Figuring out how to bill eDiscovery to clients is a challenge for every firm. Some see discovery as a source of revenue, some pass along the software costs directly, while others take a flat fee approach. Some distinguish between automated "services" facilitation by software or hardware and consider it a value-add that the firm can utilize in-house or cloud-hosted systems.
So, we've put together a quick list of the possible ways to bill-through eDiscovery costs from your vendor or service provider.
Equal Billing
Under this method, all clients are charged the same rate regardless of the size or complexity of their e-discovery needs. Essentially, if eDiscovery was used in an capacity for a client, they are charged a fixed amount for that billing cycle.
This approach offers simplicity and transparency as clients know what to expect in terms of costs. However, it may not be the most cost-effective for clients with smaller or less complex e-discovery requirements.
Per Gigabyte
With per-GB billing, clients are charged based on the amount of data processed or managed during the e-discovery process.
This method provides a direct correlation between the volume of data and what they pay. Clients with large volumes of data may find per GB billing advantageous as they only pay for what they use, but it can lead to uncertainty for clients with unpredictable data sizes. There is also an important question here about what gigabyte is being charged, as data is often stored several times and in several different ways in eDiscovery systems (for example, copies of productions).
Data Tier
In this approach, clients are charged a fixed rate based on predetermined tiers of data size (e.g., 0-100 GB, 101-500 GB, etc.)
This method provides some level of predictability for clients while accommodating the natural variations in data sizes. Clients benefit from knowing their costs upfront, but they need to ensure that the tier they choose aligns with their actual data size requirements and to understand that it might change should the case size increase.
Flat Rate + GB
Under this billing method, clients are charged a flat fee for each legal matter, along with an additional fee per gigabyte of data processed.
The flat rate per matter covers basic eDiscovery services, while the per GB fee accounts for the actual volume of data involved.
This approach offers a balance between predictability and scalability, as clients have a fixed cost per matter with flexibility to accommodate varying data sizes. However, clients should be mindful of potential additional costs if the volume of data exceeds expectations.
Alternative Fee
Much like alternative fee arrangements in law firms billing for themselves, some use alternative fee structures for billing eDiscovery as well. Although less common, these include capped fees, sliding scale, contingency, and blended fees.
Conclusion
There are a number of different ways to pass on the cost of eDiscovery to clients and it may not be a one-size-fits-all situation. Firms can consider any of the above, noting that subscription services may made some methods, such as equal billing, more appealing than others. Talk with your vendor or service provider about how they can provide reports to assist with billing clients for eDiscovery services.
What did you think? Any good takeaways? Let us know here.
