Editor: The last time we spoke, you discussed the convergence of eDiscovery and Governance, Risk and Compliance (GRC), as well as the demise of processing as we know it. We are now about to enter the fourth quarter of 2011. What trends are moving the market right now?
d'Alencon : The eDiscovery market continues to evolve and mature despite the global economic malaise. One significant part of that evolution is that corporate enterprises are maturing in their approach towards the eDiscovery process and increasingly addressing eDiscovery as a strategic business process, rather than an event-based activity. In June I attended the Gartner Security & Risk Management Summit in National Harbor and was in the audience for a session by Debra Logan titled, "Case Study: Best Practices in E-Discovery."1During the presentation she displayed an eDiscovery Maturity Model that closely matches what we at CaseCentral are seeing anecdotally in the market.
Editor: What does the Gartner maturity model tell us?
d'Alencon : As Ms. Logan suggested during her talk, it is important for any organization to assess their eDiscovery maturity level before proceeding with any technology or outsourcing decisions. Since the milestone of the 2006 Amended FRCP, corporations have been increasingly becoming aware not only their obligations, but also of the time, cost and risk inherent in their approaches to eDiscovery. This awareness has necessarily driven these corporations to become more mature in their approaches. However, as indicated by Ms. Logan, 52 percent remain completely outsourced at Level 1 or Level 2 of her model, so there is ample room for further maturation.
Editor: What does it mean to address eDiscovery as a strategic business process?
d'Alencon : I think it means moving to a centralized, multi-matter enterprise eDiscovery process and relying less on single matter and ad hoc management of individual cases. In other words, applying organizational best practices in a consistent, repeatable way and utilizing appropriate technology to support that approach, thereby reducing eDiscovery risk, cost and time.
At CaseCentral, for example, we have seen an increasing number of corporations take this approach. We announced in July that CaseCentral's strategic enterprise eDiscovery revenue has been growing with a CAGR of 45 percent since 2009 and now represents over 75 percent of CaseCentral revenue versus single event, ad hoc business.This growth signals that our enterprise clients are utilizing the unique multi-matter capabilities of the CaseCentral eDiscovery Platform to centralize their eDiscovery processes and to handle a large number of cases, as opposed to managing episodic, data-driven, single matters.
Editor: What is driving these corporations to take a more strategic approach?
d'Alencon: Cost is one significant reason. According to a recent Enterprise Strategy Group (ESG) research report, "eDiscovery Market Trends: A View from the Legal Department, Preliminary Findings,"2eDiscovery is ranked #1, compared to other areas of litigation, as a driver of increased spending by corporations. Further, over half of the corporate counsels surveyed by ESG spent over $1M on eDiscovery in 2010. The number that spent $10M or more on eDiscovery is expected to double in 2011 (compared to 2010). ESG's research also found that of the corporate counsel that spent over $1m on eDiscovery in 2010, 66 percent had never tracked the accuracy or productivity of attorney review, one of the most expensive phases of eDiscovery.
Editor: Are there other reasons?
d'Alencon: The Big 3 are: risk, time and cost. Of course, there can be some significant overlap among those three. According to ESG's research,354 percent of corporate counsels are prioritizing technology investments to automate and support the eDiscovery process. ESG's data indicates that companies have increasingly thought about electronic discovery as a process and started to measure it so they can identify process improvements. As I have been known to say, "You can't improve what you can't measure."
It is for precisely that reason that CaseCentral pioneered the introduction of a multi-matter, Centralized Legal Repository accompanied by eDiscovery Process Analytics and a management dashboard to provide real-time measurement of review rates, quality rates and costs per document - by matter, firm or user.
Editor: You mentioned that corporate counsels are prioritizing technology investments to support the eDiscovery process. What does this mean?
d'Alencon: In a sense we have a perfect storm: Litigation and regulation are on the rise; the creation and use of Electronically Stored Information (ESI) for business purposes is a de facto standard and technology has evolved to the point where it can and must be used to address the mountains of ESI that exist, both within the corporation and outside the corporation including email, file servers, social media, blogs, cloud-based applications, archives and more.
According to Gartner Group, "The reason eDiscovery is now a pressing issue for most companies is clear: (Electronically Stored Information). ESI in all its many forms dominates in legal proceedings because modern business is mostly conducted using electronic communications and electronic records."4
Therefore, a fundamental requirement for a corporation seeking to evolve their eDiscovery processes to strategic business processes is the considered and appropriate use of technology and automation to support this evolution.
Editor: What kinds of technology are we talking about?
d'Alencon: Depending upon the part of the eDiscovery process that is being addressed, the technology can and will vary. It ranges from IT-driven information governance and information management systems to archiving and enterprise search and includes Legal-driven eDiscovery and case management tools. Organizations have a choice. They can consider buying their own hardware and software, hiring their own employees and installing and managing all of this, commonly known as "on-premise," or they can choose Software as a Service (SaaS) or cloud-based applications and services to meet all or some of their needs. And many companies are increasingly choosing the latter.
Approximately 18 months ago, CaseCentral released "The Blueprint for Cloud-based eDiscovery," which is a framework that surfaces key points and guides decisions in terms of security, privacy, control, risk and cost practices at corporations and law firms looking to bring eDiscovery in-house via the cloud. We did this because there was and continues to be a significant amount of confusion regarding the different ways to approach eDiscovery as a strategic business process and what technology lends itself best in different areas.
Interestingly, use of cloud-based systems for virtually every business function has continued to skyrocket since we released the Blueprint. According to Gartner Group, SaaS already accounts for 10 percent of enterprise applications software spending, and by 2015 this share is expected to increase to close to 15 percent.5
For the "right side" processes of the Electronic Discovery Reference Model (EDRM), which include Processing, Analysis, Review, Production and Presentation, cloud computing and eDiscovery go hand-in-hand. Why? Because the fundamental nature of these activities is that they are highly collaborative and involve corporate personnel, outside counsel and other consultants, contractors or resources in multiple geographic locations. Cloud-based eDiscovery applications, like CaseCentral, provide a secure, centralized legal repository for authorized participants to collaborate in the process, as opposed to sending proprietary and confidential corporate data to many recipients who have varying levels of technological sophistication, security and compliance controls. According to the Gartner Group, by 2013 Software as a Service and business process utilities will account for about 75 percent of the revenue derived from processing, review, analysis and production of ESI.6And the reason is obvious.
Editor: You mentioned last year that eDiscovery and GRC were converging. How does this play into the notion of eDiscovery as a strategic business process?
d'Alencon: Corporations will continue the trend of bringing the eDiscovery process in-house, ultimately weaving it into their governance, risk management and compliance processes. The key to this trend is the centralization of data and application of business process. As a standardized, repeatable and defensible process is put into place these efforts will, in turn, reduce risks and save significant time and cost associated with litigation exposure, compliance and internal investigations.
Editor: What should our readers do to start approaching eDiscovery as a business process?
d'Alencon: Enterprise Strategy Group and Gartner Group have it right: First determine where you are in terms of your organization's eDiscovery maturity. To do that you will need to document some processes and perform some measurements. You will also begin to identify the internal players who need to be part of any strategic eDiscovery solution moving forward. This will likely include representatives from several different departments, such as IT, Legal and Compliance.
Once you have identified the eDiscovery maturity of your organization, you can begin to think more strategically about how to address each phase of eDiscovery. Start defining best practices so they can be applied in a consistent, repeatable and measurable way. Begin to implement supporting technology that also helps you to centralize, gain visibility into and measure your processes. 1 Gartner, Inc, "Case Study: Best Practices in E-Discovery" by Debra Logan, June 20, 2011.
2 ESG Research Report, "eDiscovery Market Trends - A View from the Legal Department, Preliminary Findings" by Brian Babineau and Katey Wood, August, 2011.
4 Gartner, Inc, "Magic Quadrant for E-Discovery Software" by Debra Logan and John Bace, May 13, 2011, page 6.
6 Gartner, Inc, "Magic Quadrant for E-Discovery Software" by Debra Logan and John Bace, May 13, 2011.