E-discovery costs incurred by the prevailing party – easily running into the hundreds of thousands of dollars in complex commercial and IP litigations – may be compensable under 28 U.S.C. § 1920(4).

I say ESI costs "may be compensable" advisedly. Not all of them are. Most importantly, the likelihood of recovering tens if not hundreds of thousands of dollars of ESI costs depends in significant part upon  the billing descriptions used by your vendor (or your firm’s in-house e-discovery group).

By specifying at the beginning of the case the billing format for ESI costs, you greatly increase the amount of these costs you will recover at the end of the case.

ESI costs deemed not compensable

The vendor’s primary responsibility was collecting data (e.g., by imaging hard drives) and de-duplication of electronically-stored information so that it could be reviewed in-house by Aliph and produced in discovery. Tasks on the bills include the following: pick-up and imaging of computer; local email extraction; network email merge and de-dupe (eliminating duplicates); normalize, prep, index, and search email; extract, de-archive, hash, filter, de-dupe, normalize, index, and search user files; and computer media.

Plantronics v. Aliph, 2012 WL 3822129, at *17 (N.D. Cal. 2012) (citations omitted) (refusing to tax third party vendor costs of $100,948.17).

Other ESI costs deemed not compensable:

The problem with Google’s e-discovery bill of costs is that many of item-line descriptions seemingly bill for “intellectual effort” such as organizing, searching, and analyzing the discovery documents. Most egregious are attempts to bill costs for “conferencing,” “prepare for and participate in kickoff call,” and communications with co-workers, other vendors, and clients.

Oracle v. Google, 2012 WL 3822129, at *3 (N.D. Cal. 2012 ) (citations omitted) (refusing to award $2.9 million of ESI costs).

But compare – ESI costs deemed compensable:

Cost of assembling, ordering, tagging, and QA for document release to Kelora. Includes the creation of metadata load files as requested by Kelora and image “placeholders” for documents and ESI that the requesting party asked to receive in native format. $ 43,500.00

Cost of feeding assembled documents into an image printer for the creation of image copies of those documents to the requesting party. The cost includes imaging, de-blanking, bates stamping, assignment of protective orders and confidentiality designations, insertion of slip sheets, and native file place holders, image quality QA and final export to production media. $ 22,450.00

[Cost of] isolating and presenting eBay source code on a secure and locked down machine in anticipation of inspection by the requesting party.  $ 1,800.00

eBay v. Kelora Systems, 2013 WL 1402736, at *6 (N.D. Cal 2013).

So why are costs taxed on some of these ESI vendor invoices and not the other? There are several reasons, each of which highlights the importance of being smarter about the manner in which ESI providers bill for their services. Let’s break this down.Continue Reading Awarding e-Discovery Costs to Prevailing Party: Billing Descriptions Dictate What is Recoverable


Our clients, as parties to litigation, are often required to collect and preserve all potentially relevant data.  When this happens, they often believe that they have had to pay far more for these services than what was necessary under the circumstances, particularly in the earlier stages of litigation.  As our clients put it, “I’m going to get out of the case before I need to buy all these services,” or, “The other defendants are going to pull the laboring oar in this case so I don’t need to buy all these services,” or "Doing things as late as possible (and not paying for anything now) is the right strategy for me, so I’m not going to buy anything now."

eDiscovery vendors have technology that allows them to identify, collect, preserve and store data at little or no cost. Instead of overcharging up front, what the vendors should be doing is giving clients a low or no cost solution, thereby levering far more lucrative processing, review and production work that will be required if the case does not go away, i.e., at that later point in time when clients can better appreciate the need for high quality and more expensive ESI services and are willing to pay accordingly.

The Left Side of the EDRM

eDiscovery services encompass searching for electronically stored information and searching within this information for specific people, places or things. The Electronic Discovery Reference Model (EDRM) breaks out these services as different phases along a chronological spectrum:

The left hand side of the EDRM encompasses early stage litigation activities of identification (locating and determining the scope and breadth of data), preservation (protecting against alteration and destruction), and collection (gathering data), as more fully explained at edrm.net, "EDRM stages."

Left Side EDRM Work Almost Always Needs to Be Done

Most if not all clients use litigation hold notices. While this is the right thing to do, the sad truth is that rarely will a court deciding a discovery dispute deem the litigation hold as having been sufficient to preserve relevant information where the opposing party can show that relevant information was destroyed or lost prior to collection. The courts have the benefit of and are happy to apply 20-20 hindsight (enhanced by carefully highlighted deposition testimony and documents supplied by the challenging party for the purposes of showing the “obvious” and “egregious” omissions in the client’s production).

Clients have businesses to counsel on operating matters, and, particularly early on, tend to be low-informed about, and low-motivated to find, all specific sources of information within the company that may be material to a specific litigation claim.  As the client might say:

You want us to find and save all data on suppliers of power trench MOSFETS before 2005, something we no longer use in our ICs, have no designated file or department that handles, and where the team leader no longer works for the company?  Really?  We don’t have that.

The litigation hold memos and otherwise sincere efforts to implement these holds nonetheless manifest the early stage litigation reality of a lesser informed and low motivated client.

Almost without exception, clients relying solely on preservation via litigation hold, if unable to get themselves out of the case before discovery begins in earnest, find themselves conducting untimely, inefficient, unduly expensive, piecemeal collections, laden with surprise developments, not the least of which is discovering the inadvertent deletion of information that the opposing party NOW says they can’t live without.

The practical insight is that all left side work (through collection and storage, but short of any processing or review) should be performed if the client is reasonably going to avoid the risks and expense of a subsequent determination of noncompliance with their preservation and collection obligations.

The problem is that left side services are so expensive that clients often will defer such things as collecting and preserving data, notwithstanding the high risk of noncompliance with common law discovery obligations. More after the jump.Continue Reading eDiscovery Vendors Should Not Charge for Collecting and Preserving Data