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Over the past five years, the costs of trying a legal case have skyrocketed. One cost that has seemingly come from nowhere to rival the legal fees of attorneys is the often-unpredictable price of e-discovery. Data are proliferating at an exponential rate, creating ever-greater volumes of documents to be reviewed, checked and indexed as part of legal discovery. In the past, a single employee might have had numerous paper files or even a cabinet of potentially relevant documents. Today, that same employee operates from a laptop that can store 20 gigabytes of data which must be sifted and analyzed. A gigabyte of data can produce anywhere from 25,000 to 75,000 pages or images, enough paper to fill the bed of a full-sized pickup truck. Multiply this employee by 10 or 20, and even a small company has a document-gathering and production expense that may rival the amount for the entire legal dispute. EMERGENCE OF ELECTRONIC DISCOVERY In truth, the production and exchange of documents between parties in litigation has been a major expense since the 1938 implementation of rules permitting expansive discovery. Before the computer advances of the early 1990s, the process typically consisted of the location, review, copying and sharing of requested and relevant paper documents. Today, though, litigation rules require parties to extract and transform all information related to the case into numbered and searchable read-only electronic documents. This processing, called electronic data discovery, involves turning all data into reviewable information. Relevant data may include business and personal records such as e-mail, voice mail, written correspondence, presentations, office memos and spreadsheets. Even photos that have gone through the EDD process can be presented as unalterable images — or read-only files. With virtually 99 percent of business records now produced and retained in an electronic format, “document” discovery has become synonymous with “data” discovery. Not only has this shift created demand for a new level of expertise in law, it has added a layer of processing and cost to the basic costs of copying reams of paper. FIXED-PRICE SOLUTION Creative new efforts are crystallizing around reducing costs. Some EDD service providers now offer a fixed-price-per-gigabyte solution that can curb costs. For a case where $1 million is in dispute, which may not be a death-of-the-company case, document processing at variable prices can easily be 10 percent or more of the final settlement or award. This is a huge proportion of the amount in dispute. Perhaps the greatest impact of fixed pricing for electronic discovery projects is on budgeting. Law firms can now give their clients an upfront price tag for the expense of processing. With variable pricing, the uncertainty of the final EDD bill can easily become an unexpected cost overrun. Unfortunately, early estimates may be far off the mark and bear little resemblance to the final EDD cost. Many electronic data discovery firms price their service by adding the prices of each phase of the service. Typically EDD involves analysis, culling (searching for and eliminating duplicate or redundant information and capturing the data that are actually potential evidence), coding (tagging key phrases to make information searchable), numbering and so on. At the heart of the matter is TIFF, which means Tagged Image File Format. It’s the raw material of the EDD process and one of the most popular and flexible of the current public-domain formats used for photos and documents. TIFFs are graphic files that are effectively pictures of pages. A 10-page PowerPoint presentation can be converted into 10 TIFF images, or files, where each image is a picture of one page. A TIFF image is difficult to alter and TIFFs do not require any special software for viewing. For example, document scanners can create TIFF images. As scanning was the most prevalent way to create TIFF images before the rapid need by law firms for EDD, software was developed for firms to review and organize the scanned information. Relying on TIFFs alone, however, is like relying on piles of unorganized paper. The electronic discovery process combines the data in electronic documents with the TIFF images so that these virtual pages can be reviewed, sorted, culled, and evaluated quickly. Most litigation teams try to predict the outcome of the data output on a TIFF image-pricing model. But budgeting for electronic output is difficult. As litigation issues and themes develop, the volume of TIFF images required by a case can dramatically increase as the data are reviewed for new key words and themes, or as new witnesses are located. The final price for the per-TIFF-image service (typically between 10 and 14 cents an image) is the number of TIFF images generated throughout a project’s duration. COMPARISON OF RATES Let’s take a hypothetical case that involves an initial project size estimated to be 60 gigabytes of relevant data. At a rate of approximately 75,000 pages or TIFF images per gigabyte, this will create approximately 4.5 million images. Charging per gigabyte, this project would cost about $180,000. Charging at a rate of 10 cents per TIFF, however, could cost more than $500,000. Not only does per-gigabyte processing save a considerable amount of the client’s budget, it eliminates the need for often time-consuming and possibly faulty efforts to reduce the amount of data. Sometimes, to cut costs, a law firm will apply search formulas to theoretically eliminate unrelated or unnecessary documents. But on a fixed-pricing model, all the data or a broader range of data can be processed, eliminating the risk of a poor search or missing an important piece of evidence. With the fixed approach, the amount of data output does not affect the bottom line. This allows attorneys to experiment with broad filters and search terms. On the per-TIFF approach, a broad search becomes a financial burden. Of course, there are still situations where the old-style per-TIFF pricing makes sense. In cases with a large amount of data but with only a small fraction of it relevant to the process, per-TIFF pricing is still competitive. For instance, per-TIFF pricing works when only documents containing a very narrow, unusual term need to be reviewed. Other examples might be certain types of software piracy cases, where only limited types of files need to be examined and produced. If a firm’s litigation-support experts already have EDD providers under contract, and meeting the quality criteria, the team need only look at the specifications of a case to determine which kinds of services are needed. But if existing service providers can’t, or won’t, provide a fixed-cost alternative, then they may be too expensive. Based in Holland & Knight’s Tampa, Fla., office, William F. Hamilton practices in the commercial litigation area. His specialties include intellectual property class action defense, telecommunications, antitrust and trade regulation, and unfair trade practices. Eric P. Ansley is president of Aaxis Technologies Inc., a Washington, D.C.-based electronic data discovery service provider.

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