In E-Discovery, It's Not About The Hourly Rate

The billable hour has received a lot of attention in recent months as it relates to associate salaries and the value the client receives, among other issues. But it has been especially relevant in the e-discovery field in recent years, as more in-house departments have realized that much of their discovery work can be done for under $65 an hour versus the $200-400 they were accustomed to paying.

So now that this is the norm in our profession – paying $45-65 an hour for e-discovery work – the real question becomes, ‘What am I really getting for that money?’

Once you’ve driven down costs to the $45-65 per hour level for e-discovery, I would argue that the hourly rate makes little, if no difference, on your bottom line. The most important factor is the review rate of the attorneys. In fact, it’s really very simple math.

Let’s take a medium-sized matter: 30 gigabytes of data, or 400,000 e-mails.

Using a traditional (linear) review tool, an average review rate would be approximately 50 document decisions per hour for an attorney. By increasing the attorney review rate by 20 decisions per hour, the cost savings over the life of the project would amount to $125,000 and cut the project’s time by 25-40%. That more than compensates for a $20 per hour difference in an attorney's hourly rate, too.

That’s also a very conservative answer, because many companies now utilize a content analytic review tool that clusters documents together by topic versus a linear tool that only organizes data chronologically. Using the content analytic tool is likely to produce a 300-500% increase in the review rates, which saves in excess of $300,000 and 70% in time on that same 30GB of data. Content analytic tools cost more, but you can see where that difference can be accounted for.

So if you can accept this concept, it truly becomes a question of what you’re getting for your money. Many in-house departments have $48 an hour attorneys handle their e-discovery work, but ultimately the work is re-reviewed by outside counsel, there’s no fluid process in place and the client has no idea what kind of productivity the attorneys are generating. How would they know if they could be doing it better?

The question really becomes about how to increase review rates and thus productivity. There are many ways to do this, but it starts with experienced attorneys who know e-discovery and the technology. It’s supported by proven processes and talented project managers. Everything must be transparent: work closely tracked, benchmarked and learned from. It’s a collaborative, highly communicative process with outside counsel. And it can be repeated from matter to matter, creating more opportunities for learning and efficiency.

Focusing on the process and maximizing productivity -- not the hourly rate -- is where money is truly saved in e-discovery. The math really will speak for itself; all a client has to do is ask for it.
 

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Lawdable - March 12, 2009 9:55 AM
The second podcast with LegalTalk Network's In-House Legal show is now up. Richard Stout, director of our Litigation Support Division, and Dennis McKinnie, executive director of our Atlanta office, discuss all things e-discovery: Why the review rate is...
Comments (12) Read through and enter the discussion with the form at the end
Rob Robinson - March 6, 2009 11:36 AM

Excellent post on the benefits of considering Analytics in Review. Thanks for the salient numerical examples - as helps quantify a concept many are beginning to truly consider.

Regards/Rob

Alex Hania - March 6, 2009 11:51 AM

I would suggest that attorneys on e-discovery matters are working more in a range of $30 to $65 an hour.

Lynn Maverick - March 6, 2009 12:22 PM

It's not just the people, even the most experienced review attorneys can be slowed by cumbersome review platforms. Software that has a poor user interface and hosting that slows down, crashes, or doesn't open documents quickly, can cut review rates in half. Comparison shopping and test driving is important when buying the lastest model, or sticking with an old one.

Richard Stout - March 6, 2009 12:33 PM

Alex--I appreciate the comment. I agree, it was not worded well-- I have since revised. Thanks again.

Lynn-I wholeheartedly agree - choosing the right software platform, the right hosting company, and structuring the review is critical to achieving top level review rates.

Steve Newton - March 6, 2009 3:50 PM

In today's chaotic economy where it seems unemployed attorneys are available on every street corner, far too many review projects are being staffed on a race-to-the-bottom, lowest-hourly-rate-possible basis, without adequate consideration of the value of working smarter, and not longer. Those projects often miss out on significant data reduction, time reduction and related cost reduction opportunities available through the strategic utilization of a combination of excellent technologies, and excellent, experienced attorney talent, as highlighted in this post.

Martin Mayne - March 6, 2009 5:18 PM

You pack an awful lot of very important ideas into that next to last paragraph.

Transparency is incredibly important and quite difficult to attain.

Let's assume you're using the best analytic review tool for the type of information you're reviewing, and you've combined this with the most reliable connectivity. The only way to avoid using all this power to make a very large number of bad calls is to have very effective reporting and management in place at the front end of the review.

Experienced management is key to focusing the power unleashed by the new tools that are available.

RRMD - March 7, 2009 10:52 AM

The content review software increases review rates by 500%? That figure seems excessive, considering that there's no content review tool out there which can effectively eliminate the need for a human review, so since there still needs to be a human review, I doubt that figure is correct. Are there any stats out there to support that figure?

Richard Stout - March 7, 2009 11:47 AM

RRMD - In comparison to a baseline of 30-50 document decisions per hour, which is industry average for linear tools that only organize (emails, etc) in chronological order, we routinely achieve review rates in excess of 150 documents per hour, sometimes in excess of 250 decisions per hour, and have also achieved review rates in excess of 400 document decisions per hour. Of course, this all depends on the type of case, composition of the data, the structure of the review. We have achieved the best rates in investigative cases looking for specific types of documents, this translates into few tags -- whether relevant or not and whether privileged or not. What we have found is that content analytic tools have the ability to blast through non-relevant data. The case in which we achieved rates in excess of 400 documents per hour had a very high non-responsive rate (above 90%). On cases where responding to discovery requests and more tags involved we typically see review rates in the 150 document decisions per hour range.

Content Analytic providers such as Attenex also have empirical data to support the 3-5 times faster productivity rates. Like I mentioned, the trade-off is that CA tools are more expensive and may not be appropriate for every case. But in the larger cases where the potential responsive rate is 25% or less, the savings from using a robust content analytic tool can more than make up for the upfront technology cost and save the client huge dollars.

Anon Y - March 11, 2009 12:34 PM

Read between the lines: You get what you pay for. If you hire race-to-the-bottom attorneys at $30/hour, you're going to get bottom of the barrel quality and productivity. If you hire experienced $45 an hour attorneys you get much higher productivity. You cut costs, not corners. Do the math yourself.
Another issue to take into consideration: you may be paying $45 an hour for bottom barrel attorneys by going through staffing agencies. For smaller projects, think outside the box and you will find attorneys that do the same.

Richard Stout - March 11, 2009 2:14 PM

Thanks Anon. Your points are well-taken, but you seem to be painting with broad strokes. Times are tough for attorneys right now and I would be hard-pressed to blame a good attorney for accepting work at a reduced hourly rate these days. Regardless, higher productivity is going to trump hourly rate every time when you’re talking about $30 versus $45 or even $65 an hour, and good productivity is attained through quality processes and management along with experienced attorneys. That was really the focus of the post.

Anon Y - March 11, 2009 4:25 PM

Mr. Stout, I actually think we are in agreement: yes, the important point of the post is that it doesn't matter if you pay your attorneys $50 instead of $30 when productivity is high. Like you said, higher productivity trumps hourly rate every time. So why not pay them $50?
I don't think you disagree with me that $30 attorneys will be less productive than $50 attorneys. Sure, a lot of good attorneys are accepting work at reduced rates these days, but they're just not going to be as motivated at that rate. The best manager in the world can't overcome this reality. And high turnover can doom a project. Since it doesn't matter if you pay your attorneys $50 instead of $30, I say we just pay them the $50 as insurance. Just my experience.
Anyway, sorry to digress off topic a little bit...

Jane Harrison - April 6, 2009 1:36 PM

Mr. Anon, I may be a little late to this conversation, but let me say that as a former placement person with one of Mr. Stout's competitors, I represented attorneys with 20+ years of experience with large law firms who worked for $25/hrly. Each one of them received rave reviews from employers and many found permanent positions with these corporations and/or firms. Conversely, I had young attorneys who billed the same hourly rate and did not do as well. I found the seasoned attorneys with years of experience were more diligent and attentive to the client's needs. I agree with you that money is not the issue, nor is management, a good experienced attorney does not need managing. What makes the difference is the level of experience of the attorney and the quality of research tools.

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