Did the Ontario Superior Court of Justice Endorse Predictive Coding (and nobody noticed)?

In an innocuous dispute about reimbursement of legal fees, Justice Mesbur of the Ontario Superior Court of Justice implicitly accepts the benefits of predictive coding in reducing the costs of document review (the January 2016 unpublished decision is available on Lexis  - Bennett v. Bennett Environmental Inc., 2016 ONSC 503).

Bennett was facing fraud charges in the US, with indemnification for his legal fees provided by his employer, Bennett Environmental Inc.  The employer balked at when the fees claimed approached $4 million prior to the trial.  Responding to an interim bill of $2.8 million, the employer brought a motion and took issue with (among other things) the cost of document review.

Bennett’s legal team used predictive coding to conduct a first level review of the US DOJ’s huge “document dump” and then used higher priced law firm paralegals for second level review (rather than the up to $75/hr contract lawyers). The decision does not address the hourly rate of the paralegals, nor does it assess the quality and speed of document review conducted by firm paralegals as compared to professional document review contract lawyers.

Justice Mesbur concluded that “Given the use of predictive coding for the first level review of massive document disclosure, I do not find it unreasonable for the lawyer to then use paralegals to conduct the next level or levels of review”, and allows the full claim for the costs of the predictive coding and document review process.

To be fair, this is hardly an in-depth analysis of predictive coding.  While plaintiff’s criminal counsel did provide evidence on the rationale for the process employed (para 43), the details provided were rather thin:

          He testified, "Right, I think we used predicative algorithm coding software, which is generally less                     expensive. And we used various other methods to limit the document review that were less expensive           than human beings." He went on to say predictive coding was the first level review since it goes "a                     little deeper" than just a word search.

​Although we cannot yet declare that predictive coding has been accepted as the defacto best practice by Canadian courts, we see this as a step in the right direction.

One troubling aspect of the decision is the lack of commentary on keeping document review costs down by ensuring that reviewers are as efficient as possible.  Our experience is that ad hoc law firm review teams (firm lawyers or paralegals conscripted to review documents) are sometimes less efficient than an outsourced managed review with contract document review lawyers.  We don’t think that the court can be taken to suggest that firms can waste money on second level review if they save money with predictive coding on the first level.  In fact, we know that using predictive coding to save money pairs well with the savings generated by a properly managed review.