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  • Planning For Variation and E-Discovery Costs

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    Chuck Rothman
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    This document discusses the importance of planning for variation in costs when dealing with e-discovery in complex litigation cases. It notes that discovery costs, including document review, can account for over 80% of legal expenses. The document provides suggestions for factors to consider in cost calculations, such as understanding billing models and rates. It also stresses the value of metrics to measure quality and identify opportunities to reduce discovery populations and costs. Examples demonstrate significant cost variation between different legal approaches. The document advocates for thorough planning and use of metrics to minimize costs and ensure discovery processes are proportional.

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    Planning for Variation and E-Discovery Costs

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    This document discusses the importance of planning for variation in costs when dealing with e-discovery in complex litigation cases. It notes that discovery costs, including document review, can account for over 80% of legal expenses. The document provides suggestions for factors to consider in cost calculations, such as understanding billing models and rates. It also stresses the value of metrics to measure quality and identify opportunities to reduce discovery populations and costs. Examples demonstrate significant cost variation between different legal approaches. The document advocates for thorough planning and use of metrics to minimize costs and ensure discovery processes are proportional.

    Copyright:

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    Download as PDF, TXT or read online from Scribd
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    33 views4 pages

    Planning For Variation and E-Discovery Costs

    Uploaded by

    Chuck Rothman
    This document discusses the importance of planning for variation in costs when dealing with e-discovery in complex litigation cases. It notes that discovery costs, including document review, can account for over 80% of legal expenses. The document provides suggestions for factors to consider in cost calculations, such as understanding billing models and rates. It also stresses the value of metrics to measure quality and identify opportunities to reduce discovery populations and costs. Examples demonstrate significant cost variation between different legal approaches. The document advocates for thorough planning and use of metrics to minimize costs and ensure discovery processes are proportional.

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    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 4

    Planning for Variation and E-Discovery Costs

    ByMacylA.Burke
    PresidentEisenhowerwasfondofthequote,InpreparingforabattleIhavefoundplansare useless,butplanningisindispensable.Thesamelogic,creatingafoundationandframework, canbeappliedeffectuallytothecomplexworldofediscoverywhereeverycasebringsitsown uniquenessandquirks. Thatsaid,therearesomecheckpointsthatshouldbeexaminedintriangulatingthefactorsof cost,risk,andtimethatloomlargeintheworldofcomplexlitigation.Discoveryisthemost expensivepieceinlegalspend,withreviewasthemostexpensiveelementindiscovery. Discoveryandreviewareestimatedatover80%ofthecostbysomesources.Itistherefore logicaltobethoughtfulaboutthediscoveryprocessingeneralandreviewinparticular.

    Cost Calculations
    Wesuggestthefollowingpointsbeanalyzedandconsideredinthedecisionmakingprocessof thelegaldiscoverycost: HOWDOTHEYCHARGE?ExaminethebasisforyourEconomicModel:Lookforcostmodels thataredocumentorgigabytebased.Explorealternativecostmodelsthatarefixedand transparent.Integratedcostingmodelsthatcombineboththecostofthelawfirmandthe vendoronafixedpricebasiscanbeadvantageous.Thecriticalpathistoachievethelowest allincostwhichincludesthesupervisionofthelawfirmandtheircertificationofthe process.Thelineitemcoststakeninandofitselfarenotthecriticalpath. WHATDOTHEYMEASURE?Knowyourenemy:Youshouldknowyourblendedhourlyrate. Theblendedrateisthecostofthecontractattorneyscombinedwiththecostofthelaw firmstosuperviseandcertifythereview.Thisisusuallythesinglelargestcostinthe discoveryprocessandlargestavailablecostsavingopportunityinmostprojects.Ifyouare notpayingforthereviewbythedocumentorgigabyteinanintegratedcostmodelbesure tounderstandtheblendedrate. WHATTOOLSDOTHEYHAVE?PracticeMTCO:MeasureTwice;CutOnceisabestpractice. Therearenumerousmethodsofmeasurementthatcanbeappliedtoyourprojecttocut costandimproveresults.Justafewareblendedrate,sampling,reviewrates,errorrates, richnessofthepopulation,recall,precision,pagecounts,documentcounts,pagesper

    27200 Tourney Road, Suite 450, Valencia, CA 91355 P 661.284.6401 F 661.284.7654 www.actlit.com

    Page 2 document,etc.thatcanbeusedtoanalyzeyourproject.Avendorshouldhaveatoolboxof metricstoexplainandexplorethebestwayforward.Thesemetricscanbeinstrumentalin reducingthesizeofthepopulationtobereviewedinareasonablegoodfaithwayandresult inlargedirectsavingsintermsofallincost.Goodmetricshelpfosterinnovationandarea catalysttochange. WHATDOTHEYREPORT?Usesamplingoverinspection:Byallmeansnecessary,avoid inspectionasaqualityassurancepracticebythelawfirminthereviewstageofdiscovery. Samplingismateriallylessexpensiveandproducesafarsuperiorresult.Samplingwill reducethecostofyourblendedrategeometricallyandprovidemorecurrentandbetter resultsastoqualityandhowwelltheknowledgetransferhastakenplace.Itallowsforquick coursecorrectionandcontinuousimprovement.Inspectionisexpensivereworkthatisnot necessary. CANTHEYDOITFORLESS?Qualityprocessesshouldlowercost:Understandthequality controlandqualityassuranceprocessesbeingemployedbythevendorandlawfirm.Ifthey donotlowercosttheyarenotqualityapplications.Theyarecostincreases.Thelowered costsshouldbemeasurableandproducethedesiredresults. CANTHEYDOMORE?Selectanintegratedprovider:Thelargestsavingscomesfrom reducingthediscoverypopulationtobereviewedasmuchaspossibleinareasonableand goodfaithmannerandreviewingitinahighqualitylowcostapplication.Anintegrated providerwhooffersprocessing,culling,hostingandfirstcutreviewisinthebestpositionto achievetheseefficiencies.Usinganintegratedproviderallowsforthegrowthand developmentofastrongpartnershipwiththeparticipatinglawfirm. HOWDOILEARNMORE?Takeadvantageofthirdpartyinformation:Useprovenquality processesfromothersources.TheSedonaConferencePaperAchievingQualityinthee DiscoveryProcessisanexcellentsource.Itreferencesnumerousothersourceswhichare richininformation.RalphLoseysblogishighlyusefulwithadiversesetofcontributors. Keepuptodateoncurrentdevelopments:Ediscoveryisafluidanddynamicfield.TheTREC 2009LegalTrackInteractiveTaskoffersnewinsightsintotechnologyassistedreview. Additionally,proportionalityandcooperationareemergingasimportantfactorsinthe discoveryprocess. ConstructanAuditTrailandFlowChart:Documentcarefullytheprocessesandresults acrossthewholeoftheEDRM.Youwantarecordthatyourprocesswasreasonable,ingood faith,andproportional.Besuretodocumentongoingchanges.Evenyourbestplanningwill needtobeadaptedtoemergingrealitiesthatcouldnothavebeenanticipatedorknown.

    27200 Tourney Road, Suite 450, Valencia, CA 91355 P 661.284.6401 F 661.284.7654 www.actlit.com

    Page 3

    Risk Evaluation
    Variationincomplexity,scale,cost,andriskarepresentinanysystemorprocess.Goodquality isaboutreducingvariationtoacceptableandpredictablelevelswhichareconfirmedbymetrics. Thisisparticularlytrueinthediscoveryprocessoflitigationthatrepresentsthebulkofthelegal spend.Ingeneraltherehasbeensomepricecompressionondiscoveryactivitiesbutthereis stillalargeamountofcostvariationinthediscoveryprocess.Thestandardisthatthediscovery burdenmustbereasonable,ingoodfaith,andproportional.Bythatstandard,using measurementandunderstanding,thevariationinsurescompliancewiththerequirement. Afewspecificexamplescanshowthescopeoftheproblemthatvariationpresentsinthe discoveryprocess. Inanactualcase,weauditedonefirmusingcontractreviewersatacostof$53anhourfor1st Tierreviewwithlawfirmattorneysdoingsupervisionand2ndTierreviewat$300plusanhour whichachievedanallincostof$7adocument.Inthesamecase,wefoundanotherfirmusing associatesfor1stTierreviewatacostof$250anhourand2ndTierreviewandsupervisionfor $300plusanhourforanallincostof$20adocument.Theseweredocumentsbeingreviewed inthesamecasewiththesameissues.Theonlydifferencewasthecostandtheprocess.In neithercaseweretheresultsmeasured. Evaluation:Thereissignificantvariationbetweenthetwofirmsandthecostsdonotinclude processing,hosting,orproduction.Weparticipateinanalliancewithalawfirmthatwould offeranallinprice(collection,processing,hosting,1stand2ndTierreview,certification,and production)ortotalcostofapproximately$1.63adocument. Inanotherexample,weauditeda1stTierreviewatcostof$0.05perpage.Therewasnotan hourlyrateorperdocumentrateinvolved.Therewereapproximately50,000documentswitha pagecountof7,400,000pagesallofwhichwerebilledbythepage.Thisworksouttoan averagedocumentpagecountofaround150pagesperdocument. Evaluation:Onaperpagebasisat$0.05perpagethatturnsouttobearound$370,000.A morecommonperdocumentchargeintherangeof$0.70to$1.10adocumentworksout between$35,000and$55,000. Lookingatvariouspergigabyteallincostnumbers,wefindthevariationisenormous.The averageallincost(collection,processing,hosting,1stTierand2ndTierreview,certification,and productionwouldbeapproximately$70,000agigabyteplusorminus$35,000.Inourview,with agoodintegratedprocessthecostshouldbeapproximately$24,000agigabyteplusorminus $2,000forallincost.

    27200 Tourney Road, Suite 450, Valencia, CA 91355 P 661.284.6401 F 661.284.7654 www.actlit.com

    Page 4 Allofthepricingexamplesaboveofferlargevariationsinoutcomes.Inplanning,itisagood practicetomeasurefromtwodifferentapproachesandcomparehowclosetheresultsareto oneanother.Wewouldrecommendyouexamineseveraleconomicmodelsforeachproject. Ask,howarewemeasuringresults?Whatarethemetrics,whatisthecostperdocument,per gigabyte,etc?Thedifferencebetweenpricingbythepageordocumentcanbeextreme.

    Time Frame
    Theexamplesshowtheorderofmagnitude,variation,andthepotentialsavingsavailableinthe costofdiscovery.Eisenhowerwasalsofondofthestatement,Whatisurgentisseldom important,andwhatisimportantisseldomurgent.Inthehaironfireworldofhighstakes litigationthisisnottheconventionalwisdom.However,thespiralingcostofdiscoveryfueledby everincreasingvolumesofESI(electronicallystoredinformation)shouldgiveuscausetopause andtakeahardlookatprocess,variation,andmeasurement.Planningcanbederailedor incompletebythedramaoflawandpressofevents.Thetemptationtoshortcuttheplanning activityshouldbeavoidedeveniftheurgencyisgreat.Planningistooimportanttobecoopted byurgency. Ifavendoroffersamagicplanintheediscoverymaze,bewary.Onlyplanningcanpreparefor variations,causeawarenessofalternatives,helpdiscoverpitfalls,andrefineourgoals.The givencheckpointsaregeneralconceptsthatcanbeexpandedtomoregranularapplications. Theapproachshouldbeemergent,basedoncircumstanceandneed.Itisbasicallyareadand reactscenariousingconceptsthatmayormaynotbeappropriateinagivencircumstance.The suggestionsarenotneworradical.Weareofferingthemastouchpointstoreducecosts,lower risk,andimprovetime.Bynomeansaretheyapanaceaormagicbullettospiralinglegalcosts. Wedosuggesttheyarereasonableandgoodfaithquestionsthatshouldbeaskedand answered.

    April2011

    27200 Tourney Road, Suite 450, Valencia, CA 91355 P 661.284.6401 F 661.284.7654 www.actlit.com

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