Pricing

Is the eDiscovery Market Growing or Shrinking? Or Maybe SHIFTING?: eDiscovery Trends

If you look at the number of eDiscovery companies that have been merged or acquired over the past couple of years, you might think that the market is shrinking.  On the other hand, if you look at the number of venture capital firms investing in the industry and the number of new startups, you might think that the market is growing.  So, which is it?

According to the ABA Journal (Market to manage electronic documents in a state of flux, written by Jason Krause), more than 30 major eDiscovery companies were acquired or merged, or they disappeared.  But at the same time, venture capital firms poured millions of dollars into startups and upstart companies offering technology to manage electronic documents in litigation.  So, with regard to whether the eDiscovery market is growing or shrinking, maybe it’s a bit of both.

Jason’s article observes that “Large corporate clients are resistant to paying millions for litigation support services when a lawsuit arises. Rather, large organizations are investing in tools to manage electronic records before litigation ever happens.” “E-discovery revenue streams and technology are opening up opportunities for companies with a focus on data from the point of creation, rather than just from the point of a legal trigger event,” says (my colleague) Rob Robinson, who (if you read our blog regularly, you already know this) tracks industry investment activity and conducts a quarterly eDiscovery business confidence survey on his excellent website Complex Discovery.

So, maybe it’s not so much that the market is shrinking or growing, as much as it’s shifting.  Hmmm…

Jason points to industry estimates as an example that the eDiscovery market isn’t as lucrative, noting that “analysts at IDC Research claimed the e-discovery industry earned $9.7 billion in revenues in 2006 and predicted they would explode and hit $21.8 billion by 2011. But last year, IDC published a new set of figures. It said the industry had only just surpassed $10 billion in revenues, making a much more modest prediction of $14.7 billion in revenue by 2019.”

Jason points to the revised Federal Rules of Civil Procedure as one potential cause for weakened demand from clients, particularly Rule 37(e) and the reduced likelihood for significant sanctions – due in large part to the new “intent to deprive” standard to be met for significant sanctions to be administered.  He notes that, because of the rule change, clients “are less terrified of sanctions and less willing to spend big bucks on a service provider who will collect and process massive data sets.”  That, in turn, is leading to consolidating of “old-line e-discovery vendors”, like the LDiscovery $410 million acquisition of Kroll Ontrack in October of last year and the $240 million merger of OpenText and Guidance Software in July of this year.

To me, the other factor of change in that equation is automation – we’re seeing automation technology increasingly being applied to both collection and processing, reducing the requirement for the professionals that used to perform those services.  At least to a degree, eDiscovery revenue is shifting from services to software (though there is still a need for certain services) and automation and cloud technologies are continuing to make those services more affordable.

However, given the fact that data within organizations is doubling every 1.2 years (but budgets aren’t) and also given how many sources of data there are to manage these days, organizations still have a challenge – how to manage the growing volume and variety of data within the organization to meet the information needs for that organization.  As a result, I think we’re seeing a shift (there’s that word again) in focus to the left side of the EDRM model and Information Governance.  The need to gain insight into an organization’s data will continue to be strong, regardless of current sanctions rules regarding data spoliation.  Maybe that’s one reason why all those venture capital firms are investing – not just for the growth in the eDiscovery market, but also the growth in the InfoGov market as well where many of the same software and services can be applied.  When you put both of them together, the future (in my opinion) is still bright.  I shift you not.  :o)

So, what do you think?  Is the eDiscovery market growing or shrinking?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Avoiding Glittering Generalities in Selecting eDiscovery Software – Considering Cost: eDiscovery Best Practices

Editor’s Note: If you read our blog regularly, you know that we frequently reference my friend and CloudNine colleague Rob Robinson’s excellent blog, Complex Discovery for various industry information, including quarterly business confidence surveys, eDiscovery software and service market “mashups” and information about industry mergers and acquisitions (among other things).  We’ve been discussing aspects of on-premise and off-premise eDiscovery offerings quite a bit lately (including this recent webcast conducted by Tom O’Connor and me a few weeks ago) and Rob has written a terrific article on the subject which he has graciously allowed me to publish here.  This is the fifth part of his multi-part article (parts 1, 2, 3 and 4 here, here, here and here) – we have published it in a series over the past couple of weeks.  Enjoy! – Doug

Considering Cost

“In economics, one of the most important concepts is ‘opportunity cost’ – the idea that once you spend your money on something, you can’t spend it again on something else.” Malcom Turnbull

Budgetary constraints are a common hurdle for law firms and legal departments seeking to address the legal, technological, and business elements of eDiscovery. This economic constraint is compounded by the lack of consistency, predictability, and transparency in the pricing of many software offerings, regardless of whether they are on-premise or off-premise, or based on emerging or mature technologies.

As law firms and legal departments strive to select the best solutions for their particular eDiscovery challenges, it is important for them to be able to compare and contrast the pros and cons of different offerings. While many vendors publicly present detailed offering attributes regarding security, capability, and complexity, many do not share public information on pricing and pricing models. Given the fact that budgetary constraints continue to be one of the leading elements impacting the conduct of discovery, by publicly publishing pricing, vendors can help simplify the eDiscovery decision-making process by removing one of the most common concerns early in the evaluation process. That concern being “how much is this going to cost.”

Additionally, just as many software providers seek to integrate the technology in their offerings to simplify discovery, prudent providers are now combining on-premise and off-premise pricing elements within their overall offering to simplify the software procurement process. An example of this pricing integration is the packaging of an overall solution that contains elements of both on-premise and off-premise offerings available for a prescribed timeframe at a single, understandable, and predictable cost.

Quick Takeaway: Given the fact that most eDiscovery software providers understand the cost of delivering their solutions to the market, it seems reasonable for those in the eDiscovery ecosystem to be able to request and expect to receive simplified pricing from providers. This simplified pricing should account for all elements of a software offering, regardless of whether it is on-premise, off-premise, or a combination of the two. Pricing should also be able to be provided for individual projects or time and volume defined subscriptions, trading length of user commitment for user cost benefits.

So, what do you think?  What factors do you consider when evaluating and selecting eDiscovery software?  Please share any comments you might have or if you’d like to know more about a particular topic.

Also, I’m excited to report that eDiscovery Daily has been nominated to participate in The Expert Institute’s Best Legal Blog Contest in the Legal Tech category!  Thanks to whoever nominated us!  If you enjoy our blog, you can vote for it and help it win a spot in their Best Legal Blogs Hall of Fame.  You can cast a vote for the blog here.  Thanks!

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Is Pricing Transparency Finally Happening in eDiscovery?: eDiscovery Trends

An age old issue in eDiscovery has been understanding and comparing pricing between various vendors and service providers.  It’s the old “apples vs. oranges” comparison when considering pricing.  A new article, which references a terrific benchmark test, may show that pricing transparency by at least two eDiscovery providers may be finally helping put eDiscovery pricing on common ground.

Rob Robinson’s article on his Complex Discovery blog (An eDiscovery Challenge: Pricing Consistency and Transparency) discusses how eDiscovery continues to challenge law firms and legal departments with a lack of consistency and transparency in pricing. Rob notes that this “lack of consistency and transparency appears to have many reasons with most originating from that fact that eDiscovery solutions (software and/or services) tend to be complex and require and understanding of need, volume, and duration before the configuration of a specific quote to assign a price to the value to be provided. However, with the advent of fourth generation eDiscovery solutions, it appears that some vendors are now comfortable enough with their understanding of the economics and capabilities of their solutions to publicly present pricing to current and potential customers.”

Rob shows how two eDiscovery providers (one of them happens to be CloudNine) have begun “publicly sharing the pricing of their technology solutions, providing an example of how consistent and transparent pricing can be highlighted leading eDiscovery vendors.”  He also references Craig Ball’s updated EDna Challenge from last year (which we covered here) that provides a hypothetical scenario where an eDiscovery solution needs to be provided for less than $5,000 under the following parameters:

  • Three Person Legal Team
  • Process, Search, Review, and Produce
  • 10 Custodians
  • 10-12 GB Total of Data
  • Up to 90 Day Review
  • Up to 21 Months Archiving

Under that framework, both solutions provide a cost estimate to address the hypothetical scenario.  Rob notes that “both offerings meet the technology and business challenges posed by the EDna Challenge”, but “the real value of this comparison is to present how the consistency and transparency of publicly published pricing allows for these types of comparisons without the need for specific challenges and with legal professionals being able to make initial comparisons without special or one-off quotes.”

Last year, for a presentation that I did for the State Bar of Texas, I wrote a white paper titled How SaaS Automation Has Revolutionized eDiscovery for Solo and Small Firms and the comparison of Craig’s 2009 EDna challenge (and the lack of full-featured solutions that could meet that challenge within the ascribed budget) to his 2016 EDna challenge (where several SaaS automation solutions could do so, albeit on a larger budget) was discussed in that white paper.  If anyone would like a copy, feel free to email me at daustin@cloudnine.com.  Hopefully, the trend toward pricing transparency continues and, thanks to Craig, we have a framework for truly comparing apples to apples.

So, what do you think?  Is comparing pricing from multiple eDiscovery vendors a challenge in your organization? Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Is a Blended Document Review Rate of $466 Per Hour Excessive?: Best of eDiscovery Daily

Even those of us at eDiscovery Daily have to take an occasional vacation (which, as you can see by the picture above, means taking the kids to their favorite water park); however, instead of “going dark” for a few days, we thought we would take a look back at some topics that we’ve covered in the past.  Today’s post is our all-time most viewed post ever.  I guess it struck a nerve with our readers!  Enjoy!

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Remember when we raised the question as to whether it is time to ditch the per hour model for document review?  One of the cases we highlighted for perceived overbilling was ruled upon here.

In the case In re Citigroup Inc. Securities Litigation, No. 09 MD 2070 (SHS), 07 Civ. 9901 (SHS) (S.D.N.Y. Aug. 1, 2013), New York District Judge Sidney H. Stein rejected as unreasonable the plaintiffs’ lead counsel’s proffered blended rate of more than $400 for contract attorneys—more than the blended rate charged for associate attorneys—most of whom were tasked with routine document review work.

In this securities fraud matter, a class of plaintiffs claimed Citigroup understated the risks of assets backed by subprime mortgages. After the parties settled the matter for $590 million, Judge Stein had to evaluate whether the settlement was “fair, reasonable, and adequate and what a reasonable fee for plaintiffs’ attorneys should be.” The court issued a preliminary approval of the settlement and certified the class. In his opinion, Judge Stein considered the plaintiffs’ motion for final approval of the settlement and allocation and the plaintiffs’ lead counsel’s motion for attorneys’ fees and costs of $97.5 million. After approving the settlement and allocation, Judge Stein decided that the plaintiffs’ counsel was entitled to a fee award and reimbursement of expenses but in an amount less than the lead counsel proposed.

One shareholder objected to the lead counsel’s billing practices, claiming the contract attorneys’ rates were exorbitant.

Judge Stein carefully scrutinized the contract attorneys’ proposed hourly rates “not only because those rates are overstated, but also because the total proposed lodestar for contract attorneys dwarfs that of the firm associates, counsel, and partners: $28.6 million for contract attorneys compared to a combined $17 million for all other attorneys.” The proposed blended hourly rate was $402 for firm associates and $632 for firm partners. However, the firm asked for contract attorney hourly rates as high as $550 with a blended rate of $466. The plaintiff explained that these “contract attorneys performed the work of, and have the qualifications of, law firm associates and so should be billed at rates commensurate with the rates of associates of similar experience levels.” In response, the complaining shareholder suggested that a more appropriate rate for contract attorneys would be significantly lower: “no reasonable paying client would accept a rate above $100 per hour.” (emphasis added)

Judge Stein rejected the plaintiffs’ argument that the contract attorneys should be billed at rates comparable to firm attorneys, citing authority that “clients generally pay less for the work of contract attorneys than for that of firm associates”:

“There is little excuse in this day and age for delegating document review (particularly primary review or first pass review) to anyone other than extremely low-cost, low-overhead temporary employees (read, contract attorneys)—and there is absolutely no excuse for paying those temporary, low-overhead employees $40 or $50 an hour and then marking up their pay ten times for billing purposes.”

Furthermore, “[o]nly a very few of the scores of contract attorneys here participated in depositions or supervised others’ work, while the vast majority spent their time reviewing documents.” Accordingly, the court decided the appropriate rate would be $200, taking into account the attorneys’ qualifications, work performed, and market rates.

For this and other reasons, the court found the lead counsel’s proposed lodestar “significantly overstated” and made a number of reductions. The reductions included the following amounts:

  • $7.5 million for document review by contract attorneys that happened after the parties agreed to settle; 20 of the contract attorneys were hired on or about the day of the settlement.
  • $12 million for reducing the blended hourly rate of contract attorneys from $466 to $200 for 45,300 hours, particularly where the bills reflected that these attorneys performed document review—not higher-level work—all day.
  • 10% off the “remaining balance to account for waste and inefficiency which, the Court concludes, a reasonable hypothetical client would not accept.”

As a result, the court awarded a reduced amount of $70.8 million in attorneys’ fees, or 12% of the $590 million common fund.

So, what do you think?  Was the requested amount excessive?   Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

George Socha of Socha Consulting LLC: eDiscovery Trends

This is the second of the 2016 LegalTech New York (LTNY) Thought Leader Interview series.  eDiscovery Daily interviewed several thought leaders at LTNY this year to get their observations regarding trends at the show and generally within the eDiscovery industry.  Unlike previous years, some of the questions posed to each thought leader were tailored to their position in the industry, so we have dispensed with the standard questions we normally ask all thought leaders.

Today’s thought leader is George Socha.  A litigator for 16 years, George is President of Socha Consulting LLC, offering services as an electronic discovery expert witness, special master and advisor to corporations, law firms and their clients, and legal vertical market software and service providers in the areas of electronic discovery and automated litigation support. George has also been co-author of the leading survey on the electronic discovery market, The Socha-Gelbmann Electronic Discovery Survey; in 2011, he and Tom Gelbmann converted the Survey into Apersee, an online system for selecting eDiscovery providers and their offerings.  In 2005, he and Tom Gelbmann launched the Electronic Discovery Reference Model project to establish standards within the eDiscovery industry – today, the EDRM model has become a standard in the industry for the eDiscovery life cycle and there are nine active projects with over 300 members from 81 participating organizations.  George has a J.D. for Cornell Law School and a B.A. from the University of Wisconsin – Madison.

What are your general observations about LTNY this year and about emerging eDiscovery trends overall?

{Interviewed the first morning of LTNY, so the focus of the question to George was more about his expectations for the show and also about general industry trends}.

This is the largest legal technology trade show of the year so it’s going to be a “who’s who” of people in the hallways.  It will be an opportunity for service and software providers to roll out their new “fill in the blank”.  It will be great to catch up with folks that I only get to see once a year as well as folks that I get to see a lot more than that.  And, yet again, I don’t expect any dramatic revelations on the exhibit floor or in any of the sessions.

We continue to hear two recurring themes:  the market is consolidating and eDiscovery has become a commodity. I still don’t see either of these actually happening.  Consolidation would be if some providers were acquiring others and no new providers were coming along to fill in the gaps, or if a small number of providers was taking over a huge share of the market.  Instead, as quickly as one provider acquires another, two, three or more new providers pop up and often with new ideas they hope will gain traction.  In terms of dominating the market, there has been some consolidation on the software side but as to services provider the market continues to look more like law firms than like accounting firms.

In terms of commoditization, I think we still have a market where people want to pay “K-mart, off the rack” prices for “Bespoke” suits.  That reflects continued intense downward pressure on prices.  It does not suggest, however, that the e-discovery market has begun to approximate, for example, the markets for corn, oil or generic goods.  E-discovery services and software are not yet fungible – with little meaningful difference between them other than price.  I have heard no discussion of “e-discovery futures.”  And providers and consumers alike still seem to think that brand, levels of project management, and variations in depth and breadth of offerings matter considerably.

Given that analytics happens at various places throughout the eDiscovery life cycle, is it time to consider tweaking the EDRM model to reflect a broader scope of analysis?

The question always is, “what should the tweak look like?”  The questions I ask in return are “What’s there that should not be there?”, “What should be there that is not?” and “What should be re-arranged?”  One common category of suggested tweaks are the ones meant to change the EDRM model to look more like one particular person’s or organization’s workflow.  This keeps coming up even though the model was never meant to be a workflow – it is a conceptual framework to help break one unitary item into a set of more discrete components that you can examine in comparison to each other and also in isolation.

A second set of tweaks focuses on adding more boxes to the diagram.  Why, we get asked, don’t we have a box called Early Case Assessment, and another called Legal Hold, and another called Predictive Coding, and so on. With activities like analytics, you can take the entire EDRM diagram and drop it inside any one of those boxes or in that circle.  Those concepts already are present in the current diagram.  If, for example, you took the entire EDRM diagram and dropped it inside the Identification box, you could call that Early Case Assessment or Early Data Assessment.  There was discussion early on about whether there should be a box for “Search”, but Search is really an Analysis function – there’s a home for it there.

A third set of suggested tweaks centers on eliminating elements from the diagram.  Some have proposed that we combine the processing and review boxes into a single box – but the rationale they offer is that because they offer both those capabilities there no longer is a need to show separate boxes for the separate functions.

What are you working on that you’d like our readers to know about?

First, we would like to invite current and prospective members to join us on April 18 for our Spring meeting which will be at the ACEDS conference this year.  The conference is from April 18 through April 20, with the educational portion of the conference slated for the 19th and 20th.

For several years at the conference, ACEDS has given out awards honoring eDiscovery professionals.  To congratulate this year’s winners we will be giving them one-year individual EDRM memberships.

On the project side, one of the undertakings we are working on is “SEAT-1,” a follow up to our eMSAT-1 (eDiscovery Maturity Self-Assessment Test).  SEAT-1 will be a self-assessment test specifically for litigation groups and law firms.  The test is intended to enable them to better assess where they are at, how they are doing and where they want to be.  We are also working on different ways to deliver our budget calculators.  It’s too early to provide details on that, but we’re hoping to be able to provide more information soon.

Finally, in the past year we have begun to develop and deliver member-only resources. We published a data set for members only and we put a new section of EDRM site with information about the changes to the Federal rules, including a comprehensive collection of information about the changes to the rules.  This year, we will be working on additional resources to be available to just our members.

Thanks, George, for participating in the interview!

And to the readers, as always, please share any comments you might have or if you’d like to know more about a particular topic!

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

If You Ever Have to Compare RFP Vendors, EDRM Has a New Calculator for You: eDiscovery Best Practices

Let’s face it, comparing bids from different eDiscovery vendors on an “apples to apples” basis can be difficult as each vendor seems to have its own unique pricing structure.  However, a new calculator from EDRM can help simplify the comparison process to identify the low cost provider.

The designer of the latest calculator is Casey Flaherty, former in-house counsel for Kia Motors America and founder of Procertas, a company offering training to corporate legal teams on improving efficiency and reducing costs.  This is the sixth budget calculator available from EDRM (we covered the previous five here, here, here, here and here).

Flaherty’s budget calculator is three sets of calculators in one. The Baseline Calculator sheet contains the client’s current pricing model. The Standard Calculator sheets compare vendors against each other and a baseline. The Proposed Calculator sheets – identified by a “(P)” in the sheet name – enable you to track additional savings vendors present that they believe they will be able to achieve. Each spreadsheet provides sample numbers to better understand how the workbook performs calculations, but Flaherty recommends that each user replace those with their own figures.

The current workbook provides several sample sheets, with the Standard Calculator and Proposed Calculator sheets named from #1 to #5 (add a “(P)” in the sheet name of the Proposed Calculator sheets and you get the idea.  Obviously, those sheets could be easily renamed to identify the vendors being considered in the RFP process and sheets can be easily added (and copied) or deleted as needed to reflect the total comparison.

Each sheet contains sections for Collection, Processing, Review and Production, with Assumptions, Pricing and Alternative Pricing sub-sections for each:

  • Collection: includes assumption options for tracking collection at the custodian, share drive, event, days, travel hours and/or GB basis;
  • Processing: includes assumption parameters for tracking initial ingested volume, filter rates for pre-process and ECA, tech/PM hours and tracking hosting for near-line data;
  • Review: is the most comprehensive section and tracks metrics for everything from reviewer and user licenses (not all providers charge those, so shop around) to consultation hours to support for tracking Technology Assisted Review (TAR) and even machine translation and bilingual review(!);
  • Production: includes tracking docs and GBs produced and provides options for tracking both native and TIFF productions.

The workbook is completely customizable, so if you’re good with Excel, you can add or remove categories as needed.  The workbook is not locked, so calculation cells are editable (either by design or accidentally) – again, if you’re good with Excel, you can lock down individual sheets or the entire workbook to lock down editing of calculation cells.  A terrific resource if you need to compare quotes from eDiscovery vendors for your project!

To download this calculator (or any or all of the previous five EDRM calculators), click here.

So, what do you think?  How do you handle evaluating bids from multiple eDiscovery vendors?   Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Should Contract Review Attorneys Receive Overtime Pay?: eDiscovery Trends

Whether they should or not, maybe they can – if they’re found NOT to be practicing law, according to a ruling from the Second U.S. Circuit Court of Appeals.

According to a story in The Posse List (Contract attorney lawsuit against Skadden Arps can proceed, appeals court says; case could enable temporary lawyers hired for routine document review to earn extra wages), the Second U.S. Circuit Court of Appeals vacated the judgment of the district court and remanded the matter for further proceedings, ruling that a lawsuit demanding overtime pay from law firm Skadden, Arps and legal staffing agency Tower Legal Solutions can proceed.

The plaintiff, David Lola, on behalf of himself and all others similarly situated, filed the case as a Fair Labor Standards Act collective action against Skadden, Arps and Tower Legal Staffing.  He alleged that, beginning in April 2012, he worked for the defendants for fifteen months in North Carolina, working 45 to 55 hours per week and was paid $25 per hour. He conducted document review for Skadden in connection with a multi-district litigation pending in the United States District Court for the Northern District of Ohio. Lola is an attorney licensed to practice law in California, but he is not admitted to practice law in either North Carolina or the Northern District of Ohio.

According to the ruling issued by the appellate court, “Lola alleged that his work was closely supervised by the Defendants, and his entire responsibility . . . consisted of (a) looking at documents to see what search terms, if any, appeared in the documents, (b) marking those documents into the categories predetermined by Defendants, and (c) at times drawing black boxes to redact portions of certain documents based on specific protocols that Defendants provided.’  Lola also alleged that Defendants provided him with the documents he reviewed, the search terms he was to use in connection with those documents, and the procedures he was to follow if the search terms appeared.

The defendants moved to dismiss the complaint, arguing that Lola was exempt from FLSA’s overtime rules because he was a licensed attorney engaged in the practice of law. The district court granted the motion, finding (1) state, not federal, standards applied in determining whether an attorney was practicing law under FLSA; (2) North Carolina had the greatest interest in the outcome of the litigation, thus North Carolina’s law should apply; and (3) Lola was engaged in the practice of law as defined by North Carolina law, and was therefore an exempt employee under FLSA.”

While the appellate court agreed with the first two points, it disagreed with the third.  In vacating the judgment of the district court and remanding the matter for further proceedings, the appellate court stated in its ruling:

“The gravamen of Lola’s complaint is that he performed document review under such tight constraints that he exercised no legal judgment whatsoever—he alleges that he used criteria developed by others to simply sort documents into different categories. Accepting those allegations as true, as we must on a motion to dismiss, we find that Lola adequately alleged in his complaint that he failed to exercise any legal judgment in performing his duties for Defendants. A fair reading of the complaint in the light most favorable to Lola is that he provided services that a machine could have provided.”

A link to the appeals court ruling, also available in the article in The Posse List, can be found here.

So, what do you think?  Are document reviewers practicing law?  If not, should they be entitled to overtime pay?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

“How Much Will it Cost?” is Not Necessarily the Right Question to Ask: eDiscovery Best Practices

This is a topic we covered last fall, but it has come up again several times with clients (and prospective clients) recently and since we have so many new viewers and subscribers in the past couple of months (thanks to our recently announced education partnership with EDRM and some very kind words from Craig Ball on his excellent Ball in Your Court blog), it bears discussing again.

By far, the most important (and, therefore, the most asked) question asked of eDiscovery providers is “How much will it cost?”. Actually, you should be asking a few questions to get that answer – if they are the right questions, you can actually get the answer you seek.

With these questions, you can hopefully prevent surprises and predict and control costs:

  • What is the Unit Price for Each Service?: It’s important to make sure that you have a clear understanding of every unit price the eDiscovery provider includes in an estimate. Some services may be charged per-page or per-document, while others may be charged per gigabyte, and others may be charged on an hourly basis. It’s important to understand how each service is being charged and ensure that the price model makes sense.
  • Are the Gigabytes Counted as Original or Expanded Gigabytes?: For the per gigabyte services, it’s also important to make sure that you whether they are billed on the original GBs or the expanded GBs. Expanded GBs can be two to three times as large (or more) as the original GBs. Some services are typically billed on the original GBs (or at least the unzipped GBs) while others are typically billed on the expanded GBs. It’s important to know which metric is used; otherwise, your ESI collection may be larger than you think and you may be in for a surprise when the bill comes.
  • Will I Get an Estimate in Advance for Hourly Billed Services?: When you ask for specific hourly billed services from the provider (such as professional consulting or technician services) to complete a specific task, it’s important to get an estimate to complete that task as well as advanced notification if the task will require more time than estimated.
  • What Other Costs are Billed?: It’s not uncommon for other charges to be included in invoices, such as user fees for hosting services (not all hosting providers charge user fees, so it’s important to comparison shop) or project management, which can be an important component to the services provided by the eDiscovery provider. And, don’t forget charges for supplies and shipping. The rates charged for these services can vary widely, from non-existent to exorbitant. Understanding what other costs are being billed and the rates for those services is important to controlling costs.
  • If Prices are Subject to Change, What is the Policy for Those Changes and Notification of Clients?: Let’s face it, prices do change, even in the eDiscovery industry. In ongoing contracts, most eDiscovery providers will retain the right to change prices to reflect the cost of doing business (whether they exercise those rights or not). It’s important to know the terms that your provider has set for the ability to change prices, what the notification policy is for those price changes and what your options are if the provider exercises that right.

With the right questions and a good understanding of your project parameters, you can get to the answer to that elusive question “How much will it cost?”.

So, what do you think? How do you manage costs with your eDiscovery providers? Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

How Much Will it Cost? – eDiscovery Best Practices

By far, the most important (and, therefore, the most asked) question asked of eDiscovery providers is “How much will it cost?”.  Actually, you should be asking a few questions to get that answer – if they are the right questions, you can actually get the answer you seek.

With these questions, you can hopefully prevent surprises and predict and control costs:

  • What is the Unit Price for Each Service?: It’s important to make sure that you have a clear understanding of every unit price the eDiscovery provider includes in an estimate.  Some services may be charged per-page or per-document, while others may be charged per gigabyte, and others may be charged on an hourly basis.  It’s important to understand how each service is being charged and ensure that the price model makes sense.
  • Are the Gigabytes Counted as Original or Expanded Gigabytes?: For the per gigabyte services, it’s also important to make sure that you whether they are billed on the original GBs or the expanded GBs.  Expanded GBs can be two to three times as large (or more) as the original GBs.  Some services are typically billed on the original GBs (or at least the unzipped GBs) while others are typically billed on the expanded GBs.  It’s important to know which metric is used; otherwise, your ESI collection may be larger than you think and you may be in for a surprise when the bill comes.
  • Will I Get an Estimate in Advance for Hourly Billed Services?: When you ask for specific hourly billed services from the provider (such as professional consulting or technician services) to complete a specific task, it’s important to get an estimate to complete that task as well as advanced notification if the task will require more time than estimated.
  • What Incidental Costs are Billed?: It’s not uncommon (or unreasonable) for incidentals like project management, supplies and shipping to be included in invoices.  In particular, project management services can be an important component to the services provided by the eDiscovery provider.  But, the rates charged for these incidentals can vary widely.  Understanding what incidentals are being billed and the rates for those services is important to controlling costs.
  • If Prices are Subject to Change, What is the Policy for Those Changes and Notification of Clients?: Let’s face it, prices do change, even in the eDiscovery industry.  In ongoing contracts, most eDiscovery providers will retain the right to change prices to reflect the cost of doing business (whether they exercise those rights or not).  It’s important to know the terms that your provider has set for the ability to change prices, what the notification policy is for those price changes and what your options are if the provider exercises that right.

With the right questions and a good understanding of your project parameters, you can get to the answer to that elusive question “How much will it cost?”.

So, what do you think?  How do you manage costs with your eDiscovery providers?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Smaller Law Firms Save Big with Cloud-Based eDiscovery – eDiscovery Trends

According to a new article in ABA Journal (Cloud-based e-discovery can mean big savings for smaller firms, written by Joe Dysart), if you are a smaller law firm, it may make more sense to “rent” your eDiscovery applications in the “cloud” rather than bring a full-fledged hardware and software solution in-house.

Dysart’s article quotes a couple of panelists from a panel session at the recent LegalTech (LTNY) conference, including panelist Alan Winchester, a partner at the New York City firm Harris Beach, who stated: “For firms without robust IT departments, it grants them the experts to manage the technology operations and security.”

The article also identifies some benefits of using cloud-based eDiscovery solutions, including:

  • No need for software updating: Updates to cloud software tend to evolve over time, with users easily absorbing smaller, steadier changes over a much longer time span.
  • Best practices are continually updated: eDiscovery cloud vendors learn to avoid the pitfalls with software much more quickly, given that they are working with multiple law firms at once. Essentially, the mistakes and misunderstandings that can happen with an eDiscovery software package tend to happen at a much faster rate.
  • No need for yearlong rollouts: With eDiscovery in the cloud, all the hardware and software installation logistics are sidestepped. Instead, firms can focus entirely on training staff and bringing them up to speed.
  • The return on investment can be very attractive: Smaller law firms may go months or even years before needing a robust eDiscovery package. Instead of spending major dollars – and then watching helplessly as the system grows obsolete – they can go to the cloud for eDiscovery on an ad hoc basis and often save handsomely.

As platform manager for CloudNine Discovery’s OnDemand® eDiscovery review application (shameless plug warning!), I can attest to the benefits above with some of our own clients.  When we have software updates to apply, it’s a simple rollout (typically on a Saturday night for up to a couple of hours – our developers have no life!) for all users of the software.  And, assisting various clients has enabled us to learn how the software can be modified to meet their needs (the priorities in our ever-changing development roadmap are largely influenced by our own clients’ requests).

If you’re a small firm shopping to “rent” an eDiscovery application, consider this:

  • Know where your data is stored: It’s your data, so you should be able to know where it’s stored and know that it’s secure.  Is it stored in the US or internationally?  You don’t want to have issues getting to your data when you need it most.
  • Try it before you buy it: The cloud provider should let you conduct a no risk trial with your own data before you have to make a purchasing decision (see the banner below if you want to check out CloudNine’s no-risk trial offer).
  • Training and support should be free: The application should be easy to use, but it still helps to get training as well as application support when questions arise.  However, you shouldn’t have to pay for it.

As Dysart’s article concludes, “law firms do need to take a hard look at the technology both ways before taking the plunge”, so it’s always important to consider the pros and cons as it applies to your firm.  Nonetheless, the benefits of cloud-based eDiscovery solutions make it an attractive option for many law firms today, especially small firms with limited budget and resources to manage the ESI in their cases effectively.

So, what do you think? Have you considered cloud-based solutions for your eDiscovery projects? Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.