A Quick Reference Guide To Understanding eDiscovery Pricing

Sep 19th, 2017

One of the biggest challenges in purchasing ediscovery services is trying to make an apples-to-apples comparison between providers, platforms, and services, including their pricing. It’s a feat that’s next to impossible.

Buying ediscovery services is a like buying a car — when you walk away from the deal, you want to be happy with what you paid and the quality you received for the price. Anything less leaves you with a bad taste in your mouth and many generalizations about car dealers (or ediscovery service providers) that you feel fine sharing with your compatriots.

Before we get into what goes into pricing, I’ll go one step further and tell you that if price is the only basis on which you are selecting services, you are likely making a big mistake. The intangibles of what a provider gives you — extra training or hand holding for a new litigation support person, some exceptional pricing on a contingency matter, assistance in working with outside counsel on some tricky document issues — don’t show up in the price, but they are the reason you would rather have that set of professionals working with you than any other.

But cash is king, so let’s talk about what makes up ediscovery pricing and what you need to know about each cost component. There are several different delivery models for ediscovery services that also impact pricing, and we’ll talk about those in a future article. For now, let’s focus on the basics of ediscovery pricing:

  1. Collection. Collection costs vary depending on what is being collected (hard drive, server, mobile device, archived email, social media, etc.), the level of complexity and the tools used for collection, and the number of devices/collections being done. One of the best ways to really understand the costs of collection is to know what sources of data you most often collect from for discovery. For example, a search and pull from an email archive doesn’t usually require a collection tool, and someone at the client with access can likely pull this information. Collections requiring specific software to make a copy of the data that preserves it and the metadata intact often have a flat fee associated with them. But keep in mind that as I mentioned above, cost is one piece of the puzzle. Who is doing the collection (e.g., experience level), how the collection is done (e.g., whether it’s defensible) and whether media is included are all pieces that you should consider. Collecting data is not a plug and play process — there are always issues that come up, and you need someone experienced to solve them. Some examples I’ve seen include data timing out on transfer, having to image a Mac versus the usual PC, collection software not cooperating, etc.
  2. Processing. I remember years ago sitting at a Sedona Conference event with an in-house counsel who pondered this question — if you pull out my ESI from my systems, why do I have to pay you per GB to process it before I can review it? If it’s readable before processing, what is that charge for? Good question, and one that many folks still have. Generally, processing is exactly what it sounds like — a process undertaken by a piece of software that does three things:  deduplication of data by hash tag, deNISTing, and conversion of the thousands of file types into one readable by the review software. That’s really simplifying what processing is, and the reality is that every tool processes slightly differently, so you’ll see some differences in results. That’s information your project manager can sort out. Processing costs are usually by the gigabyte and drop in price at high volumes. It’s a one-time cost that you’ll incur, but processing is also one of the largest expenses.
  3. Hosting Fees. Hosting fees are applicable when someone else hosts your data, and it’s usually per GB, per month. That’s the cost to keep your data active in the review software. You are paying for the upkeep of the hardware where your data sits — all of the maintenance, upgrades, and other costs that go into keeping your data live 24/7. Trust me, that cost is high, and it’s spread out over thousands and thousands of gigabytes of data to keep your cost per GB low.
  4. User fees. Some review platforms charge monthly user fees. That fee is a fixed monthly cost per user to have active access to the software. You can turn access on and off, but you usually have to do it before month end to avoid incurring the cost for the following month. User fees can vary between $80-$120/user/month and they can add up quickly, especially if you are providing access for a large group of contract attorneys to do a review. In that case, the user fees are going to be just a small part of the cost of that review, but it’s a component you need to know about and budget for.
  5. Project management fees. We talked extensively about the role of the project manager previously, and I’m a huge advocate of an effective PM. Rates vary widely based on experience and skill set and the provider or firm you are buying from, and they are usually hourly. Sometimes you can negotiate a flat rate for a fixed number of hours a month on a managed services contract, and we’ll discuss that when we talk about business models.
  6. Hardware. Hardware costs include the hard drives, flash drives and other components needed for your project that become yours. If the provider gets the hardware back, you should not be charged.
  7. Legal fees. Discovery counsel charge the same as any other lawyer, and you pay for the expertise of your discovery counsel to know the issues and how to negotiate the best ESI protocol for your matter. Time is generally by the hour, although we do several different types of billing arrangements with our clients

Those are the basic pieces of ediscovery pricing. Start learning about what you are paying and why, and dive into who is helping you manage your data so you understand the skills and experience you are getting.

Remember that price is just one component in evaluating ediscovery services. You can go to the best restaurant in the world, but if you don’t like the food, is it worth the cost?

 

Originally Posted on Above The LAW