25 October 2014

Litigation Specialist

Snehi Kumari - Hi-Tech LPO

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eDiscovery and Budgeting: Cost Approaches

03 July 2014  |  1093 views  |  0

Organizations have realized that eDiscovery is an inevitable process. Hence the wisest way out, is to focus on the pit falls of eDiscovery and prepare for them.

The prominent challenges include issues like evolving rules, new case laws, developing technology and the pressures of meeting tight deadlines to name a few. However, the gravest challenge that precedes others, and is often overlooked by firms is - predicting and managing the costs related to eDiscovery. For the last few years, complex data sources such as social media and mobile devices have seen tremendous growth. Due to this, data volumes have also grown exponentially and hence eDiscovery undertakings have become huge and highly complex. In such a scenario, it becomes all the more important to run accurate cost approximations for eDiscovery projects.

Lawyers are not conditioned to be number crunchers, but for clients it is pure business and hence keeping track of costs and planning budgets becomes crucial. This is why it is increasingly important to deal with eDiscovery as a business process. 

Modular Approach: Handling eDiscovery as a Business Process:

An evident solution is streamlining the interrelated tasks and implementing a set of repeatable processes. “Not as easy as it sounds!” eDiscovery teams face the challenges of dealing with spiraling data volumes and escalating costs that result in increasing complexities.  Planning budgets and working towards cutting down costs across the project in one go is a tad bit too ambitious.  A simpler and more organized approach is to divide your project into modules. Focus on high impact modules where you can easily implement cost cutting strategies without any compromise. It is also important that once the changes are implemented eDiscovery team measures pertinent metrics to keep track of the improvements and impacts.

Over the time, two costs focused – but highly disparate approaches have gained popularity. The success or failure of these models hugely depends on your company’s profile, internal resources and litigation portfolio. 

eDiscovery - Budget Focused Outsourcing Approaches: 

Line Item Approach: 

In a line item approach, an eDiscovery undertaking is broken down into separate items like collection of data, data processing, review and production; these items are fully interchangeable between vendors. These outsourced commodities are lined into an assembly by an in-house team. This might seem easy and streamlined on the whole however; a line-item model may mean more risk and increased cost. Also, coordinating and juggling between modules and between vendors means that the coordination and operational time increases. On paper it is a lucrative proposition, however there are several loop holes in this approach.

In order to lower the overall costs, organizations often source the cheapest software that may not be equipped with advanced capabilities like visualization and suggested coding for increasing reviewers productivity. Lack of these abilities in turn, leads to increased complexities and hence increased review costs. Any one module across the eDiscovery process if mishandled and mismanaged impacts the entire project and hence organizations often do not receive the quality of eDiscovery they expect.

Another downside to this approach is that if keywords change at a later stage in the project, no vendor takes accountability for the same. Additionally if the scope of a project changes during the course, low cost software might not be able to scale accordingly. In such cases, it becomes difficult to re-process or re-review in a disintegrated line item approach. Since different tools are used, complications and additional expenses can also arise. Many organizations take up a line item approach to save costs, however fail miserably as they cannot keep a track of eDiscovery costs or conduct post matter assessments.

Total Cost Approach

The total cost model is an alternate approach where a single vendor handles the entire eDiscovery project. It gives a flat rate that covers all the facets of eDiscovery including consulting, technology and project management. Here the vendor estimates costs, sets budgets, coordinates and manages workflows across the undertaking. Complete control of the project work flow is with a single vendor; as a result, inefficiencies are reduced. However, with control comes responsibility, the onus of providing high quality eDiscovery within the budget constrains lies on the service provider. Total cost approach allows organizations to set budgets more efficiently as there is a better clarity on the total costs incurred per document/per gigabyte. Consequently, organizations invest fewer resources and acquire a suitable combination of high quality eDiscovery within their budget constraints.

However, in this approach, it is imperative for law firms, and legal counsels to audit the vendor resources and infrastructure to make sure that the vendor can actually deliver what is promised. It is also important to be sure that the vendor has an expandable infrastructure and in case of failure or changes in the project under exceptional circumstances, the vendor will be able to handle the complexities and challenges efficiently. The project should not get stalled under any conditions, be prepared for what if scenarios.

Negotiate the pricing strategy with your vendor, and understand how it will be modified with processing, de-duplication and culling. Ask your vendor to declare any additional fees or contract re-negotiation clauses if the scope of eDiscovery changes. Prepare a detailed contract, with specifications of whether your vendor will charge based on use of technology, per reviewer based or based on volume. Also, be clear about costs associated with data hosting.

The best use of above mentioned approaches and budgeting considerations as per your organizational needs can definitely impact the bottom lines. However, it is unrealistic to expect exact budget estimates right at the onset. Collecting information at each stage and assuming certain parameters can allow estimating an amount; this proposed budget should not however, colossally differ from the actual costs incurred.

Forming eDiscovery Budgets Based on Assumptions:

eDiscovery process is fraught by unpredictable variations during its lifecycle, and a seemingly small item can have a profound impact on the total costs. Hence budgeting can only be done based on assumptions, and it is next to impossible to prepare solid estimates. In order to ensure that the actual costs incurred do not differ radically from the construed estimates, it is important to involve eDiscovery experts in the process of project planning and budgeting. Inputs from eDiscovery experts can help identify the potential issues and address them before costs are finalized and an agreement is signed. Look out for signs that might affect your assumptions. Be alert and identify any changes to the scope of discovery, or those that can cause your assumptions to change. In event of any such changes, re-estimate your budgets and reset everyone’s expectations.

There are several variable factors involved in eDiscovery; hence, proposing a solid estimate right away is not possible. It is very important to convey it to your clients that, it will take some time before you estimate an amount. Gather all the related information and understand the variables that can affect the budget. Explain it to your clients that the proposed budget is based on assumptions and the gathered information, hence is subject to even the smallest changes during the project.

Document Your Assumptions to Avoid Conflicts:

If you have fixed a certain amount based on the assumption then it makes sense to put it down in writing. It is a crucial step that will help avoid any kind of misunderstandings and the resulting conflicts related to eDiscovery budgets.

Certain aspects can be assumed, coupled with inputs from clients and from past experiences, a rough budgeting outline can be proposed. Information collection at each stage of the project is crucial; as at every stage several revisions and changes are reflected across the project. Budgets thus, need to be refined and contoured according these revisions and collected information.

With the arrival of ESI, data volumes are spiraling at a fast rate, and this has resulted in increased complexities and hence challenges in budgeting for eDiscovery. To summaries we can say that, be prepared, numbers will always change. Communication is the key; keep everyone involved in loop about any kind of variations in costs, data volumes and the resulting expectations. 

Image Courtesy of: cooldesign/FreeDigitalPhotos.net

Various Budgeting Approaches for Ediscovery

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name

Snehi Kumari

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Manager Legal Process

company name

Hi-Tech LPO

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2014

location

Ahmadabad

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Snehi Pathak works as a project manager with Hi-Tech LPO. She is involved in the broader areas of...

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