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.