Migrated from eDJGroupInc.com. Author: Greg Buckles. Published: 2010-02-16 04:00:27Format, images and links may no longer function correctly. As corporate legal departments struggle to control costs, they are often shocked at the lack of transparency and standardization in eDiscovery software and service purchasing. Public corporations have long since created structured procurement processes managed by IT departments and business units. Because the legal service industry evolved from the copy and scanning providers selling to law firms on a case by case basis, the industry still clings to the high margin, reactive sales model that values personal relationships and deadline reputation over realistic ROI and cost-benefit analysis.
The good news on this front is that every technology provider I spoke with at LTNY 2010 had some kind of enterprise or non-volume based licensing option. The bad news is that few were willing to even talk ballpark pricing without pushing to qualify a prospective sale or put discussions under an NDA. Why should the list cost of an appliance or the starting per seat cost of enterprise software be a national secret? Legal providers have a bad reputation of obfuscating total costs with hidden hourly charges and otherwise breaking up fees to artificially lower their visible volume based ($/GB) pricing. Refusing to even discuss list pricing in a public venue reinforces the perception that providers are somehow afraid that their customers will discover a better value and jump platforms.
Since many law firms still sole source work to their favorite reps without a RFP or bid process, they probably are correct to fear the impact of an open competitive marketplace. As long as corporations continue to abdicate purchasing authority and pay six figure line items without asking hard questions, why should providers risk losing the easy money?
Corporations themselves are ultimately at the root of the pricing games that dominate the eDiscovery marketplace. Until they demand transparency and accountability in the eDiscovery purchasing cycle, providers have much to lose and little to gain by revealing their list pricing.
One potential benefit of the economic slump is increased cost saving pressure on corporate legal departments by corporations and by their umbrella insurance providers. In 2008, AIG began offering eDiscovery advisory services, now offered under the Chartis brand. I had hoped that was the start of a neutral set of billing guidelines or other best practices, but it seems to now be yet another commercial aggregation of eDiscovery services and technology marketed as a ‘solution’.
With more products like Atlas PSS, Exterro Fusion Genome and iFramework incorporating cost tracking and analysis features within their overall event response management systems, corporate legal departments will have the tools to track and evaluate real Total Cost of Ownership(TCO) and Return on Investment (ROI). The increasing awareness and cost management tools should encourage providers to go public with their pricing and be comfortable that prospects will understand and appreciate their value proposition as being more than the lowest sticker price.