Inside E-Discovery & Beyond: In-House Legal Departments Embrace Digital Transformation—New BDO USA Survey

Digital disruption continues to transform the roles and responsibilities of in-house legal counsel. As the volume of data explodes and data privacy and regulatory compliance concerns grow, 71 percent of corporate counsel are considering leveraging technology and/or best practices to streamline their legal operations in the next 12 months, according to BDOs 2019 Inside E-Discovery & Beyond survey of senior in-house counsel. That number climbs to 91 percent for organizations with annual revenues of more than $1 billion.

E-discovery costs continue to grow, corporate counsel report. Fifty-seven percent plan to increase their total spending on e-discovery in 2019, more than double the percentage of those surveyed last year (25 percent). Large organizations, especially, are expecting to increase e-discovery expenditures substantially (78 percent).

Corporate counsel actions in the past year suggest that a significant portion of the increased expenditures will go to improving existing e-discovery processes and procedures, while increasing the sophistication of their methodology. Survey participants made several changes in 2018, including adding or switching to cloud-based storage (58 percent), adopting new tools and technologies (52 percent), and implementing new guidelines or policies (52 percent). Sentiment analysis, technology assisted review (TAR) and data visualization top the list of technologies being considered for deployment by corporate counsel who do not already use them. Technologies like data analytics, artificial intelligence (AI) and robotics process automation, among others, also likely will play a bigger role this year and beyond.

A combination of too much data, too little time and heavier workloads has made following traditional approaches to e-discovery virtually impossible for the modern legal department, said George Socha, EDRM co-founder and managing director in BDOs Forensic Technology Services practice. As a result, organizations are ramping up technology investments that can boost their productivity, with the added benefit of mitigating digital risk. Moving to cloud-based systems and adopting newer tools and techniques powered by data analytics, AI, automation and other technologies, for example, can help in-house counsel sort through complex information, make better strategic decisions and discover what matters most more immediately.

Critical to e-discovery success is good information governance, which encompasses everything from traditional records management to compliance and risk management, data privacy and cybersecurity, IT governance and overall operational excellence. More than half (59 percent) of organizations plan to increase their information governance spending this year, up from last years 46 percent. Large organizations (78 percent) are taking the lead, perhaps due to the greater volume of information they need to contend with, and/or their more global nature, which makes them subject to more regulations.

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The increasing speed at which the business and legal environments are changing today makes continuous innovation even more of an imperative, says Stephanie Giammarco, partner and national leader of BDOs Technology & Business Transformation Services practice. From the EUs recently enacted General Data Protection Regulation (GDPR) to a potential U.S. national data privacy law, to hundreds of other regulations at the state and local levels, corporate counsel will not only have to deal with the increasing quantity and complexity of compliance obligations, but also greater standards of accountability and transparency demanded of them from external stakeholders.

In its fifth year, BDOs 2019 Inside E-Discovery & Beyond survey examines the opinions and insights of more than 100 senior in-house counsel about changes in their approaches to e-discovery, information governance, compliance, data privacy and cybersecurity.

Other major findings from BDOs 2019 Inside E-Discovery & Beyond survey include:

Data Privacy & Cybersecurity Are Top of Mind

  • Data breaches and data privacy rank in corporate counsels top three biggest legal risks with respect to data, cited by 54 percent and 42 percent, respectively.
  • 59 percent implemented or updated their data privacy notices and/or increased their data privacy budget (51 percent) in response to the GDPR.
  • 37 percent say navigating disparate, and sometimes conflicting, data privacy laws is the greatest challenge in managing cross-border e-discovery, followed by access to data (31 percent).

Corporate Counsels Evolving Relationship with Law Firms

  • 36 percent are considering replacing their outside counsel with a new firm over the next 12 months. This percentage rises to 55 percent among lower middle market companies.
  • Law firms lack of innovation is the top complaint, cited by 29 percent. This percentage rises to 39 percent among the lower middle market companies.

Regulatory Compliance Concerns Persist

  • 24 percent say keeping up with regulatory changes is their top personal challenge, a figure that rises to 38 percent among general counsel and chief legal officers and 35 percent for large organizations.
  • More than one-in-four participants (26 percent) cite regulatory compliance as their organizations biggest information management challenge, after data privacy and security (32 percent). This figure rises to 42 percent among lower middle market firms.
  • 28 percent list regulatory activity (FCPA, ITAR, HIPAA, etc.) among the top three e-discovery-related issues that will have the greatest business impact on their organization this year.

The 2019 Inside E-Discovery & Beyond Survey is a national survey conducted by Rabin Research Company, an independent marketing research firm, utilizing Op4Gs panel of executives. Rabin Research Company surveyed 100 senior in-house counsel at leading corporations throughout the United States to collect their insights for BDOs fifth annual study. Respondents come from corporations with revenues ranging from $100 million to more than $3 billion from a variety of U.S. industries.

About BDO USA

BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, and advisory services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and over 650 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of more than 80,000 people working out of nearly 1,600 offices across 162 countries and territories.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.

Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your needs.

2019 BDO USA, LLP. All rights reserved.

Sally Slater
Bliss Integrated Communication
(212) 584-5475
[email protected]