e-discovery 2.0

Hello from Los Angeles, where the weather’s fine and summer’s in full swing! Accordingly, a few of us in the legal technology community spent the night before LegalTech enjoying a Dodger’s game hosted by LTN editor-in-chief and rabid Yankees fan Monica Bay (outfitted in full Yankee regalia for the occasion). So as to not incur Monica’s wrath, I left my Red Sox cap at home.

At the game, I happened to sit next to a colleague from another vendor who mentioned that her firm is about to celebrate twenty years in e-discovery.

Twenty years! What a remarkable milestone for any company. It got me wondering about how much technology has evolved over that time period, and raised an interesting question to noodle over between innings: With all of the investment and innovation in the e-discovery space, who’s actually winning the e-discovery tug of war, twenty years in?

What is the e-discovery tug of war, you ask? Let’s start with the scene in 1988.

On one side, the documents: They stared at you from across the mud puddle — hundreds or even thousands of boxes stacked one of top of another, hauled out from a warehouse where they’d spent their days, against their will, in windowless solitude, ready for battle. They were ticked.

And on the other side, you: With your new IBM PS/2 Model 80 (the best money could buy: 640×480 VGA color screen, 16mhz 386 processor, 80MB hard drive), flatbed scanner, and some new DOS-based database program called “Concordance.” To add insult to injury, Starbucks hadn’t even really gone national yet, so you were probably stuck with a jar of instant coffee to try to stay awake.

You didn’t stand a chance.

From then until now, two different dynamics have played against each other, pulling the flag back and forth over the dividing line:

1. On one side, the explosive growth of electronic documents has been truly mind-boggling. From a baseline of close to zero in 1988 (WordPerfect 5.1 wasn’t introduced until 1989), today essentially every single business document is created, transmitted, and stored electronically.
2. On the other side, technology innovators in the e-discovery space have used creativity and a large dose of Moore’s Law to store, process, and search electronic documents with ever-increasing speed and efficiency.

During the seventh inning stretch, with the Dodgers holding a commanding lead over the White Sox, I thought: Maybe technology is about to win.

Here’s the argument: Assuming that the creation of document content will still largely be human-driven, now that most every legally significant class of communication is being created and managed on-line, growth of e-discovery-relevant data volumes may quickly move from being exponential (when everything was “going digital”) to a rate driven more by productivity improvements and economic growth. Improvements in processing, search, and analysis of documents, however, will continue to improve at a Moore’s Law pace for the foreseeable future, presumably making it fairly trivial for advanced e-discovery technologies to outmuscle their longtime adversary.

Google shows some evidence of this victory of technology over data. Remember that just a few years back, search engines frequently trumpeted how much of the Internet they were able to index – and it was far from the whole thing. Today, that’s largely a solved problem. It’s simply amazing how quickly Google’s index ingests new data, often in what seems like a matter of minutes. In fact, I dare say that by the time you read this post, you’ll be able to perform a Google search on some of its content and have it come up front-and-center in your search results. Amazing.

What does this mean for e-discovery? The best e-discovery technologies will change to solve challenges that are far more strategic in nature. Instead of focusing on how fast and effectively they can process documents, or how quickly they can allow attorneys to review them, they’ll provide powerful capabilities for addressing some of the most important e-discovery problems that inside and outside counsel face, such as:

• How do I craft robust, defensible search strategies for my cases while minimizing e-discovery costs?
• How can I standardize a repeatable, high-quality discovery process that’s executed consistently across my organization?
• How can my organization become more proactive in identifying potential legal risks and liabilities based on our company’s “legal history”?

I’m sure you can come up with a number of others. What do you think – is the war against documents over, and e-discovery ready to move to a new phase? Or are there still many more battles to be fought?

HP announced today that it has signed an agreement with Clearwell to resell the Clearwell E-Discovery Platform. The two companies have been partners for some time and have many joint customers such as Constellation Energy, Del Monte, and Universal Music. But, under this new agreement, thousands of HP sales people will now be compensated for selling Clearwell, giving them a powerful incentive to introduce their customer base to Clearwell’s e-discovery solution.

To my knowledge, this is the first time that a major archiving vendor has agreed to resell a partner’s e-discovery solution, and it raises a couple of interesting questions: why did HP do this deal? And, what does it mean for HP customers?

Ask anyone who tracks the email archiving market, and they will tell you that e-discovery is a major driver of archive purchases. As Gartner’s Carolyn DiCenzo observes: “Legal discovery is being mentioned by almost every client evaluating an e-mail archiving solution.” That’s because whenever a company has litigation, regulatory inquiries or internal investigations, IT is required to provide relevant electronic information to legal or information security. Far better to have it in one repository than spread out on user desktops, email servers, and file shares. So, CIOs are partnering with General Counsels to deploy email archives, much as they did – in years gone by – with the VP of Sales to implement CRM systems.

The problem is that, when you look at archives as e-discovery solutions, they only solve 50% of the pain. In EDRM terms, archives are a very effective solution for collection and preservation, but awful for processing, analysis, and review. They provide a bulletproof way to capture and preserve every message, but do not make it easy to perform early case analyses and cull down data to the very small set of documents relevant to the case at hand.

That’s why enterprise customers find it so compelling to pair up an archive, such as HP’s Integrated Archive Platform, with an e-discovery solution, such as the Clearwell E-Discovery Platform. So to summarize, HP is doing this deal because it’s the best way to provide HP customers with an end-to-end solution for e-discovery. The two products integrate out-of-the-box, have been proven to work together at several large enterprises, and can be purchased from a single supplier (HP). That’s a much easier, lower risk decision for many enterprises than purchasing separate point solutions and cobbling them together.

Very few companies have as much mindshare with corporate CIOs as HP. It can only be good news for the e-discovery market as a whole to have one the largest technology companies in the world out there educating its customers on the value of lowering the costs and risks of e-discovery.

There are two independent analyst reports identifying the top e-discovery software vendors.

The first, published in June 2007, is the Socha-Gelbmann Annual Electronic Discovery Survey. The authors, George Socha and Tom Gelbmann, probably know more about e-discovery than anyone else you are likely to meet. As someone who has filled out their 178-page survey, I can tell you it is excruciating in its detail and incredibly rigorous. According to the report, George and Tom contacted nearly 1,000 individuals and collected detailed data from 115 organizations.

The second analyst report is Gartner’s MarketScope, which is published today (December 2007). Its author, Debra Logan, is fast emerging as one of the leading lights of e-discovery and has great instincts about the market. For her report, Debra tells me that surveyed 30 vendors and checked over 90 customer references.

The results from the two reports are as follows:

(1) Companies listed as “Top Electronic Discovery Software Providers Based on 7 Criteria” (Table 19 and 20), listed in alphabetical order. (2) Companies awarded ratings of “Positive” or “Strong Positive” (Figure 1), listed in alphabetical order.

Why are the lists so different? Primarily because of two main factors:

1. Gartner’s list mixes service providers and software companies whereas Socha breaks them out separately. The Socha report has an entirely separate list for service providers.
2. Socha’s report was completed 6 months earlier than Gartner’s. In that intervening period, several new players entered the e-discovery market. For example, Kazeon was ranked by Gartner earlier this year a “niche player” (lower left quadrant) in the enterprise search market, and has not been in e-discovery long enough to participate in the Socha study (or, if they did participate, they did not have enough e-discovery customers to gain a high ranking).

Conclusions

The first conclusion to draw from these lists is that any vendor not in them is probably not worth considering for e-discovery. If neither Socha nor Gartner ranked them highly, then the vendor either could not provide compelling customer references or has lost competitive bake-offs to someone who is on the list. Either way, they are best avoided.

The second thing that stands out is how different these lists are. Of the 21 vendors identified by Socha and Gartner, only 5 are ranked as top e-discovery software vendors by both of them. Those 5 are Attenex, Clearwell, FTI, Guidance, and LexisNexis. So, if you are an enterprise looking for an e-discovery solution, it is clear who you should call first.

Finally, it is worth noting that both these analyst reports are relatively new. This is the third annual survey for Socha, and the first MarketScope for Gartner. That speaks to the fact that e-discovery software is a new, fast-growing product area. More and more enterprises are adopting e-discovery software solutions, and asking analysts about them, because they offer such a compelling ROI.

Thursday, December 6 was a big day for several e-discovery companies. Starting on the home front, it was Clearwell’s 3^rd birthday and we celebrated by announcing our deployment at Bear Stearns. Looking at where we are now, it’s hard to believe that 3 years ago the company consisted of a few guys with an idea. Today, we have over 100 customers who rely on Clearwell for e-discovery, and we are thrilled to count Ruben, Christoph and the team at Bear Stearns among them.

That same day, MetaLINCS announced its acquisition by Seagate (more on that to follow shortly), and Guidance announced the appointment of a new CEO. Victor Limongelli was promoted from President to the top job after what sounds like a comprehensive evaluation of both internal and external candidates by Guidance’s board. I always enjoy my conversations with Victor and applaud Guidance’s decision.

All in all, an eventful day.

To the long list of reasons why e-discovery companies should be good to their customers, we can now add one more: because if you don’t, they might blog about you and say nasty things. That’s what has happened to Metalincs on this blog Which carries the intriguing description of “legal software whistle-blower” in its web page address.

I have no idea who this person is, but their comments about Clearwell’s e-discovery solution are well-informed and accurate.