The manner in which corporations and law firms approach e-discovery budgeting is evolving. Predicting costs is a continuing challenge and an increasing necessity. The traditional and commonly used line-item approach has a number of benefits, yet new budgeting models are emerging that may give corporate clients greater control and transparency. The new models focus on value rather than unit price. The success of either approach may depend on the company’s litigation profile and types of matters faced, as well as the number of in-house resources, personnel and technology.

The goal of this paper is to educate corporations on e-discovery costs and budgeting so that they may more effectively decide upon, and budget for, an e-discovery program that best suits their needs.

Given the actionable goal of this paper, readers can expect to learn how to:

  • Identify the e-discovery model in use at their company;
  • Pinpoint the areas within their program that lack transparency;
  • Assess the efficacy of each model for their particular litigation profile and resources;
  • Ask the right questions of software vendors and legal service providers when selecting and/or implementing either model.

How much do you know about your e-discovery costs?

A recent Fulbright & Jaworski report found that in 2009, corporations spent an average of $3 million per legal case on e-discovery – from collection through production.i Another recent survey of inside counsel at Fortune 1000 companies using common cost-cutting tactics, only 40 percent could measure savings, and many of the calculations were only vague estimates.ii What these surveys and others indicate is that e-discovery is an expensive process and many, if not most, do not have a reasonable amount of transparency into current costs or how to reduce the overall cost.

Two models have emerged that focus heavily on the issue of cost, the line-item model and the total-cost model. Both take very different approaches to e-discovery, especially around pricing, process and technology. The success or failure of these models, as well as the level of budgeting transparency provided by each, depends upon each organization’s profile, including litigation portfolio, internal resources and technical environment...