Achieve Savings By Predicting And Controlling Total Discovery Cost

Monday, December 1, 2008 - 01:00

Buyers of electronic discovery and litigation support demand cost savings. In the current economic climate, cost control has become more important than ever and it will almost certainly remain a key business driver for the foreseeable future.

In this landscape, law departments and their outside counsel must aggressively focus on understanding and dependably predicting their Total Discovery Cost (TDC), which includes electronic data processing, hosting and document review services. Choices of processing workflow and hosting applications significantly affect TDC. Case teams must weigh these choices carefully early in the litigation lifecycle.

Consider this real-life scenario: a legal team needs to provide a TDC comparison to the general counsel. They want to compare the cost of processing, hosting, and review, using either a linear or a conceptual review platform. The matter involves 100 gigabytes of Outlook.pst files; de-duplication and key word searching will be applied in processing; and the team has six weeks to complete the review.

We found a dramatic cost difference between these two options. The estimated TDC for the linear review option was $1,011,250 compared to $416,625 for the conceptual review option - a 60 percent difference.

Integreon estimated these savings using our proprietary tool that we designed to calculate and compare TDC. This "Calculator" is a key component of Integreon's new service called Doctane, an integrated discovery management solution that enables predictable cost planning at the start of every case. Integreon developed Doctane to meet the growing need to approach discovery management holistically, as opposed to treating the different components of discovery as independent costs and decisions. Doctane is a full suite of discovery services including planning, processing, hosting, review, and production. Clients can choose a full end-to-end solution or select just the services they need. Regardless of which services clients want to buy, the Doctane Calculator can help analyze different options and accurately predict TDC.

A Rigorous Approach To Estimating TDC

How can the savings be so big? Review platforms have very different features and costs. Spending more on the review platform can speed document review. But is that a good trade-off? Calculating TDC requires a sophisticated mathematical model that analyzes upfront costs, review rates, project duration, team size, and other factors.

The Doctane Calculator models the efficiencies specific to each review application, allowing case teams to see how various proposed workflows will affect the overall project budget and timeline. The Calculator is interactive, allowing the team to easily change assumptions and product selections so that the resulting cost, time and staff requirements can be compared in minutes. Our clients find the Calculator is an effective tool to help select the optimal workflow for each matter, based on varying factors of data volume, budget, deadline, review location and available review staff.

How The Doctane Calculator Works

Total Volume. The case team starts using the Doctane Calculator by entering the type and volume of data to be processed. The first step is estimating the number of documents to be reviewed and the amount of data that will be processed and hosted in each application. For Outlook.pst files, we use a benchmark of 10,000 documents per gigabyte of source data. This benchmark is based on historical analysis and can be adjusted. For the 100 gigabyte data set in the example, we estimated a collection of 1,000,000 source documents.

De-Duplication Rate. We then take into account predicted de-duplication and filter rates, from which we calculate the estimated number of documents remaining for review. With a linear review tool, a de-duplication rate of 30 percent is typical. That would yield a remainder of 700,000 documents (70 gigabytes of data) to review. When near de-duplication is included for a conceptual review process, the estimated de-dupe rate increases to 50 percent. The higher de-dupe rate is a result of e-mail thread simplification: the software displays only the longest, most recent message in a thread; it suppresses all previous shorter messages that contain identical content. In our example, a cull rate of 50 percent yields 500,000 documents (50 gigabytes of data) for review.

Lawyer Review Rates. The next step is to consider the estimated review efficiencies associated with the two platforms being compared. For a typical linear review, an industry-recognized standard is approximately 50 documents per hour, per reviewer. For a conceptual review product, our historical data shows an average of 200 documents per hour, per reviewer. The faster rate is possible because the conceptual software organizes documents with similar content into groups. Grouping enables reviewers to more efficiently identify commonalities and differences between documents. In this approach, even though every document is still being reviewed, the process of viewing similar documents together results in a dramatically faster, more streamlined review.

Software Cost. Based on our standard rates, the estimated software cost for the linear review would be $92,150 for processing and hosting. For conceptual review, it is $228,125. At first glance, the linear review option seems the winner. Stopping here, however, is a big mistake because TDC includes more than just the processing and hosting components. The document review cost is usually the most expensive component of any discovery, so we must take that into consideration to complete the cost comparison.

Time and Cost for Lawyer Review. The key driver of TDC is the cost of the lawyer review time required. A linear approach for 700,000 documents at the industry standard review rate of 50 document decisions per hour requires 14,000 hours. At a typical New York contract attorney billing rate of $65 per hour, that means a review cost of $910,000. In contrast, a conceptual review of 500,000 documents at 200 document decisions per hour takes only 2,500 hours. At $65/hour, the review cost is just $162,500. So in this scenario conceptual review saves 80 percent relative to linear review. (The estimates here and below are for a first-pass review only, do not include QC or second-level review costs, and are based on the estimated review rates and document counts and assume reviewers work 8 hours per day, five days per week.)

Assessing Offshore Savings. In addition to a best-in-breed technology choice, Doctane offers document review in multiple locations, onshore and offshore. Current options are midtown Manhattan, Fargo, ND, India, and the Philippines. At the offshore review rates of $28 per hour, the review cost would be at least 50 percent less.

Assessing Law Firm Review Charges. Comparing the two review platforms is also relevant to evaluate the cost using outside counsel attorneys. For example, at an average billing rate of $200 per hour, the linear review would cost $2.8 million versus the conceptual review cost of $500,000, resulting in a TDC of approximately $2.9 million for linear review and $728,125 for conceptual review.

Turnaround Time and Team Size. Cost is not the only important factor in managing discovery - so too is meeting deadlines. The Doctane Calculator helps case teams make sure they staff cases and choose software to meet deadlines. In our example, the linear review requires 58 reviewers for six weeks. In contrast, the conceptual review would allow a team of just 10 lawyers over the same six weeks.

Costs in Future Cases. Sophisticated as the Doctane Calculator is, it does not take into account the costs over a portfolio of cases. By choosing the conceptual review option, a firm or law department may be able to rely solely on its own attorneys rather than having to hire a significant number of contract reviewers. Law departments may find this attractive, especially in serial litigation where retention of case knowledge by the review teams may yield big savings on future matters.

Simplifying TDC: Total Cost Per Document

If you are confused by all the numbers, don't worry. The Doctane Calculator provides an estimated per document cost. This is an "all in cost" that includes processing, hosting and review. In the examples above, the linear review cost is $1.44 per document and the conceptual review $0.83 per document. Once a legal team considers the TDC on a per document basis, the trade-offs become easier to understand.

Integreon recognizes that flexibility is important, which is why Doctane is not an all-or-nothing solution. Clients can pick and choose any Doctane service or combination of services. Integreon can bill for them in a variety of ways. We can process and host with traditional billing breakdowns at a per gigabyte and per user licensing level, or we can bundle those two services with attorney review and use the Doctane Calculator to arrive at a per document price that includes all three. By establishing a fixed per document price, the overall case cost becomes far more predictable.

Lower Cost And A More Flexible Approach

The big difference in TDC in this example illustrates the cost and time savings of leveraging the efficiencies of conceptual review as compared to the slower review rates typically associated with a linear review. The example also illustrates that with the right planning tools, teams can adjust the number of lawyers and/or the amount of time to meet deadlines.

With flexible software options and industry expertise, Integreon advises clients which tools are best suited to each matter. Integreon's integrated discovery management approach offers the cost savings, flexibility, and budget predictability that is vital in today's market.

Chris Egan is SVP, Discovery Solutions and Glen Homer is Strategic Account Executive, Discovery Solutions at Integreon.

Please email the authors at chris.egan@integreon.com or glen.homer@integreon.com.