January 8, 2010
By Christopher Musico, Contributor, CRM magazine

E-Discovery Requests Set to Rise in 2010

As companies are looking for innovate their way out of the recession, strategically cutting costs could be one viable option. Bringing services and processes in-house to gain more control might be another way to shake things up.

Particularly when it comes to e-discovery, enterprises have been looking for a way to navigate what many in the space view as "the perfect storm": ever increasing data volumes, more litigation and government inquiries, e-discovery costs skyrocketing -- and a call from the c-suite to cut costs due to the recession.

Findings from an Enterprise Strategy Group (ESG) study, "Trends in Electronic Discovery: A Market Perspective," show many do not believe the storm will go away any time soon. What is encouraging, though, is that organizations are doing more than just quickly brandishing an umbrella looking for a place to seek shelter.

According to the study, 78 percent of respondents say the number of lawsuits and regulatory inquiries they experienced increased in 2009 compared to 2008 -- and more than two-thirds of them expect the number to continue to rise in 2010 by at least 20 percent. To Brian Babineau, senior consulting analyst at ESG, this tells him that e-discovery is not a passing fancy. "E-discovery started gaining momentum well before the financial crisis hit," he says. "A lot of people say the [downturn] had a huge impact, but research shows it is more of a steady state event as opposed to one on the rise."

To try and combat this slow yet steady rise in litigation, the study found more companies are beginning to dedicate leadership and staff specifically to e-discovery, comparable to the effort some organizations have undertaken in customer service by appointing chief experience officers.

Statistics reveal 22 percent of those surveyed actually have "e-discovery manager" titles, which the study states is a "reflection of the move in-house and importance of having a dedicated resource." "For me, that data point sticks out," Babineau admits. "It is taking on a specialized role inside of these Fortune 2000 companies. E-discovery is a recurring business process, and you need to have certain specialized skills to address it effectively."

Companies aren't just slapping titles on employees -- they are laying out an increasing amount of money to bring particular e-discovery processes back in-house. The study reveals nearly 40 percent of respondents forecast a 20 percent or greater increase in e-discovery spending in 2010. Furthermore, 87 percent of those surveyed said they plan to budget for technology specifically supporting the e-discovery process next year.

Seventy-three percent of respondents plan to bring all or some e-discovery processes back in-house in 2010. Babineau says that this is not a surprise, and companies shouldn't feel pressured to bring every single aspect of e-discovery back under their control -- just the ones that make the most sense. "You only have to bring a portion of it back," he says. "It's not surprising that people focus on the tasks and processes that can drive more cost savings."

Consequently, the study found the top phase of e-discovery that respondents -- 69 percent of them -- plan to bring in house is processing/analysis, with identification/collection a close second (66 percent). "These are the most cumbersome, resource intensive, and therefore expensive tasks as corporate counsel and [information technology] have to sift through terabytes of corporate information to locate any and all [electronically stored information] that may be relevant to a given request," Babineau writes in his report.

Kamal Shah, vice president of marketing and product management at Clearwell Systems, an e-discovery vendor and sponsor of the report, says this jibes with what he says his company sees currently. He added that by bringing processing and analysis in-house, companies could money by culling more relevant data rather than wasting time and manpower with data that isn't germane to a particular piece of litigation.

Babineau is hopeful for e-discovery's continued rise regardless of the global economic climate. "E-discovery has its own [gross domestic product], and will continue to grow," he says.

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