Excessive litigation costs are hurting American companies and scaring foreign companies away from investing in the U.S., writes former Senator Jon Kyl in the Wall Street Journal:
The primary culprit for excessive cost and delay is "discovery"—the process of preserving, reviewing and disclosing vast amounts of corporate information. A 2010 survey of Fortune 200 companies by Lawyers for Civil Justice, the Civil Justice Reform Group and the U.S. Chamber Institute for Legal Reform found that in 2006-08 companies at the low end of the range were paying $620,000 per case, and those at the high end were paying almost $3 million per case in discovery costs. And for what purpose? According to the survey, only one-tenth of 1% of the material produced in discovery was used at trial.
But there is hope. The federal Advisory Committee on Civil Rules is looking at reforms to discovery rules that could reduce costs by narrowing the scope of discovery, giving judges stronger authority to allocate discovery costs, and setting a national standard for sanctions for failing to retain information.
Kyl recently testified in support of the changes, saying they are an important first step towards meaningful reform. “Companies that do business in the U.S. are losing their competitive advantage because the costs of resolving disputes here are needlessly inflated,” he writes. “The committee's proposals are a step forward and should be embraced and supported.”