e-discovery 2.0

At Clearwell, we’re constantly ruminating on innovative ways to help make our customers’ e-discovery process more efficient. Given the astronomical growth of social gaming, we began asking ourselves, “How can we harness the power and passion of millions of social gamers for the greater good?”

Questions like this really get our engineers cooking, and what they came back with is, to steal a word from one of our most popular product launches a year ago, simply “magical”.

Starting today, Clearwell’s eDiscovery World leverages the red-hot consumer social gaming trend to provide dramatic and previously unattainable increases in e-discovery technology training and productivity. In fact, the promise of eDiscovery World is so great that we have added social gaming as a core part of our product architecture across all Clearwell modules, from legal hold through production.

And we’re not stopping there. We believe that strategic social gaming delivers such powerful benefits to a best practices e-discovery process, that we’ve proposed modifying the EDRM diagram to account for this critical new requirement for truly end-to-end discovery.

Prior to today, unstructured obsession with social gaming has actually been an obstacle keeping end-to-end e-discovery from becoming a reality in many organizations. Interviews conducted across law firms, service providers, and every major enterprise vertical indicate that the time spent protecting crops from withering and urban blight from descending upon virtual cities has left insufficient hours with which to implement next-generation electronic discovery technology. As a result, legal costs have continued to rise and the risk of sanctions has grown substantially. One Director of E-Discovery at a Fortune 100 company, when grilled about his organization’s failure to implement a robust legal hold process, pleaded, “Can you spare some Facebook credits so I can buy a chicken?”

Now, Clearwell has turned this challenge into a tremendous opportunity. In eDiscovery World, we provide an alternative to traditional social gaming that allows users to perform end-to-end e-discovery in a virtual environment – first in training mode to gain e-discovery process knowledge and experience, and then working with live documents and high-stakes cases. All stages of the e-discovery process are functional in the eDiscovery World environment, which is backed by a robust cloud computing platform able to support the largest and most complex cases. Best of all, in addition to the substantial productivity gains our beta customers have already achieved, many have even found their employees clamoring to forego significant portions of their salaries in order to earn precious Facebook credits, thus delivering dramatic cost savings for the organization.

eDiscovery World is truly a win-win, and we couldn’t be more excited about it. Enjoy!

The amazing thing about the litigation hold process is that everyone is doing it, but the vast majority of people are still doing it manually.

Every company in every case has a duty to preserve, and the only way to meet that obligation is to send out litigation hold notices, track responses, and monitor compliance. To help companies do this, software vendors like PSS (now part of IBM) and Exterro have had products on the market for years. But, despite being good applications with several happy customers, they have only been adopted by about 100-200 customers in aggregate, which is a tiny fraction of the thousands of companies struggling to manage the litigation hold process. Why the low penetration rate?

Well, it turns out there are several good reasons. First and foremost, these applications are expensive, and usually cost over $250K in software licenses, hardware, and implementation services. Second, they take a long time to deploy, often requiring services engagements lasting more than 6 months. Finally, they are pure workflow solutions which are disconnected from the data. That makes it hard to keep them up to date, and means you cannot use them for later stages of the e-discovery process such as collecting data or then processing it. So the audit trail, which is important for defensibility, is often incomplete, and there’s the real risk of “disconnects” between different phases of the e-discovery process.

At Clearwell, we find this type of situation – where there’s a clear market need that’s unaddressed by existing solutions – absolutely fascinating. It led us to ask: what if there was an inexpensive litigation hold solution that’s easy to deploy AND is tightly integrated with identification, collection, processing, ECA, and review? For the past few months, we’ve been working closely with a large number of our customers to answer that question. Our goal was to design a product that will meet the needs of the mass market, which today is still using spreadsheets to track its litigation holds.

The result is Clearwell’s new Litigation Hold Module, which we announced on Monday and is available this month. It brings Clearwell’s trademark ease-of-use and quick time-to-value to the preservation stage of EDRM, and enables customers to manage all their cases from cradle (preservation) to grave (production) within a single product. From the initial conversations with customers, the response has been incredibly positive. Prior to the product shipping, it has been purchased by CA Technologies, Exterran, Flowserve Corporation, and several others, with many more evaluating it for purchase this month. As with all our products, we offer free evaluations and I encourage anyone responsible for managing the litigation hold process to give it a try.

For those who are keeping count, this is Clearwell’s fourth module, all built as a single integrated product. We first came to market in 2006 with processing and ECA. In 2009, we expanded to the right of the EDRM model by adding a module for review and production. The following year, in 2010, we moved left (in EDRM terms) by releasing a module for identification and collection. Now in 2011, this new module for preservation and managing the litigation hold process completes the picture. It makes Clearwell the only fully integrated, end-to-end e-discovery product suite, since other vendors either offer a narrower product footprint or have cobbled together disparate products via acquisition.

Coming on the heels of Transparent Concept Search, this is our second major product announcement of the year – and there will be more to come. The product development team is bursting with new ideas, and we have a rich pipeline of new technologies and products slated for release in the coming months.

(Editor’s note: This special guest post was written by Teddy Cha, Clearwell Senior Product Manager, MIT alum, and coffee connoisseur. Teddy was a key member of the team that developed our Legal Hold Module and has worked tirelessly with our engineering team and lead customers to bring the product to market. – Kurt)

Legal hold is a critical first step to any e-discovery process, but as recent experience has shown, enterprises are still struggling to perform them in a defensible and repeatable way. A judicial warning was heard as early as 2003 with Judge Sheindlin’s ruling in Zubulake v. UBS (and most recently in Pension Committee).  The need for change is not coming from only a single judge, however.  In 2010, the Duke Law Journal studied the level of sanctions compared to previous years and found that:

1. Sanctions are at an all-time high (up 271% since 2005)
2. Damages were as high as almost $9 million
3. The most common misconduct was the failure to preserve data

Sending legal hold notices can start out simple, but it can quickly become unwieldy if not managed correctly. It’s like taxes. Everybody has to do them, and it typically starts out as a “simple” process. But as your assets grow, you may want to invest in more complex software or an online service to maintain efficiency. And once you start a family (or a small business), you’ll need to graduate to a much more robust process.

As companies grow their legal hold process evolves in the same way. Their progression can be described in the following distinct three stages:

Stage 1: Manual Legal Hold Process

Sending a litigation hold notification is as easy as…well, sending an email. But tracking these litigation matters and their responses in spreadsheets quickly grows out of hand once a poor paralegal has to manage a 10th, 20th and 50th simultaneous legal matter (or even multiple holds in a single case).  This manual process is difficult to repeat, error-prone, and likely doesn’t reflect the real-time status of compliance the second the spreadsheet is saved. Typical corporations are concurrently managing hundreds active legal holds, involving thousands of custodians, across multiple business units and groups. It becomes quickly apparent that a better solution is required.

Stage 2: Stand-Alone Legal Hold Software

Legal Hold solutions have been in the marketplace for a number of years. Typically they fall into two categories:

1. Matter Management or Information Governance systems that help enterprises construct workflows and integrate record management policies and controls. Legal Hold notification capabilities are an appended component to these ambitious and holistic solutions. These systems are typically expensive and have long implementation cycles.
2. Narrowly focused offerings aimed at managing just legal hold notification and survey tracking. These solutions typically cost less than the above and are delivered as a hosted service (SaaS).

Stand-alone legal hold software products are certainly an improvement on the Stage 1 manual process. But despite virtually all major enterprises needing some sort of legal hold process, they have not yet raced to embrace these Stage 2 solutions yet. Why not?

Following a typical e-discovery case quickly uncovers the problem. Sending and tracking legal holds is a necessary part of the e-discovery process, but it is only the first step. Soon after custodians are notified of their obligation, e-discovery teams must separately collect, process, analyze, review, and produce that data using other solutions. Stage 2 legal hold solutions are stuck just managing the holds.

This is where purchasing a stand-alone legal hold solution is a bit like buying an iPhone without the network plan: You can’t really do much with it (well, you could play Angry Birds, but only if you download it over a WiFi connection). You can’t obtain your goal of mobile communication without a phone and a network plan.

Stage 3: Integrated Legal Hold Software

To address to drawbacks of Stage 2, many companies today are looking for a more integrated approach – one that marries legal hold with the rest of the e-discovery process. This is where Clearwell’s new solution can help. Once custodians have acknowledged the legal hold notice, Clearwell can immediately reach across the enterprise network and collect those custodians’ data. Once the data is collected, a few clicks of the mouse prepare it for early case assessment (ECA), analysis, and review.

As any experienced corporate IT and legal executive will tell you, such a comprehensive solution has long been promised, but has not come with fast implementation (i.e., up and running in a day), ease of use (i.e., no training required), or in a single platform  (i.e., one login for users and no exporting or importing of data between e-discovery phases). With this in mind, we are delighted to announce the Clearwell Legal Hold Module, now available as part of the Clearwell E-Discovery Platform. Combined with Clearwell’s Identification & Collection, Processing & Analysis, and Review & Production modules, companies can now leverage a truly integrated e-discovery solution to lower the cost and risks of e-discovery. Key features of the new Module include:

• Hold Notices: Hold notices can be quickly created and sent to relevant custodians and system administrators via email. Different notices can be sent to custodians and system administrators, streamlining the notification process. Notices can be sent immediately or scheduled for delivery.
• Auto-Reminders and Auto-Escalations:  Reminders and escalation notices can be scheduled for delivery to non-responsive custodians, eliminating the need for manual follow-up.
• Custodian Surveys: Surveys containing single-choice, multiple-choice, or free form text questions can be created and issued to key custodians so administrators can easily capture information critical to a case, thereby expediting the interview process. Surveys can also be saved as templates to the Notice Library and reused.
• Automated Tracking and Reporting: Administrators have immediate visibility into the status of all legal hold notices across all cases through a single pane of glass. Administrators can drill-down by case to view the status across all custodians, including those who have received and responded to their hold notices, and those who haven’t.

Until today, corporations have been making do with manual or stand-alone legal hold solutions that are neither scalable nor integrated with the rest of the e-discovery process, assuming more and more risk and incurring greater costs – never an ideal combination. Fortunately, it no longer needs to be that way.

(Teddy Cha is a Senior Product Manager at Clearwell Systems and the lead Product Manager for Clearwell’s Legal Hold and Identification & Collection Modules.)

Last fall, when Transparent Concept Search was still in development, we showed an early version of it to a group of our customers. Their excitement was palpable, and they spent most of our session together comparing notes about the varied ways they will use it. But at the end of the discussion, one of them asked the question which was on everyone’s mind: “how much will you charge for it?”, or as someone else immediately said “I get charged $200/GB for plain vanilla concept search, so how much of a premium do you think you will get for this?”

Our answer surprised them: there’s no charge. Transparent Concept Search is included in Clearwell for free. Here’s why doing that makes sense:

There are two business strategies in the technology industry which are proven to work. One is to be the low-cost provider and compete on price. These companies, such as Chinese PC manufacturers, do not spend anything on R&D or marketing. Instead, they ruthlessly squeeze out cost savings and pass them on to their customers. The other proven strategy is to be the innovation-leader, whereby you continually delight customers by giving them more and more functionality at the existing price. Players following this strategy are never the cheapest, since they charge a little extra to fund new product development. For example, iPhone is by no means the cheapest smart phone, but its price did not go up when, with the iPhone 4, Apple added video, a forward-facing camera, better battery life, and a retina display.

It is worth noting that either strategy can work, and companies sometimes move between the two, although making that transition is incredibly hard. Staying in the PC industry, Dell started as the low cost provider, but has more recently tried to move up the value chain by investing more in the design of its products. The results, so far, have been mixed.

At Clearwell, our strategy is to be the innovation leader in e-discovery software. We tackle really hard technical problems, solve them in innovative ways, and then seek to delight our users by providing them with breakout, new capabilities at no incremental cost. Transparent Concept Search is a perfect example of this.

Rather than just integrate with concept analysis plug-ins, as pretty much every review platform does, we asked ourselves: if we were to create concept search from scratch specifically for e-discovery, what would we build? As part of that process, we tapped into the latest academic research in semantic analysis coming out of UCLA, University of Pittsburgh, and other universities, and discovered that it offers a solution to the biggest single problem users have with concept search: the heavy computational burden traditional approaches require. By using a variation of the semantic space model which is explained in that new research rather than, say, latent semantic indexing, we can deliver concept searching to much larger legal matters.

Beyond the core technology, we also wanted to change the user experience, by bringing the same level of visibility and control that our users enjoy in keyword search to this domain. Our goal is to enable users to balance both precision and recall in a way that was not previously possible. The result – Transparent Concept Search – is completely seamless within Clearwell in a way that simply cannot be matched by concept search plug-ins to a review platform, which are essentially two separate products from two separate vendors. In summary, it’s a vastly superior user experience – at no incremental cost.

This is the first of many things you will see from us this year. Our team could not be more excited about the new products and ideas that we have in the pipeline.

For years, concept search in electronic discovery has been like concept cars at auto shows: Cool. Slick. The thing that everyone is talking about.

But not ready to move to the assembly line and be put into production.

Like a concept car, concept search has been based on a lot of good ideas and shown a lot of promise. However, it has failed to move beyond a few edge use cases and reach mass adoption in the e-discovery market.  Why is this the case?

It’s not been because it’s an unproven idea or that the basic technology hasn’t been available. In fact, the core algorithm that underlies most existing concept search technologies has actually been around since 1988, when latent semantic analysis (LSA) was first patented by a team from Bell Labs. Over the last 20 years, dozens if not hundreds of companies have sprung up to apply concept search to the broad area of enterprise search and to e-discovery in particular.

To understand why concept search has never taken off, it’s always interesting to look for parallels, and the parallel du jour is social networking. Readers of David Kirkpatrick’s excellent book The Facebook Effect and (perhaps to a lesser, more fictionalized extent) viewers of the movie The Social Network understand that Facebook was far from the first social networking site (remember MySpace? You won’t admit it, but I know you do). But, despite being several years late to the party, Facebook somehow took the core of the social networking idea and presented it to users in a way that really allowed it to “cross the chasm” to the mainstream market.

In introducing Transparent Concept Search, Clearwell plans to help conceptual search cross that same chasm in e-discovery.  In talking to customers over the last couple of years, we have found that there are unmet customer needs with existing concept search products that, once addressed, will really allow its use in e-discovery to flourish – and not just in a way that makes concept search marginally more useful, but, a la Facebook, makes it orders of magnitude more useful.

What are these unmet customer needs?

Ease of use: Historically, concept search has been relatively easy to use in the strictest sense of the word – you type in some terms that represent your concept, and you get a set of search results back, along with some related terms and/or clusters of related documents. Simple, right? The issue is that in most cases that’s not what the user really wants to do. Because concept search is inherently “fuzzy”, users want to be able to refine their concept based on the feedback that they got from their initial search. Concept search, just like keyword search, is an iterative process, and prior-generation technologies have not allowed for that form of iteration. In contrast, Clearwell’s Transparent Concept Search allows concepts to be defined and refined in a way that is intuitive, visual, and (don’t take my word for it, but try it for yourself) fun.

Precision: Traditional concept search increased recall when compared to just keyword search, but it came at the cost of precision. The refinement process facilitated by Clearwell’s Transparent Search addresses this issue by allowing intelligent human input to guide the concept search process. You get the best of both the recall and precision worlds with vastly diminished time and effort.

Defensibility: Even more important than ease of use and precision is defensibility. Defensibility, for those new to the term, isn’t so much about whether the way the algorithms work is known and able to be understood. They are, and aren’t that complicated. Rather, defensibility is about reasonableness: was the concept search a reasonable way of determining which documents are responsive? Without the ability to define your concept in an interactive manner, we believe that the answer has historically been “no”, making concept search nice in theory but unusable in actual legal practice. Transparent Concept Search promises to change that. The end result is a more defensible search process that yields both greater recall and greater precision, enabling users to more quickly analyze case facts, rapidly identify key documents that may have been missed, eliminate irrelevant documents, and prioritize the most relevant documents for review. Clearwell also provides a reporting and auditing feature to document your search, allowing you to improve defensibility by “proving up” what was done.

Low cost: Finally, never underestimate the value of “free” in helping meet the ever-important unmet need of cost predictability and control. Historically, vendors have charged price premiums (often substantial) for concept search. Trying to charge a premium in e-discovery for something that doesn’t fully meet the customer use case and isn’t defensible, and it’s a recipe for low adoption. However, provide a highly useable, effective, and defensible capability as part of the core functionality of today’s leading e-discovery platform, and it starts to look very attractive indeed.

Hopefully you can tell that we’re incredible excited about the promise that this technology holds for the market, and this initial version is really just the beginning. Want to see it for yourself? Check out the video below, visit our web site or, if you are in New York this week, please visit us at LegalTech New York – we would love to see you.

I’ve been doing this long enough that predictions about the future (for good or ill) seem to be a useful convention to talk about emerging trends in the electronic discovery space.  My recent post about the top 5 trends for the upcoming year received way more attention than I would’ve imagined.  So, in attempt to replicate that and do my best Carnac impersonation, here are a few predictions about ALM’s 2011 Legaltech New York:

• “All in one” e-discovery will be the vendor message de jure, even if the beginning phase is first pass review and the last phase is granular review.  The mantra “don’t let the truth get in the way of a good story” (not surprisingly) holds more water at LTNY than in most places.
• For the first time, it will actually take longer to get to your room in the Hilton (never mind the annoying ads) than it would at another hotel across the street.
• At least one person will have an Inception moment and think that they’re having a dream (or perhaps a dream within a dream – if they’re really sedated) about being on the Legaltech show floor, while they’re really still in their hotel room, waiting for their Starbucks Trenta (a whopping 30 ounces) to kick in.
• The b-discovery group will hold a massive all chapter party without any official affiliation with the LTNY conference, showing again that the off-the-floor meetings, parties, sessions, interviews and the like are continuing to eclipse the officially sanctioned events.  As another prime example, check out these stellar Supersessions.
• Members of the European Cockpit Association (yes there really is one) will accidentally show up for day one of the conference, after getting a pamphlet at LaGuardia airport advertising free wine and cheese with a discussion of ECA.
• DTI will announce that it’s stepping up and acquiring FTI (since the acronyms are pretty similar) after a torrent of other purchases in the space, including Unlimited Discovery and Daticon/EED.
• Given his prominence in NYC, I think it’s likely that Donald Trump makes an appearance (probably to look for a lit support professional as an all new Apprentice: the e-discovery edition).

If you’re anything like Dr. Evil, Tears for Fears, or Napoleon, ruling the world is at or near the top of your to-do list, and part of ruling the world is having as omniscient a knowledge as possible of what’s going on, in order to better control it. Ruling the world has also long been the dream of many software vendors, who want to own and understand all the information in an enterprise in order to, um, provide maximum value to their customers… oh, and also to lock them in to a single underlying platform that allows them to control as much of the organization’s information management decisions as possible.

In some cases, these dual interests are aligned. However, in e-discovery, it’s not so clear. Over the last couple of years, many vendors have pushed a notion of “index everything” or so-called “proactive” e-discovery, in which you have instant access to all the information in your enterprise, in real-time, from which to drive your e-discovery process. But is this feasible? Or even desirable?

The Myth of the Silver Bullet

It can be tempting for IT to turn to an enterprise search solution that can index all data sources – laptops, desktops, file servers, SharePoint servers, databases, email archives, content management systems – and enable e-discovery across the entire enterprise in an instant. The reality is that while such a solution may work for enterprise search in small and medium-sized companies with a finite scope of data, the level of complexity in scale and defensibility of operations makes this simply not an achievable approach for e-discovery at most large enterprises. As Anne Kershaw and Joe Howie of the Electronic Discovery Institute noted in their just-published Judges’ Guide to Cost-Effective E-Discovery:

“There is no single silver bullet that solves all problems associated with escalating discovery costs and delays. As noted above, the single most effective cost reduction method is the focused collection of records most likely to contain relevant information. Some argue that e‐discovery is best accomplished by taking large amounts of data from clients and then applying keyword or other searches or filters. While, in some rare cases, this method might be the only option, it is also apt to be the most expensive. In fact, keyword searching against large volumes of data to find relevant information is a challenging, costly, and imperfect process. A much better approach is to ask key client contacts to help you locate core relevant information and then, by reading that information, determine other sources of relevant information.”

What are the specific reasons why a targeted collection approach is superior? From our conversations with clients as we have been developing our solution to this problem over the last couple of years, three major drawbacks to the index-everything approach stand out.

1. Impact to Existing IT Environment

While the collect-and-preserve approach employed by Clearwell is widely accepted for e-discovery, index-everything and preserve-in-place solutions have recently emerged, originating from other enterprise applications such as knowledge management and enterprise search. These approaches from other domains have significant disadvantages when applied to e-discovery, including impact to existing IT infrastructure and processes that result in increased cost and complexity. For instance, the scope of e-discovery can exceed the amount of information being indexed by knowledge management or enterprise search applications. According to Forrester, the majority of enterprise search implementations range in size from the hundreds of thousands to tens of millions of records, not billions of documents that are potentially discoverable during litigation. Consequently, index-everything solutions must index a much larger volume of data across a broader range of applications and data stores than would typically be necessarily for enterprise search.

Indexing such a large amount of data has implications for the entire IT environment. These solutions either crawl data repositories over the network or employ agents on local desktops and laptops to find new and modified files. IT organizations using these solutions report experiencing disruptions including:

• Requiring read access and permissions to numerous line-of-business applications and storage systems where data resides

• Significant increases to disk I/O for enterprise applications, network file shares, and client machines

• Increased network consumption as large amounts of data are read over the network

• Increased consumption of local hard drive space on employee desktops and laptops for search indexes and redundant copies of preserved files

• Scheduling resource-intensive indexing tasks during off-peak hours, impacting the ability of IT departments to complete backups during shrinking backup windows

Taken together, these issues add cost and complexity to the deployment of index-everything and preserve-in-place solutions. This often results in organizations not fully deploying the solution after purchasing licenses and spending months or years trying to integrate with their existing systems.

2. Risk of Missing Critical Data

Another key concern of organizations seeking to meet e-discovery requests is the ability to find all relevant files and documents for a case. Missing even a few important documents may result in multimillion dollar fines and sanctions. UBS and Morgan Stanley each paid $29.2 million and $12.5 million, respectively, for losing key files during litigation. It is therefore critically important that e-discovery solutions have the ability to not only index and search common file types, but also a range of less common but equally important files such as those within nested container files, encrypted files, and TIFF images containing text. Solutions that originate from applications outside the e-discovery domain often skip these files because 100% accuracy is not required for other applications such as enterprise search. Across organizations with billions of documents, there may be hundreds of thousands of potentially relevant files which are in the dark and unknown to legal teams because they are not indexed.

Index corruption is another commonly reported issue with index-everything solutions that results in incomplete search results. Search indexes are susceptible to data corruption just like any other computer file, but the large size of indexes containing billions of records increases the probability of errors. In fact, this is a common problem of most archive solutions and other solutions that manage billions of records. A corrupt search index will result in incomplete results or in the worst case scenario, the inability to conduct searches until the index is repaired. In some situations, data must be re-indexed to rebuild a corrupt search index which is time consuming due to the slow speed of some solutions.

The net result isthat in-place solutions increase the likelihood of missing critical data, exposing the organization to considerable legal and financial risk.

3. Time Delays and Uncertainty in Searches

When embarking on a project to make all enterprise data searchable for e-discovery, an important consideration is indexing speed in relation to total outstanding data and projected data growth. Organizations deploying such a solution typically have a large amount of existing data that needs to be indexed, and this index must be continually updated as data is modified and new data is created. Many companies report that although vendors claim high processing rates, these high rates erode over time as companies index greater amounts of their existing data, increasing the size of search indexes. Beyond an application’s ability to index data, there are exogenous factors affecting indexing performance including network speed, disk I/O, and latency. Along with index size and the number of search indexes, these factors can also affect search query performance, resulting in searches that take hours or days to return results.

Another issue facing organizations deploying index-everything solutions is that end users may be creating and modifying documents faster than the solution can index them. As a result, there is a widening gap between the state of data in the wild and the solution’s picture of that data, leading to incomplete search results. Equally troubling, search results may include files that were moved after the search engine indexed them, and so they appear in the results but cannot be viewed, retrieved, or preserved. End users clicking on the link to an item may receive an error similar to the “404 Error: File Not Found” that everyone has experienced when browsing the web. This presents a significant defensibility problem in e-discovery, and IT teams often end up tracking down these missing files one-by-one to ensure they are preserved. The result is that organizations may be exposed to unnecessary legal risk while IT teams have the additional burden of manually tracking down hundreds of files for each legal matter.

A Better Approach to Collection and Preservation

Recognizing the challenges of collection and preservation, Clearwell has developed a targeted approach that enables organizations to defensibly collect and preserve data without increasing the work of IT or exposing the organization to risk. Targeted collection provides an easy way for IT or Legal teams to collect from all critical data sources and securely manage collected data in a preservation store for the duration of a case. Unlike index-everything and preserve-in-place approaches, Clearwell is up and running quickly, delivering value in hours or days without the cost and complexity of lengthy multi-month deployment timelines. In addition, Clearwell’s targeted collect-and-preserve approach has a number of benefits over in-place approaches:

Minimal impact to IT infrastructure: Clearwell only collects potentially relevant data from custodians involved in a case or investigation, targeting resources at the most important data instead of wasting resources on indexing all data across the entire organization. As a result, targeted collection requires less impact to existing applications and storage systems, does not cause significant increases to disk I/O or network consumption, and does not require agents to be installed on client machines or servers.

Finds all critical data: Purpose-built to support the complex and difficult to read file types required by e-discovery, Clearwell can index and search all critical content such as nested container files, encrypted files, images containing text, and hidden content.

Up-to-date collection: Clearwell collects all relevant data for e-discovery by targeting information that is related to custodians in the case. Because this approach is not limited by legacy indexing approaches, Clearwell is able to collect data that has been recently modified or moved.

Maintains existing workflow: With Clearwell, end users are able to continue using their existing workflows and business processes without interruption. Using targeted collection, Clearwell can collect data in the background without altering data where it resides. When users create or modify files in the normal course of business, Clearwell incrementally collects new data automatically.

Reduces risk: Targeted collection significantly reduces the risk of spoliation by retaining data in a secure preservation store, providing a defensible process that maintains chain of custody. As a result, data cannot be tampered with by end users or accidently lost on laptops, desktops, or other data repositories not under the control of IT.

Collecting and preserving evidence are critical steps in the e-discovery process. Solutions that promote indexing everything as the optimal solution for your e-discovery problems might be conceptually promising, but create new challenges for IT and increase risk in practice. As a result, organizations are seeking a solution that enables them to respond effectively to e-discovery without causing major disruptions or exposing the organization to additional risk. Clearwell’s targeted approach solves the challenges of collection and preservation by making it easy to collect data from all critical data sources and preserve data defensibly, without incurring greater risk or disrupting the organization’s business processes.

What’s next in the electronic discovery world?  Well, it’s nearly impossible to say with too much precision, but my recent e-discovery trends article attempts to peer into the crystal ball to divine some hints about the future.

The following five predictions are what I expect to create the biggest waves in e-discovery in 2011.  Most are nascent trends that we’ve seen a bit of in 2010, but that should continue to accelerate next year.  Enterprises that can prepare for and understand these areas will be well equipped to continue taking a proactive approach to the ever-changing challenges of e-discovery.

1. Changes in Forensic Best Practices: In 2011, manual forensic imaging will continue to take a backseat to more automated, forensically sound data collection techniques.  Forensic (bit for bit) images have long been the gold standard for the legally sound collection of ESI in response to legal proceedings.  And, while forensic imaging will continue to be important in a number of discrete situations (fraud, misappropriation of trade secrets cases, etc.), it will largely be seen as overkill in basic electronic discovery cases.  Since imaging is both time consuming and highly manual, automated collection tools will increasingly be used by savvy organizations to speed up and streamline the collection process.
2. Consolidation in the Electronic Discovery Industry: Consolidation in the electronic discovery sector will impact market forces and the balance of power.  The past year saw traditional, pure-play electronic discovery companies looking (sometimes successfully and sometimes not) for diversification and deep pockets.  In the upcoming year, the relative dearth of pure play EDD companies may reverse the downward price pressure that’s been seen over the past several years.
3. Proportionality Becomes Reality: Burgeoning data volumes, as seen in multi-terabyte (versus gigabyte) cases, means that the legal community will continue to search for ways to prevent electronic discovery costs from exceeding legal exposure and attorneys fees.  Groups like The Sedona Conference will continue to push for better clarification within the community surrounding “proportionality” in order to keep the electronic discovery “tail” from wagging the litigation “dog.”  If successful at all, there may be a slight respite for litigious enterprises that may be able to better scale e-discovery efforts with the risk profile of the matter at hand.
4. Collision of Cloud, Social Media and E-Discovery: The seemingly unstoppable migration of corporate data to the cloud, combined with the proliferation of social media applications, will continue to stress electronic discovery practitioners as they attempt to preserve, collect, search, and process electronically stored information (ESI) from sources that aren’t traditionally managed behind the firewall.  Proactive enterprises will increasingly evaluate the legal and compliance risks of storing data in the cloud so that they’re not painted into a corner when they need to preserve, collect, and produce offsite ESI.
5. Global E-Discovery Matures: International jurisdictions will increasingly look to the United States (and the Federal Rules of Civil Procedure) as their nascent electronic discovery paradigms are increasingly stressed by the proliferation of both ESI and discovery disputes.  The recent Goodale case out of the UK (and impending procedural changes to the e-Disclosure Practice Direction) demonstrates how the global community is rapidly maturing along the electronic discovery continuum.

While the tools and best practices designed to combat top ediscovery hurdles continue to mature, the challenges are multiplying at any equally fast rate.  In the past, the crux of most discovery matters usually centered around email and sometimes instant messaging.  In 2011, new problems will continue to crop up on the horizon, such as collecting SharePoint data from the cloud, trying to extract structured data from a range of proprietary systems and capturing ephemeral ESI from an ever changing array of social media applications.

Please let me know if you disagree with any of the predictions or have any others you’d like to share.

Working in the industry, I have a good sense for the annual revenue generated by most e-discovery software vendors. I do not write about it, because these companies are almost all private and prefer to keep their revenue numbers confidential. But when a private company publicly discloses its annual revenue, then the numbers are in the public domain and it’s reasonable to examine them.

That’s the situation with Recommind, which has chosen to disclose its revenue in an effort to draw attention to the company. Recommind participated in industry surveys conducted by Deloitte in 2009 and Inc Magazine in 2010, revealing its revenue for the years 2006, 2008, and 2009. The company then spoke to the451 Group, which published a report on August 25, 2010, stating: “[Recommind] predicts 60-90% overall growth for the year – potentially topping even 2008′s 70% growth rate”. If you apply these growth rates to the previously disclosed revenue numbers, it’s simple arithmetic to calculate Recommind’s revenue in 2007, and its revenue forecast for 2010. The data is collated in the table below:

Recommind Revenue 2006-2010

(1)     Inc Magazine’s 5000 List for 2010 ranked Recommind #1334
(2)     From the451 Group: “Recommind rallies with strong growth and more hosted e-discovery traction” by Nick Patience and Katey Wood, August 25, 2010
(3)   Deloitte’s 2009 Technology Fast 500 ranks Recommind #251

I found two things striking about these numbers. First, Recommind’s business clearly hit the wall in 2009, when it grew only 2% at a time when other e-discovery software companies like Clearwell, Exterro, kCura, and others were all growing at a rapid pace. Things appear to have turned around for the company since then, and the 60-90% annual growth expected in 2010 raises it firmly to the middle-tier of industry players.

Second, it’s interesting to note how small these numbers are. From an electronic discovery software perspective, they look even smaller when you consider that Recommind’s expected $23-28 million in 2010 revenue comes from 3 different markets:

1. Enterprise search: For example, the company recently announced that it has been selected by Staples to power search on Stapleslink.com

2. Knowledge management for law firms: This accounts for the bulk of customer testimonials on its website.

3. E-Discovery: Its Axcelerate product has been adopted by a handful of enterprises and law firms for processing, early case assessment (ECA), and review.

If you divide its revenue estimate for 2010 equally across these three markets, it suggests that Recommind’s e-discovery revenue in 2010 is only $7-10 million. That’s much less than many other companies in the space.

What can we take away from all this? First off, you have to wonder if it’s a good idea to disclose this information, since it exposes the fact that Recommind is a lot smaller than many people think. More generally, it’s an interesting case study in how, by selecting the right time period and calculating high percentage growth rates off small numbers, a company can gain recognition despite its small size and erratic growth.

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Yesterday, Clearwell announced a new module for identification and collection, which is available with Version 6 of its e-discovery platform. This sits alongside the existing modules for processing/analysis and review/production, extending Clearwell’s capabilities upstream to a part of the e-discovery process typically done by IT. The new module has already been purchased by GlaxoSmithKline, Nisource, and several other enterprises and government agencies, and the initial response has been incredibly positive. I wanted to say a few words about what led Clearwell to add the Identification and Collection Module, and how it’s different from other solutions.

Over the past few years, I have seen a transformation of the e-discovery software market. Previously, there were no specific people within corporations or government agencies dedicated to e discovery, and no formal budget was allocated to it. As a result, purchase decisions were typically made at the departmental level by legal or information security people who could “find the money” by borrowing from other projects. In stark contrast to that, today most major corporations have people specifically responsible for electronic discovery, and many of them have company-wide initiatives to lower costs by bringing e-discovery in-house. Companies are issuing more and more formal RFPs; performing proof-of-concepts as part of the evaluation process; and creating committees of both legal and IT to make purchase decisions.

Some vendors have sought to play up a “gap” between legal and IT teams when it comes to e-discovery. They manufacture survey information claiming that collaboration and communication between legal and IT is decreasing. Our experience has been exactly the opposite. At corporations like Coca Cola, Home Depot, and hundreds of others, we find close, collaborative relationships between legal teams and the IT professionals dedicated to help them. There’s now a new career path, sometimes called “legal IT” or “e-discovery manager”, for technically savvy IT folks who understand legal’s requirements. I was happy to see at LegalTech this year that legal professionals would often come by our booth with a colleague and say to us, “I brought my IT guy with me because I want him to see this”.

It is precisely because legal and IT are working so closely together that they want a single product to manage all their e-discovery activity. That’s what led us to add the Identification and Collection Module.

Why is offering a single product for everything from identification through production such a big deal? Clearwell’s approach offers two main advantages over alternative solutions. First, like earlier versions of Clearwell, the Identification and Collection Module is very easy to use – so much so that, with IT’s permission, legal could even manage the collection process itself. For example, existing products like Guidance Encase require users to write scripts to create filters for targeted collections; with Clearwell, everything is point-and-click through a simple web UI. That makes identification and collection accessible to non-technical users.

Second, because identification, collection, processing, early case assessment, review and production can now all be done using a single product, Clearwell is able to provide end-to-end reporting through the entire e-discovery life-cycle. For example, Autonomy’s disparate e-discovery products (Introspect, Aungate, etc.) require multiple log-ins, all have different UIs, and different data models. With Clearwell, all of these are the same, giving you complete control over your data – at significantly lower total cost of ownership.

You can sign up for a product demonstration or even evaluate the product for free. Take a look – and leave a comment to let us know what you think.

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