e-discovery 2.0

Now that that dust has settled, the folks who attended LegalTech New York 2012 can try to get to the mountain of emails that accumulated during the event that was LegalTech. Fortunately, there was no ice storm this year, and for the most part, people seemed to heed my “what not to do at LTNY” list. I even found the Starbucks across the street more crowded than the one in the hotel. There was some alcohol-induced hooliganism at a vendor’s party, but most of the other social mixers seemed uniformly tame.

Part of Dan Patrick’s syndicated radio show features a “What Did We Learn Today?” segment, and that inquiry seems fitting for this year’s LegalTech.

• First of all, the prognostications about buzzwords were spot on, with no shortage of cycles spent on predictive coding (aka Technology Assisted Review). The general session on Monday, hosted by Symantec, had close to a thousand attendees on the edge of their seats to hear Judge Peck, Maura Grossman and Ralph Losey wax eloquently about the ongoing man versus machine debate. Judge Peck uttered a number of quotable sound bites, including the quote of the day: “Keyword searching is absolutely terrible, in terms of statistical responsiveness.” Stay tuned for a longer post with more comments from the General session.
• Ralph Losey went one step further when commenting on keyword search, stating: “It doesn’t work,… I hope it’s been discredited.” A few have commented that this lambasting may have gone too far, and I’d tend to agree.  It’s not that keyword search is horrific per se. It’s just that its efficacy is limited and the hubris of the average user, who thinks eDiscovery search is like Google search, is where the real trouble lies. It’s important to keep in mind that all these eDiscovery applications are just like tools in the practitioners’ toolbox and they need to be deployed for the right task. Otherwise, the old saw (pun intended) that “when you’re a hammer everything looks like a nail” will inevitably come true.
• This year’s show also finally put a nail in the coffin of the human review process as the eDiscovery gold standard. That doesn’t mean that attorneys everywhere will abandon the linear review process any time soon, but hopefully it’s becoming increasingly clear that the “evil we know” isn’t very accurate (on top of being very expensive). If that deadly combination doesn’t get folks experimenting with technology assisted review, I don’t know what will.
• Information governance was also a hot topic, only paling in comparison to Predictive Coding. A survey Symantec conducted at the show indicated that this topic is gaining momentum, but still has a ways to go in terms of action. While 73% of respondents believe an integrated information governance strategy is critical to reducing information risk, only 19% have implemented a system to help them with the problem. This gap presumably indicates a ton of upside for vendors who have a good, attainable information governance solution set.
• The Hilton still leaves much to be desired as a host location. As they say, familiarity breeds contempt, and for those who’ve notched more than a handful of LegalTech shows, the venue can feel a bit like the movie Groundhog Day, but without Bill Murray. Speculation continues to run rampant about a move to the Javits Center, but the show would likely need to expand pretty significantly before ALM would make the move. And, if there ever was a change, people would assuredly think back with nostalgia on the good old days at the Hilton.
• Despite the bright lights and elevator advertisement trauma, the mood seemed pretty ebullient, with tons of partnerships, product announcements and consolidation. This positive vibe was a nice change after the last two years when there was still a dark cloud looming over the industry and economy in general.
• Finally, this year’s show also seemed to embrace social media in a way that it hadn’t done so in years past. Yes, all the social media vehicles were around in years past, but this year many of the vendors’ campaigns seemed to be much more integrated. It was funny to see even the most technically resistant lawyers log in to Twitter (for the first time) to post comments about the show as a way to win premium vendor swag. Next year, I’m sure we’ll see an even more pervasive social media influence, which is a bit ironic given the eDiscovery challenges associated with collecting and reviewing social media content.

As we approach LegalTech New York next week, oft referred to as the Super Bowl of legal technology events, there are any number of helpful blogs and articles telling new attendees what to expect, where to go, what to say, what to do. Undoubtedly, there’s some utility to this approach, but since we’ll be in New York, I think it’s appropriate to take a more skeptical approach and proffer a list of what *NOT* to do at LTNY.

1. DON’T get caught up in Buzzword Bingo. There are already dozens of sources attempting to prognosticate what the most popular buzzwords will be at this year’s show.  Leading candidates include “predictive coding,” “technology assisted review,” “information governance,” “big data” and even the pedestrian sounding “sampling.” And, while these terms will undoubtedly be on booths and broadcast repeatedly from the Hilton elevator, it doesn’t mean an attendee should merely parrot these without a deeper dive.  Here, the key is go behind the green curtain to see what vendors, panelists and tweet-ers actually mean by these buzzwords, since it’s often surprising to see how the devil really is in the details.
2. DON’T get a coffee at the Hilton Starbucks. Yes, we all love our morning coffee, but there’s no need to wait in the Justin Bieber-esque line queue at the in-hotel Starbucks. There are approximately 49 locations in a ½ mile radius, including one right across the street. There’s also the vendor giving out free coffee on the second floor, so save yourself 30 minutes of needless line waiting.
3. DON’T ride the Hilton elevator. For those staying or taking meetings at the Hilton, the elevator lines can be excessively long.  Once you finally get on, you’ll wish they’d been even longer as you then find yourself subjected to the brainwashing of vendor announcements while you make multiple stops on your way to your desired floor. Either take the stairs or, if that’s not possible, try to minimize the trips to keep your sanity. Or, plan B – bring your iPod.
4. DON’T talk to booth models. It’s tempting to gravitate to the most attractive person at a given vendor’s booth, but they’re often hired professionals designed to get you in for the all-important “badge scan.” Instead, focus on  the person who looks like they’ve been in the same company-branded oxford for 48 hours, because they probably have. While perhaps less aesthetically pleasing, they’ll certainly know more about the product and that’s why you’re there after all, isn’t it?
5. DON’T pass out your resume on the show floor. While certainly a great networking opportunity, LTNY isn’t the place to blatantly tout your professional wares, at least if you want to keep your nascent job search on the down low. And, if you want to have more private meetings, you’ll need to do better than “hiding out” at the Warwick across the street. For more clandestine purposes, think about the Bronx.
6. DON’T take tchotchkes without hearing the spiel. There are certain tchotchke hounds out there who roam around LTNY collecting “gifts” for the kids back at home. While I won’t frown on this behavior per se, it’s only courteous to actually listen to the pitch (as a quid pro quo) before you ask for the swag. Anything less is uncivilized.
7. DON’T get over-served at the B-Discovery Party. After a long day on the show floor you’re probably ready to let loose with some of the eDiscovery practitioners you haven’t seen in a year.  But, in this era of flip cams and instant tweeting, letting your hair down too much can be career limiting. If you haven’t done Jägermeister shots since college, LTNY probably isn’t a good time to resume that dubious practice.
8. DON’T forget to take your badge off (please!). Yes, it’s cool to let everyone know you’re attending the premier legal technology event of the year, but once you leave the show floor random New Yorkers will heckle you for sporting your badge after hours – particularly the baristas at Starbucks. Plus, if you’ve broken any of the other admonitions above, at least you’ll be more anonymous.
9. DON’T forget to bring a heavy coat, mittens and scarf. Last year there was the infamous ice storm that stranded folks for days (me included). Even if the weather isn’t that severe this year, anyone from warmer climates will need to bundle up, particularly because it’s easy to unintentionally get caught outside for extended amounts of time – waiting for a cab in the Hilton queue, eating at Symantec’s free food cart, walking to a meeting at a “nearby” hotel that’s “just a block or so away.” Keep in mind those cross town blocks are longer than they appear on a map.
10. DON’T forget to learn something. Without hyperbole, LTNY has the world’s greatest collection of legal/technology minds in one place for 3 days.  Most folks, even the vaunted panelists, judges and industry luminaries are actually quite accessible. So, at a minimum, attend sessions, ask questions and interact with your peers. Try to ignore the bright lights and signs on the floor and make sure to take some useful information back to your firm, company or governmental agency. You’ll undoubtedly have fun (and maybe a Jagermeister shot, too) along the way.

In the eDiscovery universe, hot trends and evolving technologies tend to capture the attention of the legal community.  Discoverable data sources have been the focus in the courtroom for quite some time, and just like the “popular kids” from high school, email has held the crown of eDiscovery darling.  Not surprisingly, the more time end-users spend in a specific medium (on Facebook, for example), the more likely data will be created – and as that data multiplies, it has the potential to become compelling in discovery.  It seems that many U.S. organizations are electing to allow social media use at work and for work, rather than blocking access.  For obvious reasons, granting this access is culturally desirable, but from an eDiscovery perspective social media use introduces new complications.  However, don’t be mystified.  There is nothing that new here.

Recently, Symantec issued the findings of its second annual Information Retention and eDiscovery Survey, which examined how enterprises are coping with the tsunami of electronically stored information.  Having lost some popularity, email came in third place (58%) to files/documents (67%) and database/application data (61%) when respondents were asked what type of documents were most commonly part of an eDiscovery request.  The new kid on the block for data sources is social media, reported by 41% of those surveyed.  Social media is in essence no different than any other data type in the eDiscovery process, it’s just the newest.  Said another way; social media is the new email.

Of course, it’s no longer news to proclaim that communications from social networking sites are discoverable.  What is newsworthy is the question of how to effectively store, manage and discover these communications which come in such varying forms, making the logistics of doing so for social media different than for traditional mediums.  Like email, social media is used by everyone (ubiquitous), is viral (fast), has mixed uses (professional and personal) and there is a lot of it (high volume).  Unlike email, social media comes in many different forms (Facebook, LinkedIn, Twitter, etc.), is not controlled within an organization’s firewalls (custody, possession and control issues), and has more complex requirements within the information governance lifecycle (technology is needed to ingest social media into an archive).

The two main areas to examine in relation to social media use and an organization’s policies are: 1) the legal issues that apply specifically to the organization, and 2) the logistical and technical requirements for preservation and collection.  Essentially, what is the organization’s policy surrounding social media use, and how can the information be accessed if need be? Luckily, technology exists that is nimble enough to be able to ingest social media and archive it in accordance with an organization’s policy, should one exist.  Organizations that have recognized social media as the newest kid on the block have, ideally: developed a social media policy, purchased (or deployed) collection and retention technology, and instituted training for their employees.  They have also integrated social media into their information governance strategy and document retention policy. Remember, not all organizations will have to archive social media, but all should address social media with a policy and training.

Other organizations have not accepted social media as part of the evolutionary process of eDiscovery.  They proceed at their own peril – as did the organizations that did not control their email some ten years ago!

These organizations will be in crisis when they need to collect social media for litigation and will most likely have a large lesson in damage control, as well as an equally large bill.  They will be uneducated, ill-prepared and overwhelmed about how to discover social media.  Without a policy, they will have to over collect by default, which will drive up the costs for collection and possibly for downstream review.  Given that the aforementioned survey found nearly half of the respondents did not have an information retention policy in place, and of this group, only 30% were discussing how to do so, it is likely that many of these organizations do not yet have a social media policy either.

With this background in mind, organizations should evaluate which laws and regulations apply to their organization, develop a policy and train their employees on that policy.  Plus ça change, plus c’est la même chose.

For more information about how IT and Legal can manage the impact of social media on their organization and to learn how archiving social media can be accomplished, please join this webcast from Symantec.

Symantec today issued the findings of its second annual Information Retention and eDiscovery Survey, which examined how enterprises are coping with the tsunami of electronically stored information (ESI) that we see expanding by the minute.  Perhaps counter intuitively, the survey of legal and IT personnel at 2,000 enterprises found that email is no longer the primary source of ESI companies produced in response to eDiscovery requests.  In fact, email came in third place (58%) to files/documents (67%) and database/application data (61%).  Marking a departure from the landscape as recently as a few years ago, the survey reveals that email does not axiomatically equal eDiscovery any longer.

Some may react incredulously to these results. For instance, noted eDiscovery expert Ralph Losey continues to stress the paramount importance of email: “In the world of employment litigation it is all about email and attachments and other informal communications. That is not to say databases aren’t also sometimes important. They can be, especially in class actions. But, the focus of eDiscovery remains squarely on email.”   While it’s hard to argue with Ralph, the real takeaway should be less about the relative descent of email’s importance, and more about the ascendency of other data types (including social media), which now have an unquestioned seat at the table.

The primary ramification is that organizations need to prepare for eDiscovery and governmental inquires by casting a wider ESI net, including social media, cloud data, instant messaging and structured data systems.  Forward-thinking companies should map out where all ESI resides company-wide so that these important sources do not go unrecognized.  Once these sources of potentially responsive ESI are accounted for, the right eDiscovery tools need to be deployed so that these disparate types of ESI can be defensibly collected and processed for review in a singular, efficient and auditable environment.

The survey also found that companies which employ best practices such as implementing information retention plans, automating the enforcement of legal holds and leveraging archiving tools instead of relying on backups, fare dramatically better when it comes to responding to eDiscovery requests. Companies in the survey with good information governance hygiene were:

• 81% more likely to have a formal retention plan in place
• 63% more likely to automate legal holds
• 50% more likely to use a formal archiving tool

These top-tier companies in the survey were able to respond much faster and more successfully to an eDiscovery request, often suffering fewer negative consequences:

• 78% less likely to be sanctioned
• 47% less likely to lead to a compromised legal position
• 45% less likely to disclose too much information

This last bullet (disclosing too much information) has a number of negative ramifications beyond just giving the opposition more ammo than is strictly necessary.  Since much of the eDiscovery process is volume-based, particularly the eyes-on review component, every extra gigabyte of produced information costs the organization in both seen and unseen ways.  Some have estimated that it costs between $3-5 a document for manual attorney review – and at 50,000 pages to a gigabyte, these data-related expenses can really add up quickly.

On the other side of the coin, there were those companies with bad information governance hygiene.  While this isn’t terribly surprising, it is shocking to see how many entities fail to connect the dots between information governance and risk reduction.  Despite the numerous risks, the survey found nearly half of the respondents did not have an information retention plan in place, and of this group, only 30% were discussing how to do so.  Most shockingly, 14% appear to be ostriches with their heads in the sand and have no plans to implement any retention plan whatsoever.  When asked why folks weren’t taking action, respondents indicated lack of need (41%), too costly (38%), nobody has been chartered with that responsibility (27%), don’t have time (26%) and lack of expertise (21%) as top reasons.  While I get the cost issue, particularly in these tough economic times, it’s bewildering to think that so many companies feel immune from the requirements of having even a basic retention plan.

As the saying goes, “You don’t need to be a weatherman to tell which way the wind blows.”  And, the winds of change are upon us.  Treating eDiscovery as a repeatable business process isn’t a Herculean task, but it is one that cannot be accomplished without good information governance hygiene and the profound recognition that email isn’t the only game in town.

For more information regarding good records management hygiene, check out this informative video blog and Contoural article.

As the saying goes, “I’ve seen the future and the future is now.”  This was my first reaction after analyzing two recent surveys regarding social media and eDiscovery.  The first one was from Clearwell (now a part of Symantec) and the Enterprise Strategy Group, entitled: “Trends in E-Discovery: Cloud and Collection.”  Beyond examining cloud issues it also queried respondents about the growing impact of social media on electronic discovery.  While many of the responses struck me as intuitive, I was taken by the fact that we seem to have crossed over the chasm of social media to the point that this content simply cannot be ignored any longer.  For ages, and perhaps some still today, email was the 800 pound gorilla in the eDiscovery context, often to the dangerous exclusion of other forms of electronically stored information (ESI).

But, in 2011 we’ve now reached the tipping point – with 58 percent of respondents of the ESG survey expecting to manage social media applications as part of eDiscovery, more than double the 27 percent who did so in 2010.  That’s not only a massive increase in one year, but it also moves social media from a fringe element to a mainstream source of ESI.  When asked what types of social media applications would be the most relevant for eDiscovery, 79 percent of survey respondents named Facebook, followed by Twitter (64 percent) and LinkedIn (55 percent).

Similarly (and coincidentally), Applied Research and Symantec (who just acquired Clearwell) queried 1,225 senior enterprise IT professionals around the world in a Social Media Flash Poll.  In one of the main findings, the Flash Poll found that social media is extremely ubiquitous in the enterprise environment, with 45 percent of respondents using it for personal uses and 42 percent using it for business reasons.  Rating highly were a number of disparate social media devices including blogs, multimedia sharing, business forums and, of course, social networking – both personal (e.g., Facebook) and business (e.g., LinkedIn).

The impact on eDiscovery, while somewhat obvious, is nevertheless a significant challenge for many enterprises.

Initially, the increased use of social media intrinsically means that email isn’t likely to be the sole source of responsive information pertaining to a lawsuit (or governmental inquiry).  While this hasn’t really been the case for a while, it’s time for the attorneys scoping eDiscovery matters to face facts and abandon old school notions that email axiomatically equals eDiscovery.  For good or ill, our world of potentially responsive ESI simply isn’t that homogenous.

The Flash Poll also honed in on how this increased use of social media is impacting IT professionals.  While information governance concepts (compliance with regulations and retention polices – both at 45 percent) rated higher on their risk index, the management of eDiscovery was still a significant (and growing) concern at 37 percent.  And, while IT folks are increasingly concerned, it’s safe to say that their attorney counterparts (who have a heightened sense of risk profiling) are even more worried about the impact of social media on the already complex eDiscovery process.

So, what can be done in the face of this changing eDiscovery landscape that used to be dominated by email?  First and foremost, it’s imperative to understand your unique regulatory and legal requirements.  This facilitates the mapping of new social media technologies and content to the requisite policies that address data mapping and the retention of social media content, either in a proactive sense (i.e., archiving) or in a reactive sense (i.e., litigation hold).

As Glenn Close frighteningly said in her 1987 thriller, Fatal Attraction, “I will not be ignored.”  That warning fits the entire social media genre as it relates to eDiscovery in 2011.  And, just like ignoring Glenn Close, failing to pay proper attention to social media is done at significant peril to both IT professionals and attorneys alike.

Today, I am delighted to report that Clearwell Systems has become part of Symantec. We have, of course, been working closely together since obtaining regulatory approval for the acquisition last month, but this makes it official: Symantec can now offer customers Clearwell’s market-leading eDiscovery platform as well as its market-leading Symantec Enterprise Vault archiving solution. We are excited to be part of the Symantec team, and to work alongside so many talented people to create the next generation of eDiscovery and information governance solutions.

There are already a large number of joint customers using the Clearwell and Symantec solutions as part of an integrated eDiscovery and archiving workflow, and we are well underway towards building more robust integration between Clearwell and Symantec Enterprise Vault. In updating our product roadmaps, all our decisions are guided by feedback from customers who have told us over and over again that they want to:

• Reduce costs across all phases represented in the Electronic Discovery Reference Model, from information management through review and production
• Reduce risk by improving the defensibility and repeatability of their archiving and eDiscovery processes
• Streamline their end to end archiving and eDiscovery lifecycle to meet legal and regulatory deadlines
• Start managing information and conducting eDiscovery in as little as one day; whether on-premise, as a hosted solution or in the cloud
• Meet their enterprise-wide archiving and eDiscovery needs, whether they have less than 25 to more than one million users

As we’ve discussed before, our plan as part of Symantec is to deliver a seamless, integrated archiving and eDiscovery management workflow that benefits all our customers. To keep everyone in the loop, we will continue to post updates and answer questions on the integrated product portfolio here and on the Symantec eDiscovery blog.

For more on the acquisition, and the response from our customers, partners and the industry at large, visit: http://www.symantec.com/clearwell.

Very soon, Clearwell Systems will become part of Symantec and cease to exist as an independent company. This will bring to a close 6 ½ wonderful years, during which Clearwell has grown from the two founders into a profitable, 240-person company. All told, our team has shipped 6 major versions of the Clearwell E-Discovery Platform, signed over 400 customers and 75 partners in 14 different countries, and become widely recognized as leaders in our industry. As a result, Clearwell’s valuation has increased from effectively zero to the $410 million which Symantec is paying our shareholders to acquire the company, making this by far the largest acquisition of an e-discovery software company to date.

For 6 of Clearwell’s 6 ½ years in existence, it has been my privilege to lead the company as its CEO. These have been, by far, the most rewarding, stressful, exhausting, and exhilarating years of my career. So in this, my final blog post, I would like to reflect on how we got here, and take this opportunity to thank some of the many people who made it possible.

***

In my view, there’s no single thing that makes a company successful. Rather, it’s a distinctive mixture of the right idea at the right time, executed the right way, by the right team, which gets the right lucky breaks and is propelled forward ahead of the competition by surging customer demand. That, in summary, is the story of Clearwell.

Right idea at the right time:

In the early days of a company’s life, when there’s no product and no hint of a customer, the only thing that you have is the idea. This is not the specific idea of what the company will do (that comes later); it’s the idea that there’s a huge change, a shift in the tectonic plates, that creates the opportunity to build a substantial new company. Much of this is about timing. Many changes are obvious over a 10-year timeframe, but it’s very hard to gauge which of them will occur in the 2-4 years that investors are willing to fund a startup venture.

The founding team at Clearwell was attracted by two big trends which combined to produce a profound change. One trend was that, by the mid-2000s, almost all communication within an organization had started to flow through email, as opposed to voicemail, memos, or hallway conversations. The other was that storage costs had fallen to the point where it was almost free to store all the email that people were generating. We realized that these two trends in combination had resulted in the creation of a user-generated written record of everything happening within an organization – something which had never existed before. Our hunch was that there had to be some way of unlocking value from this written record, while still respecting privacy.

Executed the right way:

We came to Clearwell with very specific ideas about how to build a world-class software company. These are too numerous and varied to capture here, but I will give you a few examples. In product development, we have always sought to build our enterprise products as if they were consumer products, so we made sure that they are intuitive and easy to use without any training. We designed them with the sales process in mind, by making them very easy to install and evaluate, so that prospects can try them out for free prior to purchase.  When it comes to marketing, we sought to promote a better way of doing e-discovery, rather than just pitch features, by championing the importance of early case assessments (ECA). With respect to pricing, we made the entry-point price as low as possible to encourage adoption, and pegged it to a metric that scales in line with value.  Strategically, we chose processing, analysis, and review as our entry point into the e-discovery market, because that’s where software provides the biggest, most immediate ROI.

In every area of the business, we brought a distinctive approach, all centered around our view of the ideal customer experience – the experience we would want to have, if we were our customers.

Right team:

The standard playbook for recruiting is to hire people who have done it before, ideally in the same domain. We took a different approach, and instead hired primarily based on personal qualities. Some of our team had no prior experience in enterprise software; many (including me) had never worked in e-discovery before coming to Clearwell. But we all share one thing in common: a relentless drive to win in the marketplace by building better products and providing better service than anyone else.

That hunger to win will trump experience every time. It’s the reason why engineers work through the weekend to resolve customer issues without being asked, or why a salesperson will travel 4 days out of every week to call on customers. It’s something that gets built into the company culture and then self-perpetuates. Our team tripled in size in the space of 18 months, and I never cease to be impressed by the fresh ideas and boundless energy coming from the new generations of “first-timers”.

Right lucky breaks:

Every successful company needs the rub of the green, and there have been many occasions when I’ve marveled at our good fortune. But perhaps our biggest break was that the Federal Rules of Civil Procedure (FRCP) changed for the first time in 38 years in December 2006, defining rules for the treatment of electronic information in the courts. This accelerated the movement from paper to electronically stored information and coincided perfectly with our entry into the market, drawing us into the electronic discovery domain.

Surging customer demand:

It’s an amazing feeling when you achieve “product/market fit”, as we did at the beginning of 2009. The user community among law firms and litigation support firms embraced our technology for ECA, taking our user base from hundreds to thousands. Enterprises woke up to the money that could be saved by bringing electronic discovery in-house, proactively issuing RFPs and creating new positions specifically responsible for e-discovery. Federal agencies began to adopt e-discovery solutions to sift through the vast quantities of data coming to them as part of their regulatory and investigative duties. Essentially, e-discovery became a core business process, just like finance, sales or HR – it became something that every organization had to do. And just as other departments use applications like salesforce.com (sales), Success Factors (HR), or NetSuite (finance) to manage those business processes, so it was that legal departments realized that they needed an application like Clearwell to manage the e-discovery process.

All of a sudden, the business accelerated, sales took off, and we felt ourselves being pulled in every direction at once. In response, we expanded our platform, moving from 1 product to an integrated platform of 4 products; and, we increased our geographic coverage by building out the sales team across North America and establishing beachheads in Europe and Asia. The Clearwell team worked around the clock to respond to customer demand, while at the same time recruiting and training as we added people at a furious pace. We learned that hyper-growth can be painful, but in a good way.

***

When things go well, the CEO often takes a disproportionate share of the credit. I must confess, it would be nice to think that the company’s success is due to some kind of brilliance or magic touch on my part, but the reality is quite different. This has been a team effort from beginning to end and there is a very long list of people who deserve recognition. It’s impossible to capture them all, but I’m going to do my best, by saying a heart-felt “thank you” to:

• Venkat Rangan and Charu Rudrakshi who started the company, raised the first round of funding, and set the DNA of the engineering team;
• Jim Goetz at Sequoia Capital who acted more as co-founder than investor in the company’s first year, and has since been incredibly supportive of the management team;
• Tom Dyal at Redpoint Ventures for his support and insightful advice on strategy; Bill Coughran at Google for helping us think through how best to scale engineering; John Dillon at EngineYard for teaching me what it means to sell software; and, Scott Dettmer at Gunderson Dettmer for his finesse and deft touch in managing the most delicate negotiations;
• Andy Byrne, Anup Singh, Kamal Shah, Ryan Snyder, Soumitro Tagore, Trevor Eddy, and Venkat Rangan for creating a truly outstanding management team built on trust and mutual understanding – it is quite remarkable that in 6 years, the company has only ever had 1 VP Business Development, 1 CFO, 1 VP Marketing, 1 VP Sales, and 1 CTO;
• Amar Laud, Amy Johnson, Andy Kashyap, Aruna Mantripragada, Bill Duffy, Brandon Cook, Cat Lee, Chitrang Shah, Cris Barrett, Dave Fraleigh, David Speicher, Dean Gonsowski, Donna Hui , Doug Kaminski, Ed Hinton, Jason Montgomery, Jason Reeve, Joe Schwartz, Krista Jones, Kurt Leafstrand, Malay Desai, Manish Sampat, Mark Wentworth, Mike Lee, Peter McLaughlin, Sangeeta Relan, Sean Wilcox, Steve Rapp, Subbu Gooty, Teddy Cha, Tom Kennedy, Tom Wells and Umair Hamid for being the leaders who have really defined the company, and without whom we would never have got anything done;
• Clearwell “Class of 2005” for their super-human efforts in shipping Version 1 and launching the company; Clearwell “Class of 2006, 2007 and 2008” for tirelessly iterating until we cracked the code for a profitable business model; and, Clearwell “Class of 2009, 2010, and 2011” for driving the huge expansion of our operations, both in the US and overseas;
• John Petruzzi from Constellation Energy, Joe Tawasha from Charles Schwab, Don McLaughlin from Qwest, Pallab Chakraborty at Oracle, Jesse Hartman at the Department of Health and Human Services, and Ron Best at MTO for being bleeding edge customers who took a chance on a fledgling technology;
• Jeff Fehrman from Onsite; Greg Mazares, Keith Lieberman and the infamous Taylor brothers at Encore; and Paul Tombleson at KPMG UK – for being the first service providers to embrace Clearwell’s technology;
• Debra Logan and John Bace at Gartner; Barry Murphy and Greg Buckles at eDiscovery Journal; Brian Babineau and Katey Wood at ESG; Brian Hill at Forrester; Chris Dale of the eDisclosure Information Project; George Socha and Tom Gelbmann; Nick Patience at 451Group; and Vivian Tero at IDC – for doing so much to help define e-discovery software as a space and make it intelligible to end-customers;
• Deepak Mohan and Brian Dye at Symantec for sponsoring an acquisition that will massively accelerate the adoption of Clearwell’s technology; and,
• Finally, Enrique Salem and the entire Symantec M&A and Integration Teams for giving us such a warm welcome into the Symantec family.

***

It has been a remarkable journey. I feel proud, and humbled, to have been a part of it.

Clearwell just announced major enhancements to our Identification and Collection Module that together usher in a new generation of targeted collection capabilities for e-discovery. Why are we excited about this? Because it promises to provide our customers with a dramatic increase in their ability to perform quick and efficient collections across the enterprise with a small fraction of the cost and effort traditionally required.

Before Clearwell, vendors could only rely on building their own indexes when attempting to collect content by keyword from unstructured document sources. They did this in one of two ways.

The first method was to build one-off indexes with each collection, indexing content and then discarding the index after collection is complete. This minimized the amount of infrastructure required to maintain the index, but was painfully slow and wasteful of computing and network resources. These sorts of solutions came from vendors who originally focused on the forensic investigation side of the world, whose tools had been designed around small-scale collection from individual devices and hard drives. Unfortunately, they simply don’t scale to meet the demands of today’s large enterprises with their ever-increasing data volumes.

The second method was to attempt to create an uber-index of all of the information in an enterprise and keep it continually updated so that it would be ready at a moment’s notice for your collection needs. This approach proved to be incredibly challenging to implement, required a huge amount of infrastructure to maintain, and, worst of all, didn’t really work: creating the uber-index, as it turns out, was uber-difficult.

In talking with hundreds of customers over the last couple of years, we realized that there was a better “third way,” which combined the lightweight nature of the first method with the comprehensiveness of the second. How? By leveraging the indexes that enterprises already have in place. From comprehensive, robust archiving solutions like Symantec Enterprise Vault to the fully-searchable indexes found on Microsoft SharePoint, Exchange, and file servers, the way of finding the information you need quickly for e-discovery is, by and large, already out there. It’s simply a matter of building an e-discovery platform sophisticated enough to leverage those indexes and, when necessary, be intelligent enough to build its own when not available from another source. That’s exactly what we’ve done with Clearwell’s targeted keyword collection feature.

One of the most exciting things about this approach is that, while it works great for today’s enterprise information infrastructure, it is perhaps even more powerful in tomorrow’s. As your company’s information stores gradually shift toward the cloud, leveraging the indexes in the cloud becomes essential to being able to access the information that lives there in a fast and efficient manner. It’s simply not feasible to be able to use the “one-off” or “uber-index” approaches when data is living in a cloud infrastructure, since data access rates are often slower because they are occurring over a wider-area network.  Last year, Clearwell was the first e-discovery platform to support direct access of cloud Exchange and SharePoint environments, and now with keyword collection we have made another great stride forward in achieving our customer’s vision for next generation e-discovery. And there’s still more to come as we accelerate our product development by integrating with Symantec’s world-class information management team. Stay tuned!

I am thrilled to announce that Clearwell has signed an agreement to be acquired by Symantec for $410 million ($390 million, net of our cash balance of $20 million). By bringing together Clearwell’s market leading e-discovery platform with Symantec’s market-leading archiving solution, we are uniquely positioned to provide customers with the next generation of information management solutions.

The e-discovery software industry has matured rapidly in the 6 years since Clearwell was founded. As electronic information has become a key part of all litigation, regulatory inquiries, and internal investigations, companies have had no choice but to adopt e-discovery software to keep their costs down. Some have done so by bringing e-discovery in-house; others prefer to work with law firms and litigation support companies who provide cloud-based solutions. Either way, e-discovery software has become widely adopted by corporations, government agencies, and law firms around the world.

Clearwell has been a major beneficiary of these trends. Our annual sales have grown rapidly to over $50 million, and the company has been profitable since 2009. Today, we have over 400 customers and 75 partners in 14 different countries.

Many of these customers are using Clearwell together with Symantec Enterprise Vault in a single integrated workflow, and they have often requested that we couple our products more tightly to better serve their information management needs. That’s what led us to partner with Symantec for the past several years and ultimately led to this transaction. Over time, we see corporations and government agencies increasingly seeking information management solutions that encompass both e-discovery and archiving, making the combination of Clearwell with Enterprise Vault incredibly compelling.

In the near term, we expect very little to change for our existing customers. The product will continue to be sold on a standalone basis and supported by the Clearwell team. We remain committed to serving law firms and litigation support partners, who are absolutely critical to our success in more ways than we can describe.

This is an exciting time for the e-discovery industry. Last week, Gartner published its first ever Magic Quadrant For eDiscovery Software. Today, Symantec and Clearwell join forces to deliver a seamless, integrated archiving and e-discovery management workflow, benefitting all our customers. You can find more information about the acquisition at: http://www.symantec.com/clearwell.  There are exciting times ahead.

Yesterday, George Socha and Tom Gelbmann published summary results for their 2008 EDD survey. George and Tom gathered self-reported data from 85 electronic data discovery service providers and 40 e-discovery litigation 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 ediscovery 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 litigation software market. As litigation 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 top ediscovery, then we can expect many fewer changes to the software rankings in future surveys as the leaders pull away from the pack.

Learn More On Litigation Support Software & Frcp Electronic Discovery.