Thu. Dec 1st, 2022

    Supplier’s Pricing/Client Tactics

    The purpose of this Section is provide an overview of the various factors that affect service providers’ pricing so that the reader is better equipped to compare like for like. It is included in the Guide because this is a very difficult area, so be prepared for some work when you obtain quotations.

    If the three most important things about buying a house are location, location, location, then the three most important factors about costing eDisclosure projects are volume, volume, volume. That is to say, ESI is notorious for becoming a black hole of ever increasing volumes, and as such it can be difficult to price the work. That being said there are some words of advice that can help.

    Involve the supplier as soon as possible #

    The sooner a service provider knows what the project is about, the quicker they will be able to give you a price, and the more likely they are to be able to give you a more fixed cost. In an ideal world, readers will have selected a preferred supplier, (with a fall back in case of conflicts), familiarised themselves with the software and its capabilities, and have a call-off contract in place with a table of pricing. Failing that, you should at least have 2-3 known suppliers that you can call upon at short notice. If you telephone someone out the blue at 5 o’clock on a Friday afternoon and say you have 200 GB of data that you have to review by Monday, you will get a very different price than if you have pre-prepared the process.

    Tell them as much as possible about the case

    A good supplier will want to come and talk to you to explore all the aspects of the case; where the data is stored, what technical “gotcha’s” might be lurking in the shadows, any obscure software or products that have known issues (Lotus Notes for example, is a favourite of corporates and has a lot of pitfalls for the unwary). The more they know about the task, the more they can advise you on the best way forwards and the more flexibility they will have on pricing. Treat them as you would any technical expert. They have a deep range of knowledge, that you need on your side.

    Understand the supplier’s constraints #

    Service providers have three main components to their cost base, these are the costs of; storage, software and their professional services.

    Storage in the UK is typically charged from between £15 – £20 per GB, per month. Some organisations rent their storage space, and thus are constrained on how much flexibility they have on pricing, others own their environment and thus have more room to manoeuvre. There are still some significant margins in this area, so be prepared to press hard on pricing here, but equally be prepared to divulge how much work you might be putting their way, what’s the average size in ESI terms of your cases, how many litigation cases you do a year, and those kind of things. You do have that information at your fingertips don’t you?

    Suppliers that use third party software that they don’t own, may have limited room to manoeuvre in terms of pricing. The original supplier of the software sets price boundaries beyond which third parties cannot move. Normally the more volume a bureau puts through a product, the cheaper it is for them, and thus they can pass on the price reductions. This is why it is advisable to run a procurement exercise and establish a call off contract before you find yourself making the Friday 5PM call.

    Finally there will always be an element of professional services. The software tools need to be managed, and there is a need for some overall project management. Be aware that when a vendor provides project management, it will not include managing the project from your end (unless you are specifically paying for these services). That normally ends up the role of some hapless junior associate who spends more time being an ad hoc litigation support manager then they do practising law.

    Don’t keep asking for the “best of three” quotes #

    Some law firms have a policy of always getting a number of quotes beforehand and then showing the end client that they have got the “Best Price”. This is very short sighted and no substitute for a proper procurement exercise. Suppliers get tired very quickly of being asked at short notice for a “quick quote”, when they are only given half the facts, put in a lot of effort to provide a professional response, only to miss out on the work. Unsurprisingly they stop replying to law firms who operate in such a manner, meaning that you are limiting your procurement pool to the desperate and/or inexperienced suppliers.

    Ask for flexibility in pricing #

    Once you have built a relationship with a supplier, then you can explore what flexibility they can provide in pricing. Just as the courts and clients are looking to pass risks on to the law firms, so you could be looking to pass some of that onto your litigation support partner. Note the deliberate use of the word partner. You cannot get a good price by ringing round the suppliers and seeing who will give you the cheapest quote for “processing 50 GB”.

    Service providers are well aware of the implications of the various legal reforms in this area, and should be looking to build relationships with you and give as firm a pricing as they can. The “worst” case should be a straight per GB price, but this is becoming increasingly rare. Vendors have a range of pricing plans they have on offer. Some will not charge for the data going into the processing stage, only the material that emerges from the other end. Some will offer you a range of options for specific stages, and agree only to charge you the cheapest once the work is done and they can individually price what the components cost them. Some will ask for a retainer and then provide a fixed amount of capacity and processing for that price, which (if you are pushing the limits of the deal) can be good value.

    The shorter version is that there are many ways to “skin this cat”, ask for them and then work out what suits you best.

    Be prepared to do some work in comparing pricing #

    If the good news is that, there are many options for pricing, then the bad news is that, there are many options for pricing. You need to allocate some time and effort to getting the information and then putting it into a form so that you can compare like with like. It is not a simple matter of ringing three firms and asking them for their price to process 50 GB. You will tend to get three different sets of questions and then three different pricing models. If you haven’t set up a preferred vendor arrangement, then the best way to proceed, might be to have an example requirement, that mirrors one of your cases, complete with all the background information and assumptions, then pass that to the vendors so that you can get an idea of their pricing. Be prepared to build and maintain a spreadsheet for this.

    You will have sensed by now the common theme running through this section of involving service providers as early and as fully as possible in the case. Try to build a partnership with one of the many competent firms out there and (in the main) you won’t go wrong. You will certainly be in a better position than those who don’t bother and leave it to the last possible minute.

    The rest of this section takes you through how to procure suppliers and software.

     

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