Outsourcing

Ready, Set, Recover: Attain eDiscovery Cost Recovery with CloudNine

There’s a simple truth to running any business, including legal service providers and law firms: Profitability means you need to make more money than you spend. While this seems like an easy concept to follow, there are hidden or unexpected costs which can jeopardize your ability and financial performance. 

One of the biggest culprits behind your firms’ rising operating costs is legal data collection and review. As data sizes and timelines become more unpredictable so does the price of eDiscovery services. 

eDiscovery costs are on the rise for three main reasons:

  1. Exponential growth in data: As our communications have become more sophisticated, so has eDiscovery. Previously, cases including paper files now include financial transactions, geolocation, slack messages and more. This has led to an ever-expanding amount of data associated with new cases.
  2. Complex technology: Many eDiscovery solutions operate more like IT systems, requiring servers, networks, desktops, applications, etc. This requires firms who insource their eDiscovery to maintain a team of IT professionals to manage any updates that may arrive. 
  3. Complex infrastructure:  The fear of missing critical deadlines has driven system architects to prepare for extreme one-off situations versus everyday matters resulting in overbuilt and overcomplicated review solutions. 

The Most Common Cost Recovery Models

Despite the unpredictable cost of eDiscovery, nearly 82% (1) of LSPs and law firms continue to pass these costs along to their clients even though they typically recover only 77% of the costs (2).

The most common cost recovery models are:

  1. Billable hours for time spent performing eDiscovery services:  This typically results in minimal pushback from the clients since they’re accustomed to paying by the hour. 
  2. Billable hours + hosting:  Usually charged per GB, hosting fees allow you to recoup more of your eDiscovery costs but are not always accepted by clients as actual legal work. 
  3. Third-party style:  Charging fees like a vendor allow you to recoup costs for specific line items like GBs processed and hosted, analytics, and licensing fees. 

Surprisingly, 13% of LSPs and firms simply absorb the cost of eDiscovery rather than bill their clients (3).   The most common reasons for this are:

  • They practice in an ultra-competitive market
  • They honor previous agreements
  • They take on non-billable projects

To recoup more of your eDiscovery investment, read on to learn the steps you can take to optimize your cost recovery efforts or download our eBook: Optimize eDiscovery Cost Recovery: 6 Steps to Make Your Review Process More Profitable for a more expansive look into cost recovery. 

1.  Quantify Your Current Cost Recovery Challenges

Identifying all the costs associated with your eDiscovery lets you know where, how, and when you’re losing money. A few of the factors you should assess include:

  • Total annual eDiscovery and document review costs
  • Total revenue from eDiscovery
  • Cost comparison of running eDiscovery document review solutions in-house versus outsourcing. 

2.  Re-examine the Cost of eDiscovery Insourcing versus the Benefits of Outsourcing

While larger law firms can afford complex eDiscovery technology, smaller LSPs and firms need to balance cost and functionality to optimize cost recovery. They need to consider things like:

  • What pricing model makes the most sense?
  • What technology is more economical to own versus lease?
  • What features and functionality do you need to provide your users?

3.  Right-Size Your eDiscovery Data

With data volumes increasing exponentially, you need to be smart about what data you’re hosting in the cloud. By culling your data on-premise, you can reduce your hosting costs before you move it to the cloud. 

4.  Be Strategic About Your Storage

Not every client needs a lot of data storage. Adopt a solution that allows you to adapt your storage strategy on a case-by-case basis so you’re not stuck offering a single standard storage model to clients that may need smaller options.

5.  Choose Self-Service, Easy-to-Use Tools

Your cost recovery is much easier when your internal staff can perform eDiscovery during billable hours. By adopting a solution that’s simple and easy to run, you reduce the need for additional external services.

6.  Standardize Through One Primary Vendor

The more eDiscovery vendors you engage with, the more complex things get – more contracts, more fees, more systems to learn. Look for a single self-model with lost costs, flexible storage plans, and easy-to-use tools to optimize your cost recovery.

Now that you have a better idea of what it takes to improve your eDiscovery cost recovery, it’s time to go a little deeper to understand the benefits of an eDiscovery solution that’s perfectly suited to help you earn more than you spend. Click here to request a demo of CloudNine Review and learn how to make your review process more profitable. 

 

Sources

(1), (2), (3):  2019 eDiscovery Billing Survey

What Happens When You Don’t Have a Modern Data Solution?

Why a Modern Data Review Platform is Critical to eDiscovery

When legal professionals first incorporated electronically stored information (ESI) into their eDiscovery document review process, it opened the door for a variety of digital data types to be used in investigation and litigation. 

It didn’t take long for eDiscovery to begin taking in ESI like emails, documents, spreadsheets, databases, CAD/CAM files, digital images, and websites. These have remained the primary sources of digital discovery data used by legal professionals. 

However, as technology continues to evolve, new modern data types are becoming increasingly vital in litigation. These new modern data types fall under five primary categories, in addition to traditional eDiscovery: 

  1. Communication
  2. Computer/User Activity 
  3. Geo-location tracking (location tracking software)
  4. Financial Transactions
  5. Social Media

These modern data types have their own unique uses and their associated metadata allows you to create a chronological list of events and user activities so you can gain context where it did not exist in traditional discovery. 

Here are just a few examples of how it works:

  • By gathering data on computer activity, you’re able to see when individuals upload documents to Google Drive or download them onto thumb drives. 
  • Geolocation lets you determine where a computer activity took place so you know if they were at home, in the office, or at another location.
  • By using the metadata associated with different communication applications, you can track and document relevant dialogue between two parties as they carry their conversation from one device or application to another. 

With these additional data types, you’re able to tell a complete story through your legal review when combining traditional and modern data, in one unified eDiscovery platform

As more modern data forensic artifacts emerge, CloudNine is doing our part to help your eDiscovery team gain the context and confidence you need to solve your cases. Sign up to receive updates on our offerings here.

Reconstructing Digital Conversations To Unveil The Full Picture

In a modern data eDiscovery solution, you can do things that simply aren’t possible or are too difficult or costly to do in a traditional document review-centric platform. 

In a traditional legal document review platform, communication between two individuals would be collected and stored as individual documents. This means the context of the whole conversation including text before and after the individual messages could lose context in the conversation, leaving a void in the interpretation.

A modern data review platform allows you to collect data from multiple devices and applications including traditional ESI and loose files. By using the metadata associated with the collected data, you can select two individuals and review all communication between them in a chronological timeline. Now you have the context to perform the smartphone forensics and short message discovery you need to follow a conversation that began in Slack but transitioned to text messaging before concluding in WhatsApp.

Cell Phone Discovery: Reviewing Text Messages In a Modern Data Review Platform

Traditional legal review platforms are often inefficient when reviewing text messages. In a traditional platform, text threads are converted to PDF requiring each thread to be reviewed, text-by-text. In this case, five individuals in a group text messaging thread, means you’ll see the same message collected five times. This results in a lot of time and money wasted redacting large parts of the text thread, irrelevant to the topic. 

Smartphone data discovery allows you to filter duplicate messages, and remove 20-30% of the collected data.  With a simple click of a button, modern eDiscovery review allows you to select the text messages you want to advance and remove the irrelevant text from long or group threads.

Another challenge for traditional review platforms is the inability to maintain native formats for data. By relying on screenshots or PDFs, organizations using older platforms can fall victim to doctored images that could affect the course of the litigation. 

For example, in Rossbach v. Montefiore Medical Center, a plaintiff used screenshots of a text message to attempt to prove that her former employer had sexually harassed, then fired her. The message was allegedly sent to her iPhone 5 which cannot run an operating system beyond iOS 10. A forensics investigator examined the screenshot and discovered an emoji present in the image was a version not available until iOS 13 was released.

Modern eDiscovery review platforms capture text message formats (MMS and SMS) in their native format so there’s no risk of fraudulent or altered data in the review.  A unified eDiscovery platform will combine both traditional and modern data without creating documents from modern data sources.

Learn more about how your legal team can hit the eDiscovery bullseye with every data type with CloudNine Review here.

Why Organizations Are Hesitant to Commit to a Modern Data Review Platform

Some organizations are hesitant to adopt a modern data review platform because of their apprehension to change standard operations. They’re unwilling to change their review mentality from document-based to metadata-based or a hybrid of both.  After all, if it’s working, why change it?  

Many organizations are also forced to break-out their review processes among multiple platforms – one for traditional data like emails and Word documents and one for modern data like geolocation, social media and computer activity. 

In addition, there are some objections to native file production:

  • Retrieval of native files after initial document collection would mean additional costs.
  • Redaction is difficult or even impossible with some native file types.
  • Image-based productions are often accepted in court. 
  • Static images are equally useful for analysis and review of native files.
  • Federal Rule of Civil Procedure 34 does not specifically require native formats.

However, as modern data types become more common and important, organizations are beginning to understand that using a traditional, legacy document solution to review modern data is becoming burdensome, expensive, and slow. 

How a Modern Data Review Platform Simplifies eDiscovery

Simply put, a modern data review platform like CloudNine’s ESI Analyst organizes your data more efficiently by using metadata to sort modern data types by recipients, senders, timestamps, locations, and computer activity. 

The data is then tagged under one of the following data types:

  1. Call logs and voice mails 
  2. Chat applications (WhatsApp, Telegram, Facebook Messenger, etc.)
  3. Email
  4. Corporate chat applications (Slack, MS Teams, etc.)
  5. Text Messages (SMS, MMS)
  6. Computer activity 
  7. Geolocation
  8.  Social media
  9.  Financial transactions 

In addition, with a built-in foreign language tool, you have access to more than 80 supported languages so nothing gets lost in translation.

While legacy document review solutions are limited to reviewing documents, they miss key data points like geolocation, financial transactions, and other pertinent data that does not fit in a document-centric workflow.  The CloudNine, integrated solution allows you to filter, search, tag, and review all data in one platform.  

Let CloudNine help you integrate a modern data review platform into your eDiscovery processes. We can train your case teams quickly so they’re up and running in 15-20 minutes. To learn more about how our modern data solution can make your eDiscovery processes more efficient, drop us a line

Remote eDiscovery: Uncovering eDiscovery Best Practices From Home

When businesses and governments began shutting down due to the COVID-19 virus, it fast-tracked the slow and cautious transition to remote work begun by legal service providers

LSPs had already begun finding success operating in remote environments, using the cloud for eDiscovery data storage, processing, review, and analytics. 

However, it wasn’t until companies were forced to send their employees home to work that traditional legal departments and law firms began adapting to remote work environments. This led to finally upgrading, optimizing, and strengthening their infrastructure to accommodate this new normal. 

While this transition was a nerve-wracking experience for some, statistics tell us that remote work environments are not only possible but preferred:

  • 71% of companies have a new, positive view of remote work environments. (IDG).
  • 59% of remote U.S. workers would prefer to continue working remotely. (Gallup).
  • 69% of remote U.S. workers reported their productivity levels are the same or higher when working from home. (Citrix).

With a more productive eDiscovery solution, your LSP is set up for success. Learn about four other ways your organization can build value and boost margins in our ebook here.

The Benefits of Remote eDiscovery Tools

As foreign a concept remote working seemed to be, the benefits were obvious from the very beginning. Roadblocks were quickly reconciled, increasing efficiencies and reducing costs associated with eDiscovery

This was expedited by the realization that while personnel were becoming increasingly more dispersed, the eDiscovery data they were working with was becoming more centralized due to the cloud. Secured cloud environments allowed for a more efficient and effective workflow to collect, process, host, review and produce critical data. 

Other benefits of remote eDiscovery tools include:

  1. Lower-touch processes so you have fewer discoverable copies and less movement and enhanced control of data
  2. No geographical workforce restrictions so you can bring in the best people no matter where they live
  3. Easy scalability for near-instant provisioning or decommissioning
  4. Cost-effectiveness that allows you to shift from CapEx to OpEx

How Secure is Remote eDiscovery?

For some traditionalists, as well as others that are simply more cautious by nature, there’s a question of data security that has them hesitant to embrace a remote eDiscovery solution. However, there’s nothing to fear with the right eDiscovery solution.

Simply put, eDiscovery cloud computing provides a secured digital environment that protects the integrity of your data. To ensure this, there are certain security protocols your LSP must follow to guarantee your data security. 

  • Personnel should only use company devices or assets when working remotely
  • Data encryption must be used in transit
  • Multi-factor authentication must be deployed
  • Secured connectivity must be ensured for all employees 

With these protocols in place, your data is secure from all but the most devious and skilled cybercriminals. The only thing you’re missing is the perfect partner to provide a solution that makes sense for you and your clients. 

The CloudNine Remote eDiscovery Solution

Offering speed, security, and simplicity, CloudNine Explore empowers LSPs with a remote eDiscovery solution that allows you to investigate issues, assess risks, confirm compliance and begin early case assessment quickly and easily. 

More importantly, with CloudNine Explore, you’ll maintain the highest quality of data processing by leveraging these benefits:

  • Process as many as 1 million records per hour
  • Deploy CloudNine anywhere through a single workstation deployment
  • Easily scale up or down across multiple secured devices with mobile access
  • Effectively manage remote teams with powerful administrative and user controls
  • Remove bottlenecks by reprioritizing projects and reviewers as needed
  • Use deduplicate, filter, and search functions to reduce your data and hosting fees

Discover what CloudNine Explore can do for your remote eDiscovery team here.

Finding Value in CloudNine Explore’s eDiscovery Tool

CloudNine Explore gives you early visibility into the size and scope of your eDiscovery data so you can determine costs upfront. By insourcing your eDiscovery solution, you can cull data before you send it out, resulting in a significant ROI by:

  • Reducing costs associated with data collection, processing, hosting, and review
  • Mitigating risks by identifying problems easier and quicker
  • Opting to deploy on-premise or in the cloud

While most eDiscovery solutions only work with traditional datalike documents, emails, and spreadsheets, CloudNine now has the ability to work with modern data like:

  • Communication (texts, MMS, etc.)
  • Computer Activity
  • Geolocation
  • Financial Transactions
  • Social Media

To learn more about our modern data solutions, read the announcement on our acquisition of ESI Analyst.

By providing you with the ability to work remotely, scale quickly to take on more clients, or pivot for new types of data, CloudNine Explore allows you the flexibility to explore your options as an LSP so you can decide best practices for your organization and your clients. 

To see firsthand how CloudNine Explore can improve your remote eDiscovery solutions, schedule a free demo today.

 

The Hybrid eDiscovery Solution: The Best Of Both Worlds

When deciding on the most efficient processes to run eDiscovery in your organization, the options are nearly limitless with hundreds of products and service providers vying for your attention.

Not all document review solutions are the same. Before you commit to your eDiscovery solution, you need to determine whether you would like to perform eDiscovery in-house, outsource it or do a bit of both.

Regardless of which path you take, CloudNine can provide you with a solution that is perfectly right-sized for you, learn more about CloudNine’s review solutions here.

What is eDiscovery Insourcing?

Insourcing is the delegation of a task or operation to a specialized unit within your organization rather than a third party. For legal service providers and large law firms, this includes both the technology used to perform legal data collection and people assigned to collect and review electronic discovery documents.

Insourcing is the traditional method for eDiscovery. Ten years ago, cloud solutions weren’t widely used for eDiscovery due to cost and the fact that most professionals were not aware or comfortable with it yet. Larger law firms invested heavily in developing an in-house infrastructure and software to process and review electronic documents.

Today, the organizations with the infrastructure already in place continue to insource their eDiscovery because it allows them to control both the cost and the data. Typically, these organizations are large law firms.

Benefits of insourcing your eDiscovery:

  • No data hosting or processing fees
  • Complete control over data collection
  • Protection from cybersecurity attacks on external parties

100% control means 100% responsibility. With this responsibility comes the cost of maintaining your eDiscovery environment which includes hiring IT professionals and updating the infrastructure regularly.

If your organization chooses to insource your eDiscovery process, you will need to hire a software company to develop your new software or hosting platform. Of course, you can avoid this if you already have a software engineer on the payroll.

In addition, your new eDiscovery software will need a robust infrastructure to support it. This requires a large investment of capital. If you already have the infrastructure in place, you may have to expand it before you are ready if your organization scales quicker than you’re prepared for.

Lastly, an insourced eDiscovery solution requires trained professionals to make it operational. Not only will you need a team of dedicated attorneys to review the documents, but you’ll need IT staff to maintain the network, software, and hosting platform.

Interested in learning more about the pros and cons of corporate legal insourcing? Check out our blog, Insourcing vs. Outsourcing Your eDiscovery Review Process.

What is eDiscovery Outsourcing?

Outsourcing is the transfer of day-to-day operations of a business function or task to an external service provider. For eDiscovery, this means an outside organization is responsible for providing the technology and personnel to collect and review electronic discovery documents.

Because of the high expense associated with maintaining an in-house infrastructure, many legal organizations contract legal service providers or legal technology companies to host and process their eDiscovery documents.

This also means you do not need to keep IT staff or review attorneys on payroll full-time. Instead, your expenses are tied to a few laptops and a reliable connection to the internet.

With less investment in infrastructure, accounting becomes much easier because you’re not looking to make money back on an expensive investment. Your books and budget are simplified, only paying predictable monthly hosting and processing fees.

Other benefits to outsourcing include:

  • Up-to-date software patches to protect you from cybersecurity threats
  • Hosting and processing fees are based strictly on volume
  • Data can be culled to reduce the number of documents processed

Outsourcing means you have to frequently communicate with your legal service provider. The more you outsource, the more management you need to ensure communication is being relayed correctly and different pathways mean the odds of miscommunication increases.

Data transfer time could pose a problem if one party is suffering from a connection issue or if a hard drive has to be physically shipped to the service provider for processing.

Also, you’re dependent on the service provider’s availability. If they have a system outage or are the victim of a natural disaster, you’ll potentially lose access to your data.

A Hybrid eDiscovery Solution

For some organizations, one solution- insourcing or outsourcing- may not be suitable. Different challenges require different solutions and those that find themselves in this position can always consider adopting a hybrid eDiscovery solution.

A hybrid eDiscovery solution finds the best balance between your internal and external resources to perform specific business functions or tasks like eDiscovery collection, processing, and review.

For example, you could use insourcing to cull the data before advancing it to your outsourced processing. Or you could reserve your insourced platform to handle smaller data collections while sending larger data loads to your external service provider.

Tasks to consider for your hybrid approach include:

To determine which solution is best suited to perform each task, you need to consider these challenges for each:

  • ROI – How much will the solution cost and is it cost-effective?
  • Time – How quickly will the solution allow you to perform your eDiscovery tasks?
  • Complexity – How complex is your eDiscovery process and what risks are involved with the solution?

By recognizing your specific needs and comparing them to the benefits and drawbacks of each solution, you can determine which solution – insource, outsource, hybrid – works best for your organization.

Regardless of your decision, CloudNine can help guide you to discovering the right eDiscovery solution for you. We offer an all-in-one processing and hosting solution that you can use on-prem or through our cloud-based eDiscovery platform, giving you the option for insourcing, outsource, or hybrid.

To learn more, request a free demo and see how CloudNine can make your eDiscovery solutions more efficient and affordable.

Even the Coronavirus Can’t Stop Legal Tech Companies From Pushing Forward: eDiscovery Trends

Sure, the COVID-19 (coronavirus) is disrupting many things from eDiscovery industry events to web teleconferencing solutions to even Federal and State court dockets.  But, at least according to one article, legal tech “vendors” are still chugging along.

According to Bloomberg Law (Legal Tech Companies Push Forward Despite Virus Disruption, written by Sam Skolnik), legal tech vendors say they are unbowed in the wake of the coronavirus outbreak, and are so far keeping new product releases on schedule despite volatile markets and disruptions in how their law firm and corporate clients operate.

Even though some vendor executives recognize that a prolonged national emergency spurred by the virus could cause legal industry clients to reassess their need for new products and services, many in legal tech—especially larger, well-established companies—say disruptions to the pipeline to develop and implement legal technology caused by COVID-19 seem far away.  Examples:

  • Technology and legal services company UnitedLex isn’t delaying any product or service rollout as a result of the virus, CEO Dan Reed told Bloomberg Law in a statement. Digital is in our DNA and we are designed as an organization to deliver even with a primarily remote-first work model,” said Reed. “We continue to monitor and assess the situation and can wholeheartedly speak to our clients’ ongoing reliable access to business applications and information.”
  • Veritone, which offers artificial intelligence-enabled eDiscovery and transcription and translation services, said they haven’t seen a drop-off in work since the coronavirus hit. They say this is reflected by the new contracts they’ve signed with police department and advertising agency clients, as well as one legal client in a transcription matter.
  • For Ben Levi, co-founder and chief operating officer of InCloudCounsel, a legal tech provider, the outbreak has been “unprecedented” in some ways. Yet the pandemic hasn’t been as disruptive to his business as it could have been, he said, citing a strong company balance sheet and the fact that his team was already set up to work from home.  “We’re well-positioned to ride this out,” he said.
  • Orrick Herrington & Sutcliffe is still poised to roll out the next version of the Orrick Dashboard on May 1, according to partner Don Keller. The tool would enable the firm and its tech company clients to access clients’ corporate legal information and to collaborate.

CloudNine is also continuing to push forward with new software releases as well.  On Monday, we rolled out the latest release (version 1.08.05) of our Concordance Desktop product, which focuses on a brand-new document viewer (the first new image viewer in many years!) and related production and printing functions.  If you’re a Concordance Desktop client, you can download the new release here.

So, at least one thing – legal tech “vendors” churning out product releases – hasn’t changed in this very unusual time.

So, what do you think?  Has the COVID-19 pandemic changed how you use and purchase legal tech software?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

eDiscovery Markets Are Growing and Legal Tech Investments Are “Skyrocketing”. So, Who’s Buying?: eDiscovery Trends

No, I don’t mean who’s buying the drinks.  Though the growth of the markets and the growth in legal tech investment is certainly worth celebrating (especially for those who’ve seen their investments pay off).  ;o)  But what I’m asking is: who’s buying the technology?

First, the investment part.  As discussed earlier this week in Legaltech News® (As Legal Tech Investments Skyrocket, Startups Combat Tech Adoption Perceptions, written by Victoria Hudgins), it’s been a record-setting year for investments in legal tech, with the industry reaching the $1.2 billion threshold this year for the first time, according to Bob Ambrogi’s excellent LawSites blog.  And, that was as of the middle of September!

Hudgins has some excellent quotes from several C-Suite execs from legal tech companies that have received funding from investors and part of the tone of the article is the challenge associated with convincing investors that tech-averse lawyers will really buy the software.  As an example, Litify chief revenue officer Terry Dohrmann, whose law firm management software company raised $2.5 million in 2018 and $50 million last June, noted that there are differences in pitching legal tech to investors.

“The short answer is yes, there is a difference,” Dohrmann said. “A lot of that is driven by the universal acceptance that law firms are a little behind in adoption of technology.”

So, it’s the law firms that are fueling this growth in the market?  Maybe partially, but I’m not so sure they are the major factor.

As we’ve covered many times before, Rob Robinson on his terrific Complex Discovery site tracks the eDiscovery specific mergers, acquisitions and investments here (he’s got them all the way back to 2001).  By my count, we’ve had 44 such transactions so far this year (that we know of), with a total estimated amount (at least where amounts are available) of over $560 million, just for eDiscovery company investments.  And, that doesn’t include two investments of over $2.5 billion which have been announced, but not closed.  So, that $1.2 billion threshold could be shattered before year’s end.  Crikey!

Also, as we covered just last week, Rob presented his worldwide eDiscovery services and software overview for 2019 to 2024 on Complex Discovery last month and his annual “mashup” of industry estimates shows the eDiscovery Software and Services market is expected to grow an estimated 12.93% Compound Annual Growth Rate (CAGR) per year from 2019 to 2024 from $11.23 billion to $20.63 billion per year.  Here’s the combined eDiscovery markets for 2019 to 2024, represented graphically:

Of that, the eDiscovery Software market is expected to grow at an even larger estimated 13.05% CAGR per year from $3.39 billion in 2019 to $6.26 billion in 2024, growing about 85% in five years.  Here’s the eDiscovery software market for 2019 to 2024:

Which leaves the eDiscovery Services market, which is expected to grow at an estimated 12.88% CAGR per year from 2019 to 2024 from $7.84 billion to $14.37 billion per year.  Here’s the eDiscovery services market for 2019 to 2024:

Charts courtesy of Complex Discovery.

So, who’s buying?  Seems a lot of the technology is being purchased by the service providers, who are (in turn) using it to provide services to corporations, law firms and government entities, who are buying those services.  Obviously, corporations, law firms and government entities are buying some of the technology as well and law firms providing some of the eDiscovery services.  But, it seems like it’s the service providers who have the biggest impact on the growth of the market.  Do you agree?

So, what do you think?  Will the growth of the market and the “skyrocketing” investment in legal tech continue?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

It’s Time for Your Annual “Mashup” of eDiscovery Market Estimates!: eDiscovery Trends

The appearance of the mashed potato graphic can only mean one thing.  Nope, not that it’s Thanksgiving week (though, many of us will enjoy our mashed potatoes this Thursday).  It means that it’s time for the eDiscovery Market Size Mashup that Rob Robinson compiles and presents on his Complex Discovery site each year.

It’s become an annual tradition for Rob to release it earlier and earlier each year, and, this year, he released his worldwide eDiscovery services and software overview for 2019 to 2024 on November 12 (not quite before Halloween like I predicted last year, but still eight days earlier than last year, so it might happen next year).  ;o)

This is the eighth(!) year we have covered the “mashup”(!) and we can continue to gauge how accurate those first predictions were.  The first “mashup” covered estimates for 2012 to 2017 and the second one covered 2013 to 2018.  Last year, we took a look how close the estimate was for 2018 back then.  This year, we can look at the original 2019 with a look back at the estimates for 2014-2019 (in two parts).  We’ve also covered estimates for 2015 to 2020, 2016 to 2021, 2017 to 2022 and 2018 to 2023 and will undoubtedly look at those in future years.

Taken from a combination of public market sizing estimations as shared in leading electronic discovery publications, posts, and discussions (sources listed on Complex Discovery), the following eDiscovery Market Size Mashup shares general market sizing estimates for the software and services area of the electronic discovery market for the years between 2019 and 2024.

Here are some highlights (based on the estimates from the compiled sources on Rob’s site):

  • The eDiscovery Software and Services market is expected to grow an estimated 12.93% Compound Annual Growth Rate (CAGR) per year from 2019 to 2024 from $11.23 billion to $20.63 billion per year. Services will comprise approximately 69.7% of the market and software will comprise approximately 30.3% by 2024.
  • The eDiscovery Software market is expected to grow at an estimated 13.05% CAGR per year from $3.39 billion in 2019 to $6.26 billion in 2024. In 2019, software comprises 30.2% of the market and, by 2024, approximately 64% of the eDiscovery software market is expected to be “off-premise” – a.k.a. cloud and other Software-as-a-Service (SaaS)/Platform-as-a-Service (PaaS)/Infrastructure-as-a-Service (IaaS) solutions.
  • The eDiscovery Services market is expected to grow at an estimated 12.88% CAGR per year from 2019 to 2024 from $7.84 billion to $14.37 billion per year. The breakdown of the services market by 2024 is expected to be as follows: 63% review, 20% processing and 17% collection.

If we look at the original “mashup” that we covered for 2014-2019 (in two parts), the original eDiscovery Software and Services market estimate for 2019 was $10.56 billion, the original Software portion of the estimate was $3.38 billion and the original Services portion of the estimate was $7.18 billion.  So, the original software estimate was understated at .01 billion, while the original services estimate was understated by .66 billion.  Overall, that’s an understatement of .67 billion.  A reversal from last year, where all of the 2018 estimates were overstated from the actual 2018 numbers reported last year.

A couple of other notable stats:

  • The U.S. constitutes approximately 63% of worldwide eDiscovery software and services spending in 2019, with that number decreasing to approximately 58% by 2024.
  • Off-Premise software spending constitutes approximately 54% of worldwide eDiscovery software spending in 2019, with that number increasing to approximately 64% by 2023. That’s a considerably slower move to off-premise than previously forecast five years ago (78% by 2019).  So, on-premise software is still a significant portion of the software market and is expected to be for some time to come.

So, what do you think?  Do any of these numbers surprise you?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Firm IT Director Predicts “Carnage” in Legal Tech Consolidation: eDiscovery Trends

Not since Clubber Lang predicted “pain” in Rocky III has the state of legal tech consolidation been stated quite this way.  Is that good news or bad news for consumers of legal tech software and services?

As reported in Legaltech News (Consolidation is Inevitable in Legal Tech, Says Firm IT Director, written by Simon Lock), major consolidation within the legal tech market is unavoidable, according to the director of IT at international law firm Osborne Clarke.  That’s probably because it’s already happening as we speak…  ;o)

Speaking at Legal Week’s Strategic Technology Forum, Europe in Spain, Nathan Hayes said that the most successful legal tech ventures would not come out of one specific institution but instead via amalgamations and joint ventures between traditional law firms, accountants and legal tech firms.

“It’s not going to be one of those, it’s going to be a merging of them,” Hayes argued.

“We’re already beginning to see law firms buying up legal tech companies; law firms partnering with academia and legal tech, having stakes in them, investing in them,” he said. “I think we’re going to see different entities evolving rather than these siloed organisations.”

“We’re in a situation where we’ve just seen a massive explosion in legal tech which is great,” said Hayes.

“The carnage that will ensue though, there’s going to be a lot of consolidation, which is going to be incredibly helpful for people like me.”

Yes, he actually referred to it as “carnage”.

Stephanie Hamon, the former managing director and head of external engagement at Barclays, also expected greater collaboration to follow.

“The market is highly fragmented, so when you’re on the client side, you get solicitation all the time and it’s really hard to see the wood from the tree,” she said.

“It’s true for the law firms, and it’s even worse for legal tech.”

Also this week, Rob Robinson posted the eDiscovery Mergers, Acquisitions, and Investments in Q2 2019 on his excellent Complex Discovery blog.  Rob notes that there “have been at least 12 M&A+I events in the eDiscovery ecosystem during Q2 2019”.  That’s the second most in Q2 in the last five years – only last year with 15 events had more.  That’s after this Q1 had the most events in the past five years for Q1 with 15 events and last year’s Q1 was the second most with 14 events.  So, if that doesn’t show that the pace of M&A+I events is accelerating, I don’t know what does.  “I pity the fool” who doesn’t see that!  ;o)

So, what do you think?  Do you predict “carnage” in the consolidation of legal tech companies?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Image Copyright © United Artists

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

My Guest Post for Complete Legal: eDiscovery Best Practices

You might think that since I write a daily blog, I have no time to do any other writing on the side.  And, a lot of times, that’s true.  However, I wrote a guest blog post recently for our good friends and Kansas City partners at Complete Legal and so I’ve decided to point to that blog post for today to give our readers a chance to read that post.

The blog post is titled Leveraging Your Services Provider to Meet Today’s eDiscovery Challenges: eDiscovery Best Practices and it’s on Complete Legal’s site here.  We’ve been partners with Complete Legal for several years and have worked with co-founders Jeff Dreiling and Eric Kelting for several years before that.  In the post I noted that in this era of automation in eDiscovery, you might think that the need for eDiscovery services is dwindling, but nothing could be further from the truth – the need to partner with an experienced eDiscovery services provider to ensure a successful outcome to your case is more important than ever.

I covered several topics in the post, including some interesting statistics that illustrate that the demand for eDiscovery services is as strong as ever, why you need an eDiscovery provider, making sure you select a provider with the right experience, getting your eDiscovery “geek” involved early and often, working with your eDiscovery service provider as a partner (not as a vendor) and how familiarity breeds “content” – which is to say that developing a comfort level with the right vendor can be a beautiful partnership that lasts for years.  That’s something we can all appreciate!

Again, the post is here, so please check it out!  Consider it today’s post, just in a different place.  See what I did there?  Sneaky, huh?  :o)

So, what do you think?  How do you work with your eDiscovery services provider?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Investment is Changing the eDiscovery Market as We Speak: eDiscovery Trends

Yesterday, we talked about how eDiscovery business confidence seems to tend to take a downturn every summer.  But, when it comes to private equity firms’ investment in eDiscovery companies, eDiscovery business confidence seems to be stronger than ever.

As reported in LegalTech News (E-Discovery Market’s Demand Attracting More Investors Than Ever Before, written by Rhys Dipshan), the author notes that over the past few years, private equity firms have invested in over a dozen eDiscovery companies.  Since January 2018, have played a leading role in reshaping the eDiscovery market.  Some examples:

  • Xact Data Discovery was acquired by private equity firm JLL Partners in January 2018;
  • San Francisco-based private equity firm GI Partners was behind the March 2018 merger of Consilio and Advanced Discovery;
  • In October 2017, Knox Capital led a funding round for eDiscovery and forensics provider HaystackID, which then supported HaystackID’s April 2018 acquisition of Envision Discovery and Inspired Review;
  • In late May 2018, another New York City-based private equity firm, Leeds Equity Partners, also moved into the e-discovery industry by investing in Exterro. While the exact investment amount was not disclosed, Exterro told Legaltech News it was a “nine figure deal”;
  • And yet another private equity firm, Peak Rock Capital, invested in eDiscovery company (and sponsor of this blog) CloudNine and helped fund its March 2018 acquisition of the LexisNexis eDiscovery product suite. A spokesperson for Peak Rock Capital said the firm invested in the CloudNine because it “saw great potential in CloudNine as a high growth software-as-a-service provider of processing and review solutions.”

So, what’s behind private equity’s appetite for all things eDiscovery? The author states that “[a]t its core, it stems from private equity’s belief that demand for e-discovery technology and services remain strong for years to come.”

Private equity firms seem not to be too worried that their eDiscovery picks will be crowded out of the market anytime soon. Peak Rock Capital, for instance, believes that there “is ample demand in the growing e-discovery segment. There’s been consolidation on the services side, but the market is quite large, and we continue to see robust demand from new customers.”

As I’ve noted several times on this blog, a great resource for a list of mergers, acquisitions and investments is Rob Robinson’s Complex Discovery blog where he lists industry transactions back as far as November 2001 – which is even before Kroll acquired Ontrack!  Now, both names are absorbed in acquisition.  We’ve certainly seen several large transactions over the years, but if you look at the most recent transactions (since May 1, 2018), we have at least three “nine figure deals” in the last nine months.  That’s big business!

So, what do you think?  Are you surprised in the amount of investment in the eDiscovery industry?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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