If you have been involved in any eDiscovery at all, you likely have experienced a project whose cost spirals far beyond the initial, confident estimates.

Here are some real-world examples:

  • An initial review of agreed custodians’ data sources overlooked important ESI repositories that must now be collected, processed, and reviewed under a looming production deadline.
  • Errors in documentation mean there is uncertainty about from who, where, and when critical data was collected, triggering expensive conference calls between providers and inside and outside counsel to untangle the tainted audit trail.
  • Search terms were inconsistently applied across multiple data sets at different times by different personnel, causing overproduction and expensive clawback efforts.

The list of possible error-driven eDiscovery nightmares across the EDRM phases is potentially limitless. This all too common experience of unforeseen and unbudgeted cost increases ruins litigation budgets for in-house counsel, loses clients for outside counsel, and damages reputations.

Reduce the Risk of Cost Escalation in eDiscovery

To reduce the risks of cost escalation, we suggest a slightly unconventional approach to due diligence on eDiscovery providers that focuses on their ability to execute without costly errors.

We should clarify that here we are concerned with errors largely under the providers’ control and not, for example, a sudden increase in the number of parties to the litigation (a scope change). Errors can also be caused in conjunction with other stakeholders in the discovery process beyond the provider.  And lastly, when we talk about cost escalation, we include damage caused by delays in a deadline-driven process.

Literature on Cost Control in eDiscovery

The literature about cost control in eDiscovery tends to reflect the results of the RAND 1 study of 2012: reducing the amount of data being moved through the eDiscovery process generally correlates with cost minimization. Reducing data size requires limiting the number of custodians, data sources, types, or date ranges. Specifically, reducing the amount of data for human eyes on review is the heart of cost control under the RAND study.

Another focus in eDiscovery cost literature concerns accurate cost estimates. While important, estimates are only as good as the underlying assumptions. The extensive literature in the field of government procurement also teaches us that forecasts for technology projects generally underestimate the final cost. Government departments, just like eDiscovery providers, can have an inbuilt incentive to minimize cost estimates to win approval for the project.

Also, frequently discussed is negotiating down the prices of line items for eDiscovery services, from per hard drive imaging to processing costs per gigabyte. This can help, but prices do not correlate to the project’s final cost. And with today’s mature, relatively efficient market for eDiscovery, list prices are more or less within a similar range across providers.

Finally, the promise of new technology is often presented as the solution to cost control, Technology Assisted Review (TAR) was the savior, and now tools assisted by generative AI are touted as the next technological wave. But tools are just tools and have to be wielded by humans within business processes and organizations subject to mistakes and dysfunction.

Ensure Due Diligence with Your eDiscovery Provider

But ESI minimization, realistic cost estimates, and competitive prices will not keep costs under control if the provider doesn’t have a reliable ability to execute without fundamental errors.

eDiscovery is a complex, deadline-driven endeavor involving people, policy, process and technology, and data of growing type, complexity, and volume.  Judgment calls in execution are required throughout the process. eDiscovery remains inherently risky, despite all the intelligent machine learning and AI technology applied today.

Yet quality in execution is rarely tackled in the literature, perhaps because it is challenging for counsel to assess and predict. Too often, counsel rely on referrals or a sense of competence from in-person presentations.  RFPs – in so far as they can be designed to reach quality in execution — are burdensome and usually reserved for extremely large or multi-year engagements.

Questions to Ask Your eDiscovery Provider

Fundamentally, cost control is about people, culture, and experience — not just process and technology tools. Here are some areas on which to test your eDiscovery provider about their ability to execute:

  • What is the tenure of the senior and mid-levels of the operational and serviced delivery team?

The longer the tenure of the team, the better.

  • What is the qualification profile of your service delivery team?

Relevant industry certifications from PPMs to CEDS measure competence.

  • What is the staff turnover across your entire organization?

Instability among staff disrupts institutional knowledge and service delivery teams.

  • What is the continuity in the ownership of the company?

Stability in firm leadership can be a predictor of quality work.

  • How long has this company been in business?

It is not enough to consider the brand, but as above, the personnel.

  • What is the track record of retaining major clients?

Client retention versus churn is another proxy for the ability to execute with quality.

  • Is the provider dedicated to a process improvement methodology like Lean Six Sigma?

A pillar of process improvement is error reduction.

A quality eDiscovery provider should be able to provide coherent answers to these questions and some hard data. When an RFP to dig into these factors is not practical, these questions can be valuable.

Notice that nothing in that list refers to the size of the eDiscovery provider. Gross size, however, measured — by number of personnel, revenues, offices, or number of clients — does not cleanly correlate with the ability to execute. Many eDiscovery providers became large through a highly leveraged process of acquisition, for example, not because they delivered consistent excellence.

Unforeseen cost escalation through provider errors remains a significant risk in discovery that is sometimes overlooked. Consider asking some of the above questions to reduce that risk.

1 Nicholas Pace & Laura Zakaras, The Cost of Producing Electronic Documents in Civil Lawsuits, RAND Corp, 2012.