e-discovery 2.0

Yesterday, George Socha and Tom Gelbmann published summary results for their 2008 EDD survey. George and Tom gathered self-reported data from 85 e-discovery service providers and 40 e-discovery software companies. To help vendors resist the temptation to “exaggerate” their accomplishments, they then cross-referenced the responses against independent surveys submitted by 29 law firms and 19 corporations, and applied a healthy dose of their own good judgment. The outcome, which they will publish in-full next month, is a great snapshot of the industry, and probably the most objective ranking of e-discovery vendors that you can find.

By comparing this year’s results to the 2007 survey, you get a sense for how much has changed in the e-discovery world over the past 12 months:

Top E-Discovery Software Companies

Note: arrows show change to rankings from last year’s Socha-Gelbmann Survey

Autonomy and Clearwell move up to the Top 5, overtaking Attenex and CT Summation which slip back to the second tier. There are also 3 new names ranked 6 through 10 (Epiq, iConect and Symantec) who displace Cataphora, Doculex, ISYS, and Oracle, none of whom even make it into the top 15. In other words, 70% of the rankings have changed since last year.

If a litigation support manager were to focus only on the Top 5 in making her e-discovery software decision, she would have a choice of some very different solutions. Autonomy positions itself as a high-end (expensive) platform for corporations, while Lexis offers a comprehensive toolset for law firms. Guidance and Clearwell are complementary in that both provide best-of-breed solutions for parts of the EDRM model: Guidance is the leader in collection and preservation, while Clearwell is the leader in processing, analysis and review. Finally, FTI takes a services-based approach which centers around RingTail, its hosted review application.

Looking lower down the list, there were some other interesting results, primarily around which companies were NOT ranked. Kazeon made it into the third tier (ranked 11-15) whereas StoredIQ, its main competitor, did not. Nor did Recommind break into the rankings, despite making a major push into e-discovery from knowledge management over the past year. But the most striking absentees are PSS Systems and Exterro, which have pioneered litigation hold management for Fortune 100 companies. I can only guess that they cover too much of niche market to warrant inclusion in an industry-wide report.

Top E-Discovery Service Providers

In contrast to the world of software, e-discovery services saw much less movement in this year’s rankings:

Note: arrows show change to rankings from last year’s Socha-Gelbmann Survey

There was only one change to the top 5: Fios moved up, displacing Guidance which plummeted 10-20 places down to a 16-25 ranking. In addition, there were two new players in the top 10, Epiq and Huron, who edged out Electronic Evidence Discovery and Ernst & Young.

Conclusion

Changes to the software rankings reflect broader changes in the e-discovery market. As e-discovery has moved in-house, corporations have become a major driver of purchase decisions that were previously left to law firms. Many software companies, such as Attenex, have struggled to make this transition, while others, such as Clearwell, have capitalized on it. There has been no such change in the service provider world and, as a result, the rankings are relatively stable.

It will be interesting to see what happens next year. Every other software space is dominated by a small number of players, like Oracle for databases or VMWare for virtualization. If the same is true for e-discovery, then we can expect many fewer changes to the software rankings in future surveys as the leaders pull away from the pack.

The recent announcement of $18 million in financing for PSS Systems got me thinking about preservation.  PSS is a provider of enterprise-class preservation and litigation hold management systems with solutions starting in, from what I can tell, six figures.  Nevertheless, this begs the question, why would a Fortune 500 company need such an expensive enterprise class software application to manage legal holds?

So, let’s start from the top…

With the advent of e-discovery during the last decade an entirely new class of evidence spoliation came into existence - i.e., situations where electronically stored information (ESI), particularly back-up tapes, could inadvertently become overwritten, lost, erased, etc.  In the good old days of paper-based discovery, there was certainly an opportunity for spoliation, but paper documents didn’t routinely become lost or otherwise unavailable, unless in extreme instances of intentional spoliation.  For a particularly comprehensive tome on this type of negligent spoliation, please see this excellent piece written by Judge Scheindlin (of Zubulake fame).

Accordingly, in the past several years litigators have had to learn and then re-learn the notion that the duty to preserve ESI begins once litigation is “reasonably likely.”  Unfortunately, this duty to preserve is fraught with a number of practical challenges, including:

• When is the duty triggered?  For example, the duty is in most instances certainly in place prior to a complaint being actually served.  But, as you move upstream from that crystalline moment reasonable minds certainly can differ about when litigation is “reasonably likely.”  EEOC claims, in the HR context, are a good example of potentially early trigger points.
• Then, assuming that the duty is triggered what must then be preserved?  Is it just the ubiquitous email?  Or, as is more likely, will an increasingly broad and voluminous set of ESI be implicated, such as loose files, instant messaging, blog posts (maybe this one?), mobile or PDA/handheld data, deleted but forensically recoverable files, etc.?

Those two thorny problems aren’t the only issues that counsel needs to deal with when they embark upon issuing a legal “hold” – the decree that instructs custodians of their obligation to preserve all relevant information related to the matter at hand.  But, the duty to preserve is only the start of the challenge.  This is where folks like PSS come in, meaning that they manage the potentially complex logistical tasks associated with hold notification, monitoring, and compliance.

Here’s where I start to have a problems with large scale, complex preservation efforts.  Let’s take a somewhat common example:  a multi-national enterprise is sued for misappropriation of trade secrets.  Even prior to the complaint being filed, plaintiff’s counsel issued a demand letter, which in some cases could be held as a triggering event.  But, in either case, once the complaint hits the GC’s desk the duty to preserve is clearly in force.   Let’s then say that in consultation with outside counsel they wisely embark on a set of interviews to determine the scope of departments/locations/custodians that may be reasonably implicated.  Then, following the synthesis of this information they issue a legal hold notice to 2,500 people located throughout numerous domestic and international offices.

Now, here’s where the risk comes in…   One thing is statistically certain with that number of custodians: the legal hold will not be followed to perfection.  If I were more mathematically inclined I’d say it could be reduced to a formula along these lines:

Legal hold compliance *decreases* exponentially as you multiply:

• The number of custodians
• The length of time the legal hold is in effect
• The types and volumes of potential ESI that may be relevant
• The presence of individuals who don’t want data to be preserved due to their own perceived errors/foibles/omissions

The answer, in my mind, doesn’t lie in a better mouse trap to manage the vagaries of the legal hold process.  No, the best way to take the risk out of the legal hold process is to move very rapidly from preservation to collection.

Once ESI is collected two main things start to happen:

1. Subjective notions about the universe of data (allegedly) covered by the preservation process can be changed into objective observations that the custodians really are the right ones.  For example, in the above example the 2,500 custodian list is again almost certainly not correct.  Since the decision process was made subjectively (likely without insight into the data) the custodian list is inherently either under or over-inclusive.  However, with the advent of early case assessment solutions, the preserving party can now quickly collect and assess an initial corpus of data to ensure that exactly the right folks are in the collection/preservation process.
2. Once the ESI is collected, the risk of loss, deletion, etc. will largely have been taken out of the equation meaning that the danger of spoliation is greatly reduced.

My belief is that the larger the preservation effort the more likely there will be gaps that the opposition can use as leverage.  Scaling up the preservation effort is only one way to skin the cat.  Instead, the better practice is to start small, collect quickly, and then expand collection efforts once your legal team has objective insights into the case data.

Yes, preservation is still important. But, biting off more that you can chew simply means a statistically greater chance of failure.