The pictures at the top of the article showing a grim faced Dick Fuld, former Chief Executive, and one of the workers who lost her job that fateful day almost one year ago brought home what a momentous event the collapse of such a major investment bank actually was. The banks in the UK were deemed to be too big to fail and have been bailed out with huge amounts of taxpayers’ money but Lehman Brothers went under owing an eye watering $613 billion.

The thrust of the Sunday Times article was the bill to be incurred for sorting out the claims arising as a result of the bank’s collapse. Apparently, advisers liquidating its remains have already billed $500 million. It is said that Enron cost $725 million to unravel, currently the world record!

This figure is likely to be dwarfed if Tony Lomas is to be believed. He is the PwC partner   leading the UK liquidation and he has said that the costs could exceed a massive $4 billion once litigation costs are included.

The article reports that there are at present some 76 actions going on in courts around the world from Luxembourg to Germany to Japan with more to come as claims are notified, the deadline for which is in 3 weeks’ time, some 53 weeks after the bank filed for bankruptcy.

All these figures made me wonder how much was being spent on processing the paper and electronic documents involved. I would hazard a guess that it will be more than a drop in the ocean as lawyers and other advisers struggle to get to grips with the complexities of the arcane trading in which the traders at Lehman excelled in the good times.

For any advisers reading this, may I offer a few thoughts on how their job might be simplified? Unsurprisingly (since this blog is about Smart e-Discovery) I return to a favourite theme of mine -  the imperative to reduce the costs of discovery, as noted by the judge in the recent Multiplex/Cleveland Bridge judgement and referred to elsewhere in this blog [see: The Road from Wembley]

A few tens of thousands saved here and there on discovery costs, even if seemingly a small proportion of the billions involved overall, can have significant impact particularly if the cost of the advisers themselves can be reduced as fewer people need less time to understand the issues and litigate them.

I shan’t recite the Millnet mantra here but if you are curious about the scope for cost reduction in the e-Discovery process, take a look at our Introduction to Smart e-Discovery Services [PDF - 531KB]

Less well known are the 6 paragraphs (out of a total of 1693!) in a judgment given towards the end of last year in yet another Multiplex/CB case (no. 6) and entitled “The Lesson to be drawn from this Litigation”…

In those paragraphs the Judge criticised the parties’ failure to resolve the matter through ADR or other means.  He particularly pointed to the 550 ring files which were produced for the Court, the £1m photocopying bill and the total costs of the parties of some £14M which were wholly disproportionate to the amounts realised. 

He ended by saying that “the parties might be well advised to use the dispute resolution service offered by the [TCC] in a more conventional and commercial manner than has been adopted in this case.”   He might also have added that the parties would have saved themselves very considerable cost if they had used the latest cost-reducing e-Discovery services from vendors such as Millnet.

Millnet’s system is based on the premise that clients should not have to pay their lawyers to process material which they do not need and offer e-Discovery at substantially lower and more proportionate cost than existing methods. In a recent case, around 4.5 terabytes of data were reduced to less than a gigabyte for eventual disclosure. The speed of this process means  that the lawyers can start their review much earlier than before, often in a matter of hours, confident in the knowledge that they are only looking at material which they actually need to review. 

When all is said and done the National Stadium is an iconic building whose 315m span arch is not only the longest single span roof structure in the world but also is visible from many miles away.  It is a pity, therefore, to reflect that just as much paper was used in the disputes relating to the stadium as cement poured into construction.  Perhaps both the experience of the Multiplex litigation and the Judge’s words of advice may lead parties to re-think how disputes are handled in the future. 

[This post is an edited version of a longer article co-written by Charles Holloway and Julian Holloway.   Julian Holloway is a partner at law firm Speechly Bircham].