ROI of Records Management – Legal Discovery

5/25/2011

Having surveyed a group of records managers a couple of years ago, I learned that for most companies, the return on investment (ROI) for records & information management is basically the assurance of never failing a regulator’s audit, or assurance that you won’t get burnt by a document that has mysteriously disappeared. The ROI is more akin to cost avoidance than a true dividend of the original expense.

ARMA recently published an article called Litigation Costs: A 1000:1 Ratio. The 2010 litigation survey quoted in the ARMA article polled Fortune 200 companies to compare costs to pursue litigation versus costs of discovery process activities. These large companies indicated that on average, 4,980,441 pages of documents were produced in discovery for major cases that proceeded to trial – of which only 4,772 pages were actually marked as exhibits. In summary, for every document page produced as evidence, there were 1000 document pages that were collected, reviewed and preserved during the legal discovery process. Hence the 1000:1 ratio.

Hypothetically, if each member of my legal team (involved in the discovery process) can review an average of 30 pages an hour, with a median internal labor rate of $150 per hour (actual rates range between $100 - $650 per hour), the cost of reviewing 4,980,000 pages is $24,900,000. For a legal case with half the volume of document pages to review, the cost is still a staggering $12,450,000. With a records management software system like OmniRIM, used by trained, professional records management personnel, one should be able to conservatively reduce the 1000:1 ratio to 750:1. The cost savings is significant. For the second scenario – the more conservative 2.45 million document pages reviewed – the cost saving is $3,112,500. That is over $3 million in savings for a single case. I’m sure that companies that are the most proficient with records management systems like OmniRIM achieve ratios that are closer to 500:1, for double the cost savings.

This 2010 litigation cost survey helps us model the ROI for records management software with strong legal discovery features. Increases in productivity, accuracy and completeness of matter-relevant searches for discoverable content are additional non-financial benefits to factor into your ROI. For companies in litigious industries, a good records management software package has a fast and compelling ROI.

Bruce Nunn
VP of Marketing
Archive Systems, Inc.


What do you think?

Your email address will not be shown
ARCHIVE SYSTEMS    800-899-3975    info@archivesystems.com