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Determining Return on Investment for E-Discovery Projects

ediscovery.ROIIn a prior post we discussed the benefits of estimating the return on investment (ROI) of technology use to increase process efficiency or figure out whether to invest in technology. The return on investment from the use of e-discovery technology not only comes from the use of e-discovery software, but also through the use of proper workflows and processes to maximize savings and efficiency.

 

Below, with the help of Kelly Twigger, Principal of ESI Attorneys, a law firm specializing in electronic discovery and information law, we offer just a couple examples of how to use E-Discovery metrics to track ROI.

 

Working Backwards to Determine E-Discovery ROI

Twigger points out that to determine the return on investment for an e-discovery project, you may have to work backwards. For example, in one e-discovery project, Twigger and her team reduced 200 gigabytes of data to a review set of just 12 gigabytes by leveraging technology and a combination of efficient workflows.

 

At an average processing cost of $200/GB, processing the whole collection would have cost of $400,000 before any document review. By using strategic thinking, talking with custodians and culling irrelevant information, Twigger’s team reduced the data set to 12 GB, for a total processing cost of $2400 – a savings of $397,600.

 

Using Twigger’s case as an example, to determine the return on investment for the use of technology in an e-discovery project, assume your company or firm invests $25,000 for a tool that offers early case assessment (ECA) features permitting you to identify and cull irrelevant data. Assume further that like in Twigger’s case, 200 GB of data is collected and will cost $60,000 to host it in e-discovery software for one year. Assume further, just as in Twigger’s case, that before loading data into e-discovery software for review, processing would cost $200 per gigabyte. So, in total, the cost is $457,600 to process and host the data for a year. However, using the ECA tool, assume that just like in Twigger’s case, you are able to cull the data to 12 gigabytes. So, in all the cost is $6,000 to process and host 12GB data for a year for a savings $451,600.

 

To determine ROI, you divide the savings by the cost (savings/cost). So, the return on investment in this hypothetical scenario? A cool 1700% ROI ($451,600/$25,000) on just one case.

 

ROI for Targeted ESI Collections

Twigger also notes that doing a targeted collection of electronically stored information (ESI) is another efficient use of technology to save on e-discovery costs. Rather than copying an entire hard drive or device, targeted collections grab data only from selected data custodians, locations, or target only ESI containing certain keywords or search terms.

 

For metrics purposes, to determine the ROI achieved through a targeted collection Twigger says you must first account for the time spent to understand and pull the targeted data. That is, determine the billable time necessary to understand what specific data to collect instead of simply instructing an e-discovery vendor to copy an entire hard drive. Next, you must compare the volume of data collected from a targeted ESI collection against the volume of the entire drive and also determine the average cost to process and cull a GB of data.

 

For instance, it is not uncommon for an e-discovery vendor to charge $60 to $200 a gigabyte to process data before loading it into e-discovery software.*  If an entire hard drive contains 250 GB of data, but a targeted ESI collection results in only 50 GB, that is a savings of $12,000 to $40,000 (200 GB x $60 to $200).

 

Assuming it took an attorney or vendor $1000 of billable time to determine what targeted data to collect, the ROI would be at least 1100%.

 

Keeping Track of Metrics Helps with Budgeting

Twigger’s firm tracks all metrics for their clients to provide budgeting capabilities across matters. Once a client knows metrics such as cost per custodian and an average number of custodians per matter, budgeting for eDiscovery becomes much easier. But those numbers have to come from tracking actual, representative matters to make them truly useful, says Twigger.

 

* If you are paying for exorbitant ESI processing charges, please contact us, we can help!

 

Posted on August 5, 2016 in E-Discovery, Legal Technology, Metrics, Software

About the Author

Chad Main is an attorney and the founder of Percipient. Prior to founding Percipient, Chad worked as a litigator in Los Angeles and Chicago. He is a member of the Seventh Circuit Electronic Discovery Pilot Program Committee and may be reached at cmain@percipient.co.