eDiscovery Daily Blog

eDiscovery Trends: What Do Investment Bankers Think About the eDiscovery Industry?

We’ve published a few studies and surveys regarding the state of the eDiscovery industry, including this one from last week and this one from last fall.  Another industry review was published just last month by VRA Partners, an investment banking firm based in Atlanta, GA.

After a brief summary, the industry review, available here, begins with a brief overview of the eDiscovery process (at least Identification through Production) for newbies to eDiscovery.  The next section discusses market size and growth, citing numbers from the Socha-Gelbmann surveys and also from eDG Journal.  If you haven’t seen these numbers published previously, they’re rather eye-opening, including:

  • The eDiscovery industry is currently anywhere from $3 billion to $5 billion, based on numbers from Socha Consulting and eDG Journal.
  • The eDiscovery industry grew at a Compound Annual Growth Rate (CAGR) of 56.3% from 2002 to 2008 and a 34.4% CAGR from 2002 to 2010 (based on information from the 2009 and 2010 Socha-Gelbmann Surveys).
  • The EDD market has increased more than ten-fold since 2002 from $0.3 billion to $3.2 billion in 2010.
  • As of 2009, the worldwide legal market was $546.8 billion, 47.6% of which is accounted for within the USA.
  • US legal spend grew at a CAGR of 4.1% from 1998 to 2011, from $166 billion to $281 billion.

Reasons given for the continued growth of the eDiscovery market included resistance to recession in the legal market, increased adoption of eDiscovery (partially through required compliance with the Federal Rules changes adopted in December 2006), increased regulation and the part that EDD plays in that process and dramatic growth of electronic data in the world.  With regard to data growth, the review quotes a 57.6% CAGR (from IDC) from 2006 to 2010.  An even more eye-opening figure (not in the study, but also from IDC) is that since 2002, data in the world has grown from 5 exabytes to 1,800 exabytes (or approximately 1.8 zettabytes) – a 36,000% increase in nine years!  It is currently accepted that data in the world is doubling every 1.5 to 2 years.

The review then proceeds to discuss some of the current industry trends, including an increased focus on managing costs, growing focus of corporations to manage eDiscovery more closely (instead of delegating to the law firms) and new technologies (such as clustering and predictive coding).  Other trends noted include an increased sophistication of customers, a focus on process improvement by efficient providers for improved economics and the growth of eDiscovery outsourcing.

The review also includes a look at the market from a provider standpoint, breaking the 600 providers into two halves: the top 30 which comprise a little over 50% of the total market, with the rest comprised of smaller regional and local providers.  It finishes with a look at Mergers & Acquisitions (M&A) and Capital Markets Activity, including a one-page summary of the recent acquisitions in the industry (more than you might think or remember, I bet there’s at least one that most of you didn’t know about).

It’s an interesting perspective from an interesting source.

So, what do you think?  Are you surprised by any of the numbers or the recent acquisitions?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.