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43
e-Discovery was increasing at a pace that required
firms to reconsider their recovery approach or
lack thereof. This is why in 2019, Mattern went
to the market to conduct our first deep dive into
e-Discovery and litigation support cost recovery
in the 2020 e-Discovery and Litigation Support
Cost Recovery Survey ("Survey"). Some of the
results were expected, other results surprised us.
Some of the unsurprising Survey
results included the fact that over
80% of firms reported electronically
stored information (ESI) involved in
discovery was on the rise. We expect
this to continue despite the current
turmoil in the marketplace. Disputes
will continue to be filed with the courts,
likely with a shift to employment and
bankruptcy/insolvency matters, but
the aggregate case volume will remain
steady for the most part as affirmed by recent court
filings data compiled by Lex Machina.
Mattern also suspected the more advanced
activities, especially those typically scrutinized by
opposing counsel, would largely end up vended
to third-party providers. This certainly proved
to be the case for forensics data collection, where
virtually all firms reported shifting this activity to
organizations that specialize in this field. Mattern
supports the decision most firms have adopted in
this area; this is one of our core recommendations
to avoid spoliation and scrutiny risks.
Furthermore, we expected to see firms with
in-house IT or Litigation Support talent capable of
processing and hosting ESI utilizing on-premises
infrastructure to also rely on third-party assistance
to manage larger data collections and, oftentimes,
hosting.
Lastly, we found that the majority of firms pass
through costs to clients without mark up, with only
around 14% of respondents marking up their costs.
Given clients' general lack of understanding related
to e-Discovery, the ability to support flow-through
costs is reported by many firms as a success factor
in improving their net recovery rate and to survive
attorney write-off.
The Survey did deliver some surprises,
though – rates were highly variable, far more so
than anticipated. Processing fees, as an example,
resulted in a high per GB rate 13-fold above the
lowest reported and hosting fees
followed a similar pattern. Firm
success related to the net rate of
recovery -- the proportion of costs
deemed as billable, survive attorney
write-off, and are actually paid by
clients -- also spanned the spectrum.
All indications of a market that is still
trying to find its footing and relying
on unbiased third-party data were
apparent – and a primary reason for
our survey.
However, some trends emerged from this, and
it's a consistent theme we have noticed through the
years with our traditional survey – hard costs trump
soft costs from a recovery perspective. Simply put,
the ability to reference a 3rd party invoice stands
a better chance of surviving attorney write-off
"Lastly, we found that the
majority of firms pass
through costs to clients without
mark up."
