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eDiscovery Jumping Back In-House

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Monday, November 16, 2009

eDiscovery Jumping Back In-House

Beyond vendor predictions and the ancedotal evidence, analyst spending reports and surveys are now begining to indicate that eDiscovery is jumping back in-house.

Gartner predicted that spending on eDiscovery software will grow to more than $1 billion in 2009, up 33 percent from 2008, with much of the spending comming from moving eDiscovery in-house. Bud­gets for man­ag­ing elec­tronic data tripled this year at average-​​sized U.S. com­pa­nies, accord­ing to a study, as busi­nesses braced for an influx of law­suits stem­ming from a reces­sion that’s been partly blamed on fraud. As I have reported on this Blog, I find Gartner's prediction of more spedning in 2009 to be reflective of what I am seeing in the industry worldwide as long as you view the increase from the perspective of increases in in-house IT spending to address the overall need to provide next generation document mangement infrastructure and Governance, Risk and Compliance (GRC) with support for eDiscovery being a willing benefactor.

To add even more credibility to the arguemnt, in addition, a recent survey by Kroll Ontrack Inc indicated in that com­pa­nies spent about $1.29 mil­lion each on man­age­ment of elec­tronic data this year, com­pared with $437,000 last year, accord­ing to the sur­vey by con­sult­ing com­pany.   That is almost a 300% increase. The data, released  in late October 2009, were based on inter­views in June, July and August with in-​​house lawyers and tech­nol­ogy spe­cial­ists at 231 U.S. and 230 U.K. companies.  Again, most of this additional expenditure is probably not showing up as an increase in spending on eDiscovery.

The most recent evidence was reported on November  16, 2009 on the NearShore Journal Site in a press release by Clearwell tittled "Survey Finds 73 Percent of Enterprises Plan to Bring E-Discovery In-House in Response to Rise in E-Discovery Requests".  In the press release, Clearwell announced findings from a survey conducted in partnership with analyst firm Enterprise Strategy Group (ESG). The survey, titled “Trends in Electronic Discovery: A Market Perspective” quantifies both the rise in e-discovery and litigation over the past year. Additionally, the survey findings reinforce the need for increased enterprise readiness to manage the expected growth in volume of cases in 2010.  This is probably the most eDiscovery centric indication of the increase in spending as I would assume that Clearwell was looking for evidence that corporations were spending more money on Early Case Assessment (ECA) solutions

I realize that not everyone in the eDiscovery industry is seeing these trends and reaping the rewards of this increase in speding.  However, the spending is real, it has just jumping in-house and may not be listed under a line item called eDiscovery.

Prediction: With the impdening crash of the worldwide commerical real estate market and the subsequent institutional  failures and eventual legal actions, I see 2010-2012 being even bigger. However, it is not clear if these will be handled in-house or by law firms.  I think that this may be one last bite at the eDiscovery processing apple outside of the corporation.

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