Tag Archives: law firms

How to Turn eDiscovery into Baby Carrots: 5 Models for Recovering your Law Firm’s eDiscovery Costs

It’s not uncommon for companies to look for ways to turn losses into profits, and the baby carrot, of all things, is a perfect example of this. California carrot farmer Mike Yurosek came up with the idea for the baby carrot in 1986 after growing tired of discarding a significant percentage of his crop due to imperfections. Using an industrial green bean cutter and a potato peeler, he created the original “baby-cut” carrot, and as a direct result carrot consumption in the US more than doubled over the next 15 years.

But eDiscovery isn’t produce. Most law firms see it as a cost they simply have to absorb. Others will outsource eDiscovery work and pass the bill on to the client. However, with the right cost recovery tactics, the litigation support team can become one of the most profitable divisions in the firm or agency, essentially turning a cost center into a profit center.

5 eDiscovery Cost Recovery Concepts for Law Firms

The following analysis was created by polling a sample set of law firms from medium and large markets across the United Sates. For the majority, turning their investment into a profit center isn’t necessarily the goal; however, they do want to recover the investment made in the software and infrastructure required for eDiscovery work.

To clarify, eDiscovery in this case refers to:

  • ECA (ingestion for mass analysis and culling of data prior to review)
  • Review (on-line searching, tagging, coding, analytics, TAR, etc.)
  • Processing and Production (conversion to TIFF or PDF, if needed, with endorsements)

eDiscovery software is just one component for which firms wish to recover cost. Additionally, there
is hardware, backups, IT, Database Administrators, support staff, and 3rd party software if hosted by the firm. If a firm decides to go the Managed Services or IaaS route, then there are monthly costs associated with storage and machine rentals which firms wish to recover.

The concepts below are listed in no particular order. In some instances, combinations of the concepts can be used.

Concept 1

The Traditional (Hourly Billing Only)

  • $10/hr – $25/hr = Machine Time
  • $100/hr = Tech Time
  • $150/hr = Project Management Time
  • $10/GB – $25/GB for ongoing storage (a few firms charged for storage, while others did not)

Concept 2

The Ingester (Bill for Ingestion of Data Only)

  • $150/GB = Data ingestion
  • One flat fee for any data brought into their system, no additional fees for: culling, processing, productions, storage, etc.

*One firm with on-prem enterprise software recouped their initial year 1 spend within 3 months of implementation of this model

Concept 3

The Vault (Storage Billing Only)

  • $20/GB/moth = Data storage

That’s it, one flat fee for any data stored by the firm; no additional fees for ingestion, culling, processing, productions, user fees, etc.

*One firm who has enterprise software in an IaaS turned this model into a profit center for them; they are now considering lowering their storage costs further.

Another firm polled wanted to move to this model (although at a lower cost) simply to combat their growing storage concerns and were less concerned about the initial up-front work considered the cost of doing business for internally-kept projects.

Concept 4

Bill Like a Service Provider

Pre-Processing and Culling

  • $50/GB – $150/GB = Data ingestion and indexing (some firms gave this away and only charged for data promoted into review after initial culling)
  • $25/GB = Culling of data (only one firm sampled charged for this; all others included the culling at no cost)
  • $50/GB – $150/GB = Data promoted to review after ingestion and culling (the firms that charged in this area typically didn’t charge for the initial ingestion of data; if they did, it was in the $10/GB – $25/GB range)

Review

  • $75/user – $125/user = Monthly license costs for review software (about half the firms sampled did not charge for these licenses)
  • $5/GB – $35/GB for ongoing storage (a few firms charged for this, some did not charge any storage)
  • $50/GB – $150/GB = Analytics technologies applied (near dupe, email threading, concept indexing, cluster and category creation a few firms only charged machine time for the Analytics indexing) 
  • $75/GB – $200/GB = TAR technologies applied (a few firms only charged machine time for the TAR indexing)

Processing and Production

  • $100/GB – $350/GB = Processing s (conversion of native file to TIFF or PDF)
  • $0.05/document – $0.15/document = Production
  • OR – $0.02/page – $0.05/page = Production

Concept 5

Bill Like a Service Provider, Take 2

One firm sampled told us they go out every year and poll the local, regional, and national vendors for pricing and services in each market. Then, they compare the pricing and services gathered with the firm’s services offered and average the pricing across-the-board.

Once the firm has calculated the averages, they reduce the average price by 50% before presenting the costs to their corporate clients. They also make the point that IP protected by keeping data on their systems, and if help is needed from other people or parties, they can securely access the environment through the web to assist with services or managed review.

Conclusion:

As the eDiscovery space becomes more and more competitive with corporations bringing operations in-house, growing datasets, and the complexity of new data sources, alternative billing models could give mid-size to large law firms a chance to offset or even reverse costs associated with eDiscovery.

It’s easy to get caught up in a “we’ve always done it this way” mentality. Then again, I’m sure no one imagined the cut-and-peeled nub of a misshapen carrot could change the agriculture industry.  

 

Written by Jim Gill
Content Writer, Ipro

Be a Game-Changer or You’ll End Up on the Sidelines: Why Law Firms Should Invest More in eDiscovery Technology

Most of us saw the headline in Forbes at the beginning of this year about the record increase in legal technology investment for 2018. “713% Growth,” it proclaimed. Which should come as no surprise to anyone who’s been following the trends over the last several years. I can imagine the industry evangelists all nodding their heads assuredly: “Told you so.” And according to the recently released Altman Weil Law Firms in Transition 2019 survey, it’s not just the legal tech folks, but law firm leaders as well, who “agree almost unanimously (96 percent) that a focus on improved practice efficiency is a permanent trend in the profession.”

But just because law firms agree, doesn’t mean they’re changing anytime soon. Why? The top four reasons given in the survey are:

  • Law firm partners resisted most change efforts (69 percent up from 44 percent in 2015)
  • Law firms experienced insufficient economic pain to motivate change (66 percent)
  • Most partners were unaware of what they might do differently (60 percent)
  • Clients weren’t asking for it (59 percent)

It’s not really an unfamiliar story. In fact, much of the growth over the past several years has been with corporate legal teams bringing eDiscovery in-house. But if you rewind the clock to 2015, many of them were giving similar reasons for putting off investment in legal tech, until enough corporate legal departments realized the benefits – namely by becoming educated on new tools and processes and how adapting them could affect significant cost savings. Those same driving forces can also apply to law firms.

Clients aren’t likely to drive the change. If you’re in the middle of litigation and need to send large data sets to outside counsel for processing and review, you probably aren’t going to push the law firm to invest in new technology. You simply want the job done correctly so that a resolution can be reached.

Which is why it’s up to technology vendors and forward-thinking law firms to move the needle and push the industry beyond its entrenched views. Law firm leaders might ask, Why change when things are going well? Two reasons: Because efficiencies gained through technology investment can make what is going well go even better, and an economy that is up will eventually go down.

In fact, 62 percent of respondents in the Altman Weil survey indicated in-house legal teams doing more of their own eDiscovery was currently taking business from them. So, if technology can help in-house teams increase their effectiveness, increase the defensibility of their processes, and cut costs, then it stands to reason that law firms can do the same by streamlining their processes and increasing their investment in technology.

The most difficult and expensive stage in eDiscovery is related to the right-side of the EDRM (processing and review). Most corporate legal teams are using technology to help with the left-side (information governance, preservation, and collection). Yes, there are some who do everything in-house, but this requires an extremely mature in-house eDiscovery process, with all of the stakeholders (Legal, IT, and Business Units) working together seamlessly, as well as a robust technology solution.

Which means, when litigation arises involving large data sets, complexities with file types, and complicated search needs, those in-house teams are still going to want to utilize law firms or service providers that specialize in elite eDiscovery. Which in turn means, the 31% of law firms who aren’t resistant to investing in technology are going to be able to take on bigger cases and more of them, while recouping their costs.

As Nicole Black said in a recent Above the Law article, “Large law firms are happily winning at checkers, while the rest of the world has long since moved on to chess.” As the ubiquity of electronic evidence in both civil and criminal cases is becoming more and more inevitable, law firms would do well to become game-changers instead of being left on the sidelines.

Written by Jim Gill
Content Writer, Ipro

Contact us to begin your discovery

Attending ILTACON 2019? Register for a live demonstration on August 20, at the Swan Hotel in Orlando.Register Today

Ipro – Simplifying the Process from Discovery to Trial.