eDiscovery for Small Cases
The economic downturn of the last several years has a particularly chilling effect on solos and small firms. And an area where that effect is particularly noticed is that of electronic discovery, a notoriously expensive and time consuming aspect of the litigation process.
Once viewed as only a large case, federal forum issue, the fact is that firms of all size must know how to handle electronic discovery cost-effectively and successfully. Why?
First, because 2/3 of the states have passed their own eDiscovery rules. Coast to coast from California to Florida and from states as populous as New Jersey to mostly rural states such as Louisiana and Alabama, eDiscovery is now a local issue. The result of all that state activity is a dramatic increase in e-discovery activity for small local cases, especially in the area of domestic disputes.
And second, with the increase in digital activity by people in all areas of their lives, we are now seeing eDiscovery become an issue in criminal cases. Again, starting at the Federal level with an agreed upon eDiscovery exchange protocol between the offices of the US Attorney and the Federal Defenders , this development is now bleeding down to state and local criminal matters.
My involvement with this small case issue began in 2010 when noted e-discovery consultant Craig Ball wrote a column for Law Technology News called “E-Discovery for Everybody“. This article came to be better known as the “EDna Challenge” because in it he proposed a solo practitioner named Edna with an e-discovery budget of $1,000 and asked how she could possibly perform any e-discovery on that amount.
The problem as Ball defined it was simple:
“The vast majority of cases filed, developed and tried in the United States are not multi-million dollar dust ups between big companies. The evidence in modest cases is digital, too. Solo and small firm counsel like Edna need affordable, user-friendly tools designed for desktop eDiscovery — tools that preserve metadata, offer efficient workflow and ably handle the common file formats that account for nearly all of the ESI seen in day-to-day litigation. “
The response to the column was overwhelming with dozens of consultants, attorneys and vendors, myself included, proposing solutions. By the next year, the ABA TechShow asked Atty. Bruce Olson (a former TechShow Chair) and I to speak on the subject. We both thought that by then the challenge would have been met by the high number of eDiscovery vendors and resultant stream of ED conferences, seminars and on line training venues, but in fact the room for our presentation was packed with was packed with Mr. Ball himself sitting in the front row.
It was then that Bruce and I realized the problem had not only persisted but grown larger. In response we decided to write a book about the issue, eDiscovery for Small Cases, which was recently released by the ABA. And to drive further data for the book, I drew up the “Ernie Challenge,” with advice from Craig Ball and DLA Piper senior counsel Browning Marean. Named for my good friend Ernie Svenson, a solo attorney with a general practice in New Orleans, this challenge covers those “tweener” cases that fall in the range covered by the Edna Challenge and mega cases suitable for the larger brand name products that dominate the EDD world.
The Ernie Challenge posited a case with roughly 1 terabyte of data to collect and a final amount of 200 gigabytes of data to review, the majority of that e-mail with the balance being various types of financial data. It asked for some form of web review tool in order to work with the clients’ counsel and contract staff in a separate location.
By the time the book was released, Bruce and I referred to this situation as the Small Case Dilemma. Because while it is not automatically true that small cases require different tools for managing eDiscovery, the fact is that small cases often mean small technology budgets. Unless your practice is sufficiently mixed with big budget cases, so you already have a full complement of litigation support tools to use, you probably don’t have the tools necessary to handle anything but the smallest e-discovery matter. And the small budget means you can’t engage an outside consultant or vendor.
But the “new” ED rules at both the federal and state level don’t apply to just large cases. They force civil litigants into a compliance mode with respect to the retention and management of electronically stored information or ESI. The risks that litigants face as a result of improper management of ESI can include findings of spoliation of evidence, summary judgment findings and sanctions, including adverse inferences, adverse jury instructions and even complaints filed with state bar associations.
The first problem for small firms is current market pricing in the market. Many, if not most, eDiscovery vendors have their roots in the per unit commodity pricing days of photocopying and imaging. The standard practice for years now has been to charge hundreds of dollars per GB each time data is handled.
In the early days of litigation support, you simply purchased a product such as Summation or Concordance for flat fee plus annual maintenance. This model doesn’t exist for eDiscovery products.
Instead for each step of the ED process, you pay an exorbitant per GB price. $X per GB for processing, $X per page for OCR, $X per document for near duplicate detection, $X per page for Bates numbers, $X per user and per GB to host and so on. And each of these may be performed for different units with different unit pricing that can run from a penny to $500 per unit
So if a forensically sound forensic collection of 800 GB (the size of the hard drive of one typical computer) and that data set eventually yields 200 GB of reviewable material, a typical eDiscovery company will charge $200 per GB for the processing ($160,000) plus $50 per month per GB ($10,000) and $90 per month per user for the hosting. If the case lasts 18 months, this cost alone will be just under $350,000.00.
And if we accept the commonly cited statistic that the review process will account for 60-70% of the total project price, then we’re looking at a project cost that will eventually be close to $1,000,000.00 for only 200 GB of data.
As you might expect, at this low price point, eDiscovery vendors have simply not been interested in 200GB cases. The simple fact is they can’t support themselves on small jobs. Large companies have large overhead and need large revenue amounts to support that infrastructure.
And these companies may have spent millions of dollars developing software or, more commonly, acquiring another company with its already existing software. When this cost is added to their mind set of unitized pricing noted above, they are locked into a system of set monthly costs and simply cannot, from their perspective, give away their services to small firms with small cases.
The second problem is that technology for e-discovery was developed initially for large cases with large data sets. Companies with revenue streams based on processing or hosting terabytes of data cannot easily adapt to projects consisting of several hundred gigabytes much as you cannot expect a 747 jumbo jet to be used as an effective or cost efficient means of transporting commuters during rush hour traffic.
Finally, products that have been designed to work with immense data collections cannot easily scale down to small sets of information. A Sequel based product working with terabytes of data on a distributed internet framework needs a certain hardware and software infrastructure to operate. That type of system can’t be scaled down to load on a laptop or IPad.
So these big products have big prices and both the products and the prices are beyond the scope of most small firms and small case budgets. But while those cases might be small to an international corporate service provider, they are far more meaningful to a person involved in a small business dispute or a divorce.
But if that case is valued at $100,000.00 or even a $500,000.00 and after analyzing the case and its budget, you believe you cannot spend more than $50,000 for handling eDiscovery, then you have a problem.
The good news is that low cost programs designed for small cases have begun to appear. These products are for the most part modestly priced and in several cases the cost is low enough that it could justifiably be passed on to the client directly rather than being absorbed as overhead. Functionality may be somewhat limited for each product as compared to higher end but similar solutions, but given the immediacy and lower data set sizes of small cases, that may not be a drawback.
Rather than attempt to list all of those products, I would suggest you look at the reviews of many of them in our book or look online for a CLE session on small firm eDiscovery. But they are available.
Traditional eDiscovery pricing is changing with processing prices dropping from $500-600 per GB to $100 per GB and hosting fees changing to a combined monthly fee incorporating both user and per GB charges. There has also been the beginning of a trend away from the unit pricing model towards a flat fee or “all in” pricing. These sort of bundled flat rate prices, whether it be “per drive,” or even “per case,” cover all the variables currently priced as separate line items.
This development stems from two factors: (1) increased pricing competition
among vendors and (2) newer cheaper technology. In the past year, many commentators have remarked that per-GB pricing cannot continue to maintain its stranglehold on the eDiscovery process. Indeed in a 2011 E-Discovery Journal interview, Craig Ball said, “I’m seeing some behind the firewall products, even desktop products, that are going to be able to allow lawyers and people with relatively little technical expertise to handle small and medium-sized cases. Some of the hosting services are putting together pricing where [they] are starting to sound rational and less frightening.”
Regardless of the product you choose, there are several basic considerations for working with eDiscovery in small cases. They are:
- Work data in its native format. The types of files you will be dealing with are likely typical or standard files created by common programs used for email, word processing and other office functions.
- Host the data yourself. There are many good Internet based hosted solutions that can fill your needs but the typical storage fees charged for a case that exists for any length of time can bust a modest technology budget. So small cases work best with programs that can be installed on one computer for processing and review.
- Keep the data sets manageable. This means getting agreements to dedup and cull data down BEFORE you receive it, whenever possible.
- Agree on exchange protocols. The single most effective way to keep eDiscovery costs low is to work with your opposition in a cooperative manner so you can stipulate to the use of low cost solutions.
This last issue is paramount because the fact is that technology is not the key to successful management of e-discovery in small cases. Rather, in our estimation, it is the process. We all must change to the new paradigm of working in the digital world. In the words of The Hon. Lee Rosenthal of the United States District Court for the Southern District of Texas and Chair of the Judicial Conference Committee on Rules of Practice and Procedure, “Litigation habits and customs learned in the days of paper must be revisited and revised. The culture of bench and bar must adjust.”