Reprinted with permission from the May 8, 2013 edition of The Legal Intelligencer© 2013 ALM media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 or email@example.com or visit www.almreprints.com.
A recent hot topic, and the subject of many articles, has been law firms and corporations deciding whether to insource, outsource or create a hybrid model for handling discovery services. For those that decide that outsourcing is the appropriate model for them, selecting the right service provider or providers to assist with handling discovery is not as easy as one would think. Different service providers have different strengths and it seems as if every service provider has a different way to price its work or is using different terminology to define various services. For law firms and corporations that do not do this every day, this can be confusing and frustrating.
Typical questions from people selecting service providers include the following: You told me that you could meet these processing and production specifications, but now you can't? I thought these services were included. What did I actually pay for? Why did you tell me the project would cost X, but the invoices are much more than X?
This article outlines some ways to help with selecting not just a service provider, but a partner in the discovery process.
Comparing Apples to Apples
When selecting a service provider, one of the biggest challenges is comparing apples to apples. Many service providers use their own terminology and pricing models. Law firms and corporations receive statements of work that range widely in number of pages and level of detail; some may be simple price lists for a hypothetical project and include assumptions that may or may not be realistic. This makes it very difficult to compare pricing and the scope of services and leads law firms and corporations to select what they believe to be the lowest-cost service provider when, in fact, they may not be comparing apples to apples.
Some war stories of buyer's remorse:
It's Not All About Price
Pricing is a big component in selecting a service provider, but buyer beware. In evaluating service providers, we recommend considering a number of factors other than just price, including, but not limited to:
Not considering these and other factors, and focusing solely on price, can lead to buyer's remorse.
How Do I Make the Best Choice?
Don't be "penny-wise, pound-foolish" when making your service provider selection. In addition to evaluating the nonpricing-related considerations, make sure you understand what is included in the service provider's proposal; i.e., what is included in its pricing and, more importantly, what is excluded and would be out of scope from the pricing provided. Make sure you understand total estimated project costs, rather than comparing a single line item in the pricing. Understand any hidden fees. In fact, the issue of hidden fees is one of the biggest complaints we hear from people in the market in the service provider selection process. When law firms and corporations receive bids, they expect to pay a certain price, but - without any notice or well after it is too late to make a change in their selection process - they find out that the price quoted is not actually what they will pay.
To some degree, this may be unavoidable, as the scope of a project may change. However, there are ways to help manage and mitigate these issues.
In managing the service provider selection process and helping to avoid the "apples and oranges" proposals, we recommend creating a hypothetical project that outlines your expectations and project assumptions. Depending on the services for which you are seeking assistance, your hypothetical may include information like:
You can also take it a step further and make it easier to compare the responses by building a pricing matrix that includes your assumptions in read-only format, requesting the service provider to input its pricing in cells that will automatically calculate total project costs. Because you do not want to lock yourself completely into these costs and want to take advantage of advances that service providers may be offering, we recommend that you still provide opportunities for service providers to explain differences in their processes or pricing that may impact total costs. This will help avoid limiting service providers from bringing something different to the table that reduces your project costs. Your primary goal is to avoid having to guess how each service provider prices the project and better understand the total project costs, while being able to then evaluate which service provider best meets your needs.
Do not let unique pricing models trick you. Make it easier for yourself to understand the project budget, so your goal to reduce the overall costs of your matter, and potentially your entire litigation portfolio, may be fulfilled.
Scott A. Milner is a partner in Morgan, Lewis & Bockius' eData practice and resident in the firm's Philadelphia office. He counsels firm attorneys and clients on a wide range of discovery topics from records management and information governance through production. He can be reached at firstname.lastname@example.org.