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Key Decision Points When Planning and Budgeting For E-Discovery Costs In Litigation By Kelley Halliburton

Reprinted with permission from the March 5, 2023, edition of The Legal Intelligencer © 2023 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or

There are several key decision points early in case development when planning and budgeting for e-discovery that can help control costs. Decisions made in information governance, choosing a vendor, and negotiating an ESI protocol can save money throughout the life of a case.

The best time to start planning for e-discovery happens before any need for litigation arises. Planning and preparing before litigation arises by advising your clients on information governance issues including data retention and legal holds is laying groundwork to save your clients costs in the long run. Up-to-date data mapping and a robust data retention policy will make planning and budgeting for collection easier and help keep costs lower by reducing irrelevant or duplicative data. (See “Manage Risks by Developing a Robust Document Retention Policy”, CFMA Building Profits, January/February 2020). Having a standard legal hold policy in place will also be beneficial to planning and budgeting when litigation arises. There are legal hold management solutions including software and services from vendors and platforms that include notifications, custodian questionnaires, and data preservation of standard enterprise software applications. (See, e.g. here; here; here).

If litigation arises before such plans are in place, a litigation hold must be put into place that includes communications with all relevant employees and IT to preserve data. Interviews with employees should be conducted to determine where data is stored and what may need to be collected.

If the type of groundwork discussed above has been done, it’s possible that a vendor is already engaged to take care of basic collection. Many clients, especially larger corporations, already have relationships with e-discovery vendors, host their own data in-house in e-discovery platforms such as Relativity, or use cloud-based SaaS (software as a service) providers to do so. For smaller matters, you may have in-house tools or subscriptions already in place. Much of the time, however, choosing a vendor or vendors for data collection, processing, hosting, and production is another key decision point in planning and budgeting for e-discovery costs. Some of the questions to consider when making these decisions include:

  • Do I need a separate vendor to collect data or do the vendors I’m pricing offer that service?
  • What is the volume of data my client will likely have? What volume are we likely to receive from other parties?
  • What is the timeline of the litigation?
  • How do the pricing models compare? Is there a per GB/month price that includes everything or are there additional costs, or are the costs ala carte?
  • Are the vendors being considered all offering the same platform? If you’re considering multiple platforms, what are the differences in functionality?

An estimate of data volume and a general timeline of the litigation or at least an estimate of the length of time that data will likely need to be hosted is critical to developing a plan and budget, and to comparing different pricing models if you receive pricing quotes from e-discovery vendors in different formats. A vendor that has separate line item costs for production will likely have a much higher up-front cost, for example, but if the timeline is long and the hosting costs are low it may be less expensive in the long run than an all-inclusive per GB/month price.

In addition to cost, an additional factor to weigh is the functionality of the platform or performance of the vendor. Is it a platform you and/or your staff are comfortable with? Do you know others who have recommended it? Have you or others you know had good (or bad) experiences working with the vendor? Does the platform offer analytics that can help make your review more efficient?

Negotiating an ESI protocol can also affect the planning and budgeting for e-discovery costs. In federal court, you are of course governed by FRCP 26. Parties are required to meet and confer with opposing counsel “as soon as practicable” to make a discovery plan by FRCP 26(f). When negotiating the discovery plan, proportionality should be considered when attempting to agree on limitations. FRCP 26(b)(1) lists the six factors of proportionality:

  • the importance of the issues at stake in the action;
  • the amount in controversy;
  • the parties’ relative access to relevant information;
  • the parties’ resources;
  • the importance of the discovery in resolving the issues; and
  • whether the burden or expense of the proposed discovery outweighs its likely benefit.

Those six factors, intended to prevent expensive over-discovery, should help guide negotiations as they will certainly guide the courts in making any proportionality ruling.

In state courts, the rules on ESI conferences or protocols vary greatly and may not exist or be required, but conferring with opposing counsel to negotiate a protocol can greatly assist in planning and budgeting costs. Agreeing to limits on what to collect, date range limits, or on methods to cull data can greatly assist in reducing the overall size of the data in the litigation. Culling methods could include agreed search terms or TAR protocols.

Agreeing to and specifying a production format is also a key budgeting factor, and the choice of production format can assist with managing costs. A full native production, or choosing to produce primarily black and white images with color only when necessary, will keep the data size much lower than full-color imaged productions would. Including a robust “claw back” agreement for inadvertent production of privileged material or work product (a Federal Rule of Evidence 502 agreement in federal court) can help manage privilege review costs and the costs of potential disputes. Discussing and agreeing on additional processing factors such as deduplication will make a difference in data collection size – deduplication across custodians, also known as global deduplication, will keep the data size lower but it may be necessary to know the custodian priority or be able to track the deduped custodians. Many government investigations require deduplication only by custodian [cite].

The bulk of the time spent and, when including productions, the vast majority of the costs in e-discovery budgets are in the review phase. Budgeting for this phase builds on factors from the data information, selection of a vendor, negotiation of the ESI protocol, and collection to determine the workflows and staffing before initial productions and during the factual development of the case. The type of review done prior to the initial production of documents depends on several factors, including the size of the data, sensitivities of the client, available budget, and the negotiated protocol. Depending on those factors, staffed review prior to production may include a review of only “potentially privileged” documents or wider review, such as email communications, for relevance and privilege. A wider review may include the use of predictive coding to help speed up the results of the relevance review.

Staffing choices at this point in the review process include whether to staff the review internally, engage temporary review attorneys to be managed in-house, or hire a managed review team (including project managers) to accomplish the objective. When pricing and budgeting these options determine approximately how much oversight and feedback the managed review team will require to help compare pricing against managing a review internally.

For budgeting, a ballpark base number of hours required to complete the pre-production review can be determined based on the size of the review universe divided by a predicted rate of review. First-pass privilege review may be 50+ documents per hour, while additional review that includes choosing privilege log descriptions will likely be slower. Make sure to include the cost of quality control or second level review and privilege log finalization in your budgeting. Determining the staffing level necessary will then depend on the timing and how fast the review must be accomplished.

After the pre-production review phase, budget and staffing for claim investigation, coordination with expert witnesses, deposition preparation, and dispositive motions should be determined. Investigating the data received may be done using a wide variety of methods, including the use of analytics tools, search term review sets, computer-assisted review, and targeted searching based on knowledge gained from client interviews or deposition testimony. The options available to use in this phase of the matter are dependent on the choices made when selecting a vendor and negotiating the ESI protocol, so it is important to consider the entire timeline when going through that process. Once again, timing and data size are the main factors in cost. Other factors that may impact budgeting in this phase include witness availability and knowledge, requirements of expert witnesses, and the number and complexity of issues and/or claims in the matter. During the pretrial and trial phases, consider the cost of exhibit creation as part of your e-discovery budget. In addition to staffing costs, this may include additional data to host and potentially additional production or software costs.

Planning for an e-discovery budget at the beginning of a matter, or preferably before litigation is even contemplated, is the best way to control costs overall. Choices made early in a matter will impact the budgeting throughout, so it’s important to pay attention to cost control points early on to control the budget later in the game.

Kelley Halliburton is a trial and construction attorney at law firm Shapiro Lifschitz & Schram. She has experience in all aspects of electronic discovery, including managing significant volumes of electronically stored information (ESI) utilizing various electronic review platforms and litigation support systems, and manages the firm’s electronic discovery team. Halliburton can be reached at (202) 689-1914 and