What is a reasonable e-discovery vendor fee?

It’s human nature, or at least the nature of every good business owner, to look at the bottom line first. When this bottom line is the total cost of your e-discovery fees, the answer may look overwhelming. How can electronic discovery fees stack up so quickly, and what’s a reasonable benchmark to aim for when looking at vendor fees?

$3.3M Is Reasonable in Context Piggy bank

In Tampa Bay Water v. HDR Engineering, INC., $3.1M was awarded to an e-discovery vendor for costs related to the trial. The grand total may look intimidating as a whole; looking at the separate components can help shed light on that number.

The electronic discovery vendor in the case processed and hosted 2.7 million different documents for review. The case docket spanned not only the large trial itself but also the preceding three years of litigation. The case docket logged 678 entries, including motions to dismiss, motions for protective orders, motions to quash, motions to strike and dozens of other motions as well.

When attorney’s fees were awarded in this case, they too were large: $9.2M, plus another $7.8M for additional costs incurred. The total value of the case came to $30M; when taken in context, the $3.1M from e-discovery fees is only about 10 percent of legal costs incurred. From that perspective, the discovery fees no longer seem unreasonable.

Totals in Context

Like so many things, context is essential when trying to make sense of e-discovery vendor fees. Most companies see only the end results (in other words, their invoice), a number that, in and of itself, doesn’t shed light on all the background involved, namely the lengthy and time-consuming process of gathering and sorting electronic evidence. Without context, it’s definitely tempting for companies to feel like they’ve been overcharged. Yet, looking at what the full process of what, exactly, electronic discovery entails may shed some light on the fees incurred.

A study conducted by the Minnesota Journal of Law, Science and Technology estimated that each gigabyte of data examined costs $30,000 or more in e-discovery fees. This number includes both external costs associated with outsourcing, and internal costs to the client in developing and maintaining an information governance program, sometimes very hurriedly and in response to litigation. Each step of the process requires the time, talent and expertise of a team that includes not just lower-level legal researchers but often upper level management, in-house counsel and experienced IT personnel. Electronic discovery fees are a premium rate, because companies are paying for a premium and comprehensive service.

Before the era of electronic data, the costs of physically sorting and processing relevant documentation were just as cumbersome, albeit on a different price scale. The real change lies not in the process of discovery, or even in the manner of its execution, but rather in the vast volumes of data that are now being stored and transmitted on a daily basis… data that must be sorted and organized in the event of litigation.

Reducing Costs

Electronic discovery is here to stay, just as electronic data processing and storage have become a permanent fixture of daily business life. However, there are some strategies that can be adopted to lower the costs of e-discovery to a more manageable state.

Incorporating tools like predictive coding and technology-assisted review to help reduce the manual aspect of review can cut down on the time investment of the electronic discovery process. As long as the human touch is still needed, streamlining remains difficult. Working with a smaller team that deploys more comprehensive technology can more quickly extrapolate applicable data, which means a lower cost for discovery fees.

Businesses that create a sensible information governance program will also notice cost advantages when it comes to e-discovery. Better management of data helps organizations and their in-house counsel more quickly and efficiently access any information that could be relevant to a case.

Because electronic discovery is, by its very definition, the sorting and collection of relevant electronic data, it’s easy for outside parties to assume that this process should be as quick and efficient as other computing processes. Yet, the e-discovery process absolutely has to incorporate the human touch in order to be effective. Looking at the numbers of legal assistants, digital forensics experts and hours spent in a day sorting through terabytes’ worth of data, e-discovery vendor fees become quite reasonable in context.  

Image via www.theguardian.com

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