$1.2 Billion eDiscovery Market by 2014

A press release as posted on Marketwire on October 11, 2010, indicates that a very recent study by The Radicati Group, titled, “eDiscovery Market, 2010-2104”, predicts that the eDiscovery market will reach $1.2 billion in sales by 2014.

This is considerably less than the $2.8 billion market size for 2009 as indicated in the The 2010 Socha-Gelbmann Electronic Discovery Survey.

And, unless we assume no growth over the next few year, less than the $1.2 billion forecast by The Gartner Group earlier this year.

I am sure that there are differences in the exact revenues sources that these studies are looking at and also differences in statistical methodologies.  However, under I any circumstances, eDiscovery is a big market and I believe from personal experience that it should continue to grow.

Over the past 12 months I have talked to numerous CIOs and other “C” level information technology executives from the Global 2000 that have jumped into the eDiscovery discussion internally, added the requirements to their radar and expect to budget funds to cover infrastructure to support bringing some aspects of eDiscovery in-house.

According to a somewhat related study that adds an even more interesting twist to the expected growth and direction of the eDiscovery market,  The Cowen Group recently conducted a study of the AmLaw 200, the highest-grossing law firms in the United States, and found 87 of the 200 currently have internal eDiscovery practice groups.  According to David Cowen, founder of the Cowen Group, the results signify the importance of reliable eDiscovery solutions and practices for firms of all sizes and specialties.

The Cowen Group study goes on to state that many of the firms with practice groups reported that their current and prospective clients showed interest in their services due to the presence of the eDiscovery experts. However, the report also found a number of organizations with practice groups still do not have the adequate IT and human resources required to fully support the initiative.

"These findings are significant for corporations who require law firms with legitimate eDiscovery experience," said David Cowen, founder of The Cowen Group. "Many firms realized that they needed to establish an eDiscovery practice group to market themselves to savvy clients, but far fewer made the necessary investments in people, process and technology to develop a group with true eDiscovery expertise."

To improve the standards of eDiscovery use and practice, Cowen expects to release an essential guide for firms planning to implement practice groups.

Having talked to partners from most of the AMLaw200 over the past 12 months, my take is that they are seeing their corporate clients either already brining eDiscovery and associated activities in-house or planning to do so over the next couple of years.   I also have heard time and time again that many of these partners are pleased to see this trend as they never wanted to be in the IT business in the first place.

Summary Questions I have a few questions about the results these various studies:

1.  Is the eDiscovery market in fact growing?
2.  Who is buying? Is is the Global 2000 or the AMLaw200
3.  Are  per unit eDiscovery costs coming down?  And, if so, is the overall cost of eDiscovery going up because of the accelerating increase in the amount of ESI?

The full text of the Radicati Group press release is as follows:

The latest study by The Radicati Group, "eDiscovery Market, 2010-2014," offers an in-depth analysis of the worldwide market for eDiscovery solutions. The study includes market trends, vendor revenue market share, market size and four-year forecasts, and breakouts by region.

eDiscovery solutions enable organizations to identify, collect, analyze, process, and present data stored in various corporate repositories. The data may be collected in response to lawsuits, internal investigations, or regulatory compliance requests. 

eDiscovery solutions today range from custom-built for each individual customer, to pre-packaged solutions that work out-of-the box in less than an hour. About 80% of all eDiscovery solutions are deployed by legal departments of large organizations, and the remaining 20% by law firms. 

This study includes an analysis of leading players in the eDiscovery market, including: Anacomp, Autonomy, CaseCentral, Clearwell, EMC, Guidance Software, Iron Mountain (Stratify), Recommind, StoredIQ, Symantec, and others.

To order a copy of the study, or to subscribe to our market research services, visit our website at http://www.radicati.com/, or call Todd Yamasaki at (650) 322-8059 begin_of_the_skype_highlighting   (650) 322-8059 end_of_the_skype_highlighting.

About The Radicati Group, Inc. The Radicati Group is a leading technology research and advisory firm focused on all aspects of email, security, email archiving, regulatory compliance, wireless technologies, web services, instant messaging, unified communications, social networking, and more. The company provides both quantitative and qualitative information, including detailed market size, installed base and forecast information on a worldwide basis, as well as detailed country breakouts.

The Radicati Group works with corporate organizations to assist in the selection of the right products and technologies to support their business needs, as well as with vendors to define the best strategic direction for their products. We also work with investment firms on a worldwide basis to help identify new investment opportunities.

The Radicati Group, Inc. is headquartered in Palo Alto, CA, with offices in London, UK.

Labels: Autonomy, Clearwell Systems, eDiscovery, Gartner, Recommind, Socha-Gelbmann Electronic Discovery Survey, StoredIQ

posted by Charles Skamser @ 10:35 AM 1 Comments

The Cost of eDiscovery

As we approach the two(2) year anniversary of the December 2006 changes to the Federal Rules of Civil Procedure (FRCP), it has been interesting and somewhat educational to follow the tremendous confusion and the dramatic changes in the cost of processing Electronically Stored Information (ESI). As I have been claiming, the changes to the FRCP and the subsequent requirements to utilize new technology to meet these changes, is a classical example of a market paradigm shift causing chaos and therefore the opportunity for the free market system to run wild. And, as George Socha and Tom Gelbmann report in the 2008 Socha-Gelbmann Survey, commercial expenditures on Electronic Data Discovery (EDD) topped $2.7 billion in 2007 , up 43 percent from 2006, and that they predict that they will grow by 21 percent, 20 percent and 15 percent in 2008, 2009 and 2010 which equates to a $4.5 billion market at the end of 2010. As a point of comparison, Gartner Says "Worldwide IT Spending On Pace to Surpass $3.4 Trillion in 2008".

Standard EDD Fees
In a traditional electronic data discovery (EDD) project, costs break down along the following lines: (1) The cost of collecting data; (2) the cost of processing data from its native format into a format that can be loaded into an electronic document review system, and: (3) the cost of reviewing the data. Please note that according to the Fourth Annual Fulbright Litigation Trends Survey, document review accounted for 30 to 50 percent of all litigation costs. So, the current trend is to reduce the amount of data that has to be reviewed and to also reduce the actual review costs.

Manual Data Collection and Computer Forensics: The cost of manually collecting data and performing computer forensics is billed at an hourly rate plus expenses. In 2007, rates ranges from $350 - $750 per hour and have dropped to $250-$500 per hour or even lower depending upon the complexity of the project.

EDD Processing: EDD Processing or what is more commonly known as electronic data discovery (EDD) includes loading the data onto an EDD platform, extracting and "flattening" attachments and embedded files, converting the data to a readable format, reducing the volume of the data by culling it down based upon key word filters, de-duping and then creating a load file to enable the data to be loaded into an electronic review software. In 2007 EED processing costs were $1,500 - $2,000 per Gigabyte (GB) and have dropped to less than $1,500 per GB depending upon whether or not the clients request key word filtering, de-duplication or other specialized processing. In addition, in the last six (6) months, some service providers and vendors are charging less than $1,000 per GB for what they are calling "quick peek" EDD processing which is nothing more than flattening and converting the Electronically Stored Information (ESI) into a format that can be read by one of the electronic document review platforms.

Manual Document Review: Document Review is the "time honored" ritual of paying a lawyer or paralegal and hourly rate to literally review every document associated with a matter to determine pertinence, privilege and responsiveness. In 2007, if done manually in the United States by a licensed lawyer, hourly rates for review ranged from $250-$500 per hour or higher. However, in response to the markets demand to reduce the cost of review, many of the larger US based law firms are setting up off-shore operations in India and Malaysia to take advantage of the lower cost of labor and there are also now several third party off-shore document review organizations that are putting downward pressure on hourly fees with rates as low at $35 per hour. In addition, there are now several software solutions that contend that they can supplement human document review to even further reduce the costs.

Recently, several service providers, law firms and other interested third parties have introduced the concept of per-unit pricing for document review as opposed to the conventionally accepted billable hour. So, as with any market going through a paradigm shift, creative people will step in to fill a demand or void. Brett Burney does an excellent job of outlining some of the current trends in reducing the cost of document review in a June 23, 2008 article on the Law.com site, titled "Subdue the Costs of Document Review".

Document Review Platforms: There are several very poplar legacy client/server document review platforms such as Concordance and Summation and several newer Online Review Tools (ORT) such as iConect, RingTail, ImageDepot and Lexbe. The costs to host data on these platforms runs about $50 per Gigabyte (GB) with $100 - $200 per GB setup and load fees. However, several of the new Software-as-a-Service (SaaS) based ORT's such as ImageDepot, have recently run promotions to offer hosting and review of unlimited amounts of data for $1 per month for 5 months with a twelve (12) month commitment.

In keeping with the standard dynamics of new technology being introduced into a market in a paradigm shift, these newer ORTs are using SaaS technology that is very scalable and very inexpensive to run and can actually make an acceptable margin at these lower prices. It will be interesting to watch how the legacy vendors respond. The new lower price points will force them to either develop their own SaaS based tools, acquire one of the newer SaaS based tools or go out of business.

Solutions that Reduce the Amount of ESI
As stated, the easiest way to reduce the overall cost of EDD is to reduce the amount of data as early in the process as possible. Not surprisingly, several advanced technology vendors have emerged to fill this demand, including Clearwell Systems and Kazeon.

Clearwell Systems: Clearwell System's E-Discovery Platform, for instance, is an appliance-based system that identifies duplicate email and document attachments. It filters email according to domain, sender and receiver to further winnow the amount of data that needs to be reviewed. Beyond that, it handles reporting and hosting (in your client's data center, of course) and offers privacy controls.
Standard pricing for Clearwell Intelligence Platform is $65,000 per 100 GB of managed data. Compared with processing fees of about $1,500 per gigabyte of data, Clearwell Intelligence Platform costs clients about $650 per gigabyte to reduce the data required for review. By reducing the amount of data to be reviewed (which, again, is more expensive per gigabyte than the processing work), companies can realize significant savings -- a minimum of $200,000 per 100 GB, assuming 1% is actually reviewed.

Kazeon: Kazeon contends that they revolutionizes the way companies perform eDiscovery by using the Kazeon Information Access Platform software to intelligently discover, search & index, classify and act on electronically stored information. Kazeon provides a full spectrum of proactive and reactive eDiscovery solutions in response to litigation, information security and privacy, corporate investigations, regulatory compliance and storage consolidation requirements. The Kazeon Information Server software automates eDiscovery functions from identification, collection through processing, preservation, analysis and review for corporations, service providers, and law firms. Through the development of unique search & indexing, analysis and workflow automation technology, Kazeon has been recognized by various industry forums, including Gartner's eDiscovery MarketScope and the recent Socha-Gelbmann eDiscovery Survey 2008 where Kazeon was recognized as a Top 5 eDiscovery Software Provider. Kazeon has established partnerships with leading companies, including Fujitsu, Siemens, Google, Network Appliance, Oracle and Symantec.

Kazeon's Claim of $4.30 per GB Processing Costs Stirs Up the Industry
On May 6, 2008, in a press releases announcing that Attenex and Kazeon have formed an eDiscovery Alliance, the real news was buried in the boilerplate as Kazeon contended that they could process a Gigabyte (GB) of data for $4.30. This was actually not new news as they had previously contended in a press release titled "ESG Lab Finds Kazeon’s Information Server Delivers Fast and Cost Effective Information Access" this same financial offering in a slightly less alarming way by stating that the ESG Lab verified impressive price/performance with a single Kazeon Information Server appliance able to index 2,500 documents per dollar and a cost as low as $4,300 dollars per terabyte (which is approximately $4.19 per gigabyte).
However, even in the face of the overwhelming Blog posting response from the industry about this claim being completely misleading, Kazeon has not removed the claim from subsequent press releases and in fact has embraced the claim as the center piece of their marketing message. The best and most thoughtful response came from a posting on the eDiscovery 2.0 Blog by Kurt Leafstrand on May 6th, 2008 titled "eDiscovery Processing: You Get What You Pay For". Given the fact that the eDiscovery 2.0 Blog is written and sponsored by Clearwell Systems, a another player in the eDiscovery space, it may be a bit biased. However, Kurt did a great job of listing the various critical and required processing components that need to be considered when comparing the overall cost of Electronic Data Discovery (EDD).

Example of the Cost of an EDD Project (Using Standard Technology)
Given all of the above as a general foundation for the fees associated with an EDD project, following is an example project:
Parameters and Assumptions

1. Two (2) US based corporations
2. Two (2) Sites for ESI Collections
3. Approximately two (2) terabytes (TB) of data (all native ESI)
4. 2X expansion of ESI during the initial flattening and extraction of attachments and embedded data
5. 50% reduction during initial processing with key word filtering and de-duplication
6. Document Review required at multiple locations
7. Time from matter filing date to completion is estimated to be 3 years.
8. Onshore legal review at 300 pages per hour

Collection Costs
Collection of the data along with computer forensics work, travel expense, storage hardware and hourly rates is as follows;
Collection Fees = 10 hours x $300/hour = $3,000
Storage Hardware = $2,000
Travel Costs = $2,500
Computer Forensic Fees = 10 hours x $300/hour = $3,000

Total Collection Costs = $10,500

Initial Processing Costs (Flattening, Culling, De-duping)
4 TB of Data x $1,000/ GB = $4M (Reduced back down to 2 TB)

Hosting and Review Technology Costs
36 months of Hosting for 2 TB at $50/GB/Month = $3,600,000

Document Review
2 TB of data at 75,000 pages per GB = 150M pages
150M pages at 300 pages / hour = 500,000 hours at $150 / hour = $75M

Total Cost of Project
Collection = $10,500
Processing = $4M
Hosting = $3.6M
Review = $75M

Total Cost = $82,610,500

Alternative Approach
Obviously, $82M is cost prohibitive. So, where can we save from money? Following is an alternative approach:
Changed Assumptions

1. Use of new front-end processing technology
2. 90% reduction in data during culling and de-dupe
3. Use of off-shore review

Alternative Collection / Processing Costs
Although it may not be completely realistic, lets assume that both sites had technology to automatically gather, filter and de-dupe the data (e.g. Clearwell, Kazeon). And, there was no computer forensic work required. Therefore, the cost of processing 4 TB of data using the Kazeon model would be 4 TB x $4,300 / TB = $8,600 (reduction of data to 400 GB)

Alternative Hosing and Review Technology Costs
36 months of Hosting for 400 GB at $50/GB/Month = $720,000

Document Review
400 GB of data at 75,000 pages per GB = 30M pages
30M pages at 300 pages / hour = 100,000 hours at $40 / hour = $4M

Total Cost of Project
Collection / Processing = $8,600
Hosting = $720,000
Review = $4M

Total Cost = $4,728,600

Conclusion
ESI reduction through culling and de-dupe is essential to reduce the amount of data that has to be hosted and reviewed along with reducing the cost of actual document review is the key to reducing the overall cost of EDD processing.

Labels: Clearwell, Consulting Fees, EDD, eDiscovery, Electronic Data Discovery, FRCP, Kazeon, Pricing, Socha-Gelbmann Electronic Discovery Survey

posted by Charles Skamser @ 10:49 AM 2 Comments

New Litigation Software Review Site

With the potential changes to The Socha-Gelbmann Electronic Discovery Survey, I started to research alternatives for substanttive research on litigation technology. I am pleased to report that I have found LitiReview by Lexebe.com.

Launched in August of 2008, LitiReviews boasts the largest collection of free legal and litigation software reviews on the web. All reviews (100+) are full-text, and have been published in legal magazines, journals, websites and blogs. LitiReview links to copies of reviews available on the internet, or hosted by us at the author's request.

LitiReview enables users to:

- See the latest reviews listed below
- See only reviews from a specific software category or for a particular application by clicking on the links to the left
- Register for our free newsletter including recent reviews
- Receive our RSS feed in XML or in the following readers: Google Yahoo AOL
Send this page to a friend
- Find out more about the LitiReviews legal software reviews collection
- Add a legal software review to the collection
- Make a specific search in the box below

I would encourage anyone interested in researching litigation technology to take a look at LitiReview by Lexebe.com.

Example Reviews

CaseLogistixReview: Anacomp’s CaseLogistix 5.2, by Timothy Piganelli. Overall this tool has to be one of the top choices for document review with its native file review capability. Attorneys and law firms that have an in-house IT or litigation support staff to handle the SQL application would find CaseLogistix useful and very workable. My top three features are the Document Native Review tool, the IntelliFolders and their functionality, and the prompted search feature. Category: Electronic Discovery. Written: 2008. Added: 8-15-2008. Techno Lawyers

Trident 4.0 SoftwareTrident Suite from Wave Software, by Randall Consulting. Trident 4.0 Software suite is composed of five unique applications to assist in processing PST files: Email De-Duplication, Email Re-Generation, Message Exporter, Message Importer and Snapshot software. Category: Electronic Discovery. Written: 2007. Added: 8-11-2008. Randall Consulting

OneO Discovery PlatformFerris Research on OrangeLT™, by David Ferris. The integrated analysis, processing, and review is certainly an attractive feature, making life a lot simpler for the user. Today, these different phases are commonly handled by separate products. Over the long term, such integration is likely to win out over cobbling together best-of-breed solutions. Category: Electronic Discovery. Written: 2008. Added: 8-02-2008. Ferris Research

SafeCopy 2.1 MobileReview: SafeCopy 2.1 Mobile, by Bruce A. Olson. SafeCopy 2.1 Mobile by Pivotal Guidance is an inexpensive tool that may enable you or your client to maintain document security and validity as part of the discovery process. SafeCopy is not, however, intended to be a forensic application that can create a forensic image of a drive. SafeCopy offers a cost effective option that fills a needed niche. Category: Electronic Discovery. Written: 2008. Added: 7-12-2008. Technolawyer

ConcordanceThe E-Discovery Hostess with the Mostest, by Dennis Kennedy. Lawyers beginning to delve into the world of electronic discovery often express surprise at how even simple cases can involve large amounts of electronic data. Help is usually the first word that comes to mind. With Hosted FYI, you and your team can review, process, store, retrieve, redact, and share documents in a secure, centralized, and always-accessible environment. Category: Litigation Management. Written: 2007. Added: 7-12-2008. Law.com

Discovery AttenderDiscovery Attender From Sherpa Software, by Brett Burney. Discovery Attender from Sherpa Software is a sturdy platform that enables you to search across electronic mailboxes, email archives, and folders of loose files. I found Discovery Attender to be an extremely simple and effective tool for searching through a hefty stack of email. It wasn’t overly complicated, and after a couple of searches, I became very comfortable with the logical steps involved in the Search Wizard. Discovery Attender is a nice addition to the tool belt of anyone who regularly needs to search through email to find messages relevant to a litigation matter. Category: Electronic Discovery. Written: 2008. Added: 7-10-2008. Technolawyer

CaseLogistixCaseLogistix Discovery Partner, by Jonathan Franklin. I like this product a lot. It’s powerful, easy to use and intuitive. Candidly, it’s the first program in this market segment that my firm wants to use. In fact, the firm now is using it. Dynamic document analysis and management. Its SQL-based system is powerful, highly scalable and robust. No predefined templates for library creation. An integrated training video would be nice. It exceeds expectations. Category: Electronic Discovery. Written: 2006. Added: 7-09-2008. Law Office Computing

IPROIPRO ePrint-IT, by Milton Hooper. EPrint-IT is very easy to use and features only one screen with which you mainly work. Once installed, you immediately can start putting ePrint-IT to use. The customizable options are easy to understand and adjust. It's a little pricey at $695 for the first year ($195 each year thereafter) and might not be worth the investment for someone who doesn't have a lot of electronic documents. If you are involved in EDD and don't have time to learn new software, ePrint-IT might be the right match for you. Category: Electronic Discovery. Written: 2008. Added: 7-09-2008. Legal Assistant Today

Labels: Lexbe, Litigation Software, LitReview, Socha-Gelbmann Electronic Discovery Survey

posted by Charles Skamser @ 12:19 PM 0 Comments