e-discovery 2.0

After more than ten years of IT experience and over a year of experience as an attorney working exclusively with e-discovery, I am delighted to join the E-Discovery 2.0 team.  I am a member of the South Carolina Bar Association and the American Bar Association.  In this and future posts, I will try to bring a practical perspective or view from the trenches to this blog – a look at how to deal with some of the day-to-day problems facing e-discovery practitioners today.  I will begin with a discussion about how to approach the decision to move e-discovery in-house, and although the desire to build a solution “in a day” is tempting (and sometimes precipitated by necessity), a solution that will stand the test of time and provide the greatest ROI requires a bit more planning and care.

E-Discovery can sometimes be thought of as an ailment that requires a quick remedy in the form of software or services.  We continue to be reminded, however, that e-discovery is much more than a fleeting malady; it is an ongoing business problem that must be treated with the same diligence and meticulous execution as regulatory compliance or data security.

So where should the prudent practitioner begin?

Every good IT project manager I have ever worked with always had the same mantra when it came to solving a problem with technology – make sure the business problem has been well defined and establish detailed requirements before venturing into the marketplace.  So, why are so many companies sending out form RFPs containing canned text expecting to find a miracle “end-to-end” e-discovery solution in a relatively short period of time?  The answer, I believe, lies both in the abundance and availability of generic information about e-discovery and the fact that most companies looking to bring e-discovery in-house are already feeling the pain of rising costs and demands on existing staff.  They are, in short, trying to conquer their e-discovery problem in a day.  To truly conquer the problem, it should be attacked from the areas causing the greatest pain and expense first, and those areas should be thoroughly examined using proven project management techniques.

If e-discovery is indeed a significant business process, then companies must address that problem using the same proven methods that they have been using for years to solve other business problems.  For example, every company today, believe it or not, has an e-discovery solution in place.  If the company was sued tomorrow, and there was a significant e-discovery component to the matter, the company would likely react in a certain way based on a number of factors – hire outside consultants, work with a litigation support provider, rely on their outside counsel to coordinate e-discovery, etc.  So why not predict that reaction, analyze it, and determine where the greatest expense and pain lies in that process?  From that data, the company can decide which portions of the e-discovery workflow, if any, should be brought in-house, and it can seek out best-of-breed solutions rather than settling on the first end-to-end vendor that comes knocking.  The next step is to rely on those time-honored project management edicts – define the business problem and establish concrete requirements.  Then the company will be armed with the most powerful weapon in the marketplace – the power to distinguish.

The burning question, then, is how does the company decide which portions of the e-discovery workflow to bring in-house?  The answer is relatively simple: you follow the money (right out of the front door in many cases).  Where is the company spending most of its e-discovery budget, and are those portions of the workflow good candidates to bring in-house?  Typically, processing data and review are the most expensive phases of any e-discovery project.  The logic here is simple: if you send 100GB of ESI to outside counsel to review, it will be more expensive and time-consuming than sending only 20GB.  Thus, processing, analysis, and first-pass review are great candidates to be brought in-house from an ROI perspective, and bringing these phases in-house could facilitate a form of early case assessment given the right solution.

Now, suppose a company decides to bring processing, analysis, and first-pass review in-house, also leveraging their chosen technology solution for early case assessment.  Now what?  The process can simply be repeated.  Given the solution implemented, what happens if we get sued tomorrow?  What other portions of the e-discovery workflow will need to be outsourced and how will we do that?  What will that cost?  Is there a better way?  The company can continue this process until it determines that either all portions of its e-discovery workflow have been successfully brought in house or the ROI of bringing additional portions of the workflow in house does not justify additional projects at that time.  This analysis should then be repeated on a regular basis to ensure the current solution is still meeting the needs of the organization and that market or industry shifts have not created additional opportunities for cost savings.

Although an effective and defensible in-house e-discovery solution likely cannot be built in a day, a carefully crafted plan of attack and a thorough understanding of the organization’s particular needs can strategically position it for long term success.

As a long-time reader of The Economist, I was excited to find that this week’s edition writes at length about the exponential growth in electronically stored information (ESI), and how people are using technology to manage it.  I believe this is one of the most significant “mega-trends” impacting our economy, and I was thrilled to see it recognized by a mainstream publication. But when I read the 14-page special report, I was disappointed to find that its analysis of the legal and regulatory implications of “the data deluge” is really weak.

The survey does a good job of teeing up the issue:

The world contains an unimaginably vast amount of digital information which is getting ever vaster ever more rapidly. This makes it possible to do many things that previously could not be done: spot business trends, prevent diseases, combat crime and so on. Managed well, the data can be used to unlock new sources of economic value, provide fresh insights into science and hold governments to account.

It goes on to talk about how companies like Walmart, which has 2.5 petabytes of point-of-sale transaction data, is using business intelligence software to analyze the 1 million transactions it does every hour. By doing so, Walmart is able to improve the efficiency of its supply chain and the effectiveness of its marketing. The article also describes how companies like Amazon and Google use web analytics software on click stream data to improve their services.

What’s missing is an equally intelligent analysis of the legal and regulatory implications of all this data. The move from paper to ESI (email and files) has created a user-generated, written record of everything that happens in a company. That’s incredibly helpful when, after the fact, questions or disputes arise. Rather than relying on incomplete recollections, courts and regulators can now consult a written record – one where every document is time-stamped and very often attached to a person’s name via email. That enables judges and regulators to get better information which, in turn, leads to better decisions. It’s hard to quantify the value of that, but there’s no doubt it’s substantial.

There is, however, a catch. Because the volume of ESI is so great, it’s really expensive to gather, sift through, and then produce information. Add the requirement that the process needs to be defensible (i.e., easily explained in court), and the whole thing gets really expensive really fast. Hence the need for electronic discovery software: it’s the only cost-effective way for companies to manage their ESI from a legal and regulatory perspective.

That’s why I believe e-discovery software will be as big a category as web analytics software or business intelligence software – it’s a different side to the same coin. Or, more specifically, a different dimension to managing digital information stores which, as The Economist points out, are growing tenfold every five years.

Update: Nick Patience at The 451 Group has also posted on this topic, at almost exactly the same time as me.

Judge Shira Scheindlin is famous for a number of things in her electronic data discovery opinions, but one notable aspect is her use of quotes to set the tone for her landmark decisions.  In Zubulake she quoted Cool Hand Luke (“What we’ve got here is a failure to communicate.”) and in her latest opinion she quotes George Santayana (”[t]hose who cannot remember the past are condemned to repeat it.”).

Pension Committee of the Univ. of Montreal Pension Plan, et al., v. Banc of America Securities, LLC, et al. (“Pension Committee”) is generating a lot of buzz and reminds me of the Yogi Berra quote: “this is like déjà vu all over again” … particularly when thinking back to her landmark Zubulake decisions.  In this opinion, Judge Scheindlin of the Southern District of New York pens another potential electronic discovery classic, while simultaneously paying homage to her past opus.

Before we get into the “how” and “what” of the 85 page opinion, it’s probably reasonable to posit the “why” question, particularly when Judge Scheindlin and her team spent 300 hours on the mammoth undertaking.

“I, together with two of my law clerks, have spent an inordinate amount of time on this motion. We estimate that collectively we have spent close to three hundred hours resolving this motion. I note, in passing, that our blended hourly rate is approximately thirty dollars per hour (!) well below that of the most inexperienced paralegal, let alone lawyer, appearing in this case. My point is only that sanctions motions, and the behavior that caused them to be made, divert court time from other important duties-namely deciding cases on the merits.”

So, why was this fact pattern worthy of the inordinate amount of briefing time (regardless of the inconceivably low $9,000 fee)?  A skeptic might postulate that Judge Scheindlin has been out of the limelight lately, often being eclipsed by Judges Peck and Grimm.  It’s also been a year since her Securities and Exchange Commission v. Collins & Aikman Corp., opinion and it’s likely that she wanted to hearken back to the good ole Zubulake days, where she had the ear of the entire electronic discovery world.  Her tribute is less than subtle, as she even subtitles Pension Committee: “Zubulake Revisited: Six Years Later.”

Less skeptically, however, she likely sees a host of matters rife with electronic data discovery disputes caused by the bar’s lack of e-discovery savvy.  It seems plausible that Pension Committee is a way for her to coalesce leanings from Zubulake (and beyond) into one, clear expression of legal duties.

Given the length of her opus, we won’t dissect the entire opinion as Ralph Losey did (chockablock with flying gerbils), but will instead focus in on the enduring and potentially controversial sections.  As way of background, the dispute at hand focused on claims by a group of investors who brought an action to recover losses of 550 million dollars stemming from the liquidation of two British Virgin Islands based hedge funds.  Unlike many typical e-discovery disputes, this instant action focused on the conduct of the plaintiffs as they attempted to deal with the often murky landscape of ESI preservation, collection and production.  Fortunately, Judge Scheindlin provided much needed foreshadowing to both readers and bloggers alike in her opening comments:

“Because this is a long and complicated opinion, it may be helpful to provide a brief summary up front. I begin with a discussion of how to define negligence, gross negligence, and willfulness in the discovery context and what conduct falls in each of these categories. I then review the law governing the imposition of sanctions for a party’s failure to produce relevant information during discovery. This is followed by factual summaries regarding the discovery efforts–or lack thereof–undertaken by each of the thirteen plaintiffs against whom sanctions are sought, and then by an application of the law to those facts. Based on my review of the evidence, I conclude that all of these plaintiffs were either negligent or grossly negligent in meeting their discovery obligations. As a result, sanctions are required.”

The finding of sanctions aside, Judge Scheindlin goes out of her way to crystallize duties and identify the type of conduct can cause an e-discovery breach.  Despite significant caveats about the fact intensive nature of each discovery dispute, she nevertheless proffers the following synthesis, which has caused no shortage of consternation amongst electronic discovery practitioners and commentators:

“After a discovery duty is well established, the failure to adhere to contemporary standards can be considered gross negligence. Thus, after the final relevant Zubulake opinion in July, 2004, the following failures support a finding of gross negligence, when the duty to preserve has attached:

• to issue a written litigation hold;
• to identify all of the key players and to ensure that their electronic and paper records are preserved;
• to cease the deletion of email or to preserve the records of former employees that are in a party’s possession, custody, or control;
• and to preserve backup tapes when they are the sole source of relevant information or when they relate to key players, if the relevant information maintained by those players is not obtainable from readily accessible sources.

[bullets added]

Assuming Pension Committee is followed beyond the bounds of the Southern District of New York, which is still speculative at this stage, it certainly means sleepless nights for corporate legal departments with litigation hold and preservation processes that are less than “contemporary.” While it’s hard to argue with the theoretical appropriateness of the above items, it’s questionable how practical these steps are, particularly for large enterprises that may have dozens (or hundreds) of litigation holds in place at any one point in time.  Multiply the numbers of holds times the disparate types of ESI and the complexities of the IT infrastructures and Judge Scheindlin’s seemly innocuous mandate can quickly become a tactical minefield, rife with sanctions possibilities.  Unfortunately, with the rapid proliferation of social media usage and cloud computing, this already complex paradigm is only going to become more vexing in the near term.

Given that the number of struggling enterprises is legion, it does certainly beg the question whether more folks than not can live up to this new “reasonableness” standard.  If not, this articulation may materially raise the bar and result in a demonstrable increase in spoliation motions, if that were possible.  Already, spoliation charges are often referred to as a “case within the case” by many, something which Judge Scheindlin reluctantly acknowledges.

“Finally, I note the risk that sanctions motions, which are very, very time consuming, distracting, and expensive for the parties and the court, will be increasingly sought by litigants. This, too, is not a good thing. For this reason alone, the most careful consideration should be given before a court finds that a party has violated its duty to comply with discovery obligations and deserves to be sanctioned. Likewise, parties need to anticipate and undertake document preservation with the most serious and thorough care, if for no other reason than to avoid the detour of sanctions.”

[Footnotes omitted]

Perhaps ratcheting up of the e-discovery standard of care can be rationalized as aspiration in nature.  Yet, it is hard to see how it reflects the actual business practices of many in corporate legal departments, particularly when the actions/inactions occurred (as in this case) several years ago when nascent notions about best practices were still evolving.

“The age of this case requires a dual analysis of culpability–plaintiffs’ conduct before and after 2005. The Citco Defendants contend that plaintiffs acted willfully or with reckless disregard, such that the sanction of dismissal is warranted.  Plaintiffs admit that they failed to institute written litigation holds until 2007 when they returned their attention to discovery after a four year hiatus. Plaintiffs should have done so no later than 2005, when the action was transferred to this District. This requirement was clearly established in this District by mid2004, after the last relevant Zubulake opinion was issued. Thus, the failure to do so as of that date was, at a minimum, grossly negligent.”

[Footnotes omitted]

Perhaps my biggest issue with this decision is that it (perhaps myopically) places an inordinate level of importance and awareness of the Zubulake decisions, particularly for those outside Judge Scheindlin’s district.  This lawsuit was initially brought in Florida and “[w]hile a duty to preserve existed in the Southern District of Florida at the time this action was filed, no court in the Eleventh Circuit articulated a ‘litigation hold’ requirement until 2007.”  In my mind, it hardly seems fair to retroactively imbue the Plaintiffs with this type of comprehension and duty.

At the end of the day, and despite quibbling with the equities involved, Judge Scheindlin has largely succeeded in moving the e-discovery ball forward.  The opinion will likely be one of the most widely read cases in 2010 and deservedly so since it describes with precision and clarity the burdens and penalties in the evolving area of ESI spoliation.  The main question will be to what extent will other jurisdictions adopt the same culpability framework and extend the reach of Pension Committee just as happened with the Zubulake line of cases.

Certainly, it could be “déjà vu all over again.”

Yesterday, I explained what I think Iron Mountain’s acquisition of Mimosa says about valuations in the archiving / e-discovery industry. Today, I will address the other questions that people commonly ask about the deal – why did Iron Mountain (Stratify) do it, and what does it mean for the electronic discovery industry?

In their letter to customers announcing the deal, Ramana Venkata (President of Iron Mountain Digital) and TM Ravi (CEO of Mimosa) point to two main benefits from combining the companies. On the archiving side, Iron Mountain can now offer Mimosa as an on-premise solution in addition to its existing hosted service. If it can integrate the two, then it can offer “location-independent” archiving which “will help you transparently and seamlessly move data between the on-premises data center and the cloud.” One additional benefit to Iron Mountain, which is not mentioned in the letter, is that it could even leverage Mimosa’s technology for its hosted offering, and replace Mimecast who it currently pays to provide this service.

On the e-discovery front, Iron Mountain now has a suite of 2 products and 1 service: Mimosa NearPoint for collection and preservation; the Stratify eVantage appliance for ECA (Early Case Assessment); and, Stratify Legal Discovery Services for review and production. This makes Iron Mountain a competitor to Autonomy, Clearwell, EMC/Kazeon, and everyone else listed in Gartner’s recent MarketScope covering e-discovery software companies. I’m sure the hope is that there’s synergy between the different products so that, for example, Mimosa’s experience in on-premise software will help Iron Mountain drive adoption of its new Stratify eVantage appliance behind the firewall.

Will the combination work? As Barry Murphy (a former Mimosa employee) points out in his excellent post on this topic, a lot depends on execution. But there are at least 2 reasons to be doubtful. First, the competition is far ahead, and will be hard to catch. As Barry, points out: “Iron Mountain will have a tough road ahead to compete with the likes of Autonomy, which bought successful archiving company Zantaz and has now had almost two years of development time for its hybrid on-premise/SaaS archiving offering.” The same is true on the e-discovery side, where companies like Clearwell have hundreds of corporate customers for on-premise ECA and review.

The second reason to doubt why the combined company will be any more successful than either were before the acquisition is that Mimosa and Iron Mountain Digital serve very different markets. Most of Mimosa’s customers are small to medium sized companies; most of Iron Mountain Digital (ie., Stratify)’s revenue comes from law firms. So it’s not obvious that by combining them you create a company well-suited to serving large corporations, which is the sweet spot for e-discovery and archiving.

It will be interesting to watch events unfold.

On February 21, Iron Mountain Digital (formerly Stratify) announced it had acquired Mimosa Systems for $112 million. The deal was widely rumored at LegalTech New York last month, so it came as no surprise. I know several people closely connected with Mimosa and I’m happy for them that the company has found a good home.

From an industry perspective, there are two interesting questions about this deal, and I’ll cover the first of them in this post: what does the price suggest about the valuation of archiving/e-discovery companies?

To answer that question, you have to consider Mimosa’s history and financial performance. The company was founded in December 2003, and proceeded to raise $51.5 million in venture funding over 5 years from Clearstone Venture Partners, August Capital, JAFCO, Mayfield, and few others. Initially, it had great traction in the market and, at various industry events around Silicon Valley, I would often hear about how well it was doing. But then, as often happens with startup companies, Mimosa lost its way, and the growth slowed. I don’t know exactly why that happened; it could have been the recession, competition from Microsoft Exchange 2010’s new archiving features, or something completely different. But the signs were unmistakable: there were layoffs, pay cuts for the remaining staff, and (according to Venture Source) a series of 4 small debt financings totaling $10.4 million between May 2009 and January 2010.

The deal documents, which were sent out to all shareholders to approve the acquisition, reveal the financials. In 2009, Mimosa generated $20.6 million in revenue and $32.7 million in expenses, meaning it was burning about $1 million dollars every month.

So, to answer the question that many in the archiving / e-discovery community are asking, that means Iron Mountain Digital paid 6 times trailing revenue to acquire Mimosa. That’s about the same multiple it paid for Stratify in October 2007, about the same multiple Dell paid for MessageOne, and a lower multiple than EMC recently paid for Kazeon. It is reasonable to expect that the revenue multiple would have been much higher if Mimosa had been profitable, or growing more quickly.

Overall, I think this is a great outcome for Mimosa’s shareholders who must be delighted. My congratulations to them, and to the entire Mimosa team.

Next week, as most of you know, is the Superbowl of legal technology events.  And, so if this is a newsflash, you’ve probably found this blog by searching for the European Cockpit Association (“ECA”).  If on the other hand you have an unnatural affinity for the other ECA – early case assessment — then you’ve probably been planning to head to this year’s LegalTech show immediately after the last one ended.

For fear of gratuitous self promotion, I will be moderating several panels with e-discovery pundits on the first day. Akin to the upcoming Superbowl, these “Supersessions” will be chockablock with EDD luminaries and it’ll be all I can do to get a word in edgewise.  Below is the schedule. Feel free to pre-register since we expect a packed house.

1:00 – 2:00 pm: The E-Discovery Expert Panel.  This session will discuss best practices in e-discovery. Panelists include:

• Jay Brudz, senior counsel, legal technology at GE;
• Ron Best, director of legal information systems at Munger, Tolles and Olson, LLP, and
• Brian Hill, senior analyst at Forrester Research, Inc.

2:15 – 3:15 pm: Strategies for Transparency and Cooperation in E-Discovery. This session will discuss how to move toward a more cooperative resolution of legal disputes.  Speakers include:

• Sean Gallagher, partner at Hogan & Hartson, LLP and
• Lauren Schwartzreich, associate at Outten and Golden, LLP

3:30 – 4:30 pm: Ask the E-Discovery Doctors. The “doctors” will take questions from the audience and provide their prescriptions for a wide-range of e-discovery topics.

• Craig Ball, attorney and president, Craig D. Ball, P.C.
• Ralph Losey, attorney and co-chair of E-Discovery Practice Group, Akerman Senterfitt,
• George Socha, attorney and president, Socha Consulting, LLC

While it’s probably not fair to pick a favorite session, my sense is that the last one will be the most anarchical, chaotic, and stimulating, assuming that the speakers don’t take the faux Doctor thing too far (yes, they will be in scrubs).

Please come by to get your recommended daily dose of e-discovery insights.

There are many barriers preventing the creation of a new product category, especially in the legal industry. The biggest is inertia, since most people prefer to leverage the tools they have, both on grounds of cost (why spend money on something new?) and familiarity (who wants to spend time learning a new workflow?). A second barrier is risk-aversion, since the consequences of errors in the legal world can be severe for all concerned. A third is insensitivity to cost, since service providers simply pass on expenses to their corporate clients. When safety and risk mitigation rank above efficiency on the hierarchy of needs, there’s not much incentive to try new technology.

Yet, despite all these barriers, in the past few years “early case assessment” (ECA) has emerged as a product category. In a typical workflow, ECA products are used after collection and before review, to assess case facts and estimate the scope of electronic discovery. Whereas collection typically occurs within the corporation, and review is usually conducted by outside counsel, ECA bridges the two, and can occur either in-house or via an outsourced model. Either way, it leads to better case strategies, more effective discussions at the “Meet and Confer”, and fewer nasty surprises in downstream review.

How has this happened? Why has ECA been able to establish itself as a product category despite the barriers? There are two answers to that question, each of which is completely different.

One answer is that ECA possesses the unique combination of characteristics needed to create a new category. It capitalizes on macro trends, such as the growth in electronically stored information which makes it impossible to review every document, as occurred in a paper-based world. It’s disruptive, meaning it has completely new functionality, such as transparent search, that other products do not. And, it reduces the overall expense of litigation discovery, by giving savvy litigators the information they need to make better decisions earlier in the case. This cocktail of factors led to initial market traction from sophisticated corporations and law firms, which led to positive word-of-mouth and analyst coverage, which, in turn, educated the broader the market.

The second answer takes the opposite perspective: ECA may be a product category but, because of the barriers listed above, it’s a nascent one. No ECA is performed on the vast majority of data. Instead, the traditional workflow is still used in most cases, whereby service providers blindly run keywords, load the resulting dataset into a review platform, and hire a legion of contract attorneys to sift through it. This is changing over time, but new methodologies do not catch on overnight.

In my view, both answers are correct. Today, ECA is growing rapidly as a part of a workflow that emphasizes data minimization to lower costs. That’s spurred on by corporations who are acutely cost sensitive and increasingly taking control over the processing, analysis, and review phases of the e-discovery process. But inertia remains a huge factor, and ECA is still a small fraction of the total market.

From a historical perspective, this is to be expected. Five years ago, virtually no one did ECA; five years from now, everyone will do it, just as they all do collection and review. The only open questions are how quickly we move from one state to the other, and who will benefit from the change.

Recently, I attended the Sedona Conference’s annual meeting in Atlanta and, amongst other interesting topics, was the discussion of local rules developments and in particular the Seventh Circuit’s new Electronic Discovery Pilot Program (“Pilot Program”).  The Pilot Program was launched October 1, 2009 and seems to be a model for collaboration, since it was developed by eliciting input from a number of disparate groups:

“(a) continuing comments by business leaders and practicing attorneys, regarding the need for reform of the civil justice pretrial discovery process in the United States, (b) the release of the March 11, 2009 Final Report on the Joint Project of the American College of Trial Lawyers Task Force on Discovery (“Task Force”) and the Institute for the advancement of the American Legal System at the University of Denver (“IAALS”), and (c) The Sedona Conference® Cooperation Proclamation.”

The impetus of the Pilot Program was the “broken” nature of the electronic discovery process with the belief that better collaboration and cooperation would certain help remediate the situation.

“The goal of the Principles is to incentivize early and informal information exchange on commonly encountered issues relating to evidence preservation and discovery, paper and electronic, as required by Rule 26(f)(2). Too often these exchanges begin with unhelpful demands for the preservation of all data, which often are followed by exhaustive lists of types of storage devices. Such generic demands lead to generic objections that similarly fail to identify specific issues concerning evidence preservation and discovery that could productively be discussed and resolved early in the case by agreement or order of the court. As a result, the parties often fail to focus on identifying specific sources of evidence that are likely to be sought in discovery but that may be problematic or unduly burdensome or costly to preserve or produce.”

What I really like about the Pilot Program is that it strives to be both prescriptive and practical, which should hopefully avoid the type of ambiguity often exploited by obstreperous counsel.  For example, there is an entire section on early case assessment (ECA) principles, which require discussion of:

• Production issues
• Identification of electronically stored information (ESI)
• The scope of preservation
• The meet & confer process

There’s also the relatively novel requirement that counsel designate an e-discovery “liaison” to work with the parties to coordinate and flesh out germane e-discovery issues.  Regardless of whether the e-discovery liaison is an attorney, a third party consultant, or an employee of the party, the e-discovery liaison(s) must:

“(a) be prepared to participate in e-discovery dispute resolution;

(b) be knowledgeable about the party’s e-discovery efforts;

(c) be, or have reasonable access to those who are, familiar with the party’s electronic systems and capabilities in order to explain those systems and answer relevant questions; and

(d) be, or have reasonable access to those who are, knowledgeable about the technical aspects of e-discovery, including electronic document storage, organization, and format issues, and relevant information retrieval technology, including search methodology.”

Needless to say, this requirement alone should make marked improvements in the e-discovery dialogue, which unfortunately seems like it’s occurring (literally) among participants who both speak different languages and don’t realize it.

Finally, what makes the Pilot Program unique is that its Principles will be subjected to testing during the phases of the Pilot Program, which is scheduled to end on May 1, 2010 (for the first phase).

This project certainly seems like it’s on the right track and pending feedback from the bench and bar, it could serve as a model for local jurisdiction everywhere.

We’ve devoted a number of posts to the topic of ECA, ranging from a quest to define the acronym, all the way to the cost savings benefits of the ECA approach.  And, while there seems to be relative unanimity around the beneficial aspects of ECA, there still seem to be a number of myths and misconceptions.  So, ala the Mythbusters, we’ll run these myths through the gauntlet to see which survive scrutiny.

Myth #1: ECA Is Only Valuable if Performed “Early”

Certainly, ECA is best leveraged and will be most valuable when performed at the outset of litigation.  As has been stated before, it has value on two primary fronts, the first being the ability to scope electronic discovery (both in terms of cost and timelines).  The next is the more traditional value proposition where ECA is used to get an understanding of the case facts to enable the strategic decision making process.

As such, there are scenarios where an ECA methodology would still generate value even if performed “later” in the mater.  For instance, with bifurcated, class action litigation initial discovery about the class may occur months before discovery on the merits.  In this instance using a later ECA approach would still make sense since discovery about the case facts may not have been possible earlier on.  Similarly, “late” ECA may still hold value when new parties or claims are added to an existing lawsuit, or when there’s a substantial change in case direction, data, or custodians.

Myth #2: ECA Is Only Performed With Technology

Sure, enterprise grade ECA products  are an important part of the mix, but the products won’t perform an ECA by themselves.  There’s just too much subjective decision making involved in the assessment process.   Therefore, the right people are critically important — not only in terms of experience performing this analytical work, but also in their ability to capably testify about the underlying decision making process.  It’s also important to be able to follow a repeatable and defensible processes to show that the “recipe” used was aligned with industry best practices and wasn’t ginned up for a particular engagement.

Myth #3: ECA Only Works With Large ESI Volumes

Yes, ECA methodologies makes a lot of sense for large, bet-the-company matters because even modest savings when processing, analyzing and reviewing terabytes will easily approach six to seven figures.  However, smaller matters will still benefit from better budgetary insights that facilitate informed matter management.  And, in a way there’s almost more benefit from being able to quickly evaluate (fight/settle) smaller suits since the transactional costs are so high relative to the amount in controversy.  In both scenarios it’s important to view objective case data to prepare for meet & confer conferences.

Myth #4: Clients Don’t Want To Pay for ECAs

Many end clients (corporate counsel typically) have a similar litigation mindset:  i.e., the desire to avoid costs for as long as possible.  While avoiding early costs makes some sense on its face, the fact is that spending a small amount of money early on (for budgetary and case assessment purposes) will in most instances reduce the overall litigation budget.  It’s the classic, “you can pay me now, or pay me later” situation.

Counsel must understand that while some costs are incurred early in the process the benefits are crystal clear: i.e., determining customized case strategies early in the matter to decide whether to fight or settle.  Similarly, corporate clients must recognize that the benefits outweigh the costs and require their litigation counsel to include this process in every significant matter.

This illustration highlights how an initial ECA investment actually pays for itself over the life of the litigation.

Myth #5: ECAs Begin when the Complaint is Filed

Many newbie ECA practitioners may think that the timing for an ECA approach would start when the complaint is filed.  And, while this isn’t patently ridiculous, I think the better approach is to begin the clock at the time litigation becomes “reasonably likely” — versus later dates such as when the complaint is filed or when discovery is propounded.  This trigger is also the same for trigger preservation obligations and a host of interrelated activities such as ESI “identification,” which makes the matter kick-off more synchronized.

For more information about ECA, watch a recording of our recent webinar — E-Discovery MythBusters: Debunking Common Myths About Early Case Assessment.

Earlier today, Clearwell announced Version 5.0 of its e-discovery platform. Unlike prior versions which focused on processing, early case analysis, and first-pass review, this release extends Clearwell’s capabilities in two directions: upstream, by adding pre-processing; and downstream, by adding document-by-document review and production. I wanted to say a few words about what motivated these changes, and why the new release greatly increases Clearwell’s value to enterprises, government agencies, law firms, and litigation support service providers.

Over the past year, the benefits of early case analysis and first pass review have driven hundreds of companies to adopt Clearwell. They have saved huge amounts of money and time, and often become evangelists for the product. But despite that, we continually hear that the overall e-discovery process remains expensive, unpredictable, and risky. When we investigated why, we found the problem lies less in the features of the products being used than in the number of products used.

Once data is collected, a typical e-discovery process today may involve as many 4 different tools: one for filtering by custodians or date range, another for de-duplication and keyword search, another for load file creation, and yet another for review and production. Each time data moves between these tools, and there’s a handoff from one to another, there’s the risk that document counts do not tie out, data does not convert correctly, or any of a hundred other things go wrong. This risk is magnified by the fact that e-discovery is highly iterative: custodians are often added or keywords changed as new information comes to light, forcing people to redo many steps of the process. As a result, timelines are unpredictable and it’s hard to stick to a budget, even with extensive project management which itself is not cheap.

Since the problem lies in the handoffs between different products, it’s impossible to solve this problem by making any one part of the process better. The only solution is to have a single product that can manage collected data from soup (filtering / pre-processing) to nuts (production). Prior to today’s announcement, that product did not exist: there was no single, integrated product that could do everything from process data to review and produce it. And that, in summary, is why Clearwell is releasing Version 5.0.

With Clearwell’s new product, there are no handoffs, no uncertainty about how long it will take to export out of one tool and into another. There’s no need to cobble together a string of different products or train lawyers on multiple different interfaces and workflows. As a result, the risks of cost overruns or missed deadlines are greatly reduced.

To our mind, this is just part of a natural evolutionary process that affects many markets, not just e-discovery. Who wants to carry a Palm Pilot, iPod, and a mobile phone when you can carry a single device like the iPhone? Who wants a cable receiver and a TiVo when you can get both in a single set-top box?  As markets mature, there develops a logical package of functionality that customers prefer to buy from a single, integrated provider.

You can sign up for a product demonstration at our website, or come see the product at ILTA next week (Booth 606). Take a look – and let us know what you think.