Hello my name is Mary Mack.
I'm the executive director of a said.
The Association of certified
ediscovery specialists and I
want to welcome you to one of our
last summer school web and R. Ah.
Event and our summer school webinars
series on the inside web and our platform.
We have today are diamonds.
Partner logical and as always logical
will break a little bit of glass.
We're going to be talking about
benchmarking E discovery costs recovery
and telling tales from a survey
that they have done in to do that.
We have 2 presenters.
We have the head of content to an attorney.
A writer Casey Sullivan and he
is a prolific Blogger closing the
loop blogon highly recommended.
Also, we have the senior director
over it logical and Esadze own X
executive director Robby Hilton.
Robbie is also a writer and a
journalist Prior to joining the
E Discovery Community and even
during the E Discovery Community.
So Robbie you were going to lead us through,
and the slides are in the slides
are in the platform and you will
be sending out an email afterwards,
so People don't have to take copious notes.
But Robbie taken through what you find?
Alright Maryum will thank you for
that introduction and thank you
very much for having us as well.
Before we get into the agenda.
I just wanted to give everyone a little
bit of context for this presentation
and we're talking about cost cost
recovery in building models in the
1st place and why it's just Katie
and I delivering the presentation
so this is actually the culmination
of pretty giant research project
that we've been working on for many
months at this point,
you know to kind of step back
a little bit logical's mission.
If I'd been at democratize discovery
such that you know anyone anywhere
at anytime as a means of discovery
quickly and affordably about 2,
1/2 years ago. We moved to this page.
You go per GB per month.
Price model that you know it's not
pretty prevalent in this industry.
But we're really excited about at the time,
no friction. The getting started.
No contracts no minimums, etc right.
But for a lot of organizations.
You know what we've seen is it over
the last 30 or so minds data volumes
across all these projects within
logical has grown dramatically and
where this monthly per GB model
really starts to kind of fall part
is when you have cases that are let's
say upwards of 10 or 20 gigabytes
where you know if you need to host
your data for several months.
You're just getting slammed with
Sky High monthly fees.
And that's not Democratic right
so we've been working toward a new
pricing model for about 11 months
at this point at this point and a
lot of the findings that will share
it here are the result of research
and surveys that we Conducted in
part across our own
customer base, but also kind of in the
broader profession and we kind of did this
whole thing to answer the question like?
How can we eliminate data storage fees
entirely and pass on the advantages of
having native cloud platform so I appreciate
you giving me the time for that prologue.
Let's get into the agenda is going to
talk about kind of the 3:00 basic ways
of law firms are attempting to recoup the
rediscovery costs and the pros and cons
of each of those approaches were then
going to turn to the findings of our.
Annual billing survey,
which we hope will provide everyone here
some valuable benchmarking information
that to how other firms and your
colleagues are handling discovery cost
recovery and then we'll talk about
areas where our case in our findings
from standing prove their practices
around go back and hopefully have
some time to give some best practices,
there as well.
So Casey with that.
I'll turn it back over to you
and you can talk us through the 3
common approaches to cost recovery.
Great thank you Robbie so I
think that you know,
there's basically 3 main models that firms
can employ that fall into these buckets,
which we're calling absorption pass
through an profit center models.
The names are pretty pretty self explanatory,
but I'll give a quick quick overview
how we define each of these and how
they were defined in the survey as
well so with an absorption model.
You essentially have no direct
cost recovery right discovery.
Services are treated generally
is overhead costs absorb 100% by
the firm and they're recouped.
In the hourly rates,
I'd wager that this was once the most
common approach and it's very it's
no longer so much will see later on,
but there's still 2 places where you see
this very frequently first of all of course,
is plaintiffs terms operating on
contingency or everything is fronted
right and then also firms were clients
can't or won't cover discovery costs
clients like insurance companies are
pretty notorious for that as well.
So,
sometimes it's the client dictating
that you are going to absorb the cops
instead of instead of you choosing it.
I'm not originally the days of
treating discovery is overhead.
I think are largely over more and
more firms are moving to recovering
their discovery investments directly,
bypassing it through to the client
and in fact will see that's the
dominant approach.
These days,
so how does that model work Robbie?
Why don't you?
Talk to us about about this
pass through model?
Yeah,
so anecdotally this is kind of the
new most common approach to cost
recovery where firms are simply taking
me bills everything from vendors or
software providers and sending them
to the client essentially as is right,
so I think they're kind of a
few obvious pros there.
One is just kind of simplicity.
Generally,
there's no markup involved.
You don't have to explain the
inclusion of additional fees
to your client so it is very straightforward.
There's a transparency to it,
which is nice because the source of the fees.
Your 3rd party provider that is that
is clear to the client and then there
is kind of a one to one relationship.
Obviously between the costs.
You incur an the costs.
You build so you should in theory,
be able to recover 100% of your cost,
though, as well.
We'll talk about that not always.
The case as far as the Congo.
You should expect some client push back
at the invoices you're getting from your
vendor aren't clear or if they're not
kind of packaged in a way that easy.
Legally, you know easily able
to pass through and again.
We'll talk about some examples
of when that might happen,
it also I think this is kind of
interesting it put the emphasis on
you to explain the value of the
servers that the vendor is actually
providing especially in situations
where services might be either
bundled or they might be line line
line line item like you need to be
able to explain all the included
costs and then finally kind of
the major drawback here is that?
The transparency provided it does it
doesn't power your clients who actually
do its homework and look forward
potentially lower cost alternatives
so in case that's pass through.
You want to talk to us about
the profit center model.
Yeah,
proper center model pretty
straightforward here law firms
turned a profit on their discovery
services by charging fees for services
performed in-house think about.
We're talking about like data processing
not document review here or also this
would fall into under proper model
is marking up the cost incurred by
3rd party services will get into the
sort of pros and cons of that as well.
Right now,
so let's hop back really quickly
to the absorption model one
of the main benefits of it.
Of course,
is streamlined billing right you don't
have to push any cost through to the
client on a sort of a one for one
basis like you do in the pass through
model so that's a simplified approach.
There's no need to struggle with the
clients and I think another big benefit of
the absorption model is just perception.
So you have this general view that
attorney time is quote Unquote legal work
and therefore it is more valuable so
even if the class associated with discovery.
Sometimes are just a tiny fraction of
the overall build they will sometimes
get a disproportionate amount of pushback.
Simply because People don't think
they are as valuable as you know
the billable hour when you fold,
those into your general billable rate
you can remove those friction points.
Of course,
there are pitfalls to this,
the main one is you are leaving
cash on the table right so if
you're not recouping your discovery
costs in your billable rate.
You're either going to need
to have higher rates,
which can again be problematic on
its own or you're going to have
to accept lower profit margin.
So if you're not recouping those
costs that comes out of your revenue.
Pass through models Robbie
covered a lot of this,
but it just quickly to reiterate
main benefits around simplicity
and transparency class that are in
curd are transferred the client
one for one like Robbie said.
And if you do this correctly.
You can do get 100% of your
investment back as well.
See you later.
That's not the case in most most matters
may difficulties again our client push back.
It can have difficulty explaining
the value of the services provided
there's a lot of Education.
That's required both education
education of the.
Attorneys,
who are doing the billion as well as
of the client and you know when we are.
We are legal professionals and
we are technologists.
It sometimes like we're speaking
a foreign language,
so it requires you to recognize that
and find a way to connect with the
People who are actually ultimately
going to be handling the bill and
then finally the profit center model.
The main benefit is profit.
You're not just recovering costs.
But you're generating revenue
on everyone wants to be a profit
center instead of a cost center
rate also think there's a lot of
benefit around empowering staff.
Making your let's support teams
your paralegals,
etc because of important partners
in the firm's work.
Madison getting that work done,
but actually generating revenue
wouldn't this is done really well.
Some firms will even spin off their services.
It's sort of wholly owned subsidiaries,
but there are some pitfalls as well.
The main one being ethical
questions and client perception.
So we're not going to dive a ton into
the ethics of marking up discovery
costs but the relevant things to
look at if you are interested in.
Looking into that is American
Bar Association formal opinion
93379 as well as Model Rule 1.5.
We have stuff written about that on our blog.
Robbies covered that in depth
in a couple a couple times,
so you can check that out at
logical.com/blog or just email us and
we'll send you some info on it as well.
The main sort of take away that is that
it is permissible to mark up those fees.
If the markets are reasonable and
if they agreed to in writing,
but because of the potential ethical
friction People sometimes avoid that model.
There's also the fact that other People
are going to do this better than
you right so there's a whole industry.
That's why we're here right now
designed to provide a discovery
services and if you're going
to compete in that market.
You want to make sure that you
really have the resources needed
to do that and to do it well so
that's a quick overview.
The pros and cons of each
of those billback models.
But we also have a lot of
outside vendors or
we're going to be doing.
Taking different approaches as
well so Robbie Why don't you give
us sort of lay of a land here?
Yeah, thanks Christiane I heat up
by think five of these models and I
should just say before we get into him.
There are hybrid versions of each
of these I should also say that
these are not kind of inclusive of
all the different vendor models
that you'll see out there.
I'm sure there are others.
But I think these are kind
of the 5 main ones.
So let's go through and so we
have that in and out model.
It's one of the oldest as far as
I know and it kind of describes
pricing that essentially has 2
terrorists ones on the front end of
the process you know typically for.
Things like data ingestion in
processing and then you have kind
of another care of on the back
end typically you know a bill on
whatever is flag for production so
kind of usually how this works is
you will pay lower one time charge,
with call it 60 or 80 Bucks,
a GB one time for all the data
that you're sending over to to
the vendor and then once you've
called search reviewed everything
anything you produce out,
which is obviously hopefully at
this point is smaller volume.
Get charged it between let's called
200 and $250 per GB so a smaller
fee on the front end for kind of
the larger collection data set and
then larger fee for the smaller
volume on the back end again.
It's a pretty kind of old school approach.
But there are some advantages mean
chiefly you're not paying hosting fees.
An kind of kind of the other thing
is the more effective your searches
unless you literally pay on the back end,
so it doesn't have proper calling
in all this stuff.
One of the main setbacks is it's
often the case that you know you're
totally dependent on the vendor to
do all of the war kind of leading
up to review and you know this
isn't so much a related billing.
But it can become a little bit of
a black box situation where the
process is performed on the data
kind of in the middle, or unknown.
I encourage everyone.
Chris Wasserman,
who is kind of a widely known Blogger.
He wrote a really great article
about this recently kinda person
called with the Internet model that
I encourage everyone to check out.
The managed services model is probably
familiar to everyone at this point,
it's perhaps the dominant model
with larger organizations and it's
basically this relationship where
you have a service level agreement
in place with the provider to do.
But maybe a little bit of everything
or some of those activities are
included in kind of the core SLA that
you pay for up front and then other
things like project management for instance,
are charged on an Ala carte basis,
some pros here. You know,
kind of a sudden forget that kind
of thing and it's also easy to
divide up costs between clients.
One of the downsides is that you're
going to pay a premium for anything
that's unexpected or outside of the
service level agreement and good thing
you discover is never unpredictable.
So moving on. Let's talk about.
The per user per month models
and probably by per month,
which I spoke to in the.
Beginning a little bit.
These are both common of kind of
you know salad stats or cloud based
vendors with per user per month.
This can be a great arrangement
for small teams that have a lot
of the same type of work so think
about like government foil offices.
For instance,
where you have 3 People essentially
processing records request all day
great model for them on the other hand,
it typically doesn't kind of scale
well to larger cases where you need
to invite in a lot of reviewers.
Or increasingly for corporate
legal Department who would you
prefer to collaborate with outside
counsel by having him?
Do all the work within the software
so if you're working with a company
like or if you're a company like
Oracle or something and you have
literally 400 different law firms
that you work with and you want to
bring them to you within one of
these platforms on a user license is
tough to swallow also be mindful that
some of these types of arrangement.
Charge based on quote Unquote named users,
meaning if I buy.
Q Licenses all be made to put one in my name.
I'll put one in case his name as well.
But then if Mary just wants to comment
and take a peek at our review.
I need to buy a third license
for her even if my license is an
actively in user cases.
So that's pretty easier for month for
GB per month might be kind of the
most common among sass companies.
It's pretty straightforward.
You know,
let's call it 30 or $40 per GB for the
hosted data and that's basically it.
There are a couple of differences
to lookout for though.
We get these we used to get these questions.
All the time.
Some some of these providers have
kind of a like a pre call safety zone,
so essentially this is like a
preprocessing ECA function,
where you kind of get that at no cost
and then anything that you promote to review.
That's when you actually incur this,
this hosting rate,
and then some of these some of these
providers charge on storage volume
as opposed to be Ingestion Volume.
So you might have a 5 gigabyte.
Zip file that turns into 12 gigabytes
in the system because it's being exploded.
It's being rendered a PDF.
It's being index, etc, etc.
And when you got your page $150.
Actually,
now paying 360 bucks or something like that.
The big downside.
Here,
though,
is kind of the cost for longer
running cases and will.
Talk about this a little bit at the
end of the presentation where you
have long periods of Dormancy and
you're just kind of racking up.
These you know, these active storage rates.
Even though the data.
Actually, active and then I should
point out that there are some
variants on this model where for
GB cost decrease the more data.
You put into the system so I
think I don't know if you guys are
familiar with goldfinch out there,
but they do a version of this.
I think the first 50 gigs.
You know they're charged at
one rate was called 20 bucks.
But then like 51200 or a $10
and then anything post.
You know certain sizes is
even further discounted.
So there are some nice kind of
economies of scale to be had there
after the vendors recus recoup some
of those initial processing costs.
Alright so let's briefly talk
about subscriptions again a bunch
of different versions of this,
but you know,
we're going to call 'em all kind
of multi year subscriptions and
they work like this,
you might have something where you
have a matter ceiling of a plate
20 per month and then you have 10
users and 500 gigabytes of data
you get that all in this big bundle
and then you have caps that you can
exceed right typically subscriptions
are a lot cheaper than pay as you
go plans because you're getting.
Discount for your commitment
up front on the other hand,
if you're an organization that
either has kind of known peaks and
troughs in activity or just you can
you can accurately forecast with
the rest of the year is going to
look like it's kind of a guess at
how much you should fight off an
initial subscription kind of related
to that because all the costs are bundled.
It's it's hard to build him back to
individual clients so at most firms
will do is they'll have to mate.
You know how much work they're going
to perform and then passes pass
through those costs at per GB rate.
That's something that you typically
see in absorption model and also the
kind of the profits in our model.
One thing to watch outdoor here again
pretty 34, but it's overage rates.
The rule of thumb is like you shouldn't
be paying more than the rates offered
by the provider on the pay as you go basis.
If you exceed those subscription limits.
OK,
so now that we've looked at common
vendor billing model.
Let's look at how law firms are
actually treating their clients in
terms of billing and Casey here.
We're going to actually get into
the findings of our survey,
so I will turn it back over to you.
Yeah, thanks RV so got the lay of the land.
Let's talk about how folks are
actually navigating it.
We've been working on the survey
is Robbie mentioned early
on for several months.
We served over 100 firms hundred
hundred two law firms participated.
You can see here there rolls split
up pretty heavily on the Lizza
portside to 58% of respondents were
analytic litigation support roll.
1/3 of respondents were attorneys
and then a little bit under 10%.
Nine percent were on the side,
the firms that did participate where.
Litigation focus the 3 main practice
areas were in commercial litigation
employment litigation and construction
litigation so that give you just
sort of a quick overview of who gave
us these responses who participated
but let's talk about what the main
findings were so before we dive into
specific questions an outcomes.
There's 4 real big takeaways.
I think that you can get from this
survey and I'll just go through
them one by one really quickly.
First, the one that stood out to me.
I think is that firms have
taken discovery in house.
So as the role.
Discovery has grown dispute resolution
law firms are taking more control
of the associated work and trying
to control more of the risk sort
of displacing the vendor dominant
approach that once was sort of the
standard that I believe is both to
control costs and then also you know
to provide sopar value just to have
more of that process under their control.
Another main point that we see from
the survey is the predominant of
direct path through this is by far
the most common approach as well.
See very quickly and absorption an
profit center models really show
up in far fewer firms these days.
Finally,
this is one that I think stands out
a lot to Robbie and I have been
sort of wrangling with this issue,
but also to the People who surfaced
in the survey.
It's the difficulty associated
with hosting fees and data sizes.
Those are 2 major pain points.
Identified by survey respondents
an I think this shouldn't be too
much of a surprise.
He knows the amount of data in
litigation grows and it's growing
astronomically just getting through
that information has become the main
challenge of E discovery and of course.
The reason why all of us are here,
you have many companies that are working
to solve that problem with technology.
They're building better ways to sort
of get to the documents that matter to
separate the noise from the signal right.
But the building models that have been
had to have also grown around this,
have largely been based on hosting fees.
And that makes large data sizes
or even moderate data size is very
fiscally unsustainable even while
the cost of cloud storage is dropping
dramatically.
You know,
and People are starting to realize
that if Amazon is charging for a
fraction of a penny for GB of storage?
Why is there vendor then charging
them $50.00 for that same GB every
month right and that's leading to
do a lot of pushback and a lot
of friction in
the process that the respondents identify
Speaking of pushback that's our 4th major.
Take away here, according to the
survey clients are most inclined
to object to all costs and who can
blame them as well as hosting costs,
which I think is you know a
reflection of the point just made.
Alright so let's have a look at those sort
of main points that executive summary.
Let's dive into what folks are actually
doing so, starting with the start.
We asked respondents.
What their dominant approach to
cost recovery was using the same
definitions that breakdown that we
described at the beginning of this
web and are by far you can see past
the models are the dominant approach.
So 86% of respondents.
That's a little bit more than 17
out of every 20 law firms use a pass
through model as their main model.
Absorption followed with 13% on that
perhaps reflects the firms that filtre
discovery is overhead or operate
primarily in practice areas where cost
recovery via passthrough is difficult
and then finally we see only a tiny
little 5% of respondents using a profit
center model as their main approach.
It's worth noting,
however,
that many firms take a hybrid approach,
selecting the cost recovery model that's
appropriate for each matter and each
client so you might be a firm that has
a passthrough cost on most matters.
But then you might absorb them
depending on the client and the
demands of that particular matter
using the model that makes the most
financial sense for each matter.
So it's very possible to do a hybrid model,
here.
Alright so let's move forward
to the second point,
which is the in housing trend that we're
seeing and Robbie do you want us to do this?
A little bit?
Yeah,
cases so on average firms told
us that they were doing about
80% of discovery work in house.
And if you were actually going to
map network onto the DRM you find
that most of it occurs kind of to the
right of preservation in collection
so probably no surprises there,
although we did.
Find increasingly firms are looking
at information governance as an area
where they can bring in more kind of
consulte tive type work that type of work is.
You know it tends to be a natural fit,
too because if you're
working with repeat clients.
You know serial litigators.
For instance,
you get a fuel for their data profile.
Overtime and you get a sense of where
they can start trimming some of that
data through retention policies or
by narrowing the scope of collection
to keep keep litigation costs down.
So that was one kind of interesting
thing when you look at respondents
within these various recovery recovery
models you'll notice a couple.
Of other interesting things.
One firms that treat discovery as
a profit center actually tend to
be a little bit more specialized in
the work that they do anecdotally.
They've been kind of more effective
at identifying identifying the areas
where they can compete favorably
against vendor competitors case.
You spoke to this, a little bit earlier,
so typically doing work like you know.
Yes, I strategy or project management that
hasn't been kind of purely commoditize,
yet and then be where they have natural
economies of scale be that because.
Of you know the type of Technology.
They're using or because the way they're
geographically configured or because of
the way you know they're able to staff.
I'm preview you mentioned earlier
that some of these organizations
are actually starting to spin
off their internal litigations.
The board teams to create kind of in-house
vendors and I think you see that with
these larger firms that typically have
kind of these large economies of scale.
A second thing I think this point out
here is that firms that are absorbing
discovery costs are the ones that
are most likely to pitch themselves.
It's kind of one stop shops where
they will be able to you know,
there's going to be able to be your
soup to nuts litigation shop you know.
Of course to the extent that they are taking
on more discovery work than their peers.
There also I think exposing themselves
to eating more cost if they see a
decline an internal realization rates
will talk to this in a little bit,
but.
You know remember there are attempting
to recover discovery cost through
increases in their billable rates.
So if they have to write off those hours.
They're writing off discovery cost as well,
and then we should also note that firms
that take cases on contingency eternally
fall into the Absortion model and they're
only obviously recovering those costs
if they if they win their matters.
And then I think it probably uh
the final point to make here is
that if you're experiencing some
kind of cognitive dissidents.
When you hear that firms on average
or doing 80% of their work in house.
You're not alone.
I have the same kind of feeling to you.
You have organizations like Clock and
ACC they're telling us that increasingly
increasingly corporate legal departments
are doing more work in house.
We've also heard from organizations that
increasingly they're filling out their
work more and more to service providers.
So I don't I don't know that there
are any conclusions to be made there.
But I think all those you know, various
data points are kind of tough to reconcile.
OK, so let's let's move on.
When we ask firms.
How much E discovery
costs related information.
They provided their clients.
You can see that about 1/3,
said you know,
we provide kind of everything
that we have in our as diligent as
possible and another third,
said they provide some level of
information keep in mind that the
client's level of sophistication will
also often kind of play a determining
role and how much they're going
to want to see. If you're working
with an organization where you know
you might have an internal discovery
focus counterpart on their side you're
obviously going to want to be a little
bit more buttoned up when it comes to
presenting those costs because they are,
they have more knowledge about these
things work and they are going to
kind of expect more from you from a
diligence perspective on the other
thing to point out here and in case
you will turn it back over to you.
You can think back to our discussion of
better building models on this point but it.
And how you're being build build by
your provider that's largely going
to dictate how much information.
You are able to provide so if you're
on a bundled per GB plan for instance,
where you're getting everything
from data processing to project
management kind of in one flat rate.
There's just not going to be as
much information to provide.
Katie all uh all turn it back over to you.
Yeah, thanks great points would be alright
so we're talking about cost recovery,
but how much does a typical firm
really recoup of it said discovery
investment so I think this is sort
of the most important slide the most
important question asked in the survey?
What percentage of rediscovery cross?
Are you actually able to recover and
we've broken down results by mean
median and mode is going to go back
and consult your 5th grade math book,
the mean you'll remember is the average.
And then the average recovery rate
here is 77%. It's not terrible.
But when we look at the median we get
a little bit of a bump on the median
to remind you is the middle data point.
It's the exact center of all the
entries and it's less susceptible to
being influenced by outliers like
let's say if someone said.
Oh,
they only recover 10% but everyone else
is recovering much higher than that.
The median doesn't get pushed around
as much as a result,
so when we're looking at the meeting here.
We're looking at a recovery rate of
84% and then finally we have the mode.
Which is the most common response
and that is a cool 100% it is the
number cited by more than 12% of
respondents and in total,
20% of respondents said they recouped 95%
or more of their discovery expenditure,
which is a really high recovery rate
on a high benchmark but I wouldn't
celebrate just yet.
I think one of the problems here is
even when you have high rates of
recovery that still means you could
be leaving a lot of money behind
also probably why People?
Many of the survey respondents
don't rate their approaches.
All that effective certainly not
as effective as you would expect
with such high percentages.
So let's jump ahead and start looking at
how People grade their own building models.
We asked everyone to talk about
the efficacy of their
approach overall just 9% of respondents
said that they cost recovery
approach was extremely effective
39% that it was very affective
that's a little bit less than half.
Slightly more than half of 52%
total submit their approach was
somewhat or not so effective.
It's also worth noting that we gave
an option of not at all effective and
not a single respondents selected
that so that is an encouraging
sign 0% of People think they're
doing something completely wrong.
I think also what's interesting here,
though, is the distribution based
on the various building models right
so we have the overall numbers,
which I just quoted to you,
but you also have it broken down.
By building model and will talk
about the past,
the model since that is the predominant.
One and the one most views by respondents.
It has a pretty middling rating
here just 6% of People say that it
is extremely effective 40% give it
a less enthusia stick but still
positive very effective rating.
But more than half say that it is
somewhat or not so affective now.
You may be wondering about how can it
be only somewhat or not so effective
if you're actually recovering 84%
of your investment or 95% of your
investment or whatever it might
be and you really have to think
about this as the last even a small
loss repeated over dozen.
If not hundreds of matters a year so
think of you know a small right off of 16%,
so that's at 84% number right in
the middle can add up to 6 figures
so they have an average cost of
$10,000 per matter expended spend
it on discovery in my firm handles
100 matters a year.
But I only recover 84% of that investment.
That means I'm leaving $160,000
uncollected right so that's uh.
Significant amount of money and as
those numbers scale up as you do
more projects with discovery or the
cost of discovery rises that number
will also increase exponentially
which can give us a little bit of
an understanding of why we have
high percentages,
but generally lower than expected or
lower than I would expect rating up
efficacy towards those approaches.
All right,
Robbie and then I'll pass it over to
you and we can start talking about
some of the reasons People might not
be able to recoup some of their investments.
Yeah, so when we look at how often clients
are actually contesting discovery fees.
You'll see that more than 7 in 10
firms that they deal with push back
at least sometimes 20% of firm said
that this is basically the clients.
Mo we deal with this constantly.
and I guess to my mind,
there are kind of Q Overarching
reasons for client push back that will
momentarily but the 1st is sometimes the
costs are just genuinely out of Wack,
but we talk a lot about the the bottom and.
And commoditization when we talk
about vendor service offerings,
but I think if you actually look at it.
I think it's a case that vendors on the
whole have shown kind of remarkable
resilience and pricing power given that
you do have these plummeting cost of
data storage and data data processing.
You were talking about Casey and the
fact that there is now kind of widely
available technology that can automate
a lot of the work that is traditionally
fallen under the vendor umbrella so if
you think think about things like you
know OCR ING that you can do through.
$200 year Adobe pro subscription or
file conversion like those things are
essentially free now but they're still
being charged at a certain rate by some
of the providers that are out there.
That's one thing.
The other big reason for pushback
is just kind of a lack of Education.
Generally speaking clients.
View E discovery cost and again
in case you mentioned this kind of
outside the scope of the core legal
work that their paying for so kind of
regardless of the size of the cause.
They're going to view it.
They're going to view the discovery costs.
It's kind of more suspicious.
I'd say than other types of fees and Casey.
That's actually a pretty good transition.
I think you are next slide.
Yeah, definitely So what is
actually causing those clients
to to push back you'll see here.
The main reason or the main topic that
clients push back on is everything
so #136% of People cite clients
of resisting all discovery costs,
which is perhaps not.
Not surprising,
but it also is Robbie mentioned earlier on.
It could be a reflection of what the
level of insight that clients have
into the bill so if you're not using?
You know if you're not breaking down
fees by let's say processing tech
time all that sort of stuff and then
making that visible to a client,
you're just going to have a single
line item and then any pushback on
that light on line items to push back
against all costs right and then you
simply have the fact that you know,
these costs can sometimes be quite
high and clients will resist them
generally sometimes as a matter
of policy and then the second
most common one almost hyper 1st.
It's behind by one percentage point
35% of People cited hosting costs as
a main reason for client push back.
You know,
and that's not surprising we've
talked about it a couple times,
so far,
but again just to reiterate you
know clients as well as law firms
are becoming more sophisticated
about cloud storage.
They know it doesn't cost that
run to keep data in the cloud.
So the question is why are you then
paying 5 figures or more for it every
month for discovery matter just
to give you a quick illustration.
My Phone, which you can see here.
It's a pixel.
It has 125 gigabytes of storage
on it if God forbid somehow that.
Phone and all the data stored was
subject to litigation and needed to
be a part of the discovery process.
You know it would be exorbitantly
expensive to host that so currently
Phone thanks to things to the cloud
entirely free if it was hosted by
discovery vendor instead of what's
a Google that could cost anywhere
from $10 on the low end to $60.00
on the high end per GB per month.
So if we think about that at
125 gigabytes at $10 a gig.
That's $12150 every single month on the
high end at $60.00 a gig $7500 a month
for the singers single cell Phone.
It's not surprising that People
are objecting to those numbers
when we have services like box.
Google E cloud.
All that sort of stuff that are ingrained
into our everyday life and largely much,
much more inexpensive.
All right that's enough
editorializing on hosting fees.
Let's work down the list and look at
some of the other major issues at 20%.
We People see People objecting
to data processing costs,
which is interesting,
but I think the one that follows is
sort of the last stand out here as well.
And it's 18% of clients was this
seeing giving pushback around.
Fairview costs and that's I
think somewhat notable because as
we all probably know the actual document
review much more than the processing
of the software is where the meat.
Of costs are generated it's the most
expensive part of the discovery
process and can often be the most
inefficient part so you have this
sort of perverse verse situation where
clients are not so upset by those costs.
But they might be focusing in on other
class that might not be nearly as
much of a percentage of the overall
expense and I think we mentioned
this a couple times around me.
Just spoke about it again.
This is really a perception issue.
The idea that you know attorney
work is more valuable.
Even if it's inefficient and more
expensive so will will let that go well.
We focus on these sort of more
tangential things as well,
and then just walking down the less
you see not much not much objection to
tech support costs and very little to
collection cost only 8% of respondents
cited that as a cause of client push back.
Alright so that's what gets clients
riled up but we also asked the
respondents to tell us what their
biggest challenges were as well.
It's sort of the other side
of the same coin right.
So respondents cited predicting
data sizes and recurring hosting
fees as their 2 biggest challenges
if you squint you can see over 60%
of People mentioned difficulty
predicting data size just under 60%.
I think the actual number was about 55%
mentioned for crane hosting fees and
these 2 things really go hand in hand,
I think.
Particularly when you have so many
law firms and clients looking
not just for affordability,
but predictability and often
predictability before affordability.
So if you know how much data.
You have and how much it's going to cost.
It's much easier to make those cost benefit
analysis about what to do with the case.
How to manage your strategy whether
to go to trial whether to settle
all that sort of stuff and in fact,
if we look down the line here
all of these challenges relate in
some way to cost predictability.
We see matter length in the 3rd place,
I did buy.
About 50% of People an unexpected
service fees an add ONS as another
major major challenge and then
lack of transparency into pricing.
Again,
these are all about uncertainty
right so litigation is expensive
litigation is unpredictable.
Any factor that adds to that is going
to just be harder to stomach and I
think we see this in the results here.
All right and let's go on for one
more slide and see what happens
wink lines pushback.
How often does,
that actually lead to write off
and So what we see here is that
write offs are fairly common.
We have 50% of respondents,
saying that they write off costs always 1%.
Most of the Times 7% or sometimes 4%,
so that is fairly common sometimes is
by far the largest response, which is good.
It doesn't mean it.
Happens all the time,
but it's also not very infrequent.
We see just 26% of respondents,
saying that they rarely write
off costs and then a very lucky
12% never do so good for them.
You've also see that another 12%
saying that they don't know which
I think is a reflection of the
make up of the survey respondents
with some lit support staff,
not having insight into the actual
realization rates or the actual ability
to the firm to recoup the expenses.
And this is sort of a side note to this,
but I think something important
important to make if you're not
looking at your expenses versus
your cost recovery on at least an
annual if not a quarterly basis.
You're really missing out on an
opportunity to improve and necessary
whether you're a lead attorney on a
matter or you're on the lid support
side of something there's a lot,
that let's support teams can do
to improve cost recovery and we
don't have time to go into all
of that today that we're going
to try to mention some of some of
those strategies as we go on,
but it also direct folks who
want to learn more about that.
Bolt back to the logical blog will
recover this all the time as well
as to our prior a feds web and R
that we did just about a month ago,
which really delve into what let's
support can do to help monitor their
spending help recoup it as well,
and again if you want that if
you want to link to that.
Feel free to email us at the end or
just put it in the question panel
and Bellevue chapter him Alright.
So we see the frequency of write offs?
What is the cause of write offs,
according to the survey respondents so
Robbie do you want to walk us through these?
Yeah,
so will go into each one of these
in a little bit more depth in
the rest of the presentation.
But we look at the reasons for write offs.
Many of them arise from notes right here.
The need to maintain a positive
client relationship.
So I think this is kind of part and
parcel with a larger kind of shifting
dynamic between firms and their clients.
Let's say 10 years or so going
back to at least the recession.
We've seen a lot of evidence that clients,
particularly large,
corporate clients are just to be
more aggressive applying more cost
pressure on their law firm partners,
but we see that in the rise of.
You know the alternative
arrangements cookies,
these reverse kind of low.
It's better options for commodity
work slowing growth of billable
rates and the rise of heavy
discounting and to that point.
I encourage everyone on the call.
If you haven't already to read this
article on log.com just super eye opening.
It's called how the am law.
100 left 4.4 billion dollars on the
table in 2018, the Gist is that.
45% of all the am law,
one hundreds of revenue last year was
actually build on discounted rates.
That's equal to about
$200,000 per billing partner?
Why is this happening and this
is these are kind of the points
raised in the article but one
you have recession pricing.
That kind of set a precedent,
such that firms think they now
have to discount to win additional
business second thing that was
called out here is just kind
of generally revolve that we're
seeing you get the billable hour.
For an kind of the incentive structure
that the law firm billing model
creates and then finally you know
corporate clients are just wielding
kind of more authority now and
they've been more bold and threatening
to take their workouts where if
they are not getting better rates.
So as we as we start to wind
down the presentation.
We have about 15 more minutes.
Let's spend a little bit more time.
Digging into some of the
other reasons for write offs.
So first let's talk about client push
back you know this is a little bit
of a catchall category that include
I think several different factors?
What's highlight a few of the
most common one untimely building
definitely a factor here.
So you might be used to building your client.
Let's say every six months or you
might experience delays in getting
bills from your provider so you can
actually you flip them back over
to the client and so when they are
presented to the client they they might look.
Kind of artificially inflated
because all this time is built up
or it might come during a period
in the case where there's just not
a whole lot going on and you're
not incurring actual legal fees,
so if they're just if you're presenting
a bill for several $1000 or more
than that and he discovered cost.
You know it can be alarming.
In addition to kind of timing.
Another reason,
especially if you have larger clients
is that builds you submit just might
not be compatible with your client.
Billing guidelines so they get rejected
out again and then finally it might be
the case that you know you have any clients.
And if you can't clearly articulate
the value of the services.
There's going to be pushed back
and remember that 70% of all the
firms that we've surveyed here,
said they're getting pushed
back you 100% of the time.
So Kitty you want to talk about kind of the
perceived benefit decline relationships.
Yeah,
this was you know the second
most common reason.
A man it's really just the other
side of the same coin right,
so you have one reactive right off
which is based on client push back
and then you have proactive right
off switch are done to prevent the
client from being angle angered Bolt.
I think our educational failings
around the
value of E Discovery Services or
that's their their origin point
for those supporting attorneys.
I think we can really make a difference
by educating your attorneys around
the importance of the work done.
It is essentially a marketing job just
showing how the discovery works fits into
both the progression of the discovery
process as well as the case overall
and infirm and attorneys perspective.
It also means educating the clients early on,
particularly unsophisticated clients on
the role of discovery and the benefits
it can have their case and that can be
that can be started right at the outset
and also needs to continue through that
whole process in order to make sure
that you're not you're not writing off
costs simply for fear that they might.
Be objectionable to the client once
the client understands the benefit
associated with those become much more
palatable alright so let's jump ahead
and plastic the rest of these what about
the inability to justify work gravity
do you wanna talk about this for us?
Yeah, so I mean,
there is kind of a couple of points to
make here it might be the case that
you know you just can't articulate the
value to your client of the services
that you're offering internally.
So it's fairly common as an example
for attorneys to be comfortable
building the work.
Let's say that their paralegals do,
but not feeling comfortable billing
litigation support time just
because they're not totally sure.
What is included in that
litigation support work and then?
It also might be that the work product?
Just they've been up to snuff,
I mean that happens,
obviously so the billing attorney.
You know, essentially just just Swallows.
The fees OK, so moving on can you want
to talk about unpredictable costs?
Yeah,
and this goes back to you know the point
we made earlier litigation is risky.
Let's not make it risky right.
So when your discovery approach is
a little bit like rolling the dice.
It can be hard to justify passing those
costs on when your bet turns turns
out to be inaccurate. I think I mix.
All of those gambling metaphors.
I don't.
I'm not a gambler,
but I think you get the gist if a
project goes wrong if you require
you know extra vendors vendor support
at $125 every hour or your timeline
expands by months and months.
Or you have you discovered data that
wasn't properly addressed at the beginning.
It's not surprising that you would
then want to write off those resulting
costs or be forced to write them
off by the client.
And then let's let's rap up with
this appetizing image recovery.
Internet should I apologize yeah.
I apologize for putting that image.
In the slide deck.
But the final reason we're going
to address is that your firm eats
eats the cost of service provider or
vendor just due to lack of adoption,
so for instance,
you committed to let's say a
$200,000 a year subscription with
somebody that has 30 licenses,
but you're only pulling 15 of them.
To work this happens,
all the time with software
purchases question is why well one,
it might be the case that your attorneys
have their own vendor relationships.
We see that all the time
or for whatever reason,
they just don't want to use the
internal tools because they're hard
to use their hard to access or there
are other kind of general bottlenecks
might also be the case that People
just don't don't know about the
internal resources available to them.
Katie you said this is a big kind
of internal marketing effort.
Back to definitely decades also keep in mind,
you that discovery is for a lot of attorneys.
It's an episodic event and
you're dealing with it.
You know,
maybe 3 times a year or so it's really
important that you're keeping your firms
tools and processes Top of mind related.
Lee this might be kind of exacerbated by
lack of internal processes or policies.
You wouldn't believe how many firms
and we talked to you who have have
no defined approach for selecting.
For selecting tools or identifying
vendors that they're going to
be using for the next case.
If you ask you know how do you
decide what you use you often
get responses like well Google,
it or ask Bob and finally you
know your firm just it might not
be equipped with the appropriate
tools or resources for the types
of cases that you have so we all
know that discovery is not one size
fits all approach if for instance,
you only have kind of a super high
horsepower complex tool that.
For the big cases,
but you only have to go through your neck.
You only have to go through a couple
of gigabytes that type of conundrum
can lead to attorneys looking elsewhere.
So we have about 8 minutes left.
I think we can probably squeeze
in these best practices.
You want to uh want to give it a shot.
Yeah, let's go for it.
Alright cool so let's let's
start with the Stargazy.
Let's start start.
We're going to move quickly through this,
but again,
you know,
there's more information out there,
so feel free to follow up with us.
If you want something more in depth,
but begin at the engagement is probably
the best way to set the stage for a
successful successful discovery process
throughout the matters life cycle.
I think it's really important to start
with setting the right expectation,
so think about how much
discovery you're expecting.
How do you expect to recover those costs?
What tools are you going to use
and then those items should be
as appropriate explicitly greed.
On Groupon,
particularly are going to be
using a profit center model.
I know that's a minority model.
But that may require the client
to sign off at the beginning,
so you're going to make sure
that if you want
to do that. You have those those things
put in writing at the beginning.
This is directly related and that
scoping things out at the start as well.
We talked about this at the beginning,
but not all approaches are
appropriate for all matters.
It's kind of a Goldilocks situation so some
things are going to be a little too hot,
something's going to be.
Little too cold you want to find
the one that is just right for
that particular case for the data.
At issue, the likely custodians.
The timeline etc.
Most firms have multiple tools
and multiple approaches at their
disposable at their disposal.
Excuse me and this is true even for the
largest firms and the smallest firms.
There's so much that you can get
into and start using really quickly
that you really do have the world
available to you so scoping that out
at the beginning can help you select
the right tools in the right approach
for a particular matter as well,
starting at the start.
Start with no no in your client
so if you have a client,
who simply won't pay for certain services.
You want to be aware of that at the onset
instead of being surprised by later on,
and potentially having that
become a negative interaction.
We also want to think about how
sophisticated your client is how
frequently they litigate and
how much insight or direction
over the discovery process.
They even want and the more
of your aware of your clients
tolerances at the beginning,
the better you can tailor your
approach as you go along.
And Robbie Wedding,
he walked through this one.
Yeah, so you obviously want to make
sure that your internal solutions
fit your discovery projects is what
I mentioned that what I mentioned
a slightly gohan that you're not
trying to fit kind of a square peg
in a round hole when it comes to
this stuff if you don't feel like
you have the right internal tools.
These days, there's really no reason
not to look for other tools or
several providers out there that
offer some form of as you go pricing
or free trials and they're not going
to lock you into a contract or.
Or you know long-term subscription related.
Lee you need to make sure that a your
intended users know how to use the tools.
Uh especially if they're kind of more
complex or require training and be.
You need to be sure that billing
attorneys are comfortable speaking
to the value of the services that
are providing through the tools.
Most providers have some amount of
training resources out there that
you can leverage and some even have
suggested language that you can
use to actually pass on through
to the clients with regard to.
You know What is this tool?
How does it work?
Why is it necessary?
Why does it cost when it costs
and then along those same lines
uh if you want to drive adoption.
It's really important that
you develop guidelines.
One and then to get executive level by
end so that those guidelines are enforced.
That's really the challenging part
making sure that things are enforced
so this generally entails identifying
a champion on the team who's
passionate about these issues that
he's going to represent your interest.
Because they have some kind of incentive
so like you know a CIO for instance,
or CFO for instance,
or members of the firms technology
committee or discovery practice group.
You also want to make some type of
ROI Cade that states kind of in plain
dollars and sense what you're firm stance.
The game because you know at
the end of the day.
If you're writing off work and
those are costs that are coming
out of your partners pockets,
so you need to make them understand that
and then finally make sure that your
billing by the value of the service,
you're offering not by your title.
So this is really important for People
who were kind of jacks of all trades.
Typically,
you know,
People who are in smaller law firms,
who are doing a little bit of everything
if you're a partner Building $500.00
an hour for legal services but
you're also someone who's involved
in spot checking review like keep
the perceived value of the work in
mine when you're actually billing for
that you know discovery related time.
Katie isolate I didn't think we
were going to get through all that,
but but we did.
And we're at the end of our
presentation as surprises.
You are alright,
so we had some People have submitted
questions beforehand will hit those
but we also want to invite anyone
who has any outstanding questions.
Anything that we didn't hit already just
drop them in the Q&A panel and we'll
do our best to get through them in the
last couple of minutes that we have here
also invite you if you haven't already
go ahead and download this survey.
There's more in there than we're able to
cover in just this hour and it will be a
great reference point for you going forward.
If you're ever looking for you know,
some benchmarks and baselines to judge
yourself against or think of new strategies
and how to improve your recovery as we
wait for questions to come in Robbie?
Why don't you take us to the slide ahead?
Or I can I can hit asleep
is a grim Reaper slide,
it is I believe this is rain that we got it?
Yes, so we mentioned in the Top
of the hour that the findings.
We reviewed in the survey informed
change to our pricing model again.
We're striving to make discovery
cost affordable,
and 100% predictable for everyone.
That's part of our mission.
That's why we recently announced a per
matter per month model if you're interested.
You can go in a logical.com plus pricing.
It's all up there with all the
details so even if you're not kind
of in the market for another tool,
but we just really be interested to
get your feedback on how the model
works and how we would potentially
fit into your business.
So,
just leave you guys kind of on
the next slide.
Well anyway point that was feel
free to reach out to me and Casey
more contact information is on
one of the slides at the end,
but again we love to hear your
feedback on the new pricing model.
Yep,
definitely and if you want more information.
If you'd like us to get in touch with
you to see how pathological might
be able to improve your discovery
process you can let us know here
just say yes will reach out if you
want us to leave you alone select
no and we will not leave this up
if you can go ahead and answer
while the questions come in and we
have a few here now Robbie Saltos,
the first one to you.
And this is an interesting one
something that I've heard from
talking to some paralegals as well.
How can you recoup the time of
paralegal work during the discovery
process so not just the tools
associated with that work but actual
paralegal time and do you have any
suggestions or thoughts on that?
Yeah, I mean that's a good question.
I guess it all depends on kind of
how you're structuring your recovery
models and I'm in case we look at this
with specifically with the absorption
model where you might say you are
contract ING with some provider you're
locked into a subscription rate.
Well, what firms typically do,
especially with paralegal and
support staff is they will kind
of look at that contract look at.
The work that they are expected to
have over the course of say you know
the next 3 months or or the year
and what they will do is will just
apply it increase in the billing
rate of those types of personnel.
So you're not going to you're not
going to really build back for these
discovery cost necessarily what you're
going to do is you're going to build
your paralegal out at $180.00 an
hour as opposed to the $150 an hour.
That you were previously building them out,
so you know,
I think that's kind of at a high
level how I would answer it.
Obviously,
like you need to be diligent in tracking.
These peoples time and explaining to
your clients upfront like what the
work is that there are actually doing.
That's the only way you're going
to get these cost recovered.
Yeah, and I also add to that,
you know a lot of times whether you're
able to build for that work is is a
result of what the client refuses to
or does not refuse to pay for and
what I've actually seen is fine.
It's more willing to pay for paralegal work.
Then, for general.
Let's support work.
So we will sometimes have People
who are both certified paralegals
as well as fulfilling alit support
function and they'll be able to
bill for wine and not for the other
depending on you know what the client
has agreed to so just getting that
getting that set at the onset again
is can be really helpful in bold
framing your approach to the matter
and then also just knowing what?
But you'll be able to pass through
and what you'll probably have
to end up absorbing as well.
We're going a little bit over,
but I want to ask you another
question that we got which is how
confirms who don't pass along the
rediscovery or technology fees
communicate the potential savings
to perspective clients and Robbie.
I want to hear what you think
about this as well.
But like I mentioned before I think
this is really just sort of an
educational effort of marketing effort
as well. It really you know you can.
Simply to say this is how much it's going
to cost an attorney time for example,
if we use if we don't use this
particular technology versus
this is what the savings that we
estimate that we can get from it.
And if those are significant.
I think a client would have would
have a vested interest in allowing
you to save them money probably have
anything that you'd like to add here.
Now I mean,
I think now that I guess the last piece
would be reach out to your provider
and ask them if they have any of
those types of ROI materials on him.
They generally do I know from
RM like case. Studies are generally
released effective in helping our
customers convey that value back to
their clients. And I think you
mentioned this earlier 2 day a lot
of times People will give you
actually sample language to use as
well, and you can track that to the
needs of your firm in your client.
But if your provider doesn't
provide that you should ask them to
make it for you, because it's
something that they have an
interest in getting out there as
well. Alright so we're overtime
want to thank everyone for
attending feel free to reach out,
either to me or to
robertitdirectlyyouevercontactinformationhereitscasey.sullivan@logical.com.
Robert.hilton@logical.com and if
you have anymore questions shoot
him over to us and we're happy to
respond after the web and R as
well.
All right, thanks Robbie thanks Mary and
they said it's always great to be here.
Oh, thank you. Casey thank you.
Robbie and thank you.
Everybody who joined USDOT in
the middle of our the end of our
summer here for summer school
series and this wonderful billing
recovery web and R thank you.
Thanks guys fight. Thanks a