote:

“Having heard argument with regard to the Motion of Landow Aviation Limited Partnership, Landow Aviation I, Inc., and Landow & Company Builders, Inc., pursuant to Virginia Rules of Supreme Court 4:1 (b) and (c) and 4:15, it is hereby ordered Defendants shall be allowed to proceed with the use of predictive coding for the purposes of the processing and production of electronically stored information.”

This decision was despite plaintiff’s objections the technology is not as effective as purely human review (their objections can be seen here).

This decision comes on top of a new RAND Institute for Civil Justice report which highlights a couple of important points. First, the report estimated that $0.73 of every dollar spent on eDiscovery can be attributed to the “Review” task. RAND also called out a study showing an 80% time savings in Attorney review hours when predictive coding was utilized.

This suggests that the use of predictive coding could, optimistically, reduce an organization’s eDiscovery costs by 58.4%.

The barriers to the adoption of predictive coding technology are (still):

• Outside counsel may be slow to adopt this due to the possibility of loosing a large revenue stream
• Outside and Internal counsel will be hesitant to rely on new technology without a track record of success
• Additional guidance from Judges

These barriers will be overcome relatively quickly.

Let’s take this cost saving projection further. In my last blog I talked about “Defensible Disposal” or in other words, getting rid of old data not needed by the business. It is estimated the cost of review can be reduced by 50% by simply utilizing an effective Information Governance program. Utilizing the Defensible Disposal strategy brings the $0.73 of every eDiscovery review dollar down to $0.365.

Now, if predictive coding can reduce the remaining 50% of the cost of eDiscovery review by 80% as was suggested in the RAND report, between the two strategies, a total eDiscovery savings of approximately 65.7% could be achieved. To review, lets look at the math.

Starting with $0.73 of every eDiscovery dollar is attributed to the review process

Calculating a 50% saving due to Defensible Disposal brings the cost of review down to $0.365. (assuming 50% of documents to be reviewed are disposed of)

Calculating the additional 80% review savings using predictive coding we get:

$0.365 * 0.2 (1-.8) = $0.073 (total cost of review after savings from both strategies)

To finish the calculations we need to add back in the cost not related to review (processing and collection) which is $0.27

Total cost of eDiscovery = $0.073 + $0.27 = $0.343 or a savings of: $1.0 – $0.343 = 0.657 or 65.7%.

 As with any estimates…your mileage may vary, but this exercise points out the potential cost savings utilizing just two strategies, Defensible Disposal and Predictive Coding.