Pieces of the e-discovery process like bulk document scanning, backup tape restoration, or small, straightforward cases may be done for a set price. However, vendors are in fierce competition for business, and pricing plans obscure the true cost of e-discovery services. For example, some vendors offer free or inexpensive collection but charge for processing. “That all sounds good in theory, but you have to know that if a vendor offers one piece for free they have to be making money somewhere,” says Speros.

Unfortunately, there is no standard pricing model used by e-discovery consultants and vendors, and their models are often deliberately opaque. Some aspects of the work are billed by volume, others by the hour or by gigabyte of data processed. Often, these pricing models can provide bad incentives for vendors and lead not just to overbilling, but poorly designed processes. Speros says that too often lawyers do not understand what vendors are offering.

In fact, many times the pricing models may actually induce vendors to perform unnecessary tasks, but which generate more fees. “When vendors were getting paid per page produced, you’d see a lot of blank pages printed and unnecessary documents produced,” says Speros. “Pricing per gigabyte of data produced is more predictable, but you find that when compressed files or other unforeseen issues are stumbled upon, the true size of a discovery request explodes.”

For lawyers who fail to understand the pricing model their vendor partners are using, it can be difficult to predict costs. But surprisingly, some lawyers will tell you that e-discovery costs are hard to control not because of vendor pricing plans, but because lawyers do not understand their own efforts. “The cost paid for vendor services is dwarfed by the cost of review,” says Socha. “For every dollar spent for every other facet of litigation support, five, six, often 10 dollars are spent for review. Vendor pricing is not the pivot problem. The problem is that way too much data is reviewed.”

Unfortunately, some bad incentives push lawyers to overreach and preserve more data than necessary. Of course, lawyers get paid more, but a fear of sanctions for failure to produce evidence often induces lawyers to preserve and review too much data.

Sanctions for failure to preserve electronic information are rare, but a few high-profile cases have convinced many lawyers that they need to collect and preserve all potentially discoverable data in a matter, regardless of cost. This mania can destroy any projected budget and inflate the cost of many cases, especially in the review process. “There is a perception that there is an established standard of care to review every document you can,” says Speros. “There is no such standard. The standard is to be reasonable in what you do.”

Controlling the scope of discovery can be realized if senior litigators are able to define and limit the scope of discovery. Most importantly, they need to clearly define data sources that will not be searched because the cost of preserving them would exceed the likely value of obtaining them, or because the same information can be obtained more cheaply from other sources. “It’s best to err on the side of not doing too much, but I know from experience it’s hard to do,” says Socha. “It’s an uncomfortable and awkward conversation to explain to the client why you racked up so many bills, but most lawyers, and, to my dismay, judges as well, feel like there is a duty to search all the data sources you can possibly find.”

via The Lure and Lore of EDD Commodity Pricing.