Locating, securing and producing all the electronically stored information required in the discovery phase of civil litigation can be very time consuming and extremely expensive. However, failure to produce the required information in a timely fashion can lead to fines running into millions of dollars, thanks to revisions to the Federal Rules of Civil Procedure that came into effect in December 2006.
Many companies still deal with e-discovery obligations by outsourcing the process to external specialists, who may charge between $250 and $1,400 per gigabyte to sift through corporate data, collect what is relevant, and get it in to a form that can be submitted to lawyers for review. In the past five years, an increasing number of companies have begun treating e-discovery as a routine business process that can be performed in-house. Many of these companies use e-discovery software to help carry out this business process more efficiently.
E-discovery software is designed to enable the efficient undertaking of various stages of the e-discovery process defined in the Electronic Discovery Reference Model (EDRF), which establishes guidelines for e-discovery. These stages include the identification, preservation, collection, processing, review and analysis of corporate information. Research house Gartner said e-discovery solutions may cost more than $500,000, but in some organizations they can pay for themselves in as little as three months or after a single big law case. That's because the cost of software can be offset against fees that would otherwise be paid to outside service providers to process data for discovery and against the reduction in legal fees charged by outside attorneys reviewing large amounts of written electronic material. Little wonder the market for e-discovery software is expected to grow more than 20 percent per year for the next three years, according to Gartner estimates.
Of course, not every company needs e-discovery software. Those that do tend to have one of two key characteristics: They have significant intellectual property assets that must be protected (as is the case for companies involved in sectors like oil and gas, banking, pharmaceuticals and high technology) or they are involved in lawsuit-driven industries, such as insurance.
"These companies can save a ton of money and time by using e-discovery systems," said Debra Logan, a vice president at Gartner. "If you are facing more than 10 law suits or regulatory matters in a year, then it is worth getting organized using this type of software and getting a firm idea of what your IT situation looks like, what information you have on tape, and so on," she added. "You need to ask 'What are our systems, who can access them, and what information do we have on them?' That's the sort of level of knowledge you need to have."
Since e-discovery involves identifying and preserving relevant information stored in corporate IT systems and handing it over to attorneys for processing, it makes sense that the less unnecessary information stored, the more efficient this process will be. Minimizing the amount of stored corporation information should therefore be a priority.
"The biggest sin is keeping unnecessary data," Logan said. Typically only about 1 percent to 5 percent of a company's stored data is needed long term, and about 8 percent is needed for up to five years, she said. "The rest is usually stored because it seems like it is free to do so, but if it had to be stored in filing cabinets, it would have been thrown out long ago."
However, companies must set sensible policies governing how data should be retained or discarded. This way, should information that turns out to be relevant to a case be deleted, they can show that it was done according to the policy and not to affect the outcome of the case, she added.
Looking at the range of products (which include appliances and software as a service as well as enterprise hosted software)that assist with e-discovery can be bewildering. However, for companies looking for the biggest benefit for their software buck, Logan has no doubt about where to start: "Beyond a shadow of a doubt, email archiving is the quickest win," she said. "If you get rid of PSTs and dedupe, you can cut the volume of email that you store to 25 percent of what you had. There are big storage gains to be made."
Given this, it is not surprising that many of the leading e-discovery vendors like Symantec, EMC, CA and IBM have storage or archiving expertise. Logan said she believes many more such companies are likely to enter the market, "If you are a big storage vendor then you are inevitably going to have offerings in this space," she said. The other types of market participants include search-based software vendors and those that primarily concentrate on processing, reviewing and analyzing documents. Leading vendors in this space include Autonomy, Clearwell Systems, FTI Technology, Guidance Software and ZyLAB.
The e-discovery software market has already undergone a certain amount of consolidation, and this trend will likely continue over the coming months and years. Some analysts expect large platform vendors like HP and Oracle to enter the space through acquisition. Other vendors may also look to round out their offerings. But even if the market is not yet fully matured, the products currently on sale can offer significant savings to companies that encounter (or launch) frequent legal challenges. The cost of e-discovery software may be high, but payback periods measured in months are hard to argue with.
Paul Rubens is a journalist based in Marlow on Thames, England. He has been programming, tinkering and generally sitting in front of computer screens since his first encounter with a DEC PDP-11 in 1979.