When You Don’t Need an Army: EDD for Everyday Lawsuits

This article first appeared on the Law Technology News web site on July 28th.

Proportionality is a major issue in electronic
data discovery cases. But do we have the tools to make proportionality a
reality? Last year, Law Technology News‘ e-discovery columnist Craig
Ball wrote a fascinating article, “E-Discovery
for Everybody
.” It has become better known as the “EDna
Challenge” because in it, Ball posited a solo practitioner named Edna with
an e-discovery budget of $1,000 and asked how she could possibly perform any
e-discovery on that amount. Ball received a wide-ranging number of answers from
a variety of consultants and vendors and he compiled them in an insightful
article on his website.

But what about cases that fall between the
Edna budget limit of $1,000 and Pension Committee, a $550 million case arising out of the
liquidation of hedge funds? Are their affordable options to handle e-discovery
in the lower end of that spectrum?

Ernie Svenson is a solo attorney with a
general practice in New Orleans. He is savvy about technology and stays on top
of EDD, because Louisiana has a state e-discovery rule that mirrors the federal
rule. He often calls me when he has an EDD question involving what we call the
“tweener” cases. These are cases fit in between the range covered by
the “Edna Challenge” and megacases suitable for the larger brand name
products that dominate the EDD world.

To answer that question I drew up the
“Ernie Challenge,” with advice from Ball and DLA Piper senior counsel
Browning Marean.
It was posted on the EDD Update
blog as well as its own blog site and had the following facts:

We proposed a case with roughly 1 terabyte of
data to collect and a final amount of 200 gigabytes of data to review. The
majority of that is e-mail with the balance being the various types of
financial data. We also asked for some form of web review tool in order to work
with the clients’ counsel and contract staff in a separate location.

The problem is that at current pricing in the
market, probable quotes for this work from EDD vendors would run $100,000 to
$150,000 to process the data and $10,000 to $12,000 per month to host the data.
When review costs are added in (and all experts in the field agree that review
will run 60 percent to 70 percent of the final cost), Ernie is looking at
$500,000 just to handle the e-discovery. But suppose after analyzing the case
and discussing it with his client, Ernie believes he cannot spend more than
$10,000 for ESI processing and hosting services over the anticipated 19-month
life of the case?

Ernie mentioned reading a recent E-Discovery Journal
interview with Craig Ball in which he said, “I’m seeing some behind the
firewall products, even desktop products, that are going to be able to allow
lawyers and people with relatively little technical expertise to handle small
and medium-sized cases. Some of the hosting services are putting together
pricing where [they] are starting to sound rational and less frightening.”

That is the essence of the Ernie Challenge:
where are those programs? Are there really applications that Ernie can use
himself to process or host data? Is there any way to process and review a
couple of hundred GB of data for no more than $10,000?

We received interesting replies to the
challenge, but before we explore the responses, let’s look at several general
observations. The first is that not very many people were eager to talk about
this subject on the record. This was quite surprising, because Ball had a great
public response to the Edna challenge — but today’s market is much different
than that of 2009.

The economy is still recovering, competition
for work is intense, vendors are buying vendors; and many consultants and
service bureaus have contracts with multiple vendors and are reluctant to
jeopardize those deals by voicing criticism. It also become clear that pricing
has become extremely competitive and support for per-GB pricing continues to
erode.

Why? Because the standard practice for years
now has been to charge hundreds of dollars per GB to process the data (which
includes culling, deduping, and de-Nisting of the data set then preparing it
for loading into a review software); then charging again — by both GB and user
— on a monthly basis to review the data. The result is that the cost of
processing and hosting 500 GB of data — a relatively small data set — can be
$175,000 for processing and $38,500 per month for hosting (at $75 per month per
GB and $90 per month per user for 10 users). So if a client pays for a
forensically sound data collection and that data set eventually yields, say,
400 GB of reviewable material, a typical vendor will charge somewhere in the
neighborhood of $250,000 for processing and $20,000 a month for the hosting
while attorneys perform their review. If we accept the commonly cited statistic
that the review process will account for 70 percent of the total project price,
then we’re looking at a project cost that will eventually be close to $1
million. If the case is only worth $400,000 we have a problem.

Orlando, Fla.’s Craig Roy,
Director of IT at Lowndes, Drosdick, Doster, Kantor & Reed, concurs:
“Vendors are getting aggressive in pricing. … I had a project go to a
vendor of pst files that flattened to 5.2 GB that we wanted de-duped, tiffed
and endorsed on the front end. I got the job completed for under $3,200. And I
have seen Nuix ingestion and
de-duplication for $100/GB and less.”

More on Nuix below but keep those figures in
mind. The last general observation is that big EDD companies don’t want this
business — I’ve been told that directly by sales managers at two separate
top-tier companies. The fact is those companies can’t support themselves on
jobs like the one above.

As Joshua Gilliland,
president of Majority Opinion notes, “A company that spent $200,000 on
software, building a hosted review environment with set monthly costs, does not
want to give away their services in the hopes of getting small firms with
‘small cases.’ While those cases might be small to a service provider, they
mean everything to the person involved in the lawsuit.”

So have we found products that meet this new
“tweener” definition? Michael Adams
of Voodoo
Consulting
in New Orleans says yes, and suggests this protocol (if
you receive documents in a PDF format):

• With files already in PDF, metadata has been
removed. If you received the files in the native format you would be in a
better situation, but only if you had an existing litigation database to handle
it.

• Look at www.iprotech.com
for in-house software. (CaseMap/TimeMap
are used for different aspects of the case, not for EDD document review,
processing, and analysis.)

• Your best bet may be to have a paralegal
build you an index in Excel for document review.

• Another option is Google Apps
($50 a year for each user). Create an account for the case, import your PDFs
(be sure you keep them in PDF format, do not let Google convert them), and they
will be searchable. You could then run a search for a date or a subject line or
an author and see all of those results.

Craig Roy says that when he has a relatively
small collection, he uses the following process:

• create a copy and index everything using dtSearch Desktop $200
tool;

• use dtSearch MAPI tool to breakdown all .pst
files to raw .msg files (and add them to the index);

• create terms list for privilege and run a
search for privilege on the dtSearch index remove the hits for privilege into a
separate bucket;

• provide access to opposing counsel for
native platform viewing on the remaining ESI (absent those pulled for
privilege);

• use a clawback as the gate for everything
opposing wants.

Roy continues: “I do not want to be the
guinea pig who tries to validate accuracy of a new freeware tool in front of a
judge. I do feel comfortable using dtSearch as many of the other ‘accepted’
products use the dtSearch search engine for their index.”

Ipro. DtSearch. Adobe. Solid names with a
long-established history in litigation support. But what about new products? Nuix
figures prominently
in many commentaries, such as this one from
Fairfax, Va., attorney Sharon Nelson,
president of computer forensics/IT consultancy Sensei:

“Assuming attorneys are working with
active data only and that they give us accurate criteria (which often doesn’t
happen), we can use Nuix to do the pre-processing of the data using file types,
custodians, search terms, dates, hash values, de-Nisting, de-duping, etc. Cost
to process 1.8 TB would be roughly $6,000. That’s based on our time only (we do
not charge for run time) — not on a per GB price — and is vastly less than
what the large EDD providers offer.

“Many of our attorneys do their own
review cheaply, using dtSearch or Microsoft Office itself assuming only typical
Office documents are involved. If there are more file formats involved, they
use [Avanstar’s] Quick
View Plus
,” Nelson explains. “While not a single tool,
this hybrid process seems to work nicely for the Ernies of the world — and
saves them a heck of a lot of money.”

Another approach gaining popularity is
self-collection. Explains Germantown, Tenn.’s John Martin,
CTO of RedFile: “The best way to avoid getting hit is not to be
there.” He suggests his company’s Collector software to do the initial
capture, to “avoid getting hit with extra gigabytes in this case.”

The Collector has three databases, and
de-Nisting and de-duping is automatically conducted during the preservation
process. “Only unique files are captured and duplicate file facets are
simply logged. This is the core of Faceted DeDuplication, if you don’t collect
the extra/erroneous/duplicative files in the first place you don’t have to deal
with them downstream. This means smaller volume and faster speed,” says
Martin.

“I would then opt for an iMac system
running our Electronic Discovery Network Application program. Two TB storage
with Time Machine, 2 TB storage for backup and six virtual Macs for remote
access. This effectively eliminates the hosting charge by adding redundant
broadband connections to the iMac and allows remote users to access the
on-board VMs (Virtual Machines) remotely for free,” he continues.
“The system allows for native review, multiple visualizations,
de-NIST/de-dupe, full-text search, SmartFolders, Flag/Tag/Label and Attorney
Notes. Native file production is also included. All for a flat fee of
$10K.”

Keith Slyter,
principal of Litigation Paralegals in Dallas is a
believer in Digital War Room
to do both processing and hosting:
“I would opt to implement Digital War Room Remote or the Server Version.
This Ernie Challenge is almost exactly the situation I am encountering in my
Mobile Litigation Command Center (Mobile War Room) with small to midsize firms.
The traditional options were not working, but Digital War Room is the best
option out there for this situation. I use a self-standing network attached
storage with 2 TB storage to house the data and clients can access the
information a couple of different ways.”

“It does everything soup to nuts and is
pretty easy to set up. In fact, my first install took 50 minutes start to
finish, including running a full production of 1,100 images. Native files were
Microsoft Word, PST, and PDF. Everything was converted to TIFF, OCR, and Bates
stamped. Load files were generated for Concordance and Summation. The most
difficult and time-consuming part was loading SQL Server Express on a laptop to
get everything to run correctly,” he says. “This is the best usable
solution I have found for small to medium firms who have some tech experience
or who want to hire me to implement and train them on the best practices for
their product.”

Many companies say they are starting to build
processing and hosting systems, but few will talk publicly about their plans.
One exception is Spokane, Wash.’s John Munro, vice president and managing
partner of the Pacific Northwest for Orange Legal
Technologies
. He describes the Orange Legal OneO Discovery Platform
as an integrated, web-accessible, forensically sound system that provides
“online analytics, processing, and review of data from the security of a
hosted centralized repository.” It is offered as a software as a service.
Munro says it helps users:

• identify relevant document sets and
eliminate irrelevant documents at the front end;

• prepare relevant files for subsequent use
while ensuring evidence defensibility;

• review data sets for relevance,
responsiveness, privilege, and confidentiality.

So whether it’s well-established companies
such as Ipro Tech, or new companies such as Digital War Room or Lexbe, products
for hosting and reviewing on your own servers are now reasonably priced. And
newer products like Nuix for processing — or Equivio’s
Relevance
using predictive coding technology to enable faster review
of fewer documents to lead to the discovery of significantly more of the
relevant documents — add to the options.

And the good news is that more of these
products for the smaller cases continue to be developed. The key, says Munro,
is that increased use of front-end analytics helps users significantly reduce
the amount of data to be processed and reviewed — reducing costs.

The key is the process not the
technology. Or as John Martin once commented, it’s the archer not the arrow.

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To Edna and Beyond: The Ernie Challenge

My friend Ernie is a solo attorney with a general practice in New Orleans. He is very tech savvy and tries to stay on top of eDiscovery since Louisiana has a state eDiscovery rule that mirrors the Federal rule.  In fact, he has commented to me several times on how useful he found the Edna Challenge published last year by Craig Ball in helping him find tools for handling ESI in small cases. But he often calls me when he has an eDiscovery question involving what we call the “tweener” cases, those that fit in between the small cases covered by the Edna Challenge and the mega-cases suitable for the larger name brand products that dominate the EDiscovery world.

Why? Because most of those companies charge hundreds of dollars per gigabyte  for “read in” processing (this is processing which includes all the culling, deduping and denisting of a data set but only paying for the sub-set of that data which is actually loaded to a web site for review) and roughly $50 per GB a month plus monthly “user fees” of several hundred dollars per user for hosting the data.  So if a client pays for a  forensically sound data collection and that  data set eventually yields let’s say 400GB of reviewable material,  a typical eDiscovery company will charge somewhere  in the neighborhood of a quarter of a million dollars for the processing and $20,000 a month for the hosting  while attorneys perform their review.  And if we accept the commonly cited statistic that the review process will account for 70% of the total project price, then  we’re looking at a project cost that will eventually be close to $1M. 

If the case is only worth $400,000 then we have a problem.  Which brings us back to Ernie.

This week Ernie called to say he that he was working with a regular client of his who is the head  of small business that has been owned by the same family in New Orleans since the late 1800’s.  They have no inside counsel and Ernie serves as their only legal advisor on all corporate matters.

The company is being sued by an ex-employee who claims he was laid off as a manager because he’s over 60 and Hispanic.  Plaintiff seeks $1M in compensatory damages for lost wages and $10M in punitive damages. He had  earned $100,000 per year plus performance bonuses but received no bonus in 2010 and Ernie’s client said that they laid off the employee  because of a “drinking problem.”

 The business has a net worth of roughly $3.5 million, including bank accounts, real estate, several motor vehicles and inventory.  There are 10 employees in 2 locations, New Orleans and  Lafayette.  Ernie’s preliminary technology audit of their computer systems found the following:

1.        All employees of the company  have desktop PC’s at the office. Three senior managers also have company issued laptop computers which they use when traveling and at home for company business and personal use.

2.      The New Orleans location houses corporate network servers used by employees at both locations.  These include a Microsoft Exchange server for email, a file server for business applications including a database  for tracking customer orders, some Excel spreadsheets used to analyze the business performance, QuickBooks (their bookkeeping software), all their internal documents (Word with no Document Management System) and a number of pictures and videos of company events, trade shows, meetings with clients, etc.

3.      The client outsources it’s  IT work to a New Orleans company which maintains all the computers and does backups onto a local tape system attached directly to the file server, using a weekly rotation with saved tapes for each month and then the year.  There are backup tapes which go back ten years, a period which covers three different network systems and an equal number of tape backup systems.

 4.       The total amount of current live data on the system is roughly 1.8TB.  Approximately 60% of that is email  (some of which is Outlook email archives on the server; no email is saved locally except on the laptops)

For purposes of the discussion from this point forward, we can make two assumptions:

1.   There is no dispute between the parties as to a litigation hold

2.   Ernie has successfully retrieved all relevant data from both the active system and the backup tapes.

Ernie believes that the amount of data he will need to review is roughly 200GB. The majority of that is email with the balance being the various types of financial data.  He feels he needs some form of web review tool because he will need to engage some offsite contract staff to assist in the review as well as share data with the clients insurance carrier.  Ernie’s problem is that, consistent with the numbers above, he has been given quotes of $100-150,000 to process the data and $10-12,000 per month to host the data.  When review costs are added in, Ernie is looking at $500,000 just to handle the EDiscovery.  After analyzing the case and discussing it with his clients insurance carrier, Ernie believes he cannot spend more than $10,000  for ESI processing and hosting services over the anticipated 19 month life of the case.

When he called me, Ernie mentioned reading a recent E-Discovery Journal interview with Craig Ball in which Craig said,  “…. I’m seeing some behind the firewall products, even desktop products, that are going to be able to allow lawyers and people with relatively little technical expertise to handle small and medium-sized cases.  Some of the hosting services are putting together pricing where [they] are starting to sound rational and less frightening.” 

His next question to me is the essence of the Ernie Challenge: “Where are those programs? Is there really something I can use myself to process or host this data? If not, how can I keep costs down to the budget I have set?”

So then, what advice would you give Ernie? Is there any way to process and review a couple of hundred GB of data for no more than $10,000?  Post your answers here and I’ll use them to generate an article which I’ll also post several weeks from now.

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