E-Discovery Trends in 2009

Corporations -- Primary e-discovery technology sales will be to corporations under pressure from regulatory and litigation matters. Many implementations will be reactive and require fast deployment. A growing number will be proactive, with vendor research led by interdisciplinary teams of the general counsels office, compliance officers, and IT.

General counsels and in-house attorneys will defend companies against civil lawsuits relating to financial losses and will file lawsuits of their own. Blame and finger pointing will be everywhere, and corporations will practice e-discovery to defend and attack. They also want to cut outside counsel document review costs and will require greater accountability from them, which will frequently require e-discovery technology. Outside counsel may use their own e-discovery tools for billing corporate customers, or they might be required to use the same system the corporate client is using.

Compliance officers are under pressure from regulatory compliance and internal governance. Many will be investigated by federal teams and need e-discovery collection and analysis tools now to ease the pain. They are also under pressure to set up clear knowledge and data management systems for tighter internal governance.

IT professionals understand that accurate collection and thorough culling are critical to analysis and review. In terms of e-discovery workflow, this gives increased importance to the identification, collection, and processing phases of the Electronic Discovery Reference Model.

IT will work closely with vendors to locate data sources and manage collection and culling. IT should be able to take advantage of e-discovery tools for broader enterprise data management, making the technology a win for them as well as for the general counsel and compliance. IT will push back on large storage resources dedicated to indexes, so vendors with indexing capability will need to reduce index size, decrease network drag from background indexing, and prove ROI even with added storage resources. Quickly and cost-effectively restoring email archives from tape will increase in importance.

Law firms -- E-discovery is a double-edged sword for law firms. Some of them welcome review and analysis tools that help them to produce more accurate review results for their customers. However, outside law firms make a huge amount of money doing document review for corporate customers, and many do not welcome technology that cuts down on those billable hours. Increasingly law firms will need to control and audit attorney review costs for corporate customers, and might be required to adopt their customer’s e-discovery technology to do so.

The technology might be as simple as adopting the same analysis and reporting software, or may be as complex as deploying large multi-team project management platforms. Either way, law firms will be increasingly required to toe the cost-cutting line for their corporate customers.

This will be a difficult change for many law firms, which have built huge and profitable practices from attorney document reviews. Law firm document review billings have grown right along with an increasingly volume of discoverable electronic documents. But corporations are biting back by requiring much stricter auditing and billing oversight from their outside law firms. And corporations that have adopted e-discovery collection and culling tools are sending fewer documents for review to begin with, which is taking an additional bite out of law firm pocket books.

Law firms can still win by becoming expert at e-discovery workflow, early case assessment, analytical review tools, and document production. This is a sea change for experienced litigation attorneys, but it is one they will have to make if they do not want to see their corporate clients go elsewhere.

E-discovery vendors -- The third group of e-discovery stakeholders is the e-discovery vendors themselves. Market pressures are increasing along with opportunities.Last year there were well over 100 self-described e-discovery companies all trumpeting their wares. However, customer confusion about what e-discovery vendor did what was rampant, and still is. This has led to a customer demand for clarity around e-discovery products, and for full integration around the e-discovery workflow process. This year we will see many more e-discovery companies starting up. This seems incongruous with poor economic news in North America and the European Union, and with the stated intention of venture capitalists to pull in their horns. However, the e-discovery field is being helped by the financial meltdown. It benefits from the increasing demand by beleaguered companies for litigation and compliance support. That is not to say that every e-discovery vendor is walking into a rose garden. Many vendors depend on venture capital, and many of these same vendors struggle with clients not paying the bills. But on the whole, the e-discovery vendor community will not be nearly as hard hit as many other technology sectors.

We are seeing developing partnerships and integration points between e-discovery vendors, with an eye toward offering end-to-end e-discovery. This is particularly true with specialty e-discovery vendors such as those that provide review and analysis. Corporations increasingly want to see data collection and culling along with review and analysis products. To that end, analysis vendors are either collection vendor-neutral or actively partnering with data management vendors. The latter will become more common in order to provide a single highly integrated response to corporate clients.

Another hotbed of partnering activity is between data management companies and hosted e-discovery products and services. A data management company can add e-discovery to its line of services, and a software-as-a-service provider can integrate with on-premise data collection and repositories.

Early case assessment is a very hot topic in the corporation for several reasons: It can save a great deal of money and resources by providing an accurate picture of a case's merits early on. It bolsters settlement talks and/or trial strategy. And it can close a federal investigation in the early stages by presenting strong analytical proof of compliance. (Or not, in which case the corporation knows what it needs to fix.)

Even small cases benefit from e-discovery process management, and large cases and serial litigation require it. Vendors offering e-discovery workflow process management will benefit both governance and compliance, and have a strong advantage. Workflow management may be embedded in the interface, offered through vendor consulting, or both. The latter model is increasingly common at the corporate level.One of the most pressing issues in terms of e-discovery and compliance is different requirements across countries. For example, a global enterprise based in the U.S. must comply not only with American regulations, but also the EU Data Protection Act, differing national protections of employee privacy, and other foreign legislation. This makes cross-border e-discovery actions a minefield for a hapless general counsel. Regulatory compliance and litigation search must stretch across international boundaries as one part of a global content management strategy. Vendors who offer e-discovery tools customized for different international requirements will have a very strong message to multinational corporations.

Many companies offload data and operations to offshore vendors. When it comes to the upfront question of data security, offshore vendors are usually competent. But these same offshore providers are not prepared to support e-discovery and compliance actions, especially when it comes to providing legal holds and tracking evidence chains. This situation increasingly calls for e-discovery solutions that allow for offshore oversight and auditing. These solutions tend to be hybrids of e-discovery/compliance software and management services that interact directly with the offshore parties.

The e-discovery segment is changing so fast that our collective head is spinning. These massive changes have been a few years in the making, driven largely by stricter litigation oversight and electronically stored information management demands, such as those required by the federal rules of civil procedure; stronger federal regulations and compliance demands contained in a variety of rules, regulations, and laws here and abroad; hugely growing volumes of potentially discoverable data; and the need for comprehensive content management tools throughout the enterprise.

This fast-growing sector can be seen as both a blessing and a curse. It's clearly a blessing to strategic e-discovery vendors that can stay the course, but it can be either a blessing or a curse to corporate and legal customers. Frankly, the choice depends on customer attitude.

A number of highly respected litigation attorneys recently issued an open letter stating that legal e-discovery demands are blight on civil law. And why not? Their expertise is in managing massive manual document review projects and using delaying tactics to force their opponents to settle. But these strategies no longer work from either the court standpoint (courts want to speed up the e-discovery process) or the corporate customer standpoint (business lawyers want to save massive amounts of money). The solution for the law firms does not lie with the traditional civil attorney, but with new attorneys earning e-discovery specialty certifications in the law schools. There is a tremendous profit potential for law firms that can offer e-discovery workflow management expertise and oversight, but this does require a change from traditional methods of working. And corporations can deeply leverage their e-discovery investment past litigation and onto compliance, internal governance, and data management for efficiency and value.To paraphrase an old Western movie cliché, "There's gold in them thar hills." Now go out and find it.

Christine Taylor is an analyst specializing in e-discovery with Taneja Group , which provides research and analysis to the storage, server, and knowledge management industries. She wrote a series on e-discovery for Byte and Switch last year that looked at the issues of e-discovery classification, collection, preservation, review, and production.

Part one of the series, "The Importance of Taking Proactive Steps," can be found here.

Part two of the series, "Proper Preparation Requires Data Retention Policies," can be found here.

Part three of the series, "How You Search Can Save Money & Time," can be found here.Part four of the series, "Preservation Means Knowing When to Hold 'Em," can be found here.

Part five of the series, "The Changing Game of Review & Analysis," can be found here.

Part six of the series, "The Endgame Is Production," can be found here.