Scan vs. Store, Which Costs More?

24
Mar
2014

Steve Irons

The legal industry has been protected from market forces since the Greeks were orating in the town square, give or take a century or two. Today the business of law is losing its protected status as market forces are impinging.  The attorneys’--and, thus the law firms’ --entrenched attachment to paper exemplifies yet again the legal industry’s resistance to the mandate of market forces to migrate toward electronic and digital records. 

The thinking that ‘it is cheaper to store paper records than it is to scan them’ is misguided, simplistic, and just plain wrong. 

Here’s how we know:  DocSolid worked with Records and Technology executives (the Working Group) from nine large law firms to quantify the full cost of records storage, to bring the storage cost and contents model down to the box level, and to compare a production scanning operation that would substantially eliminate the flow of paper to offsite records storage.   All of the data provided by the Working Group were averaged. No individual firm’s numbers are depicted in any published materials. 

The result was an unbiased report that created a usable decision framework to guide any firm through its own analysis of the topic and apply to its own unique data and situation.  The full white paper is available can be downloaded here—but here are some of the salient, conclusions the report reached:

• The comprehensive hard costs of storage and scanning are close by comparison. Some of the identified cost categories remained unaccounted for because they were difficult to quantify or make relevant, but the more important utility of the study is that it can be used as the framework to assemble and analyze any firm’s numbers.
• The full cost of records storage is much higher than the simple cost to store a box per year, multiplied by the number of years of storage. Prepping and staging for storage, pickup and retrieval fees, and eventual disposition-destruction costs represent multiples of the hard expenses for accrued annual box storage. 
• Disposition – the intersection of retention and destruction process for retired records – is a dark hole in the operation of most firms today. As a result, most firms store records in bulk, indefinitely, at a high, continual cost, well beyond legal retention periods, at the risk of both the firm and their clients. Destruction of old records tends to be regularly deferred, or undertaken on an occasional project basis. Proper policy, process, accountability and applied disciplines for destroying inactive records are lacking. Therefore a choice for continuous records storage tends to win out by default. 
• About 50% of the paper heading to offsite storage is already electronically filed and available on line, or actually duplicated in the same storage box. This excess paper document storage can be corrected by more disciplined management of the paper file in its active lifecycle, or by integrated scanning in the active lifecycle of the matter. Both approaches require significant business process and cultural change in the practice areas. Doing nothing about this paper storage duplication drives up the cost and risk of stored paper documents.

The study built the Scan v Store comparison using these four, clearly defined steps to provide an unbiased framework that can be utilized by any law firm.

Step 1:  Establish the comprehensive, average cost for storing a box of records. 

Establishing the comprehensive cost for records storage involves identifying and quantifying all the related costs. To make the data digestible, we wanted to bake the result into a cost of records storage per box, over a selected number of storage years. 

Table 1 shows the average cost per box of records, to store for 10 years, and then destroy the box:

Table 1

Step 2:  Quantify the average paper document contents in the box, to the file, folder and page count levels.

What’s in the box? Paper records vary widely from practice to practice. But in order to have a modeled job for scanning work as a comparison to storage, a baseline box of paper records needed to be defined. 

Most interestingly, the Working Group estimated that 51% of the paper headed offsite was already electronically available from the DMS, or duplicated in the same box. Obviously this represents a major inefficiency in storage practices. But the Working Group was skeptical about firm-wide adoption of better practices for culling the paper in its active lifecycle, or for purging duplicated paper once the matter was closed. 

Table 2 shows the average file, folder and page count per box of records:

Table 2

Step 3:  Establish a best practice and cost for scanning and disposition of the box contents. This sets up the comparison.

When scanning retired matters as bulk records, methodical productivity and process integrity is needed. Formal quality control (QC) of the entire process is also needed, because it supports a strategy of destroying the paper by policy after it has been successfully scanned and stored. An overall best practice must be employed for repeatable, measurable, paper-to-digital results. 

DocSolid designed a best practice for getting this work done, optimized for law firm records, integrated with a law firm DMS for image storage, and with integrated QC process and controls. Built around our KwikTag Legal scanning solution, the best practice operation is called a Scan Factory for Records. 

Table 3 shows scan operations cost, on a per-box basis, for newly-retired records:

Table 3

Step 4:  Compare the Scan v Store costs, identify key data variables and ‘soft’ business factors that must be considered outside the data set.

The simple comparison shows a storage cost of $57.52 per box, and a scanning cost of $54.60 per box. As mentioned before, the comprehensive storage costs are likely higher for individual firms. And the scanning costs presume a best practice scanning operation has been put in place. The important takeaways are that a) the comparison is close enough to challenge the conventional ‘store it’ mentality, and b) the framework in the tables offers a way to consider this choice at your firm. 

Conclusion 

The advocacy for storing records is a status quo (‘if it ain’t broke don’t fix it’) approach that requires no change to the current business process, and no new retention policy, and no new work or workflows.  

On the other hand, the advocacy for scanning should include consideration of a broad set of digital advantages that aren’t reflected in the cost number comparisons:

• Retrieval of scanned image files is immediate, DMS-based, and OCR searchable. Cost savings, work efficiencies and work product quality are highly impacted.
• Uniform disposition, meaning that scanned images can now fall under the retention policy of other electronic records, is a substantial benefit. The severe costs of review and destruction for stored-boxed paper records can be eliminated. Firms can remove the corresponding risk to clients and the firm for storing paper records past their required retention, or in a manner that creates a disaster or security exposure.
• Evolving scanning activity into the active lifecycle of the matter is easier once a core, competent, Records-coordinated scanning operation is successful. Scanning of active records has a much bigger ROI because filing, retrieving and managing the paper digitally is most beneficial during the active matter lifecycle.

The entire report can be downloaded here.  

Working Group

DocSolid is grateful for the contribution of our Working Group participants. These professionals are seasoned experts in the field of legal records, and they were challenged to quantify and package data about their operations in new and compelling ways. Though opinions, experiences and practices differed between their firms, they share a common thread of proficiency and dedication. Data published in this whitepaper is an average of the submissions from the Working Group, and no data reflects any individual firm. Opinions expressed in this whitepaper are DocSolid’s, and not those of any individual firm. 

Working Group