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eDiscovery: An Unwilling Customer in an Unwilling Market?

September 09, 2021

I got introduced to eDiscovery in the “early days.” It was 2003, and I stumbled upon a fast-growing, technology-enabled eDiscovery services company. I didn’t know much about the market at that point since my view of discovery was still envisioning new associates herded into a back room with bankers boxes to conduct their rites of passage – read, review, categorize – lather, rinse, repeat.

However, I dove in for a few reasons. The CEO was a dear friend, and it was fun to work with him. Further, it fascinated me that companies were paying $4/megabyte to “process/prepare” digital documents so the data could then be manually reviewed. Yes, that’s $4,000 per gigabyte! Gulp! But the most fascinating point was that the companies consuming this service were doing it begrudgingly. They didn’t want to be customers but were compelled to do so – unwilling customers in an unwilling market. I needed to figure this out!

eDiscovery is propounded upon companies who are sued or are a party in a lawsuit. Further, companies facing some sort of investigation or compliance-related ask or companies encountering a data breach are the ones conducting eDiscovery in response to a request or to investigate the source of a breach. In other words, none of these events is desirable and only conducted because one has to, not because one wants to. No one wants to get sued, and when they do get sued, they would rather not go through discovery.

This brings me to the point of consumption pricing for eDiscovery. Why, almost two decades after I entered this industry, are law firms and companies still “buying by the gig?” Yes, it’s about not knowing how much they need to consume, so it’s hard to “flat fee” it. It’s also about making sure one doesn’t overrun a budget.

However, fundamentally, it’s about the core attributes of discovery that drive a perpetuation of a consumption-based pricing model. It’s an undesirable event which, as it’s conducted, a company is trying to “not conduct it” or reduce the scope dramatically. So it’s a variable cost (except for serial litigants who know they will spend oodles and oodles year over year – pharma and life sciences, anyone?). An undesirable event, which is variable, is well suited for a variable pricing model – or consumption-based/per-gigabyte pricing.

I don’t see this disappearing anytime soon.

“despite differing levels of enthusiasm, more e-discovery companies are touting and rolling out the consumption pricing option”

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