Calculating an E-Court Return on Investment (ROI)

By James E. McMillan, NCSC; Carole D. Pettijohn, Ph.D., Director of Technology Services for R.B. "Chips" Shore, Manatee County Clerk of Court; Jennifer K. Berg, Esq., Sustainable Practice Leader, Northgate Environmental Management.

As it is legislative budget season for the USA state courts, it is a good time to look at the excellent work that Manatee County, Florida has done in calculating the return on investment of converting from a physical paper-based to an electronic-based organization.  In addition, this article will also discuss the environmental cost savings benefits of going “E”.


The Clerk of Court office in Manatee County first presented their ROI work at the CTC-2009 Conference (PDF download).

Now they have kind enough to share their more recent information.  But before we begin, it is important to note that this work was audited in 2008 to determine estimated cost saving and re-audited three years later to confirm the initial findings by Manatee County’s Internal Audit Department. The analysis included personnel interviews, office staff observations, reviewed “flowcharts of processes, policies, and procedures” as well as a “limited time analysis for tasks related to court records” resulting in performance calculations for the time and costs for handling paper.  The original analysis, performed in the fall of 2008, attempted to separate the time and cost of the electronic system from the manual since they were operating a dual system.

Specifically, in 2008 Manatee County found that the cost of maintaining paper files was $.57 per page while the cost of documents E-filed and printed was $.68 per page.   In other words, E-filing was more costly when paper files were required to be maintained.

Please note that that this original analysis did not include the costs of maintaining the electronic images including workstations, hardware, software or technical staff support.  Parenthetically, I don’t think that this is necessarily a problem since the commercial case management systems (CMS) now include electronic document management (EDMS) as a core function.  This is at least partially due to the increased capabilities that the major database systems (Microsoft SQL and Oracle) have added in the past decade.  There is simply little reason to maintain a separate EDMS if one upgrades their CMS.

That said, the new analysis does include the costs for E-filing, document management, redaction, and their outstanding aiSmartbench system previously noted in this CTB article.

The updated 2011 analysis looked at four cost scenarios:

1. Electronic Intake; Electronic Storage; Electronic Use
2. Electronic Intake; Electronic Storage; Paper Use
3. Paper Intake; Electronic & Paper Storage; Paper Use
4. Electronic Intake; Electronic & Paper Storage; Paper Use

The report states:

Methodology: 

The methodology for determining the costs took into consideration the personnel time for those directly involved in handling documents and the supplies, equipment, and overhead required for the various tasks.  In order to establish the cost components, inquires with senior management from various departments of the Clerk’s Office were conducted; costs were also derived from the Clerk’s finance system and internet research, when needed.  In the same way, the technological costs, including the software (One-Button E-file, NetDMS, aiRedact, and aiSmartbench), the storage area network, and the Technology Services personnel time, were captured for the analysis.  

Results - Cost Per Page:

Electronic Intake; Electronic Storage; Electronic Use ............$ 0.11
Electronic Intake; Electronic Storage; Paper Use ..................$ 0.24
Paper Intake; Electronic & Paper Storage; Paper Use.......... $ 0.69
Electronic Intake; Electronic & Paper Storage; Paper Use.....$ 0.57

It is important to note the cost of scanning and printing and that the best possible scenario is to E-file and to not print anything. Unfortunately Manatee County has not been allowed to eliminate the paper copy requirement.  But they have transitioned from “file folders” to date-based box storage for the paper copies.  In other words, cost and operational efficiency are being hampered by legal records requirements (“Print on Demand” has costs).

Manatee County has been kind enough to provide the linked spreadsheet that one can download for your own analysis.

Space Cost Factors

There are additional factors that should also be considered including potential physical space savings.  Courthouses are incredibly expensive storage spaces.  It is not uncommon for a courthouse to cost $300 or more per square foot for construction with maintenance at from 5-15% (or more) per year.  Thus a small 20’x60’ file room would cost $360,000 to construct and at 5% per year, cost $18,000 per year to heat/cool and maintain.

The location of your courthouse, facility age, and efficiency of your heating/cooling systems certainly make a difference.  For example, Manatee County will be able to realize significant savings by upgrading their cooling system.

Space cost must be compared to storage of the same amount of paper electronically.  In a 2009 article: The Cost of Managing Paper: A Great Incentive to Go Paperless! (PDF), the author notes:

“A mere 150GB hard drive has storage capacity equivalent to that of 70 filing cabinets—at less than $200 for the hard drive. Cost of filing cabinets and floor space for those 70 filing cabinets? $22,000!”

Further, there is a cost to the risk of document loss and destruction when storing information on paper.  Courthouses have burned down.  Documents have been misfiled and stolen.  And while it has been possible to recreate court files from litigant copies, this solution is not complete.  Electronic storage redundancy obviously reduces these risks considerably.

Environment costs

Finally, there are environmental impacts of maintaining paper records.  Jennifer Berg, Sustainable Practice Leader at Northgate Environmental, wrote a paper while a graduate student at the Presidio Graduate School, and presented her findings regarding the “green” impact for the “mandatory use of electronic filing of all civil documents” in the San Francisco Superior Court.  She notes on page 14 of her report:

“The Court’s main impact on natural resources is the vast amount of paper that is used in the legal process. This impacts the use of timber, electricity, GHG in the form of transportation and production, and the end of life when the paper finds its way to landfill.  If electronic filing of documents was mandated, the use of paper would diminish immensely, thereby correspondingly reducing the impact throughout the value chains.”

Based on her estimates of 12,533 non-family or probate related civil cases filed during FY 2007-08:

• An estimated 123 tons of paper are used for these civil cases each year
• 455 tons of wood were used to create the paper
• 3,677 million BTU’s of energy were used in paper production
• And 723,502 lbs of CO2 equivalent were produced

( The environmental impact estimates were made using the Environmental Defense Fund Paper Calculator. See: http://www.papercalculator.org)

In addition Ms. Berg estimated more than 250,000 trips were needed to transport the paper resulting in approximately 5.4 million miles traveled or 2,400 tons of CO2 emissions.

In other words, the energy used for just 12,500 cases was the equivalent of 199 homes for one year; multiplied by the more than 1.5 million civil matters filed each year in California, these paper documents represent a significant burden on the environment.

Conclusion

It is easy to see that the reductions in these overall systems costs noted above will benefit not only the court but also the participants and the general public.  Investment in "E" pays off.

Additional reference material:

IBM Costs of Paper:  http://www-304.ibm.com/easyaccess/publicuk/gclcontent/!!/gcl_xmlid=202916

Paper vs. Electronic Operational Costs: http://ocrservicebureau.com/_blog/OCR_Service_Information_Blog/post/The_Cost_of_Paper_vs_Digital_Storage_of_Documents/