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How Much Does Your Company Spend on Legal Hold?

Nik Balepur

In last week’s post, How Confident Are You in Your Legal Hold Workflow?, we presented some questions to help you determine whether your current legal hold method works for you in mitigating risk. Software built to manage legal hold, once used by only the largest and most litigious enterprises, is becoming an attractive option to more organizations. But is it cost-effective for yours?

Assembling and reassembling the parts of a hold through spreadsheets can be cumbersome, but it’s not always clear if a manual process is having a significant impact on the bottom line. To get a rough estimate of the cost of your hold process, multiply your average number of holds per year by the total hours spent on each hold and the average per-hour salary of personnel.

Legal Hold Calculation

Then, compare the result with the cost of alternative software approaches. The first and last factors in the equation—your average number of holds and salary per hour for those who manage your legal holds—won’t budge for the purposes of this exercise, but the other time factors are where things get interesting.

Hours spent corresponding with the average custodian tend to be much lower in software, which rounds up legal hold materials such as notices, questionnaires, responses, follow-up questions, and escalation messages in one place and supports templates for that work. As for tracking and reporting, software requires some time to set up but less to maintain than manual methods, making the cost per hour for tracking and reporting negligible—but here is where you might average out the cost of new software and the cost per hour of establishing a new process.

The risk factors outlined in last week’s post carry with them their own potential costs, which are much more difficult to quantify and possibly much larger than any of the factors discussed here. A poorly managed process, with or without special software, can result in hefty legal penalties and loss of reputation. For more information on where the risks and costs associated with legal hold intersect and why certain companies consider a software solution, check out Thirteen Legal Hold Tools and How to Use Them, a recent analyst report on the subject of legal hold solutions.

If you need assistance creating a defensible, repeatable legal hold process or determining whether there are cost savings for you in an automated tool, we're here to help.

Nik was a member of Relativity’s customer success team.