Assessing Your Budget Transparency

How much do you spend on e-discovery each year? Or on each matter? If you don’t yet have a process in place to calculate e-discovery costs and measure ROI of your e-discovery program, you’re not alone.

I moderated a lively roundtable discussion on this topic last year at a Bay Area e-discovery event. Many attendees were using common e-discovery best practices to reduce costs – early case assessments, using managed document review providers for legal review – but couldn’t calculate the savings, or even their total e-discovery budget. But never fear - two models have emerged that focus heavily on the issue of cost, the line-item model and the total-cost model. Both take very different approaches to e-discovery, especially around pricing, process and technology.

Under the line item model, each phase of e-discovery is viewed as a different product: a series of commoditized steps that can be strung together on an assembly line. It’s a piecemeal approach. The appeal is simple: Break down e-discovery into its parts and seek the lowest price for each, in an effort to drive down the total cost of the process. The rationale is simple: If we pay the least for each step, the entire cost will be the lowest. Each e-discovery step is treated as fully interchangeable between providers. The typical selection process is to compare “apples to apples” by gathering prices for collections, processing, the manual loading of data into a review tool, then the hosting and production charges. Other, less visible charges, like project management, review time, quality assurance, or hand-off costs usually aren’t considered. This approach offers a-la-carte flexibility where providers and services can be mixed and matched.

The total cost model focuses on streamlining the e-discovery process with one provider, and often provides a fee structure expressed through a flat rate per custodian, per document reviewed, or per gigabyte. This approach may bring corporations closer to budget certainty at the outset of the case, and provide greater accountability as one service provider is responsible for the complete process.

The success or failure of these models, as well as the level of budgeting transparency provided by each, depends upon each organization’s profile, including litigation portfolio, internal resources and technical environment.

If you’re interested in conducting a self-assessment to calculate which model may work better for you, as well as more information on the two approaches, please download my whitepaper on the topic.