Thursday, December 8, 2011

The Dark Side of Review Costs

Many blog posts and articles of the past have been prompted by Law.Com articles.  Anytime writings prompt discussion and change, articles are useful whether you agree with the journalist or not.  A recent article prompts this discussion and would fall in the partially agree to strongly disagree category. 
Evan Koblentz’s post The Dark Side of E-Discovery Pricing” has prompted some emotional responses from “vendors” and lawyers alike.  The upshot of the article is that e-Discovery “vendors” are hiding the true costs.  Inflated pricing is the suggestion, although Evan is not that direct. 
Evan’s post talks about an exchange with some unnamed CEO of an eDiscovery company that stated the following when asked about cost: 
"[The CEO] believes people don't understand how e-discovery is priced or why it costs so much. This trend of price reduction will negatively effect the quality of the discovery process, encourage poor results and further cloud the visibility and understanding of the pricing structure behind the discovery process. ... Yes, the e-discovery process can be expensive but if you reduce the cost or offer free services you will jeopardize the quality and it will cost clients more in the long run."
Evan took issue with that statement writing: 
“Unfortunately, vendors being vague about pricing is the norm, not the exception. The majority of times when I interview companies about their legal technology products, and ask what about costs, they answer, "It depends," followed by numerous reasons why -- some valid, in my opinion, some not. But at least half of the time they do tell me the approximate typical cost, lest customers (and reporters) assume that non-answers mean it's very expensive.”
At first blush, I emotionally and loyally want to side with my competitor here (that unnamed CEO Evan mentions).  While true that some “vendors” do in fact have a hard time explaining or defending their cost models, the good ones in fact do not.  However, figuring out what anything costs requires enough information about what it is you are being asked to do.  Lawyers by and large don’t understand data preservation, processing, filtering techniques, production formats or really most of the issues that arise with data and the importance of doing it right.  Not in terms of something bad happening in court – that fear that Evan writes about.  Rather, in terms of what it is going to cost when you don’t do it right just to get that technology cost down.   Those ignorant of the process don’t understand the large volumes of information corporations are stashing away and are surprised when 10 witnesses have 1,000,000 files between them - literally.  And to someone like Evan, who has likely never darkened a court room door, put an exhibit sticker on actual useful piece of evidence, much less worked the business end of a law suit, it might seem like something that should be simple.  To someone who has spent literally decades supporting lawyers as has this commentator, they know that much of the effort in discovery is in fact wasted effort.  In any case of any size, there are quite literally a handful of documents that have any value to the actual lawyers who will have to stand up in court and use them.  Yet, lawyers are asking “vendors” to process literally billions of files every day in any given corner of the country. Evan is right, cost is out of control. But, the cost that is out of control goes beyond technology cost.
I recently had the great honor to sit with my old friend Pam Radford of Legal Media, Inc. and we reminisce about all of our trials over the years (her list is much longer than mine). 
We talked about how evidence is presented today vs. 10 years ago.  I explained how much time and effort we spend today in discovery (where I spend all of my time these days) on the unimportant.  Processing, filtering, reviewing and producing millions of files that frankly have no value to someone like Pam who is interested only in what the lawyers will use at deposition or trial.  That kind of effort is indeed expensive no matter how much you beat on the “vendor” about price.  Pressing the “vendors” to drive the unit cost down does not address the real problem, however.  That CEO is right.  At some point the price gets driven down so far that corners are cut.  Whole sale processing and review of large amounts of data become the norm.  Untenable search and filtering techniques are used because doing it right is considered “expensive”.  The real problem - attorney’s fees – does not get addressed.  Those that have actually seen the inside of the courtroom have to admit that the real problem is too much information and not enough decision about what IS important.  When you consider that on average 1,000 documents will cost $1,000 to review at $100 per hour (if you’re lucky enough to get a review rate that low), using cut rate pricing and technology, often 80% of what has to be reviewed is useless, the value of filter advice and technology becomes apparent.  But you have to be willing to listen to a new, proven approach.   Evan is right.  “Pricing” should be simpler.  Evan is just a journalist and in many ways like our clients in terms of being ill-equipped to understand what IT will cost. 

When considering cost, IT really does “depend”.   How much you spend depends largely on what the lawyers wants done and whether they will consider defensible filtering methods that will keep from processing and reviewing (the largest cost) a bunch of irrelevant information.  IT will depend upon how much “exception handling” is required.  IT will depend upon whether, as has been the case before, some lawyer wants all excel spreadsheets hand formatted before everything is tiffed (today a useless, wasted effort) before production as opposed to producing native files.  IT depends upon whether the corporation will listen to advice and spend some time and money toward reducing the amount of email they retain through unmanaged PST files (as an example).

So, Evan, consider interviewing “service providers” as opposed to a "vendor".  A vendor is someone who sells hot dogs on the street corner in NYC.  Or, in our business they bring cookies and can take care of your copy job needs as well.  Your readers can find a vendor with an eDiscovery application anywhere and that vendor will probably do the work at a very low rate just to get your business.  And then there are those cookies.  If all you are focused upon is that technology cost, and miss the real cost of review, you miss the most important component of the ROI.  A “service provider” is someone who has a great deal of experience and as your partner will help you determine the most cost effective approach based upon experience.  EDiscovery is not just a technology pricing cost analysis.  Indeed, technology cost is about 20% of the overall cost of discovery.  Paying lawyers to shift through all that unimportant information using scattershot filtering methods, or insisting upon reviewing everything is the real problem that needs solving.  Who do you want solving that problem?  A vendor, or a real trusted advisor that has proven methods for solving the problem, but at a higher rate than that vendor?