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Planning for Variation and E-Discovery CostsByMacylA.Burke

PresidentEisenhowerwasfondofthequote,InpreparingforabattleIhavefoundplansare

useless,butplanningisindispensable.Thesamelogic,creatingafoundationandframework,

canbeappliedeffectuallytothecomplexworldofediscoverywhereeverycasebringsitsown

uniquenessandquirks.

Thatsaid,therearesomecheckpointsthatshouldbeexaminedintriangulatingthefactorsof

cost,risk,andtimethatloomlargeintheworldofcomplexlitigation.Discoveryisthemost

expensivepieceinlegalspend,withreviewasthemostexpensiveelementindiscovery.

Discoveryand

review

are

estimated

at

over

80%

of

the

cost

by

some

sources.

It

is

therefore

logicaltobethoughtfulaboutthediscoveryprocessingeneralandreviewinparticular.

Cost Calculations

Wesuggestthefollowingpointsbeanalyzedandconsideredinthedecisionmakingprocessof

thelegaldiscoverycost:

HOWDOTHEYCHARGE?ExaminethebasisforyourEconomicModel:Lookforcostmodelsthataredocumentorgigabytebased.Explorealternativecostmodelsthatarefixedand

transparent.Integratedcostingmodelsthatcombineboththecostofthelawfirmandthe

vendoronafixedpricebasiscanbeadvantageous.Thecriticalpathistoachievethelowest

allincostwhichincludesthesupervisionofthelawfirmandtheircertificationoftheprocess.Thelineitemcoststakeninandofitselfarenotthecriticalpath.

WHATDOTHEYMEASURE?Knowyourenemy:Youshouldknowyourblendedhourlyrate.Theblendedrateisthecostofthecontractattorneyscombinedwiththecostofthelaw

firmstosuperviseandcertifythereview.Thisisusuallythesinglelargestcostinthe

discoveryprocessandlargestavailablecostsavingopportunityinmostprojects.Ifyouare

notpayingforthereviewbythedocumentorgigabyteinanintegratedcostmodelbesure

tounderstandtheblendedrate.

WHAT

TOOLS

DO

THEY

HAVE?

Practice

MTCO:

Measure

Twice;

Cut

Once

is

a

best

practice.

Therearenumerousmethodsofmeasurementthatcanbeappliedtoyourprojecttocut

costandimproveresults.Justafewareblendedrate,sampling,reviewrates,errorrates,

richnessofthepopulation,recall,precision,pagecounts,documentcounts,pagesper

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27200 Tourney Road, Suite 450, Valencia, CA 91355 P 661.284.6401 F 661.284.7654

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document,etc.thatcanbeusedtoanalyzeyourproject.Avendorshouldhaveatoolboxof

metricstoexplainandexplorethebestwayforward.Thesemetricscanbeinstrumentalin

reducingthesizeofthepopulationtobereviewedinareasonablegoodfaithwayandresult

inlargedirectsavingsintermsofallincost.Goodmetricshelpfosterinnovationandarea

catalysttochange.

WHATDOTHEYREPORT?Usesamplingoverinspection:Byallmeansnecessary,avoidinspectionasaqualityassurancepracticebythelawfirminthereviewstageofdiscovery.

Samplingismateriallylessexpensiveandproducesafarsuperiorresult.Samplingwill

reducethecostofyourblendedrategeometricallyandprovidemorecurrentandbetter

resultsastoqualityandhowwelltheknowledgetransferhastakenplace.Itallowsforquick

coursecorrectionandcontinuousimprovement.Inspectionisexpensivereworkthatisnot

necessary.

CANTHEYDOITFORLESS?Qualityprocessesshouldlowercost:Understandthequalitycontrolandqualityassuranceprocessesbeingemployedbythevendorandlawfirm.Ifthey

donot

lower

cost

they

are

not

quality

applications.

They

are

cost

increases.

The

lowered

costsshouldbemeasurableandproducethedesiredresults.

CANTHEYDOMORE?Selectanintegratedprovider:Thelargestsavingscomesfromreducingthediscoverypopulationtobereviewedasmuchaspossibleinareasonableand

goodfaithmannerandreviewingitinahighqualitylowcostapplication.Anintegrated

providerwhooffersprocessing,culling,hostingandfirstcutreviewisinthebestpositionto

achievetheseefficiencies.Usinganintegratedproviderallowsforthegrowthand

developmentofastrongpartnershipwiththeparticipatinglawfirm.

HOWDOILEARNMORE?Takeadvantageofthirdpartyinformation:Useprovenqualityprocesses

from

other

sources.

The

Sedona

Conference

Paper

Achieving

Quality

in

the

e

DiscoveryProcessisanexcellentsource.Itreferencesnumerousothersourceswhichare

richininformation.RalphLoseysblogishighlyusefulwithadiversesetofcontributors.

Keepuptodateoncurrentdevelopments:Ediscoveryisafluidanddynamicfield.TheTREC2009LegalTrackInteractiveTaskoffersnewinsightsintotechnologyassistedreview.

Additionally,proportionalityandcooperationareemergingasimportantfactorsinthe

discoveryprocess.

ConstructanAuditTrailandFlowChart:Documentcarefullytheprocessesandresultsacross

the

whole

of

the

EDRM.

You

want

a

record

that

your

process

was

reasonable,

in

good

faith,andproportional.Besuretodocumentongoingchanges.Evenyourbestplanningwill

needtobeadaptedtoemergingrealitiesthatcouldnothavebeenanticipatedorknown.

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Risk Evaluation

Variationincomplexity,scale,cost,andriskarepresentinanysystemorprocess.Goodquality

isaboutreducingvariationtoacceptableandpredictablelevelswhichareconfirmedbymetrics.

Thisisparticularlytrueinthediscoveryprocessoflitigationthatrepresentsthebulkofthelegal

spend. Ingeneraltherehasbeensomepricecompressionondiscoveryactivitiesbutthereis

stillalarge

amount

of

cost

variation

in

the

discovery

process.

The

standard

is

that

the

discovery

burdenmustbereasonable,ingoodfaith,andproportional.Bythatstandard,using

measurementandunderstanding,thevariationinsurescompliancewiththerequirement.

Afewspecificexamplescanshowthescopeoftheproblemthatvariationpresentsinthe

discoveryprocess.

Inanactualcase,weauditedonefirmusingcontractreviewersatacostof$53anhourfor1st

Tierreviewwithlawfirmattorneysdoingsupervisionand2ndTierreviewat$300plusanhour

whichachievedanallincostof$7adocument.Inthesamecase,wefoundanotherfirmusing

associatesfor1stTierreviewatacostof$250anhourand2

ndTierreviewandsupervisionfor

$300plus

an

hour

for

an

all

in

cost

of

$20

adocument.

These

were

documents

being

reviewed

inthesamecasewiththesameissues.Theonlydifferencewasthecostandtheprocess.In

neithercaseweretheresultsmeasured.

Evaluation:Thereissignificantvariationbetweenthetwofirmsandthecostsdonotinclude

processing,hosting,orproduction.Weparticipateinanalliancewithalawfirmthatwould

offeranallinprice(collection,processing,hosting,1stand2

ndTierreview,certification,and

production)ortotalcostofapproximately$1.63adocument.

Inanotherexample,weauditeda1stTierreviewatcostof$0.05perpage.Therewasnotan

hourly

rate

or

per

document

rate

involved.

There

were

approximately

50,000

documents

with

a

pagecountof7,400,000pagesallofwhichwerebilledbythepage.Thisworksouttoan

averagedocumentpagecountofaround150pagesperdocument.

Evaluation: Onaperpagebasisat$0.05perpagethatturnsouttobearound$370,000.A

morecommonperdocumentchargeintherangeof$0.70to$1.10adocumentworksout

between$35,000and$55,000.

Lookingatvariouspergigabyteallincostnumbers,wefindthevariationisenormous.The

averageallincost(collection,processing,hosting,1stTierand2

ndTierreview,certification,and

productionwouldbeapproximately$70,000agigabyteplusorminus$35,000.Inourview,with

agood

integrated

process

the

cost

should

be

approximately

$24,000

agigabyte

plus

or

minus

$2,000forallincost.

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Allofthepricingexamplesaboveofferlargevariationsinoutcomes.Inplanning,itisagood

practicetomeasurefromtwodifferentapproachesandcomparehowclosetheresultsareto

oneanother.Wewouldrecommendyouexamineseveraleconomicmodelsforeachproject.

Ask,howarewemeasuringresults?Whatarethemetrics,whatisthecostperdocument,per

gigabyte,etc?Thedifferencebetweenpricingbythepageordocumentcanbeextreme.

Time Frame

Theexamplesshowtheorderofmagnitude,variation,andthepotentialsavingsavailableinthe

costofdiscovery.Eisenhowerwasalsofondofthestatement,Whatisurgentisseldom

important,andwhatisimportantisseldomurgent.Inthehaironfireworldofhighstakes

litigationthisisnottheconventionalwisdom.However,thespiralingcostofdiscoveryfueledby

everincreasingvolumesofESI(electronicallystoredinformation)shouldgiveuscausetopause

andtakeahardlookatprocess,variation,andmeasurement.Planningcanbederailedor

incompletebythedramaoflawandpressofevents.Thetemptationtoshortcuttheplanning

activityshouldbeavoidedeveniftheurgencyisgreat.Planningistooimportanttobecoopted

by

urgency.

Ifavendoroffersamagicplanintheediscoverymaze,bewary.Onlyplanningcanpreparefor

variations,causeawarenessofalternatives,helpdiscoverpitfalls,andrefineourgoals.The

givencheckpointsaregeneralconceptsthatcanbeexpandedtomoregranularapplications.

Theapproachshouldbeemergent,basedoncircumstanceandneed.Itisbasicallyareadand

reactscenariousingconceptsthatmayormaynotbeappropriateinagivencircumstance.The

suggestionsarenotneworradical.Weareofferingthemastouchpointstoreducecosts,lower

risk,andimprovetime.Bynomeansaretheyapanaceaormagicbullettospiralinglegalcosts.

Wedosuggesttheyarereasonableandgoodfaithquestionsthatshouldbeaskedand

answered.

April2011