From its advent fifteen years ago with the growth of word processing and email, the eDiscovery industry has evolved substantially and not unlike many other relatively similar technology industries like internet security and networking, from birth as a subset of the much older discovery process (which eDiscovery has come to dominate) through childhood and adolescence and into adulthood.  So just how “old” is eDiscovery?  And where is it headed from here? 

Using these ancillary industries as guideposts offers some salient comparisons, albeit on an expedited basis as technological innovations continue to accelerate change inside and outside of the workplace – a byproduct of Moore’s law which produces exponential advances in all things related to computing hardware (which is almost everything these days).  At the risk of oversimplifying things, we have divided the life of eDiscovery into 4 distinct stages and equated each to the human lifespan: infancy/childhood, adolescence/teenage years, adulthood, and what we’ll respectfully call “seniority.”  Using these admittedly crude demarcations, we believe eDiscovery is in the process of graduating from college, full of promise and ready to “get serious”, but not quite sure what it will become when it grows up.

Stage 1: Infancy/Childhood
As we all know, infants know nothing and are completely reliant on “experts” (i.e. parents) to help them survive even a single day.  They cannot eat for themselves, earn a living or even defend themselves; in fact, until they reach a certain age, children do not even realize they exist as real human beings.

So, too, was the eDiscovery industry from the early 1990s through the early part of the “Aughts.”  The vast majority of practitioners had no clue what they were doing; worse yet, many did not even know what they were doing was “eDiscovery” as the term – and more importantly, the loose set of acceptable guidelines, processes and workflows which sprang up toward the end of this period – came to be widely understood over the past 5-7 years.  When confronted with an eDiscovery event, the first reaction was something along the lines of “What the heck do I do now?”

Predictably, this period was characterized by knowledge, pricing and product capabilities which were, to use a recently popularized term, “asymmetrical.”  Put another way, costs per event were high, from expensive to outrageous to downright shocking, in no small part because no one knew what a reasonable price was.  However, until the advent of mega-cases like Enron, Vioxx and the like, most cases were small and infrequent enough that they were outlier events which could be dealt with on an ad hoc basis…at least until data volumes began their inexorable march upwards (more on that shortly).

Not surprisingly, the vendors who excelled during this phase were the large incumbents to whom customers turned first, industry stalwarts like LexisNexis (whose Concordance linear review tool was once the standard), CT Summation, and Kroll/Ontrack.  Additionally, the Big Five consulting firms (or Big Four post-Anderson’s implosion) were able to charge a premium for their expertise during these glory days; large law firms also made huge amounts of money outsourcing much of this process, and frequently adding their own sizable margin to every step along the way.  All of these folks were the “experts” who had a virtual monopoly on eDiscovery knowledge and experience, and were therefore able to dictate what things cost and how things went in many cases…at least until eDiscovery started to grow up.

Stage 2: Adolescence/Teenage Years
A funny thing happens when a few savvy customers and forward-looking service providers and entrepreneurs identify an area rife for automation: they demand – and usually receive – better approaches, technology and, ultimately, outcomes.  This is exactly what happened during the next stage of eDiscovery’s lifespan, when customers, law firms and vendors alike awoke one day to find that not only were their eDiscovery budgets continuing to grow, but no end to the increase was in sight.  As a result, several sought better approaches to these constantly growing eDiscovery costs and timelines.  Many enterprises embarked on tactical projects to show some quick ROI in order to cut down on exploding eDiscovery costs – “bending the growth curve” so to speak.

What resulted was a wave or two of point solutions seeking to attack the symptoms of the problem, the proverbial “low hanging fruit” of whittling down the massive amounts of ESI that was by now part of every eDiscovery event (side note: Guidance’s popular Encase forensic “collection” [i.e. imaging] tool helped accelerate this trend with its “preserve and collect everything in sight” approach) so that less data would have to be reviewed by costly outside counsel.  Companies like Attenex sprang out of leading law firms, followed by simplistic culling boxes like Clearwell, dedupe plug-ins like Equivio and linear review applications with enhanced UIs like Relativity.  Most of these point solutions were effective at solving the first major symptom of eDiscovery’s growth into a teenager: how to cull down the volume of data which must be reviewed.  Much like a teenager’s thirst for instant gratification, customers starting to come up to speed on eDiscovery were now able to show quick ROI on their eDiscovery spend, which was music to their bosses’ ears.  Nor were these customers willing to be completely reliant on their big law firms for such tools; instead, they often went directly to the technology providers themselves, increasing pressure on law firms to remain relevant in this nascent technology arms race.

As effective as point solutions like Clearwell, Equivio and Relativity have been, however, they are essentially Band-Aids – tactical, technology-centric tools developed outside of the legal industry that seek to address a symptom of the problems, not the problems themselves: that companies are not effectively managing their content when it is created and the utter inefficiency of the linear document review process.  Much like a teenager, eDiscovery at this stage thought it knew everything and had solved the world’s ills…only to find out that once the low hanging fruit was gone, things get much, much tougher. 

The same leading edge industry luminaries began realizing that this tactical approach to eDiscovery was woefully inadequate as a mid and long-term solution, and would never be able to keep up with the growth of information; worse yet for law firms, with the economic downturn, their clients were not only continuing to build in their own eDiscovery capabilities but demanding new ways of being charged for legal services (aka “Alternative Fee Arrangements”).  As a result, leaders in both camps sought out more advanced solutions that would address the root problems created by exploding data volumes – which began leading us into Stage 3.  And this is exactly where the eDiscovery industry seems to be at this moment: quickly transitioning from teenager status to adulthood, which for many is right about the time they graduate from college.

Stage 3: Adulthood
In adulthood, eDiscovery realizes the quick fixes of its teenage years no longer suffice; the problems must now be addressed at their root.  eDiscovery as a challenge is not only not going away but has now gained such mind and budget-share that it must become part of the core fabric of the enterprise IT team and information management systems – much like networking many years ago and network security more recently.  A poll taken as part of next week’s Duke law conference illustrates this phenomenon perfectly: 97% of corporate counsel polled agree that litigation is too expensive, while 90% believe it takes too long and 80% do not believe litigation outcomes are driven by the merits (but rather the cost of the process).  When 97% of ANY group of lawyers agree on something, champagne bottles should be opened as that is a shocking level of unanimity that rivals Congress gaining universal consensus on anything; clearly the point solutions of eDiscovery’s teenage years did not solve the problem.  The Duke conference – and the Sedona Conference, with which there is a great deal of overlap – represents the eDiscovery industry’s leading edge that has begun pulling the industry into adulthood – whether it likes it or not.

In adulthood, eDiscovery will be treated like a, well, adult, maturely and in a businesslike fashion.  eDiscovery events will become repeatable exercises which are predictable and whose efficacy will be measured before, during and after in a search for efficiency improvements.  IT systems which have traditionally been separate from eDiscovery yet have an impact on it, like document management systems, email archives, SharePoint, wikis and blogs, will now be part of the eDiscovery planning discussion as a matter of course.  And given its newfound importance to the legal and IT budgets, eDiscovery will continue being brought in-house while corporate legal departments demand – and receive – billing models from outside counsel which better reflect the company’s needs (not the law firm’s).

Importantly, the solutions which will thrive during eDiscovery’s adulthood will be different than those which thrived briefly during its teenage years.  They will be broader, more powerful, strategic – not tactical – systems which are far more “baked” into the company’s legacy systems (like the aforementioned email, document and communication systems) and are able to do far more than simply cull, thread or present ESI at a single stage of the process.  They will attack the root causes of the problem – the need for better information management earlier on and automating the document review process.

The vendors who will thrive during this period will be different from those of the teenage years.  They will for the most part fall into 2 camps: core infrastructure vendors like EMC, Oracle, IBM, Symantec, Open Text and eventually even Microsoft, all of whose systems are central to information management; and a very small number of end-to-end EDRM players like Recommind and Autonomy, whose technology can automate information management for all stages related to the eDiscovery cycle, from the creation and organization of information to its access to preservation, collection and ECA through analysis, review and production (this breadth of customer need during eDiscovery’s adulthood explains why point solutions like Clearwell and Equivio will be ineffective in this phase).  Not surprisingly, many vendors have recognized this trend and responded by positioning their wares as being “end-to-end”; unfortunately for them, however, the industry is better educated now and has become well trained in separating the “product wheat” from the “marketing chaff.”

Large consulting firms like PWC, Deloitte and KPMG will continue to be relevant in this environment as their legacy audit and investigations consulting practices will continue to throw off related business in eDiscovery; similarly, smaller consulting firms with solid legacy businesses like Alix Partners, CPA Global and Rule Financial will also maintain relevance.  By contrast, eDiscovery-only consulting firms like Huron and Navigant will continue to be squeezed between clients building more capabilities in-house and large law firms with revamped business models (read on for this).
Large law firms will also be in an interesting position during eDiscovery’s adulthood.  Those who maintain the old ways – linear document review, keyword-only search tools, teams of contract attorneys, etc. – will increasingly find themselves at a significant competitive disadvantage to their modernized peers.  Simply put, they will start losing business, including large, Fortune 100 customers (this trend has already begun) because their litigation business models will no longer work for these clients.  The billable hour is unlikely to disappear, but it will be supplemented by alternative business models built on new technology which attacks the 2nd root cause of eDiscovery’s cost issues (the stark inefficiency of outdated linear review). 

Stage 4: Seniority
For those of us who have reluctantly entered adulthood’s middle age, “seniority” is too painful to think about; we just reached adulthood and now we are talking about 401(k)s, grandchildren and retirement?  Alas, seniority for eDiscovery should be a more pleasant experience as eDiscovery becomes ever more ingrained in the fabric of information management.  Whether eDiscovery remains a standalone industry unto itself remains to be seen; while its substantively technical nature means this is likely, just as likely is eDiscovery-related purchasing decisions being increasingly absorbed into a broader category, such as GRC (Governance, Risk and Compliance).

With its recent – and quick – ascent to board of directors-level importance, eDiscovery has clearly shown it is here to stay.  But it is also transitioning from awkward, over-confident teenager who thinks they know all (but don’t) to disciplined, professional, systematic adult, which is a good thing for clients, outside counsel and practitioners alike.  So please join us in congratulating eDiscovery for graduating from college; with a lot of hard work and a little luck, eDiscovery can reach its lofty potential.