Transparent and Predictable Pricing Models for eDiscovery Technology

Line-item billing for individual tasks is often a part of the traditional price model for eDiscovery, and has traditionally been the preferred method for vendors in the market. This approach has been around for quite some time.

Customers should be aware that there will be fees associated with the collecting and analysis of potentially applicable data, prediction coding, hosting to review, and production if they enter into a contract with an eDiscovery vendor. In addition to that, they might have to pay an ingestion cost connected to the collection process.

Optical character recognition (OCR), culling, search terms filtering, image conversion, deduplication, and other specialized operations may also be charged individually. OCR and image conversion are two of the most significant processes due to the high demand they place on the processing servers and the total time to complete these tasks. Being mindful of the price points is important, as well as the time for delivery.

The traditional model for eDiscovery hosting has many components, and deserves special attention. Top eDiscovery vendors typically charge a monthly hosting fee based on the volume of data being housed on their servers during the duration of the project.

License fees are also often charged for access to the technology. Each user will be required to have their own seat that is charged per user per month of access. Permissions for users may also be limited based on the type of seat and user permissions required.

Some vendors also charge additional fees for analytics tools including TAR, active learning, and other production tools. For those that don’t provide these features, you will need to add those to the technology (which requires even more data, user, and technology charges) or go without.

Many vendors also charge production fees. These can include fees for imaging the data, OCR, and load file creation charges. Although, many vendors do offer a standard production option included as part of the overall cost.

Customer support and project management are also typical fees associated with traditional pricing models. These fees are not limited to advanced support, but may be charged for any level of support or project assistance. Typically, these are based on an hourly rate and charged on the quarter-hour or tenth-hour billing model.

All of these fees will directly impact your overall budget and should be considered when evaluating and deciding on a provider.

When dealing with a few custodians, each with a significant volume of data, the fixed-fee per matter model is a cost-effective alternative. Unfortunately, this pricing model is not ideal for many matter where the datasets are not small or the custodian count is high, or when a matter grows beyond initial expectations.

If the scope of a matter expands beyond the initial fixed-fee pricing offered, there will likely be additional charges for the increased data size or custodian count. This could also apply to additional users, if the need for a larger review team grows.

This is a great option for small matters with fixed user counts and limited budgets. It provides predictable pricing that will fit the budget of these types of matters well. However, it is important to examine these advantages and disadvantages when considering a fixed-pricing model.

eDiscovery pricing models offer organizations the predictability needed for budgeting and cost control, but evaluate costs at a single point: data ingestion.. With the fixed-fee upon ingestion model, data vendors provide a single flat rate based on the data size ingested. This is typically based on a per gigabyte rate, and occasionally on a per terabyte rate (for the largest projects). Vendors do this without knowing exactly what is included in the data. The benefit for customers is that data sizes can expand significantly upon ingestion, when a significant volume of compressed data is included in the data collection to be processed.

The disadvantage of this model is that customers often pay for irrelevant or “noise” data that will never pass beyond processing and into review. This can include system files, duplicates, file types that are unsupported by the platform, and data that simply isn’t within the scope of the matter. Many eDiscovery vendors do not have the capabilities to help cull this data out of the process at ingestion, leaving customers paying for unneeded data. Although offering high predictability and control over total project costs, customers should be aware of the potential drawbacks this model brings to managing eDiscovery projects accurately.

Fixed-fee upon ingestion models provide predictability at the onset of the project, but there could be additional fees throughout the review and production stages that need to be considered. When investigating an ingestion based model, make certain that any other fees for review, analytics, prediction models, productions, project management and customer support, OCR, image conversion, and user licenses are clearly documented in the pricing proposal.

Fixed-fee for reviewable content pricing is one of the latest models provided in the marketplace. This is based on the monthly volume of data being hosted in the platform. Typically based on a per gigabyte rate, it can also be offered on a per document basis. This rate will be charged monthly for the duration of the project.

Pricing models structured like this provide customers with easy-to-understand costs and transparency resulting in better budget management and predictability. Additionally, this enables businesses to track costs more precisely, minimizing (or eliminating) hidden costs that would impact budgets.

Some vendors even provide additional control within their technology, allowing for better data management throughout the lifespan of the project, further reducing costs and decreasing monthly spend.

While this model can be applied broadly with success for organizations, it often isn’t the best model for small matters with fixed budgets. If a project extends beyond the forecasted timeframe, the recurring monthly costs would continue and could erase any cost savings realized earlier.

The traditional pricing model offers the advantage of each part of the process being clearly delineated, which can make it much easier to assign costs to particular stages and justify those costs where necessary.

While this is an advantage in certain circumstances, it can be a disadvantage when resources (money and time) are tight. The traditional model is much more expensive than alternatives and also requires a high degree of upfront expenditure which is not ideal for smaller cases or quick projects, where budgets may be limited.

The main advantage of the fixed-fee per matter or per custodian model is that it provides clients with cost predictability up front. Knowing the costs up front gives organizations clear expectations for budgeting.

While this model does provide cost stability, the downside is the likelihood of paying for irrelevant or unneeded data. To help reduce eDiscovery spend when using this pricing model, care should be taken during the collection of data, targeting custodians and filtering data before ingestion into the eDiscovery technology for processing. If the organization has time and personnel to carefully and intentionally collect targeted data for processing, this pricing model can provide predictability and savings.

The fixed-fee upon ingestion model offers customers a predictable way of managing their legal costs. With this model, customers are able to know the anticipated spend up front and any changes as volumes change.

Some organizations find the consistency is more beneficial than cost reductions. They will find that opting for a set price on ingestion approach will provide the desired outcomes for predictable upfront spend. The disadvantage is strictly based on paying for data that will not be used. Data that isn’t useful will still be part of the initial costs. Additionally, with all data being processed, review teams will need to spend more time filtering out unnecessary, “noise”, data or deal with that data during the primary review. This increases costs of time, money, and efficiency for counsel.

If the matter expands in size or scope, or the review team expands, expect additional costs that can easily outweigh the predictable benefits realized early on. Again, it is important to know your matter and needs well before choosing this pricing model.

The fixed fee for the reviewable content model is a great option due to its cost-efficiency, convenience, predictability, control, and transparency. By pricing content proportionally according to what’s being reviewed, clients only pay for data relevant to the project, resulting in time efficient review and cost savings throughout the project.

For vendors, that includes user licenses, technology, and productions as part of the fixed-fee. Organizations will quickly realize savings in their predicted budgets that they haven’t experienced before. This type of pricing enables teams to predict spend based on increased data sizes, rather than on technology use or user counts.

The disadvantages typically apply to the length of time for the project. Compared to other models, when matters extend beyond the anticipated time frame, costs will continue. For small matters with very slim predefined budgets, this model isn’t an ideal solution. For larger matters that extend beyond the initial time estimate, ongoing costs can be a concern. However, they can often be addressed by negotiating pricing for the extension that would result in continued savings and predictability. Any change in data size or length of review could significantly impact the spend and budget.

The simpler end-to-end model that includes processing, ECA, review, productions, technology tools, and user fees as part of a holistic solution is the best development in eDiscovery pricing models in quite some time. Additionally, the vendor’s eDiscovery services are fully included and come at one flat fee — as opposed to being charged piecemeal with other models — which provides clients an easy way of budgeting specific parts of their project. Furthermore, this type of pricing enables various document review services to be purchased at the same level, which offers a simpler solution for end-to-end payment.