A Look Inside Hosted e-Discovery Pricing

Secrets your service provider may not want you to know.

By Megan Miller, Gallivan Gallivan & O’Melia

     Lawyers and litigation support teams researching alternatives for e-discovery have a daunting task, complicated by the fact that information on which they will have to base an important purchase decision is often fuzzy at the time the e-discovery solution is being selected:

•        The location, scope and size of the data set may not be known.  Data volume is difficult to estimate.
•          The technologies used in processing, analyzing and producing digital documents are confusing, and vary from one provider
       to the next.
•          Pricing models are often convoluted, or based on technical aspects of the project that won’t be known until later in the
      game   - think GB, document counts, page counts….
•          “Per GB” pricing is very prevalent, and yet probably the most volatile parameter in the process. 
  
  

  It’s reasonable and prudent to evaluate several potential providers, request quotes, and compare the cost of services to make an informed choice.    

  Here’s the rub: some service providers charge an hourly fee to collect data or image a hard drive; some charge a flat fee.  Some charge a processing fee based on the number of Gigabytes (GB) of data.   Some might waive or reduce processing fees, but make it up with higher hosting fees or another line item.

  So how can you effectively assess multiple proposals for one e-discovery project and determine which will be most cost-effective?  What questions should you ask service providers to be sure you understand what’s included in each line item?

  This paper will provide some insight into the various elements that drive the cost of e-discovery processing, hosting and review.  To create our comparison we gathered several e-discovery bids; 3 representative examples are provided in the table at the end of this paper.

     We studied the bids, ‘translated’ them line by line, in order to compare them in an apples to apples view, side by side.  The pricing information is real – all of it collected from real service providers in major metropolitan areas across the US, in the last 90 days. However, it is also perishable.  The market is constantly changing, and pricing changes on a regular basis.   While the bids are from real service providers, we have changed their names in our example.

 GENERAL TIPS

Size Matters (in a per GB world)

     All of the service providers we reviewed charge on a per GB basis for at least some of their services. A smaller data set (say, 20 GB or less) becomes very expensive in these models.  Many service providers are unwilling to incur the costs of project setup and management on a small matter.  Volume-based (“per GB”) fees won’t generate enough revenue to be profitable.   

     A couple of alternatives for smaller matters:

     If your ESI corpus will be 20 GB or less, but you still want the services of a hosting center and some project management, ask the provider if there are minimum fees, or if they will provide a fixed-fee bid.

     If you have some skill and resources to manage software in-house for smaller matters, ask whether the provider has a software tool you can run on your own server or PC.   Digital WarRoom Pro™ installs quickly on your PC, where you can then process, analyze, review and produce documents at a price point under $1,000.

Collected Data may Well Grow in Size

     The approach used to collect custodian data will have an important impact on the GB volume of data flowing into the processing step.  A forensic image of an entire hard drive will typically have a higher volume of content, perhaps 100 to 200 GB, but a good portion of that will be program and system files that are not reviewable documents.  A procedure called de-NIST’ing removes these files as part of the processing phase.    More selective collection, via selective copying, or use of ECA search and collection tools, may reduce the volume of data the e-discovery provider receives. 

     The processing phase of the EDRM is probably the least well understood.  In addition to de-NISTing, processing involves the use of specialized programs to open container files (mailboxes full of messages, folders full of Word documents, .zip files full of a variety of documents), identify and remove duplicates, and index the document contents to create a database that is key-word searchable.  

     The important tip to know about processing:  in a normal collection of email and documents, for example, the GB volume of documents after processing may be 10-30% larger than the original collection.  The growth occurs during ‘expansion’, when a content of condensed folders is extracted into individual documents, messages and attachments.  So it’s important to ascertain whether the fees your provider charges on a per GB basis will apply to the 100 GB collected, or the ~125 GB after expansion and indexing.

Monthly Hosting Fees:  Volume-based

     Most hosting providers charge a per GB/monthly fee for hosting the documents, some charge a flat monthly rate.   Be sure your provider is clear about which GB volume represents the hosting fee basis: is it the collected volume, the volume post-processing, or the post-filtered volume for review.

Monthly Hosting: User Access

     A ‘user access fee’ or license is commonly charged; it typically includes account logins and credentials for authorized users.   Have the provider clarify whether the user access fee is charged monthly per named user, or per account. 

     Your hosting needs can vary month by month over the course of a matter.  If, for example, the case is delayed in the courts, you may incur hosting fees for months of downtime when attorneys are not accessing or reviewing documents.  If you anticipate this could happen in your case, ask about the availability of a ‘standby’ or ‘on hold’ rate for reviewer access licenses.  A reduced rate during a lull in activity can realize significant savings, particularly on large reviews.

Efficiency Tips to Contain Costs

•        Start early!   Decisions made under the pressure of a litigation hold and pending filing may not serve you well.  Dedicate a small team to the evaluation process, and allow them the time to research and make recommendations.
•        Request a hands-on trial of the software, if you have not used it before.  If your trial can include a test on your own data (you’ll have greater familiarity), you’ll know how intuitive the software is.  By far, an easy-to-use application for processing and review gives you greater control and will save custom consulting costs (you’ll need less help, and incur fewer hours of consulting assistance).
•     Take advantage of flat-fee processing rates if available, and then manage the ESI collection process to result in fewer and larger, rather than many smaller, collected data sets.  Combining several custodians’ data on one drive will achieve greater efficiency and lower cost when you are paying a flat fee for processing. 
•          Don’t put client data at unnecessary risk.  Each time data is moved from one system to another, or is saved in a new format, the risk of data corruption or loss increases.  A system that can process, support review, and produce responsive documents while keeping the entire collection intact in one application will reduce time delays involved in importing/exporting between various systems, and will reduce risk considerably.
•          Investigate Repository storage. Do you expect follow-on litigation? Maybe a civil case on the heels of a government investigation? Often the same documents will be responsive in multiple matters. Ask the service provider if they have the ability to build a repository of documents and work product that may be re-purposed for future matters.  Don’t collect and process the same documents multiple times.
•          Use a review platform that provides native (or near native) review, as opposed to TIFF or image review format.   If the review system is TIFF based, you will pay for conversion of all native documents into images prior to starting review.  Imaging incurs avoidable up-front time and cost.

•          Look for a provider who is also the creator and owner of the software tools.  Many companies are 3^rd party re-seller or service providers, who add a ‘middleman’ layer of cost to the project. You can realize savings, and sometimes great benefits by working directly with the company that created and owns the review platform:
•    The principal who owns the technology is not saddled with all the licensing fees and royalty costs that a 3^rd party service provider is
      required to pay; with a lower cost basis, they can price more competitively or have room to make price concessions.
•      The team who created the software knows it better than anyone, often can provide better technical  support;
•      That same team may also be more responsive on bug reports or new feature requests – you have a direct line of communication
      to the source, rather than through a 3^rd party service provider.

A final caveat: Don’t Sacrifice Quality for Cost

     There are many steps and technologies at work in e-discovery.  It goes without saying that your company’s data, or your client’s data must be carefully guarded, and the e-discovery process should be conducted by professionals who have proven skills and experience to handle the challenges that inevitably arise.  Seek to control cost, but don’t sacrifice quality.  The service provider you rely on should be ready to provide credentials held by project managers and technical staff, and those should include:

•            A healthy mix of technical talent and legal training;  degrees in information sciences, data management, database administration,
       systems architecture, machine learning
•           Field experience in a law firm, in litigation support or e-discovery management
•           Industry certifications among the following:
•       CeDP ( Certified eDiscovery Professional, Organization of Legal Professionals)
•       CISSP (Certified Information Security Specialist)
•       ISCFE (International Society of Computer Forensics Examiners)

     Now you are privy to some of the secrets that e-discovery service providers seldom divulge.  Use this information to demand fair pricing and high quality results.  You will be a hero for your firm or corporation, and the industry will be better for it.

Interested in Learning More?  This topic was addressed in a live webinar, “A Look Inside Hosted e-Discovery”, by Bill Gallivan in May 2012.  Readers are invited to download the presentation and FAQ documents on the Digital WarRoom website.