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 IST Discover-E White Paper:

Is Data Processing Dead?

The Evolution of the eDiscovery Marketplace

In the past year, many commentators have remarked that unitized pricing for each stage of the Electronic Discovery Reference Model (EDRM) cannot continue to maintain its stranglehold in an everchanging eDiscovery marketplace. Indeed, as new communication and collaboration tools emerge, they create new challenges and greater costs to litigants.  Social media, group chat rooms, photo, video and audio sharing platforms are being adopted at an increasing rate. Add to that the data tsunami of cloud computing and the Internet of Things (or internet of everything), and there is as great a demand for innovation as ever before.

Litigation holds are now fairly well understood in the legal profession, and there is a vast array of tools available for identification and collection of electronically stored information. On the review side, software has matured to a point where it can learn from reviewers and significantly speed up activity. The Processing stage of the EDRM model has become the primary target of prognosticators as computing power has grown exponentially yet processing is still one of, if not the most, costly items on an eDiscovery invoice.

With the introduction of more aggressive pricing models, some are proclaiming that Processing is dead – or rather – charging a per GB price for Processing is dead.

The vast majority of cases filed, developed and tried are not multi-million-dollar battles between big companies. The evidence in modest cases with modest budgets is digital as well and firms of all sizes must be able to handle Electronically Stored Information (ESI) cost-effectively. Accordingly, the eDiscovery marketplace has evolved with pricing models designed to reduce client costs for both large and small matters including reduced In-&-Out pricing, All-In pricing, bundles/packages, subscriptions, self-service platforms, managed services arrangements and flat rate pricing. But buyer beware. As with any other business, eDiscovery vendors cannot operate at a loss. Costs are being cut somewhere – be it on Project Manager support, unsound data collections methods, stripped-down analysis tools or boutique data processing systems. Although the solutions offered may seem like they are on the cutting edge of innovation, vendors might just be shilling for an inferior product or service.

What is eDiscovery Data Processing?

or starters, Processing is the critical stage between preservation/collection and review/analysis.  Though the EDRM positions Processing, Review and Analysis as parallel functions, Processing is an essential prerequisite to Review, Analysis and Production. Any way you approach eDiscovery, you must process ESI before you can review or analyze it.

ESI is processed to standardize, catalog and index its contents for search and review. That said, although all ESI is inherently electronically searchable, computers don’t structure or search all ESI in the same way. How ESI is encoded in its native format bears upon how it’s collected and processed, whether it can be searched and in what reasonably usable forms it can be produced. So, we must process ESI using multi-faceted and complex systems to extract content, decode it, then manage and present that content in consistent ways for analysis and review.

ESI processing tools perform five common functions. They must:

  1.  Decompress, unpack and fully explore, i.e., recurse ingested items.
  2.  Identify and apply templates (filters) to encoded data to parse (interpret) contents and extract text, embedded objects, and metadata.
  3.  Track and hash items processed, enumerating and unitizing all items and tracking failures.
  4.  Normalize and tokenize text and data and create an index and database of extracted information.
  5.  Cull data by file type, date, lexical content, hash value and other criteria.

What is the Difference Between the Tools?

In “A Primer on Processing and a Milestone”, noted eDiscovery consultant Craig Ball says, “Despite winsome wrappers, all the leading eDiscovery tools are built on a handful of open source and commercial codebases...” That’s right, the essential pieces of processing engines used by eDiscovery vendors large and small are built on the same fundamental code.  Ball points out that this shared code at the foundation of each technology makes questions of system security and pricing disparity between vendors come to the fore, but continues by highlighting the intricacies and innumerable pitfalls in getting the code to function properly as it is built upon. “In the process of delving deeply into processing, I gained greater respect for the software architects, developers, and coders who make it all work. It’s complicated, and there are countless ways to run off the rails. That the tools work as well as they do is an improbable achievement. Still, there are ingrained perils and tradeoffs to be weighed.”

As described earlier in this article, the eDiscovery marketplace has evolved to offer more favorable pricing models.  The flat rate pricing providers are making the biggest stir in the industry at the moment and for good reason. A $20 per GB flat rate for eDiscovery services (excluding review) is pretty eye-popping.  However, the great majority of vendors offering flat rate pricing are small start-ups touting proprietary technology. Knowing now that there are “countless ways to run off the rails” as vendors build upon open-source eDiscovery Processing engine code, how confident can consumers be that their smoking gun piece of evidence wasn’t tossed into the trash due to faulty coding by inexperienced developers? Especially given that most attorneys limit their knowledge of processing to “stuff goes in and stuff comes out,” it may be best to let these new tools prove themselves with somebody else’s electronic evidence.

There is an old saying that goes “Nobody ever lost their job going with IBM.” The sentiment behind this still rings true today. Small businesses are the embodiment of the American Dream; and having a desire to support them is a good thing, BUT processing is a stage of eDiscovery where things can go terribly wrong in terms of cost and outcome if an unproven vendor or technology is chosen.

When Is It Most Advantageous to Engage a Flat Fee Provider?

It is a common misconception that most current eDiscovery technology was developed for large cases with large data sets. Supposedly, vendors using top-tier systems like Relativity rely on revenue streams based on processing or hosting terabytes of data and cannot easily adapt to projects consisting of 100 GBs or less.  False - it is simply not true that small cases require different tools for managing eDiscovery. However, the fact is that small cases often mean small budgets. Vendors providing flat rates help remove the largest obstacle in eDiscovery by distributing the burdensome cost of Processing over the term of the matter. This means that litigants with a limited budget or strained cash flow can still engage a third party for eDiscovery.

Flat rate pricing is a clever solution to a real problem faced by many lawyers every day.  In “What Is the Price of Admission? Summer 2019 EDiscovery Pricing Survey Results”, Rob Robinson provides real data on average eDiscovery charges in 2019:

These results will seem correct to anybody that has sourced eDiscovery services from a third-party, but the pricing seems confusing and exorbitant when placed next to a $20 per GB flat rate. Yet, these price points exist as a result of vendors attempting to provide the most cost-effective solutions to their customers. While the initial high price of Processing can be avoided and the invoice is simplified by using a flat rate provider, the ongoing cost of data hosting at bloated rates is where the flat rate game falls flat. Surprisingly, the size of the data set has nothing to do with the comparative lack of value in the service. The amount of time a matter takes before it is resolved is what makes the difference. As a matter continues its natural course, it may take as long as two years before it can be concluded - the point with flat rate pricing when savings becomes overspending happens between month five and six regardless of data set size.

That’s right, different tools are not required for smaller cases and bargain-basement flat rate pricing actually costs you more if you need to host for more than six months. Take a look at the below - when comparing data sets ranging from 10 GB to 350 GB, the low end of the traditional eDiscovery pricing provided by Robinson saves an average of 40% over a twelve-month period versus a flat rate of $20 per GB.

What is evident is that eDiscovery Processing has not died, but it has evolved and is becoming more accessible on a daily basis. Like it or not, the evolution of Processing and the multitudinous ways it can be made to fit into a case budget has also created a need for greater technical competency in lawyers dealing with these new challenges. Keeping up with the developments in eDiscovery is difficult and, as the pace of change increases, it will become even harder. Lawyers who really understand eDiscovery are valued now, and will become even more of an asset in the future.

At IST Discover-E, we have years of experience helping our clients with their eDiscovery needs along with full scale legal support management systems.  We are expert in creating and customizing eDiscovery processes that best fit our client’s needs and expectations. Our model is uniquely transparent, easy to understand and effective in aiding our clients get the decision they want for their clients.