The Cost of E-Discovery

By Paul Travis, October 8, 2008, NOON

There are few words that frighten corporate executives or storage managers more than "lawsuit" and "e-discovery," since one usually leads to the other. Both can be costly, even if e-discovery works the way it is suppose to work and your company ends up winning the lawsuit.

Businesses and other organizations spent more than $2.7 billion on electronic data discovery last year, and spending on EDD will grow to more than $4.6 billion by 2010, according to consultants George Socha and Tom Gelbmann, who presented their Sixth Annual Socha-Gelbmann Electronic Discovery Survey in a report published earlier this year on Law.com.

The good news? "Better and earlier analysis of electronically stored information means a greater ability to successfully navigate the EDD whitewater," said the consultants, who see a shift in the market from a services-based approach to one where improved software used by companies in-house and by law firms and service providers plays a greater role.

Storage, software, and search vendors know a good market when they see it, and more vendor pitches tout the ability of their products and services to help with e-discovery. That's a change from a few years ago when they were offering products to help companies comply with SEC regulations and Sarbanes-Oxley rules, according to Arun Taneja, head of analyst firm Taneja Group ."Nobody bought those products and services because there was no budget line item for SOX compliance or SEC compliance," Taneja tells Byte and Switch. "Many of those vendors were on the edge of extinction, but then the world discovered e-discovery and the cost of litigation."

Most companies today don't have automated systems to help with discovery for litigation purposes, and so they fall back on expensive manual processes, Taneja says. Many of them have dozens of pending lawsuits that require some form of records review and disclosure. It is common for companies to tell the IT team to print out documents and email, which are then reviewed by dozens of lawyers. "They over-capture stuff and under-capture stuff, which can be risky and costly," he says. "Using classification software and an indexing engine and a policies engine and other systems can produce an ROI that often is measured in hours."

One way to better understand the cost of e-discovery is to look at a tool offered by Orange Legal, a provider of hosted e-discovery services. The company's Predictive Pricing Estimator lets you plug in the amount of electronic data that needs to be reviewed and other criteria, so you can get a rough estimate of the cost and time involved in document processing and review.

Maybe it's just finding the right marketing term, but the e-discovery concept has helped businesses better understand the importance of being able to easily and quickly classify, manage, and retrieve documents and other electronic information. That's why more hardware and software vendors and service providers are targeting the market with specific e-discovery products and services. Seagate Technology Inc. (NYSE: STX) last month, when it packaged its service offerings into a new business unit called i365, hyped its ability to help companies with data protection and recovery, retention management, and e-discovery. Others are partnering to offer e-discovery packages. For example, Index Engines Inc. said today it is teaming with Quantum Corp. (NYSE: QTM) to combine its indexing technology with Quantum's backup, recovery, and archiving tape products. Mimosa Systems Inc. next week plans to announce an upgrade to its archiving platform to better handle litigation requirements.

The market is getting crowded, with vendors like Kazeon Systems Inc. , StoredIQ Corp. , Autonomy Corp. , Guidance Software Inc. , and others offering specific e-discovery products or those capabilities in larger suites. Taneja expects the market to evolve to where e-discovery becomes part of a larger and broader information classification and management market, and he expects larger vendors to make a concerted push to grab share.One example of that is Symantec Corp. (Nasdaq: SYMC), which this week introduced the latest version of its Information Risk Management package that includes upgrades to its Brightmail Gateway, Enterprise Vault, and Data Loss Prevention products. The Enterprise Vault and Discovery Accelerator is designed to shrink down archives and make it easy to quickly review and find important documents and files with new analytical tools. Symantec says the cost of e-discovery on a specific amount of information can be 1,400 times higher than the cost of the storage holding the information.

"We offer a lightweight, self-service, e-discovery application that lets legal counsel do an early assessment to see senders and topics and offers ways to narrow down searches," said Mathew Lodge, senior director of product marketing at Symantec. "It collects and automatically puts a legal hold documents and, Like Amazon.com, suggests ways of finding related things."

IT and storage managers who need to make a case for buying e-discovery products should perhaps have a conversation with the legal department and see how much their company spends on legal discovery for lawsuits. Those numbers could help to make an effective ROI case for e-discovery.