Documens Boss

With the inexorable growth of electronically stored information (ESI), combined with the corresponding rise in regulatory compliance and pressure on electronic document storage, retrieval and retention requirements by organisations in the public and private sectors, it is not surprising to see a commensurate growth in the area of e-Discovery.

 
More sophisticated e-Discovery products and services are being applied by law firms for individual litigation support cases and they are also becoming an increasing requirement for larger organisations' in-house legal departments and are being integrated with broader corporate compliance and IT strategies and a key topic at board room level.   New job titles such as "Compliance and Discovery Managers" are becoming more prevalent. Other drivers are the Electronic Discovery Reference Model (2005) and the more recent amendments to the Federal Rules of Civil Procedures in the USA (2006) which have made electronically stored information such as emails, instant messages, voice messages,e-calendars, graphics and data on handheld devices, all discoverable in litigation, and we live in an increasingly litigious world!

 
The Radicati Group, a California based research firm specialising on email security, archiving and regulatory compliance defines e-Discovery solutions as those that "enable organizations to identify, collect, analyze, process, and present data stored in various corporate repositories. The data may be collected in response to lawsuits, internal investigations, or regulatory compliance requests". They predict the e-Discovery market to grow to some $1.2 billion by 2014 while Socha-Gelbmann in their 2010 Electronic Discovery Survey appear to be considerably more bullish. One wonders how these forecasts are measured, especially given the convergence with several related technologies.

 
Crystal ball gazing aside, this is all good news for the ECM sector, since e-Discovery embraces such broader core technology areas as Storage and Archiving (Capture & Imaging), Search & Retrieval (BI), Electronic Document and Records Management (EDRMS), as well as workflow and BPM and document scanning and hosted services.

 
Document Boss has gained some insights into some of the issues and trends emerging in the area of e-Discovery from a cross section of software and service providers in the sector; this month we are delighted to have commentary from:
 
• Johannes C Scholtes, Chairman and Chief Strategy Officer, ZyLAB - www.zylab.com
• Craig Carpenter, VP and General Counsel, Recommind - www.recommind.com
• Nick Reizen, Director EDD Operations, of Xact Data Discovery - www.xactdatadiscovery.com
• Carolyn Betts, Marketing Director, Nuix – www.nuix.com
 
 

Q1) What are the key drivers for users seeking e-Discovery solutions?
 
ZyLAB: In the United States, without any doubt, the Federal Rules of Civil Procedure (FRCP). This also applies to all companies, organizations and individuals that have business with the USA.
In Europe, most eDiscovery is driven by regulatory investigations, especially from the EC (Competition) and various local financial regulators.
Globally, the ongoing increase of electronically stored information AND the absence of records management policies and records managers add to the complexity of the problem.
 
Recommind:
The main drivers for enterprises are:
1) Cost containment/reduction,
2) Cost predictability
3) Risk mitigation.  eDiscovery has entered a second phase, where it is no longer being viewed and addressed tactically, on an ad hoc basis (with rudimentary technology and simplistic, appliance-based solutions), but rather, as a systematic concern (like risk management, email, CRM etc).
 
Xact Data Discovery:
Key drivers for Xact Data Discovery clients include:
• current or anticipated litigation,
• cost containment
• legal budget forecasting. 
Cost containment opportunities include: 
• e-Discovery readiness (data mapping, maintaining internal e-Discovery teams, effective record retention policies, etc.)
• selective data harvesting
• defining and agreeing upon effective Search Terms for the relevant data
• Analyzing/Targeting Data (Analytics) as part of their document review strategy
With the continuous expansion of electronically stored information (ESI), these pressures will be ongoing for the foreseeable future
 
Nuix: Litigation and increasing regulation are a fact of life for corporations. The massive volume of information that needs to be searched to identify the small amount of potentially relevant information and the complexity of identifying this information quickly, cheaply and easily, is critical. This is what is driving eDiscovery solutions.
 
 

Q2) Do you see this as a separate technology sector or an integral part of a broader ECM offering?
 
ZyLAB: Support for the US FRCP rules is VERY process driven and VERY specific. This is a specialism that not only requires software, but also defensible methodologies (Read more here: http://zylab.wordpress.com/2010/09/03/why-you-need-a-solid-and-defensible-methodology-when-you-bring-ediscovery-in-house/ ).
At the end of the day, the only real solution to the eDiscovery problems, is proper information and records management, so data retention and information valuation should be part of ECM systems. But when you are under fire, you need a special toolset. (Read more here: http://zylab.wordpress.com/2010/06/11/why-you-need-email-archiving-today-and-enterprise-information-archiving-tomorrow/)
 
Recommind: For most enterprises, eDiscovery is currently regarded as a separate technology sector, as it is relatively new (5-10 years old) and still quite specialized.  However, in the coming 5-10 years, we are confident eDiscovery will become part of the broader information governance framework, overseen by legal and IT departments and largely “baked into” archiving, ECM, records management, email management, storage and various other IT systems.

 
Xact Data Discovery: In the near-term, e-Discovery solutions will continue to evolve as separate technologies as well as components of a broader ECM offering. This is true due to the disparity in corporate adoption of ECMs. Many companies, particularly non-serial litigants, do not currently have enterprise records management systems and/or a regularly enforced records management policy. Such companies will engage e-discovery solutions on an ‘as required’ basis. Longer term, the trend to adopt ECMs will continue, as corporate IT departments struggle to manage continually growing data volumes.  Standardization will represent a market opportunity.
 
Nuix: At this stage there is no ECM solution out there that comes close to covering all the different types of information or has the capability to undertake effective eDiscovery. Nothing, in the way that ECM providers are progressing, would indicate that they understand the complexity of the task ahead of them, if they chose to be serious eDiscovery providers.
 
 

Q3) Are you seeing an increasing take-up of in-house e-Discovery solutions versus outsourcing?  If so why? If not, why not?
 
ZyLAB: We are seeing an increase of companies and government bringing sections of eDiscovery in-house. Most, start with Legal hold (which is a process the Legal department owns), next is automatic collection, preservation and processing (which is a typical IT task). When these two phases have been brought in-house, the next ones are Early Case Assessment, 1st pass (automatic) review and legal production. Very few organizations bring the entire legal review in-house; they simply do not have the legal resources, so this work continues to be outsourced. However, a large part of the 1st pass legal review is increasingly carried out (automatically) in-house. After this process, data is sent off to the external counsel. Since these all use different review tools, in-house tools need to be able to produce load files in a variety of formats.
Bringing eDiscovery in-house does not mean that enterprise licenses are bought. Many companies try on-demand first and then move to on-premise solutions. We also see a growing need for on-command software, including all services and assistance with first eDiscovery projects, as an initial starting point. Many organizations are afraid to do this type of new work on their own the first time. At the end of the day, everyone would like to go on-premise, but the road towards on-premise clearly goes via on-command and on-demand.
 
Recommind: We would actually characterize the situation a bit differently...We see the vast majority of enterprises grabbing control of their eDiscovery framework and response capabilities, overwhelmingly in an effort to make their costs predictable and controllable.  How they go about doing this, however, varies widely, as some pull things “in-house” (i.e. inside the firewall), some rely on third parties to host their systems and the majority go with a hybrid model (some systems and response capabilities behind the firewall, others outside the firewall and managed by third parties).  Whether an enterprise puts things behind their firewall or not, depends solely on their judgement as to which approach best lowers their costs and risk – with cost being by far the dominant driver.
 
Xact Data Discovery: While there has been much industry discussion about companies in-sourcing their e-Discovery efforts (to better manage costs and the discovery process), the reality is that this is not the answer for every company. In-sourcing requires continued investment in knowledgeable personnel (expertise), infrastructure and technology. In-sourcing has a tendency to distract from a company’s core competencies and may call into question the defensibility of the document collection and review.  Moreover, recent case law has deemed unsupervised self-collection of data by clients, unacceptable, requiring the clear supervision of counsel. 
 
Nuix: There are two types of insourcing going on at the moment.  The first is law firm insourcing, of which an increasing number is Am Law 200 firms. About 50% of these will have an in-house capability within the next 18 months.  This is up from virtually nothing a few months ago.  The second insourcing is corporations.  This is a trend which started over the last year and seems to be on the increase.  As the software matures and becomes easier to use, corporations are becoming more comfortable using it and this trend will continue.
 
 

Q4) What future developments and trends do you see emerging in this sector?
 
ZyLAB:
• Multi-media search (sound and visual search)
• Cloud based collections
• The rise of Automatic Enterprise Information Archiving applications
• On-going eDiscovery complexity and problems, because of on-going data size growth and because records management just does not work for many organisations (or they just don’t do it!).
eDiscovery is here to stay!
 
Recommind:
Near term, we are already seeing enterprises:
1) Become more aggressive in their approach to preservation and collection
2) Seek far better “pre-spend insight” through advanced analytics
3) Deploy sophisticated technology (especially Predictive Coding, Predictive Analytics and targeted collection)
 
Xact Data Discovery: At Xact Data Discovery, our observation is that clients seek improved search technologies and data analytics to improve identification and review of relevant data. The future will also include wide acceptance of the defensibility of such technologies. Globalization will place more emphasis on foreign language capabilities and early case assessment to help define a seemless discovery strategy.  SaaS delivery models will likely become more prevalent, with easy accessibility, transparency and cost predictability, for users to manage and control workflow.
 
Nuix: A lot of the eDiscovery software companies will attempt to enter the information governance market but will have major problems scaling their processing, search and productions functions; this will keep them as eDiscovery specific solutions.
 
 
 

Q5. Do you anticipate an increasing level of M&A activity in the e-discovery space?
 
ZyLAB: Yes. See also various 451 group reports.
 
Recommind: Definitely. As eDiscovery increasingly becomes part of the core IT and information governance framework (which includes records management, ECM, archiving, storage and risk management), large players in these spaces will actively seek game-changing technology and brands in eDiscovery so they can instantly gain a strong foothold in eDiscovery, and add more urgent sales and product refresh cycles amongst their large, installed bases.
 
Xact Data Discovery: Yes, as technologies evolve and cost pressures continue in this growing market, companies will continue M&A activity as they seek to maximize synergies, achieve critical mass and offer clients cutting edge, cost effective tools throughout all phases of the discovery process. 
 
Nuix: The eDiscovery space is made up of service providers and software providers.  Service providers will continue to consolidate. This is a trend that has been going on for the last couple of years.  There is a small number of competent software companies, some of which will grow and perhaps be purchased by larger organisations and some, which will fade because their offerings aren’t mature or scalable enough.