The Wild West of E-Discovery Billing

As Electronic Discovery struggles to find its identity in the legal technology world, one of the largest struggles companies have is standardizing processes and metrics.  Likewise, in E-Discovery billing, we see a wide range of ways in which E-Discovery service providers invoice the client.  Some vendors provide custom information on their invoices, while others provide one line item for a bulk of services performed, especially if the client agreement is for flat pricing.
The Legal Electronic Exchange Standard Oversight Committee has made a stab at creating a standardized set of E-Discovery billing codes, but this only touches the surface on the lack of standardization within the revenue capturing process of E-Discovery.  Additionally, LEDES relies on the industry to lead, not the other way around.
The first step to creating a standardization is understanding pricing models and how they apply to unique situations.  When an E-Discovery service provider is looking to stay competitive for a project bid, often they will bend their pricing models to fit comfortably with the client's expectations, even if it may end up to be a higher cost for the client.  Understanding how particular pricing models work effectively for the client can change the approach from bending to what the client is used to, to creating new expectations for the client.  In this Wild, Wild West of E-Discovery billing, the service provider can use their pricing models as an effective tool to stand out amongst competitors.  Therefore, it is important to be able to answer the following questions:

• Why do we use these pricing models?  Is it easier for our systems or does it best accommodate our target audience?
• What are the consequences of creating a new pricing model on the fly?  Are internal reporting systems designed for the change?  If not, will this ultimately cause more problems for the client than adjusting to an existing pricing model?

Sometimes it is unavoidable to change the way you price a project - the client will demand it in order to even begin negotiations.  It is important, however, to get back to the root of why a particular way of pricing works for you and change it only if you are able and willing to accept the consequences of this change.

It may be some time still before E-Discovery revenue professionals have a standard way to go about pricing models.  Until then, don't let the lack of standardization in the industry translate to a lack of good internal standardization.