EDiscovery and Digital Forensics: Alternative Fee Options

Many eDiscovery vendors have per-unit pricing for photocopies and images, while others charge per billable hour. Although the volume of work gathered during the electronic discovery process has only increased, these pricing models still haven’t changed with the times. While larger corporations might be willing and able to handle large fees associated with discovery and document preservation, the mid-sized and smaller clientele are struggling to keep up. Are there any friendlier alternatives to current pricing?

Escalating Costs

The largest problem within the electronic discovery industry is the issue of escalating costs. Clients are becoming increasingly sensitive to this trend, which is creating a backlash within the litigation support industry. Many corporate legal teams are weighing the possibility of moving these services in-house in the hopes of cutting costs. If eDiscovery providers want to continue building clientele, alternative fee arrangements will have to be worked out.

With the rest of the legal industry operating on billable hours to determine their revenue, it’s no surprise that eDiscovery teams have followed suit. This makes more sense than a volume-based pricing model, yet the number of unknowns involved in the support process can still add up to an unexpectedly large bill.

Cost Reduction

What other reasonable pricing options are there besides hourly or per-unit? A flat rate could result in significant income losses for litigation support firms, particularly since so many attorneys bring eDiscovery vendors in later on in the case, creating an atmosphere of crisis management.

• ECA: One key to lowering costs lies in preparation, both from vendor and client alike. Early case assessment is essential for determining new pricing models. This allows the vendor to give a more knowledgeable estimate. A comprehensive ECA could be provided in exchange for a fixed rate.

• Flexibility: If vendors are reluctant to commit to fixed fees due to possible revenue loss, then adapting to new methods and technologies is imperative. For example, shifting operations to the cloud or outsourcing some components can save overhead which can be passed on to clients, and allow for more flexible pricing.

In the end, the mentality shift on pricing among the eDiscovery industry is impossible to predict.  The industry is still fairly new, and precedents simply haven’t been around long enough to start evolving. Old practices have become irrelevant, but new practices have yet to be adopted. Given the escalating costs of eDiscovery and increasing pressure from clients to provide alternative pricing, however, new industry-wide standards are not far away.