Managed Services Case Study
Client X May 1, 2013—June 1, 2014
The following represents a case analysis of Client X’s eDiscovery costs. Client X is a manufacturer of microchips used in smart phones. Client X’s annual revenue is approximately $250m and it has 475 employees. The figures below compare the actual eDiscovery costs incurred under both a transactional model and E-STET’s Managed Services model. Between May 1, 2013 and November 30, 2013, E-STET served as a third-party vendor managed by outside counsel. This transactional relationship was obtained through a competitive bidding process and the rates at which Client X was charged are industry standard or better. On December 1, 2013 Client X entered into a three-year managed services contract with E-STET.
COSTS UNDER THE TRANSACTIONAL MODEL
On or about May 1, 2013, E-STET was hired by outside counsel, an Am Law 100 law firm, as a third-party vendor to handle all eDiscovery projects for Client X. Client X faced four separate litigations in the coming months, all of which E-STET handled. Table 1, below, shows what E-STET billed Client X each month for transactional eDiscovery services beginning May 7, 2013 and continuing through November 27, 2013. The average monthly cost was approximately $61,250. The total cost was $428,734.02. This does not include the cost of outside counsel billable hours involved in managing data collection.
Costs Under e-Stet’s Managed Services Model
After several months of paying high transactional and attorney fees, Client X fired outside counsel and asked E-STET if there was a way to mitigate its eDiscovery costs. E-STET proposed its Managed Services offering. On December 1, 2013, E-STET and Client X entered into a Managed Services Agreement at a rate of $40,000 per month for 36 months, with the first month’s fees waived as a courtesy for “early adoption” of Managed Services. On March 17, 2014, Client X initiated a new case. Client X’s monthly costs, under Managed Services, remained the same. Table 2, below, shows Client X’s monthly eDiscovery costs after entering into the Managed Services Agreement. Fees above $40,000 are due to overages. The average monthly cost, including the first month’s fees waived, was $30,051. The total cost was $240,408.06.
Through Managed Services, E-STET was able to reduce Client X’s average monthly eDiscovery spend by approximately 51 percent ($31,000 per month). Client X would have saved approximately $149,000 had it utilized Managed Services from the onset of litigation.
As disclosed above, not included in this analysis is the cost of outside counsel managing E-STET as a third party vendor. By utilizing Managed Services, in-house counsel would manage E-STET, saving thousands of dollars in outside counsel attorney fees. Client X also utilized E-STET for review services. The cost of review is not included in this case analysis. Redacted copies of Client X’s invoices are available upon request.