Modus offering Fixed Pricing in Response to Confusing and Controversial Business Practices within the eDiscovery Market
In a December 17, 2012 article on the Forbes site by Bruce Rogers, titled, “Abtin Buergari’s Modus Disrupts “Corrupt” eDiscovery Business,” Mr. Rogers states that Abtin Buergari, founder and CEO of eDiscovery service and technology provider, Modus, sees the entire eDiscovery business is not only terribly broken, but “corrupt” in the sense that the incentives around the eDiscovery service side of the legal business are at odds with client interests. Abtin created Modus to provide fixed fees, predictable costs and most importantly transparency to a process that for many General Counsels has been both opaque and increasingly devoid of accountability and cost controls.
It is about time and really refreshing to see the CEO of one of the leading providers in the eDiscovery market step up and take such a strong position in regards to the confusing and corrupt pricing practices that have been the standard in the litigation technology and services market for years.
In the 2012 Study of Global 250 General Counsel on eDiscovery that eDSG released early this year, 85% of the General Counsel that responded to this study indicated that one of their Top Pet Peeves was Outside Counsel and LPOs Knowingly Low Balling Cost Estimates. We all know that it has been standard practice in the industry since the days of paper to under quote, bury costs or provide very confusing pricing to win bids and then come back after you win and increase pricing over the life of the project with additional fees.
Abtin and Modus are on the right side of this debate and the growth of the company is proof. Over the past five years, Modus has grown to $20 million in sales and 115 employees.
The full text of the Forbes article is as follows:
The Electronic Discovery (eDiscovery) business is ripe for disruption. And Abtin Buergari is just the guy to do it. His eDiscovery business, Modus, is causing quite the stir in the hallowed halls of major law firms and outsourced eDiscovery service companies. As Abtin sees it the entire business is not only terribly broken, but “corrupt” in the sense that the incentives around the eDiscovery service side of the legal business are at odds with client interests. He created Modus to provide fixed fees, predictable costs and most importantly transparency to a process that for many General Counsels has been both opaque and increasingly devoid of accountability and cost controls.
eDiscovery is a fast growing segment of the legal business since the Federal Rules of Civil Procedure were amended by the Supreme Court in 2006. 90 percent of U.S. corporations are engaged in some type of litigation, according to research by the law firm Fulbright & Jaworski. The average company bigger than $1 billion is wrestling with 147 lawsuits at any given time. Every law suit requires extensive resources applied to the evidence discovery process. The inexpensive abundance of data storage, high-profile lawsuits and strict new laws such as Sarbanes-Oxley that demand thorough corporate archiving — are making electronic discovery a lucrative and competitive slice of today’s litigation expenses.
Analyzing and sifting through computer archives and email databases is a massive undertaking these days. The cost to process, review, cull and produce a single gigabyte of data exceeds $7,000, according to some estimates. According to the Transparency Market Research “eDiscovery Market” report, the global e-discovery market is expected to reach $9.9 billion in 2017, growing at a CAGR of 15.4% through 2017. Thanks to our highly litigious society, the U.S. is expected to maintain its lead position with a 73% share of the of global e-discovery market. Obviously a lot is stake here. As a result many legal firms have created what many refer to as “e-discovery mills” or information centers devoted to this service.
The fight over unrestrained eDiscovery services billing can get ugly at times. And as I listen to Abtin talk about the genesis of his company and the eDiscovery service side of the legal business, I suddenly feel like I’ve entered a scene from a John Grisham novel.
Abtin saw the process up close and personal when employed by an eDiscovery vendor. That eDiscovery company was working for a law firm in support of a large company involved in Katrina law suits. He was managing the eDiscovery on the case and over the course of months of working night and day he developed a process that would save the client an enormous amount of time and money. The new process also meant lower fees to the law firms.
Abtin thought it was the right thing to do and in the best interests of the large company involved in the Katrina suits. “I went off on vacation and when I returned the company undid everything I worked on and returned to their older, more costly and inefficient process,” thus retaining their eDiscovery billing windfall. Shortly thereafter, Abtin was fired by the eDiscovery vendor and later started his own eDiscovery service based on his more efficient process and his desire to “do the right thing.” Admittedly naive to the business world, he soon found himself sued by his former firm.
With the help of a lawyer friend, he successfully fought the lawsuit and began the business of creating and growing Modus. His company is growing fast based on his premise that Modus can conservatively reduce eDiscovery costs by 75% and in many cases by 90%. Over the past five years, Modus has grown to $20 million in sales and 115 employees. Not surprisingly, Modus is seeing tremendous growth by working directly with large companies. “Now our customers include enterprises as well as law firms,”” like most other outsourced eDiscovery service organizations, says Abtin.
Amazingly enough, Abtin isn’t a lawyer himself. His journey to creating Modus is as unconventional as his business model. “I was a fortunate person. I grew up with a close knit family that emigrated to the U.S. from Iran when I was five years old. I was always taught the importance of doing the right thing.” Growing up in the Washington D.C. area, he worked at the Washingtonpost.com in High School where he was exposed to managing and creating document databases. He went to college at the University of Maryland and then entered Law School at American. He was going to law school at night and working for a law firm during the day. He left law school to start Modus in his third year and never looked back.
Abtin attributes his success to his “outsiders’ perspective”. Having never formally entered the fraternity of lawyers, Abtin was free of convention and the tendencies to protect the profession over the interests of clients. Ironically, legal fees are among his largest expenses for Modus. Competitive eDiscovery services are fighting for business with Modus the best way they know how—by suing him. “We are constantly sued by other eDiscovery firms. We’re rocking the boat and they don’t like it,” says Abtin.
“I put the blinders on and just follow a policy of honesty,” say Abtin. And along the way his Modus is providing a service that is changing the eDiscovery business for the better.