Ediscovery Costs: Pay as you gone?
In today’s no-frills ‘on-demand’ economy, customers apparently want to rent rather than own things. Why commit to purchasing a car when you can order a cab instantaneously? Why take on permanent lawyers in-house when you can hire temps as and when required? And in the ediscovery world, why pay astronomical sums to license technology in-house when you can tender out work to vendors on a project-by-project basis? The way ediscovery technology is bought and sold is a hot topic.
The latter ‘pay as you go via tender’ model has been the preferred modus operandi for most law firms in the UK and Ireland. Many of the firms who have tried to make ediscovery into a ‘profit centre’ by licensing technology in-house have failed to do so. In my experience the reasons for this have included the following:
- The up-front hardware costs can be enormous;
- Technology becomes obsolete quickly and law firms are not set up to maintain it;
- A small team (often only one person) within the firm knows how to operate the technology. The firm therefore becomes overly-reliant on those people; as and when they leave they take the key operational knowledge with them. One firm I deal with has been without a litigation support manager for 2 years and hires external consultants to operate their system on an ad hoc basis;
- The ‘profit centre’ argument may make sense on paper, but in reality the technology cost is often the first line item to get written off of a client’s bill.
A False Economy?
That said, the tender model is not without its difficulties. Ediscovery is not a taxi service – it is a complex blend of technological and consultative processes which requires matter-specific application. Not to mention time and costs. Associates often spend an inordinate amount of (non-billable) time comparing quotes that seem to require a PhD in Mathematics to comprehend. Even if estimates are put into a standardised format, predicting data volumes can be as kind to the forecaster as predicting the British weather. All of which goes against the maxim that costs in litigation should be both reasonable and predictable.
The reality is that ediscovery is an integral part of the modern litigator’s practice needs. Whilst only some matters proceed to the disclosure stage, the perusal of electronic data is often necessary to assess merits at the outset of a matter. At that stage a client is just about content to invest money in legal advice, let alone to approve a disbursement for technology to enable that advice. Lawyers now need the comfort of an in-house system where they can upload data as and when they please without incurring the stress, time and moreover the uncertainty of a full-blown tender process. Could you imagine having to contact three or four companies every time you needed to conduct some legal research or find a precedent? This has led to forward-thinking law firms pursuing a third option for the procurement of ediscovery services - the subscription model.
Just Sign Here…
A subscription model (aka a Software as a Service model) is a fully-flexible solution which allows you to pay a fixed monthly sum for a certain volume of data to be hosted across an unlimited number of matters. The pricing is set out in ‘bands’ so that you have the flexibility to increase your hosting volume without incurring any extra costs up until you reach the next tier. Each offering is designed bespoke to the client’s needs. The advantages are as follows:
- There is far greater certainty on costs than under a ‘pay as you go’ model;
- Lawyers can save significant time and stress by avoiding the tender process;
- There is a tangible value-add to point your clients to. ‘Innovative’ has become an overused buzzword in law firms’ self-descriptions. Relieving clients of the uncertainty of ediscovery costs and being able to analyse key electronic data immediately when instructed on a matter are strengths to genuinely shout about;
- There is no need to worry about paying huge up-front sums to invest in technology. Your provider will maintain the hardware and software in their own data centre. Moreover, you will have the ability to host data in any of the provider’s global centres and on any of the review platforms that they offer. I have come across dozens of organisations who are using an outdated review platform purely because at the time they licensed it, it was cutting-edge. As Blackberry has discovered, 5 years is a long time in business;
- You can build a relationship with people at the provider, and set in motion a style of working that suits your firm, so that you receive a consistent, repeatable service. There is also no concern about an over-reliance on one person at your firm; some of our project managers are considered by their clients as extensions of the legal team.
- You can decide how to bill your clients for ediscovery services.
How much does it cost?
Naturally, firms will be concerned that a subscription model is only suitable for those firms with the deepest pockets. That is simply not the case. Rather than focusing on costs, you are advised to approach vendors with a ‘wish-list’ of services and a budget in mind (it may be the last time you need to contact more than one provider). We have law firms who are able to service their clients’ needs with a spend of around £10,000 per annum. Small change for speed, reliability, and a competitive advantage.
Time to get off the app and into the driving seat.