Key Takeaway: For any law firm conducting eDiscovery, no matter its size, technology cost recovery is a strategic must-have. Small and mid-sized law firms are increasingly adopting this model to offset rising SaaS and AI costs, stay competitive, and meet the ABA reasonableness standard. Financially successful eDiscovery technology cost recovery requires educating clients, a culture shift, reinvesting recovered funds, partnering with an expert, and standardizing processes.

Any small or mid‑sized firm that handles eDiscovery and is not using technology cost recovery risks falling behind. Five years ago, only the largest global firms passed eDiscovery technology costs to clients. Today, firms outside the Am Law 100 increasingly follow this practice. It enables them to leverage advanced eDiscovery technology to win business, meet client expectations, and satisfy professional requirements according to the ABA reasonableness standard. 

Cost Recovery Adoption Drivers for Small and Mid-Sized Law Firms  

Many law firms used to absorb the cost of discovery technology, especially those that invested in low-cost, server-based solutions. In this model, technology platform costs were minor compared to the billable human time (e.g., for tasks like document review) for individuals using the platform. The value they added was also minor.

Today, the shift from software hosted on a client’s own servers to the Software-as-a-Subscription (SaaS) cloud-hosted model makes it easier to gain access to best-in-class technology, including AI, where the technology itself is adding value. The result is lower overall eDiscovery costs, but the cost of technology can now exceed billable human time as AI performs 90% of first-level document review. This rewrites the math for absorbing technology costs.


eDiscovery technology cost recovery is a means to manage these costs, whether to merely cover them or generate a profit. For small and mid-sized law firms, four factors are pertinent to adopting cost recovery:

Geographic Markets: Larger firms in major cities (e.g., New York, Los Angeles, Toronto, Chicago) typically pass technology costs to clients. Smaller firms in these markets are less likely to do so. However, this is changing, especially in the Midwest and internationally (e.g., UK, Australia, Brazil). Regional market reports, such as for UK mid-law firms, show growth from zero to over 50% cost recovery adoption, reflecting a shift in both market expectations and client sophistication.

Litigation Specialties: In theory, a firm could institute cost recovery in any type of litigation. That said, clients are far more likely to resist it in low-budget matters (e.g., internal investigations and pro bono) than in high-budget ones (e.g., M&A and antitrust).

Client Types: Larger corporate clients that are familiar with eDiscovery costs are typically unfazed by their outside law firm’s use of cost recovery. Likewise, they are increasingly likely to demand the use of AI and sophisticated technology. Smaller clients and those unaccustomed to such platform expenses are more likely to scrutinize and push back against attempts by small and mid-sized firms to recover costs and at times use AI technology.

Regulations and Laws: The importance of ABA’s reasonableness standard cannot be understated. Fees must be reasonable and well explained. Courts increasingly view technology and AI as necessary to reduce costs, and fees for AI are considered reasonable if they lower overall costs.

Five Steps for Successful Cost Recovery Adoption

For small and mid-sized firms, successful cost recovery implementation requires five steps:

        1.    Educate Clients About Technology Value and Cost-Savings Potential

Successful adoption begins with client education. Many clients do not fully grasp the costs associated with advanced technologies, particularly AI, which is often perceived as “free” or low-cost. Step one is to provide clients with clear information and real numbers that demonstrate how best-in-class technologies lower overall costs. When clients understand the value proposition, this reduces resistance to new or increased fees. Anything you present should focus on the project’s cost savings rather than the “extra cost” of the technology.

        2.    Overcome Internal Resistance to Cost Recovery

Internal culture can be a significant barrier to cost recovery. Many firms view eDiscovery costs as negotiable or as something to write off to win business. The most successful firms address this head-on. Partners and decision-makers must buy into the value of leading eDiscovery platforms and be willing to articulate and defend this position with clients. Firms often face more pushback from their own partners than from clients, underscoring the importance of internal alignment. Firms that master this approach use their adoption of advanced technologies to differentiate themselves and be a main factor in winning more new work.

        3.    Reinvest Recovered Funds in Technology and Capabilities

Sustained success requires more than simply recovering eDiscovery platform costs. A firm must then use those funds strategically to invest in world-class technology, expand their capabilities, and improve efficiency. This reinvestment creates a positive feedback loop. Better eDiscovery technology enables firms to win more valuable work, meet the ABA reasonableness standard, and further justify cost recovery to clients. The move to SaaS is a driving force, as these solutions often come with higher costs, making cost recovery not just beneficial, but necessary.

        4.    Partner With an Experienced Alternative Legal Services Provider

For firms new to cost recovery, the expertise of an Alternative Legal Services Provider (ALSP) is invaluable. An ALSP with a proven track record of helping law firms of all sizes set up cost recovery models knows how to navigate the complexities of billing, technology selection, and process standardization. Firms that leverage an ALSP’s experience avoid common pitfalls and accelerate implementation. Their access to multiple solutions maximizes the firm's success and consultative options.

        5.    Standardize Processes for Defensibility and Efficiency

Cost recovery incentivizes firms to standardize their approach across matters to achieve increased efficiency and greater defensibility. Standardization involves consistent billing practices, streamlined workflows, and improved risk management. Beyond benefitting the firm, it also enhances client trust and satisfaction.

Make Your Technology Investments Count

Technology cost recovery is crucial for law firms of any size to stay competitive, leverage technology, meet professional standards, and exceed client expectations. Success rests on the five pillars of client education: education, cultural change, reinvestment, ALSP partnership, and process standardization. With those pillars in place, a firm positions itself for lasting success.
Learn more about Epiq Managed Services.


Brandon Hollinder, Vice President, eDiscovery and Cyber Solutions
Brandon Hollinder is a licensed attorney and has close to two decades of experience in the profession. Today he is Vice President of eDiscovery and Cyber Solutions at Epiq, the world’s premier Alternative Legal Services provider. In this role, he leads and develops Epiq go-to-market strategy for its eDiscovery Managed Services and Cyber Incident Response business lines, focusing on partnering with clients to ensure their technology and professional service solutions are effectively designed and expertly implemented. A particular focus of Brandon’s role is driving innovation in technology and process at Epiq. He guides clients in their journeys as they look to adopt and successfully integrate advanced analytics and generative AI solutions, among others.