Wednesday, September 23, 2009

"Why does eDiscovery cost so much?" ... DIY Kits don't come with Experience ...

In 2005 "Industry Analysts" believed that by 2014 the Litigation Support Industry would boom to a $10billion money pit. Not including Attorney / Law Firm fees. The shear amount of electronic data within companies has grown 5k% since the intrduction of Office 3.1 (Windows 95). As a society, we were once morphed about saving files to a 3.5" 1.44mb floppy disk now we salivate while purchasing 1TB external (portable) drives from Wal-mart for less than $100 ... both of which easily fit in your pocket.

Take a walk with me and lets review some more history as I attempt to paint a picture depicting the future "commoditization" of Litsupport Services.

In the early 1990's Business Process Outsourcing made great business sense as companies took notice of overhead costs that were a distraction from its core competency (and bottom line). Law Firms could easily identify with how difficult and daunting of a task it took to track and recoup "minor" expenses related to a specfic client matter. These minor expenses, if identified, could easily add revenue and profit to the bottom line. The Outsourcing concept was simple as it focused on the conversion of uncontrolled variable and consumable costs to becoming a profit center for the law firm. Today we refer to this practice of outsourcing as Litigation Support Services (Litsupport).

During the early 1990's Litsupport was all about paper. All pertinent business information was maintained in a paper document that required a multitude of duplicative sets. It was not uncommon to make 5-7 copies during discovery in preparation for a relevancy review. Easily followed by another 15 sets for productions to the Courts and Opposing Coumcil.

Year ... Medium of Discovery ... Major Variable Cost Components

1990: Paper = per Click Model

1994: Paper + Floppy Disk = per Click + per Printed Page + per Image

1998: Paper + Floppy + CD = per Click + per Image + per Printed Page

2003: Paper + CD + DVD = per Click + per Image + per Gigabyte

"Paper will go away and a new star will emerge ... eDiscovery" ... (cha-ching cha-ching)

2008: CD + DVD + External Hard Drive + Forensics + Hosting = per Image + per Gigabyte + + + +

What's next? ....

Flat Fee Pricing based per Custodian?
Monthly Volume Pricing for building / renting a Private Cloud?
Annual Subscription based Pricing?

... Death to the per Gigabyte ... ummm ... doubt it! ... You do know Paper is still here too ...

There are no pricing standards and the notion of commoditization is the culprit for this lack of standards.

The landscape of discoverable data continues to evolve at a rapid pace. Yet the demands imposed by the Courts to prepare, review, respond and exchange have not changed in a proportionate scale to the amount of effort required of Legal Teams to mount up and prepare. Legal teams continue to source, daily, for resources to meet the increasing demand imposed by the always declining ticks of time. Litsupport Services Solution providers race to release faster, cheaper, accurate SaaS solutions that inherently cost more to develop.

(hint: last sentence is an oxymoron for those not getting the subliminal message)

In 1990 a legal team could expect to pay under $15K for Litsupport Services as technology was non-existent, paper and labor were CHEAP. Today the same case strategy involves 10x the amount of data. Although technology has advanced workflows to maximize efficiency, the legal team is easily faced with spending $100k in Litsupport Services.

"Just as the World Financial Markets correct every 20 - 25 years so will the Litsupport Services Industry; often mislabled as eDiscovery" (term helps to justify lack of service required to produce)

Cost associated to purchase out-the-box software, storage and private clouds are extremly low ... (true professional would steer clear of the public cloud..right??) ... the price of Experience will always grow.

As more and more large companies gobble gobble real service providers and legal teams develop in-house platforms to curve cost associated with legal eDiscovery collections and processing ...

"Don't be a Button Pusher Buyer for eDiscovery ain't Childs Play"

... invest in Experience, SOW Standards and continuous Education and Training. Not doing so will only result in a rise of costs (redos are real $$) and possible ethical violations during the entire Litigation Lifecycle.

Sanctions Hurt!!!

"changing or blaming a Service Provider is easy ... explaining and defending internal snafu's and why capital investments sit idle .." well you get the drift.

Theses are the sole expressions of the Author based on the experiences of the Author. The expressions do not represent any entity for which the Author is employed or contracted.

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