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Be Wary of e-Discovery Costs, Not All are Recoverable in Litigation

By Tanya Roth, Esq. on June 26, 2012 | Last updated on March 21, 2019

Be careful when evaluating e-Discovery service providers. Every penny matters, especially when heading towards litigation.

Many companies use e-Discovery services when litigation arises. Some statutes provide recovery of fees and costs to the prevailing party in litigation.

But not all costs are recoverable.

Recently, a federal appeals court handed down a decision that would severely impact the collection of e-Discovery costs by the prevailing party.

"Fees for exemplification and the costs of making copies of any materials" is recoverable by the prevailing party, the law states. What does this mean for in-house counsel?

According to the case Race Tires America v. Hoosier, it means that if your company prevails in litigation, you can only collect the costs you spent on making copies. In e-Discovery world, that means "the scanning of hard copy documents, the conversion of native files to TIFF, and the transfer of VHS tapes to DVD," writes the 3rd Circuit Court of Appeals.

The problem here is that there is a considerable amount of money spent on the labor portion of e-Discovery. That amount can go unreimbursed.

There are many e-Discovery service providers out there. If your company is anticipating litigation, you should get out there and interview as many of these e-Discovery vendors as you possibly can. Get competing quotes and bids.

Specifically when looking at competing prices, try to get a breakdown of the costs to determine what the vendor's service fees are.

While you don't want to compromise quality by going with the cheaper vendor, you want to ensure that you maximize your possibility to recover the fees and costs of e-Discovery in litigation.

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