"considerable" costs

At the beginning of this month, BBC reporter Jim Reed contacted one of Digiprotect's clients in the latest round of Davenport Lyons letters. They're called Evil Angel, and are a porn company (link contains adult content). Apparently, they were blissfully unaware that people are being asked to pay up £500 in the demand letters. In Jim's report for the BBC John Stagliano, Evil Angel's owner says:

"It's not my understanding that they ask for anything near that. I think the amount was $50 (£34) or €50 (£43)," he said.

"I would be very surprised and I wouldn't be happy because it would mean it was completely misrepresented to me."

When quizzed, Davenport Lyons stated:

"[The £500 settlement fee] consists mainly of the cost of the considerable work required to identify the owner of the IP address.

"The sum in the settlement is a fraction of what would be ordered by a court if an individual were found liable after a trial

Leaving aside the fact that a French lawyer was struck off for making very similar sounding threats, I thought I'd look into this issue of "considerable costs" a little closer.

The letter

It seems quite clear to me that they've only had to set up a single MS word (or similar) mail merge template. Apparently the "evidence" they get from the ISPs is in the form of Excel spreadsheets, so it would be relatively trivial to use these spreadsheets as a database for the various mail merge fields. Once you have your excel based database properly formatted, it's just a case of pressing "print" and stuffing a load of envelopes with your 'tailored' threats. The envelopes are A4 which are quick to stuff and also the associated gumph will fit easily.

Also, it seems likley that rather than senior partners or 'real' lawyers getting their hands dirty for this they'll employ secretaries for the letter stuffing / mail merging and paralegals for the replies.

Letter writing phase

The first round of warning shot letters for Dream Pinball 3D were not quite as sophisticated as the ones being sent out now, but I'll assume that Davenport Lyons are actually organised and have their act together in the following calculations.

For generating the word document to use as a template you might give a paralegal a day or so (8hrs) to thrash out the template (£112) and you as a hotshot lawyer would need to give it the once over. You'd obviously charge more for your time, around £300 an hour. Lets say your paralegal is sloppy so it takes you 2 or 3 hours to iron out the spelling mistakes (you miss some) - that's £900. You'd bounce the template back to the paralegal once finished and get him to manipulate the spreadsheets back from the ISPs and do the actual mail merge. Let's say it takes another day or so, so another £112. A really quick high end laser printer befitting a london lawyer firm will do about 60ppm. Let's say there's 17 or so pages of laser printed material, so that's 450k pages taking 7,500 minutes or 125 hours (5 days solid printing!). You can get them with automatic staplers etc so you'd leave that for a week in the background having one secretary keeping an eye on things during working hours (40hrs at £10 an hour = £400).

Envelope stuffing phase

I've done this sort of job when I was younger and I'd estimate if you were to stuff all the envelopes at once you're looking at 11 solid hours of work or so for 4 people. Being generous and assuming paralegals are doing this part and using this advert to get a figure of £14 an hour or wages you're looking at £616 for stuffing the envelopes. In reality you might use secretaries at around £10 an hour for this bit.

Total Wage bill

So, rounding up the various components we have £150 for letter drafting, £1000 for your own time then another £150 for manipulating the spreadsheets back from the ISPs. Then £500 for the secretaries time in printing and £700 for stuffing envelopes. That's around £2,500 in terms of wages.

Raw Materials

Now for raw materials. Let's say a top of the range toner cartridge lasts 15,000 sheets. That's around 750 letters, so you're looking at 35 of them at around £80 each, so that's £3,000 on toner. There's about 5 sheets of quite fancy thick colour headed paper in each letter. Let's say that costs them 3p a sheet, that's a whopping £3,975 on the fancy paper (no wonder they don't use more!). The rest is standard copier paper @ say £1.79 for 500 sheets so that works out at about £1000. Let's say the envelopes are also 3p each, so that's say £1000 in total. Postage is around 60p a letter so that's £15,900 (not including discounted postage rates). In total (and rounding up generously) that's a whopping £30k on consumables which can probably be mitigated with bulk buying.

Total costs (or: penumbra engages in hand waving)

So, I'm struggling to make it cost more than £35k in direct costs. There is limited information available on-line as regards court fees,but this link suggests that having the hearing for the release of people's details wouldn't cost much more than a couple of thousand pounds, and they can harvest many peoples data with that. Furthermore according to the DL letter on wikileaks, they request the ISPs to not make a fuss or turn up to court specifically to keep costs down. Lets say all the legal sorting out in the background costs 10x the total above, which makes £350k. That rises to £700k if we use a 20x multiplier. £12.5 million - £700k = £11.8 million clear profit. Yowser.

Also they've actually sent about up to 26,500 letters so the running total is actually more like £13.25 million if everyone pays up £500. That's (conveniently) £12.5 million or so in pure profit terms.

Of course, in the news reports they've asked for 25,000 people's details, which might not translate into 25,000 letters. It's likley one person may have had more than one IP or, given the fact that ISPs IP accounting systems are not foolproof, some were gibberish or not assigned at the time.