3 Keys to Controlling Litigation Spending

While the commercial and consumer insurance industry has helped drive economic growth, significant changes similarly are driving increased pressures across multiple lines of business, including legal. Price increases due to record catastrophic losses from natural disasters throughout 2017, economic fluctuations, market volatility, regulatory changes, personal insurance startups and substantial merger and acquisition activity are just a few of the reasons the insurance industry is embracing innovations in analytics and technology. Legal is no exception. Over the last few years, insurance companies have had to deal with a rise in case filings for all types of insurance, including automobile, homeowner, business liability and life insurance claims, with litigation one of the biggest contributors to rising general liability costs. To address these costs, forward-thinking legal departments are taking advantage of advanced analytics, cloud technology and other strategies to not only manage costs, but also realize operational efficiencies and make repetitive insurance litigation a more predictable and repeatable process. Understanding the opportunity Many insurance companies still manage their casework in silos, sending documents and data to multiple law firms and outside vendors, perhaps by area of expertise—when, in fact, a lot of litigation or regulatory inquiries may involve the same insured or type of claim, and thus many of the same documents. Under the current model, the same documents are collected, processed, reviewed and produced for each new matter. When that case is complete, the data and work product is dispositioned. This approach creates massive inefficiencies and unnecessary costs, at a time when legal departments are increasingly being called on to rein in costs and operationalize discovery processes. However, the documents and data that companies produce related to the insured and the types of claims can be a powerful resource for reining in costs early on. With evolving technology--using the economics and access enabled by the cloud--and a centralized approach, legal departments can more effectively manage day-to-day discovery, gain greater oversight and control of litigation and their outside counsel spending—while moving to a knowledge-driven strategic business. See also: Claims Litigation: a Better Outcome?   Centralizing legal data Centralizing legal documents is the key to a more efficient process. In a siloed approach, coding decisions on documents from prior matters cannot be applied to future matters involving many of the same custodians and documents. Coding decisions and even attorney-client privilege documents may differ from one matter to the next, depending on the individual reviewer’s judgments. This increases the company’s risk of inadvertent exposure of sensitive information. When working in silos, you miss the opportunity to “review once and produce many times.” Accordingly, multiple claims by an insured would not need to be recollected and reprocessed, re-reviewed and reproduced each time—again, generating inefficiencies, unneeded cost and risk. Storing your company’s legal documents in a single repository enables your team to leverage prior decisions and documents and aggregate key metrics across cases to support informed business decisions. Centralization also helps keep your data secure by allowing in-house teams to more effectively manage documents throughout the data lifecycle, controlling access and limiting the flow of sensitive information. When using a multi-matter management system with a core repository, each new matter creates greater efficiency because data is collected and processed just once. When new matters arise, documents can be assigned from the core repository to a new matter without needing to collect or process the same data (additional costs), and prior coding can be pre-populated (greater efficiencies)—that is, coding decisions or “tags” such as privilege, confidentiality and other designations are retained for use across multiple cases. Documents can then be efficiently reproduced across matters, allowing for a “review once, produce many times” workflow for commonly produced records. Using technology-assisted review Advanced technology-assisted review (TAR), a form of machine learning, can further reduce costs by decreasing the volume of documents needing human review. The use of TAR 2.0, predictive analytics based on the continuous active learning (CAL) protocol, allows an insurance company's legal teams to review far fewer documents than linear review (reducing document volumes subject to review by 80% or more) or earlier TAR systems, surfacing most relevant ones first. When your team begins coding the documents, the TAR engine continuously surfaces the most likely relevant ones first based on the previous coding decisions. In other words, it is always continuously and actively learning. When the system mixes in contextually diverse documents, a process by which the algorithm is actively finding documents that may be related but are unlike other documents that have been reviewed, the review team will find documents they might not otherwise see. With recent advancements in TAR, it is now effective for more than large outbound productions—it equally is effective for nearly any review task of any size—for investigations, opposing party reviews, deposition preparation and issue analysis and privilege and privilege quality control. The result is that you can continue to increase savings on review and outside counsel fees for nearly every case. See also: Understanding New Generations of Data   Adopting business intelligence By aggregating legal and discovery data, a core repository enables meaningful reporting and business intelligence (BI) for data-driven decisions—outside counsel and vendor spending, effective resource allocation across matters, budgetary impacts of custodian collections, case progress and other key performance indicators. Cross-matter reporting can be used to track across enterprise custodians, collections, deadlines, review metrics and related legal spending, for each and every matter. More advanced technology will have capabilities for providing custodian profiles that track legal hold status, prior collection interviews, historical review metrics and more. Moving legal to a knowledge-driven business unit Legal executives at insurance companies, in particular, due to the nature of repetitive claims and litigation, increasingly appreciate the opportunities afforded by capturing and re-using historical work product and documents where possible, and applying meaningful metrics to manage day-to-day discovery. The traditional silo approach makes that approach virtually impossible. By centralizing your data in a core repository, using advanced analytics to cut review volumes, time and cost and adopting a comprehensive business intelligence strategy, discovery efforts will result in substantial cost savings and move your department to a knowledge-driven strategic business.