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Discovery: The DISCO Blog

How to Control Your eDiscovery Spend With Subscription-Based Software

Posted by Trevor Jefferies on Dec 10, 2015 9:20:00 AM
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If you are like most attorneys facing pre-trial document discovery, you must decide on an ediscovery processing and hosting solution, both for your clients’ documents as well as for the oppositions’ production.  Typically, you will need to review your client’s documents prior to production, then review the opposition’s documents when produced to you.  You would even prefer a solution that you can apply not just for one case but for your entire docket of cases – big or small cases – or even for your entire firm.  

Many firms have an in-house ediscovery software solution for smaller cases, hosted on the firm’s IT servers.  This solution typically requires a dedicated IT infrastructure and support team for the software and security of the clients’ data.  For larger cases, attorneys often turn to a vendor for a hosted solution.  There, the attorney faces a complicated a la carte menu of vendor service fees and charges for each task performed by the vendor.  This pricing model makes it difficult to compare different vendors on an “apples-to-apples” basis, as no one vendor uses the same menu of tasks.  And because this pricing is task-based, it makes any estimate of the total ediscovery spend difficult to predict, because your ediscovery needs in the case may change substantially during the life of the litigation.  

A subscription-based software solution, hosted securely in offsite servers, may be the best of both worlds – vendor or in-house hosted software.  Such a solution will be less expensive, reducing your ediscovery spend by allowing you to forecast the expense with more accuracy and predictability, and avoid scalability issues with less robust firm-based software.  You might also eliminate your ediscovery spend by allocating the expense across all hosted matters so that you can, if you wish to, bill the proportionate cost back to each client – much as you do now with a flat fee annual legal research subscription such as Westlaw or Lexis/Nexis.  

What you (and every other attorney in your firm) are most likely dealing with now

You have a docket of cases where you are representing various clients.  Many of these cases involve an unknown and variable number of documents that need to be collected from your client and/or that will be received from the opposing party.  (By documents, I mean not just paper, but also the ubiquitous electronically stored information (ESI) that seems to grow exponentially each day and becomes key evidence in much of today’s litigation).  For each case in your docket, you must decide how to process, store (i.e. somewhere that it can be hosted online and reviewed by your team), review, and possibly produce these documents.  

You may have an in-house solution hosted on your firm’s servers somewhere, or you may decide to have a vendor process, host, and produce the documents.  Each solution has its advantages and disadvantages.

The in-house option

If you decide to keep the documents in-house, your firm faces such issues as the following:

  • How robust is the firm’s in-house solution?  Most in-house ediscovery platforms are not robust enough to handle large document cases;
  • How secure are the firm’s servers?  Many law firms face cyber threats.  The American Bar Association reports that the number of reported cyber security attacks against law firms doubled in the 2014-2015 time period;
  • Is the firm’s IT infrastructure properly configured and maintained to host the documents?
  • Are the firm’s firm’s IT infrastructure and licensed software up to date?
  • Who will support the user interface? (Help Desk, etc.), and so on.

The advantage of an in-house option is that usually the firm has already paid an annual license fee for the software (e.g. Summation or Concordance).  The cost of the in-house option is therefore a predictable annual fee.  Your firm may handle this cost in a few different ways, such as absorbing the cost as overhead, or billing the client a proportional share of the software annual expense.  

However, while the apparently low, predictable cost of the software may be attractive, the annual license fee is just one component of the overall cost of the software.  When one considers the extra expense of additional servers, IT support (either in-house or contracted), IT security, IT maintenance, and hardware/software updates, etc., the actual or potential cost per gigabyte (GB) or terabyte (TB) of documents stored may be much higher than you would expect.  In the case of the IT security risk, which is hard to quantify in terms of cost or harm to the firm’s reputation, the potential downside of an in-house hosted software may be unacceptable.

The vendor-provided option

If you decide to have a vendor process and host the documents, you likely will pick a few qualified vendors to give you proposals, then you will need to summarize and harmonize the vendors’ proposals to develop a budget and make a recommendation to your client or to someone else in the firm.  

Most vendors offering ediscovery processing and database hosting solutions will present you with a menu of pricing for their products.  They may quote you separate pricing for the following items:

  • Processing;
  • Deduping;
  • Technology-Assisted Review;
  • Monthly hosting fees;
  • Monthly user fees;
  • Downloading and printing fees;
  • Production fees;
  • Hourly fees for help desk and engineer time;
  • And so on . . .

This is “a la carte” task pricing.  And because different vendors bundle these tasks together in the above list in different ways, it becomes difficult for you to compare each vendor on an “apples-to-apples” basis.  

To compound this problem, when pre-trial discovery begins, you typically have little insight into how much you will need to budget for all of these tasks.  You may not know yet how much data you will collect from your client and you do not know how much the other side will produce.  You may be able to come up with a budget, but to what extent are your estimates reasonable?  

Your budget may be blown by several variables, for example:

  • Deeper investigation reveals there are more like 50 relevant custodians, rather than your original estimate of 20, so you collect far more data from your client than you first thought;
  • Your opposition amends its pleadings to bring additional claims or defenses, so you need to collect more data than you budgeted;
  • The court mandates tighter deadlines than you originally estimated, so you need more attorneys to review your client’s documents, thus higher user fees than anticipated;
  • Portions of your client’s data must be reviewed in native format, so you incur additional downloading and printing fees;
  • The court’s production requirements do not match your vendor’s production templates, so you incur engineering time to customize each production you make; and/or
  • The court compels either your client or your adversary to review and produce far more documents than you originally estimated.

The advantages of the vendor-supplied solution are that the software used is typically more robust than what most firms use in-house, and usually can be accessed over the internet.  The vendor option may also avoid the IT infrastructure, security concerns, and necessary overhead that accompany the in-house option.  What you cannot do with the vendor is reign in potentially budget-busting vendor expenses that will occur when the ever-unpredictable discovery process expands during the litigation. Moreover, most clients likely are unwilling or at least unhappy to accept the upside risk of runaway ediscovery vendor expenses.

Subscription to a secure cloud-based software solves the issues with in-house and vendor platforms

Neither the in-house option nor the vendor solution solves the cost predictability, matter scalability, and cost recovery that affect all cases in your docket or in your firm.  

I think you can see that it would be easier if you had one solution for all your cases – one that is:

  • Predictably priced, with an all-in annual cost that does not change, regardless of data size, number of users, number of productions, hosting period, etc.;
  • Robust enough to handle multi-million, multi-TB size cases, yet economical enough to use for your smaller cases;
  • Available anywhere securely over the internet on any device, without the need for your firm’s IT infrastructure and support; and
  • Inexpensive enough so that the annual fee could either be absorbed by the firm or a proportional share of the annual fee could be billed back to each client who has data stored in the software.  

Ideally, this solution would be priced at a low annual subscription fee, to bring the cost per GB down to almost negligible amounts.  That cost would not change no matter how many reviewers you use on the case.  It would have a high enough data limit so that you could place the documents for every case in your docket (and indeed, every case in the entire firm) under the subscription.  It would be secure enough so that you and your clients have peace of mind that the best physical and cyber security measures are in place.  And it would provide detailed per-matter monthly statements so that you could allocate expenses to each respective client and bill the cost back to the client, should you or your firm wish to do so.  

Learn more about the benefits of DISCO vs. on-premise software 

Topics: ediscovery, Legal Industry, Technology, discovery, discovery cost