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[EDITOR'S NOTE: After the global financial crisis, cost-cutting has become the No. 1 priority for corporate legal departments. Part I of a five-part Corporate Counsel series on controlling outside legal costs focuses on measures taken by the United Parcel Service.]

E-discovery is a huge expense, even for big companies with lots of resources. United Parcel Service, Inc. is no exception, and its legal department had enough.

So the Atlanta-based shipping company managed to save millions of dollars by outsourcing document reviews to companies both here in the United States and overseas. But the mounting scrutiny of document production by opposing counsel and courts, as well as new federal rules relating to e-discovery, convinced UPS that it needed to do more to get costs under control.

The company decided to hire a national e-discovery counsel, and it had to be a firm willing to abandon the billable hour. "There's a tendency to be comfortable with what you know," says UPS chief litigation counsel Norman Brothers. "This took a leap of faith."

Last January, UPS selected King & Spalding, one of its primary outside firms since 1997, to handle all discovery matters. The firm had already worked on discovery for UPS, and knew how the company operated. More importantly, King & Spalding proposed a novel, custom fee arrangement. "What we wanted to do was create a cradle-to-grave solution" to provide the company "with quality, efficiency, predictability, and cost savings," says Paul Murphy, a partner in the firm's business litigation practice group.

The firm charges a bundled per-document fee that takes into account the costs of manual document review, and all costs associated with using document review software, data processing, data hosting, and document production. And the firm gave UPS the flexibility to hire alternative staffing agencies or King & Spalding's Discovery Center, the firm's off-site document facility, depending on the needs of the case.

The savings have been significant. In the first six months of the arrangement, document review and litigation supports costs have been slashed more than 50 percent. UPS saved more than $912,000 in review fees and vendor costs. And after King & Spalding reviewed UPS's existing contracts with other e-discovery vendors and renegotiated invoices, UPS saved an additional $758,000.

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The arrangement has done more than cut costs, though. It's given UPS predictability and budget certainty. UPS now knows how much it will spend on document review when data is collected. It's also helped lawyers on both sides operate more efficiently. It's decreased production times and increased consistency across its litigation portfolio.

Outside lawyers are also brought in earlier to help with planning. "And the savings speak for themselves," Brothers says.

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