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How to Manage Your Total Cost of Review: Every Percent Matters

Published on April 27, 2021

Zef Deda

Zef Deda is a business development manager at Acorn Legal Solutions. An e-discovery thought leader working with Am Law 100 firms and corporate legal departments, Zef plays a key role in leveraging his knowledge of advanced technology and phased project plans in helping clients solve complex issues. Zef positions himself as a collaborative thought partner to ensure the best outcomes through his understanding of his client’s problems, their end goals, and working closely with them to identify and ensure the best possible outcomes.

Continuing on the subject of reining in your total cost of review (TCR), it must be reiterated that budget concerns were more prominent than ever among legal teams in 2020—and continue to be halfway into this year.

When it comes to e-discovery, review is always the greatest cost driver, so any opportunity we have to reduce its scope—and, in turn, its costs—should be seized. But teams must first take stock of where these opportunities exist throughout the e-discovery process in order to have the most significant impact on that bottom line.

On that note, let’s revisit that all-important working question of: How do our choices prior to review affect our total cost

Last time we focused on the usefulness of targeted collections in reducing TCR. Today, let’s home in on early case assessment.

Establishing the Numbers

Let’s recap the assumptions we will continue to work off of. In this scenario, we have 6 devices with costs of $500 per device and each device has 50 gigabytes of data. Assume each gigabyte contains 1,000 documents, and our reviewers work at a rate of 50 documents per hour at $50 an hour.

Lastly, our processing rate will be $35 per gigabyte, and hosting will be $25 per gigabyte, per month. We will also be using a four-month lifecycle for this case.

In my previous article, How to Manage Your Total Cost of Review: Keeping Collections on Target, we took this same scenario and presented the choice of collecting broadly or collecting narrowly. We found that, through targeting our collection, we were able to not only reduce monthly recurring fees, but significantly reduce our total costs of review by up to $25,000.

In today’s exercise, let’s move on from the collection stage. The second question we’ll visit here is: For the custodians you collected, would you spend $5,000 up front to increase the cull rate from 80 percent to 85 percent?

Is 5% Worth $5,000?

$5,000 may seem like a lot when the total cost throughout the matter is about $50,000. Thinking in this vein, you may ask yourself: Since we already have such a high cull rate at 80 percent (remember—this means that only 1 in 5 collected documents make their way to review), why would I spend 10 percent of my overall budget for what seems like a minuscule increase of an extra 5 percent?

Well, let’s look at what the numbers say. You’re collecting and processing the same amount of data, so those costs will remain unchanged. However, in Month 3, we will start to notice that the costs shift between a scenario in which we make this extra investment in early case assessment (ECA) to increase our cull rate to 85 percent, and one where we don’t.

In the graph below you’ll notice the hosting sizes might appear similar but I assure you, they’re actually different, and we’ve reduced our monthly hosting costs by $400. But let’s be honest: it’s nothing notable and we had to spend $5,000 for those results. If we stopped right here, it would take us about a year to break even. At this point, you’re probably feeling pretty good if you chose to not to go with conducting ECA.

Looking at the Big Picture

But e-discovery doesn’t stop there. When we start thinking about this not in terms of hosting sizes but in the number of documents that will be reviewed, the real costs savings start to show.

Examined through this lens, you’ll find that, even though you’ve spent that additional $5,000 in Month 3, we’ve actually saved $11,000 over the life of the matter.

These savings are coming from two sources.

First, as we mentioned, your hosting costs have been reduced; not significantly, but it does compound over the life of the case.

Second, you should note that your biggest expense by far is the number of documents being reviewed. And so, if $5,000 removes at least 5,000 documents from review, then that $5,000 has paid for itself. If that $5,000 saves you more than 5,000 documents from being reviewed, then we were able to come out ahead and reduce our total costs.

How You Can Apply This

Utilizing ECA can be an ambiguous concept, as it can involve many different strategies for culling irrelevant data from a collection. A variety of tools can assist with the process as well, all of which can be found in RelativityOne.

One example of a basic approach to ECA that you could use to improve your culling rate is to take one or two key custodians, and pull them into an ECA workflow that allows you to gain insights into their data before it’s all fully processed into your review workspace. In this staging area, you can leverage artificial intelligence to produce communication visualizations and run a search terms report. Using some of this information and what you already know about the case, you can put together a brief timeline utilizing Case Dynamics to help you lay out the matter and see where your collected data might fall into that timeline. The combination of these applications will help you limit the date range and other data characterizations of your matter with confidence.

Now, this is just one example of a workflow and the tools you could utilize in an early case assessment exercise. To really extract the full value of the applications you may have on hand, and build case strategies for this and every matter that will help you produce the best possible outcomes, consider finding a partner with the expertise to apply the tools on a granular level. Their expertise may be essential to discovering and applying your new secret sauce.

It’s Always Worth Taking a Look

At Acorn, this scenario is one that we encounter quite often—but frequently with an even smaller percentage increase in the cull rate (think something like 80 percent to 80.5 percent). Even at a difference that small, depending on how much data you’re working with in your matter, that 0.5 percent can pay for itself very quickly.

Still, I do have to acknowledge that these scenarios are not one-size-fits-all. There are scenarios in which these additional upfront costs are not justifiable, such as if you expect to settle before review or if you’re working with a very small set of data. There’s little incentive to invest when you don’t expect to realize the returns of this investment.

In most scenarios, however, this investment will produce significant total cost savings throughout the life of a case—and in all scenarios, it is beneficial to at least evaluate this investment at the onset of the matter.

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About Acorn 

Acorn is a legal data consulting firm that specializes in AI and Advanced Analytics for litigation applications, while providing rigorous customer service to the eDiscovery industry. Acorn primarily works with large regional, midsize national and boutique litigation firms. Acorn provides a high-touch, customized litigation support services with a heavy emphasis on seamless communications. For more information, please visit www.acornls.com.