Loading ...Most of the conversation these days in the eDiscovery arena has been around Predictive Coding, the Cloud, and Big Data topics, so I wanted to bring us back to one of the basic issues in the eDiscovery marketplace…pricing.
The Predictive Coding/Technology Assisted Review (PC-TAR) makes the world a bit fuzzier as it blends the processing and review components closer together. I’m sure many vendors long for the days when the going price to process (extract the meta-data and text) and create a TIFF was $2500 per GB (uncompressed). The process was simple back then…process and TIFF the data…load it up into a review platform and let the attorneys review to their hearts content (Excel files notwithstanding). Even when we developed the technology to apply search terms to the data set, the price was based on how much data went into the processing engine.
As a vendor during these “glory days” (as I heard referred to from a long-in-the-tooth service provider that shall not be named), I recall my project management and sales teams always struggled with the expectations from clients not knowing how much actual data was in their data sets. We would get a call saying, “we have 20GB of data and I have no idea how much of the data is email and how much is user files. Please give me a quote.” Then we, as vendors, had to play the tap dance routine saying, “Based on some general assumptions (usually something like 50% email/50% user files, email is Outlook based, 40% expansion rate on emails, some number of TIFF’s per GB, etc. etc.), we estimate the price will be X amount of dollars.” I had a saying back in those days…”No matter what the assumptions are, they will be wrong!!”. So our project managers had to be the bad news people constantly…calling up the client to tell them that NOW that the data set was expanded, the price was going to be higher than budgeted and then all heck would break loose at the law firm and client. Needless to say…this is a broken system and yet many vendors in the space are still following this approach.
There have been some innovations in the pricing arena over the years with the hosted technologies and now the PC-TAR types of tools. These pricing models work well for the larger projects, but the small to medium size projects still suffer. During LegalTech, I was introduced to Yoeli Barag, the President of e-Stet. We, at the eDJ Group, are only starting to cover the pure service providers in the eDiscovery space on a more granular basis, so there were some basic questions that I wanted to understand from his perspective. I asked Yoeli on how he differentiates e-Stet from the other service providers. I was fully expecting to hear what everyone tells me…experience, capacity and project management which he promptly did. Then Yoeli threw out, “we have a transparent invoicing process,” which promptly perked up my ears. He explained that e-Stet pre-invoices the client prior to doing any processing of the data so that there are no surprises to the budget of the project. When I asked about how he protects himself from over-explosive data sets, Yoeli said e-Stet has the infrastructure to process accordingly and it doesn’t really affect his workflow. I suppose they have to be careful of clients that will zip up (aka compress) the entire data set prior to sending…yes, I have seen that happen in the past.
I thought this was an interesting solution that only enhances the customer service experience. I’d be curious to know if there are any other service providers doing this sort of thing.
Pricing and revenue tracking are pieces not typically covered in the eDiscovery space on a regular basis. The eDiscoveryJournal recently added Sarah Hankins to our growing list of independent contributors to do a monthly article on pricing trends in the industry. Sarah is a consultant focusing on revenue tracking and pricing trends in the eDiscovery space. One of the things I want to explore is the pricing models of the “All-in” providers that take it from Processing through Review for a per document price and I will continue to share my findings with our eDiscoveryJournal readers.
I look forward to seeing everyone’s comments below.
Jason Velasco
Hi Jason,
You raise a topic that is one of the most important (if not THE most important) issue for clients; in most matters, especially the mid-size and smaller matters, the cost of e-discovery is the biggest impact on a decision to pursue or settle. Litigators must have reliable e-discovery costs up-front. The company I work for (I’m not sure if I can name them here, but you can look me up on LinkedIn), we have quietly supported over 3500 matters on a fixed-fee, transparent basis.
The fixed fee pricing is based on the size of the collection. Our clients appreciate having a well-defined fixed cost services budget, and we seldom are in the position to be the ‘bad news’ guys….
Thanks for keeping the important discussion on transparent pricing alive.
February 17, 2012 at 1:16 pm
MeganMiller
Member Type: Corporate | Role: Other | Size: Med (less than 1000) | Years of Experience: 17 in tech marketing, 3 in e-discovery
As review/ECA platforms migrate from service providers to enterprise implementations, I have seen a trend to ‘transform’ $ per GB to capped subscription or usage licenses. This sounds fine, but most corporate legal departments cannot predict their actual discovery volume usage today, much less when they add new capabilities. I have seen companies blow through their caps (3/5/10 TB usually) and get stuck with massive overage fees. This reminds me of the early cell phone plans with 100-300 minutes. They were fine until you realized how much you could get done on the run. Once business behavior changes to take advantage of the new capabilities, you need to anticipate a large surge in usage. So I think that pricing is still very relevant and customers need to think hard about license structures for the lifetime of a new purchase.
February 21, 2012 at 11:12 am
Greg Buckles
Member Type: Other | Role: Consultant | Size: Solo | Years of Experience: 22 | Certifications/Licenses: court certified expert witness
Jason, nice thought provoking article, but I believe the real “glory days” were in 2001 to 2003 when vendors were charging per-page fees to process data. I worked in Sales/Ops at a well known vendor in Virginia during this time. Rates ranged from $0.15 to $0.25/page for TIFF conversion (add $0.05 for PDF). This depended on the type of data. Office files (e.g. .XLS, .DOC, .PPT) were $0.15/page while Outlook email was closer to $0.20/page and Lotus Notes was $0.25/page. Need OCR (i.e. extracted text)? Add another $0.05/page. Need a load file? Add another $0.02/page.
Back then the data volume wasn’t anywhere close to the size of data today, but the page counts were huge on some cases with 1 gigabyte averaging close to and sometimes well over 100,000 pages/gb.
So if you had 3gb of Lotus Notes email and you needed TIFFs, metadata, text (what was called OCR regardless if it was OCRd), and a load file it would cost you $0.37/page or $37,000/gb.
I think the word “printing money” comes to mind. Get a few hundred gigs and you could retire (I wouldn’t be surprised if some did).
Although these prices seem laughable today it was what the market accepted at the time. Data volumes were no where near what they are today. More predictable per-gigabyte fees soon replaced unpredictable per-page fees. But those fees had their problems too with vendors charging on the “extracted size” which resulted in 3gb becoming 6gb or 9gb or more. Completely unpredictable. Now you see all kinds of models ranging from per-custodian, per-project, per-document, per-year, per-month, to the good-ol standby per-gigabyte (maybe per-terabyte next year).
Better technology and more competition has driven down the price for processing data to very low levels and they will continue to go lower. The “glory days” of processing are mostly over. I’m confident technology will do the same for document review over the next few years as the inefficient practice is still very much in its “glory/golden days”.
February 21, 2012 at 2:07 pm
logik
Member Type: Provider | Role: Other | Size: Small (less than 50) | Years of Experience: 10