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Looking into the Electronic Discovery Crystal Ball for 2005—Predictions, Observations and Opinions
By Dennis Kennedy and George Socha
February 2004

Dennis Kennedy (DK): You didn't have to be a priestess at the Oracle of Delphi to predict that electronic discovery would be one of the hottest topics in technology for lawyers in 2004. Electronic discovery elbowed itself to the front of the stage in 2004, getting a lot of attention from lawyers, clients, pundits and the technology industry. What do we see happening in electronic discovery in 2005? Electronic discovery will certainly not cool off. If, as I think, there has been more heat than flame in the electronic discovery world, 2005 will be the year when the fire starts.

George Socha (GS): For all of the discussion about electronic discovery in 2004, what I have been hearing is that a lot of activity was pushed off into 2005. On the vendor side, some folks saw a lot less work than they have planned for and on the consumer side, people continue to come up with some imaginative ways to avoid actually dealing with electronic discovery. That said, those in the know tell me to expect not just a lot of electronic discovery work in 2005, but a rash of provider mergers and dissolutions.

DK: I believe that electronic discovery will be recognized as the single most important topic in legal technology in 2005. We might quibble about whether it actually is the most important topic, but it clearly is the 800 pound gorilla in the room. Electronic discovery brings into play so many different issues: legal, technology, strategy, management, staffing, client relations, preparing and trying cases, procedural rules, and a laundry list of other issues. In fact, the evolution of electronic discovery may fundamentally change the practice of many lawyers. In 2005, expect to see an increased focus on very specific issues, but also a growing recognition of the larger issues.

GS: While I agree that electronic discovery is going to bring substantial changes in the practice of many lawyers - after all, several of the Federal Rules of Civil Procedure likely will undergo major revisions just to address electronic discovery concerns - at the same time we should not exaggerate the speed with which lawyers are likely to change what they do. To provide some context for electronic discovery hubbub, consider this. Nearly 10 years ago I published an article on the comparative worth of photocopying versus imaging of discovery documents (paper, of course). Lest one thinks that topic is of historically interest only, I continue to receive requests for copies or to incorporate points from the article into presentations to law firms and corporate legal departments. Those folks are a long way from dealing with electronic discovery.

DK: My most important prediction is that clients will start to take on a much larger role in making discovery decisions, especially those business clients that have implemented records management technologies and policies as a result of Sarbanes Oxley, HIPAA and other regulatory requirements. In simplest terms, clients are starting to lose patience with the slow pace and even reluctance of law firms to address these issues. Once businesses have their own systems in place, we will see a growing tendency of these businesses to use their own systems, people and vendor relationships to produce, manage and perhaps even analyze data before they get their lawyers involved. The old approach of sending in squadrons of high-priced associates in to look through boxes of paper will come under increasing scrutiny. Database approaches will be seen as preferred models to labor-intensive discovery. We won't see a sea change in 2005, but the beginning of this trend will become very apparent. If lawyers do not address their appropriate roles in this process, they may find themselves getting "what's left" in a few years.

GS: This already has begun. The more sophisticated corporate clients - names everyone would readily recognize - are beginning to recognize that it often is in their best interest to wrest control of the electronic discovery process from their outside counsel or, at a minimum, work closely with outside counsel on these issues. At the same time, electronic discovery services and software providers have begun targeting the corporate market with vigor, not just devoted more effort to selling their existing offerings directly to corporations but also working to offer solutions more closely tailored to the needs of that market. I suspect that we have a ways to go, however, before we see the scale of displacement that Dennis suggests. We are still at the early adopter stage.

DK: George's studies and others have noted the dramatic growth in electronic discovery providers in the last few years. I expect to see growth in the number of electronic discovery businesses in the high double digits, and perhaps triple digits in certain categories, especially computer forensics. It will become even more difficult for anyone to have a clear picture of the total provider landscape. This growth will happen even with the simultaneous trend of consolidation in the industry. Expect to see non-traditional providers enter into the electronic discovery market by way of acquisition and some mergers within the industry. It will be a busy year and you may want to keep a score card. As I'll discuss later, there are some barriers to wholesale consolidation in the industry at large, so the action will be heaviest in certain sectors.

GS: I was able to identify over 60 new electronic discovery service providers in 2003. Although I do not have the 2004 numbers pulled together yet, it would not surprise me to find that there was similar growth last year. As to the future, this type of growth is not likely to be sustainable. As more vendors become better established, barriers to entry almost inevitably will have to increase. So here is my prediction for 2005: Continued growth but at a lesser rate than in the last couple of years.

DK: The average litigator will find that the word they become most familiar with in 2005 is "metadata." Metadata is the hidden descriptive information, stored revisions and comments, and other attached information that is associated with files, especially documents, and, most commonly, Microsoft Office documents. Several law firms were publicly embarrassed because of metadata associated with documents in 2004. Unfortunately, other firms will suffer the same fate in 2005. Metadata may not be the most important issue in electronic discovery, but it is one issue that lawyers must be familiar with because there will be negative consequences if they don't address the well-publicized issues. The good news is that, in many cases, you can address the primary issues relatively easily and inexpensively.

GS: Here is an area where what goes around comes around. When I first started giving presentations on electronic discovery in the early 1990's, audience members generally were more concerned about whether it was safe to send attorney-client communications via email. This question of metadata is, in many ways, old wine in a new bottle. What it does point out, I think, is the difficulties many attorneys (and clients, for that matter) have with this whole field. There is a lot of noise surrounding electronic discovery, but we still lack fundamental agreement about what electronic discovery is, what it covers, and what we should do about it. I predict that in the coming year, this topic will start to get the attention it deserves.

DK: My 2005 phrase of the year is "native file format." Electronic discovery has evolved out of paper discovery. One of the legacy processes has been scanning paper documents as .TIF image files. As a result, there is a tendency to treat .TIF as a common file standard. Today, however, conversion to a more common standard such as PDF can have a number of advantages, not the least of which being smaller files. Many lawyers would like to work with files in their native formats to the great extent possible. In other words, Word documents stay in the .DOC format and Outlook email stays in the .PST format. There are benefits of working with data in familiar programs and potential cost savings if conversion can be limited or avoided. "Native file format" is becoming the buzzword to know in this area.

GS: Yes . and no. I agree that there will be much more interest in trying to deal with electronic files in their "native format" if for no other reason than the costs and deal of converting to TIFF or PDF. What we should not lose sight of, however, is that native is not always the best way to go. There often are legitimate reasons for converting electronically stored information from the form in which it was stored by the client, to some other form that can be more readily used by attorneys, more easily produced to the other side, and more successfully tracked. The day someone comes out with a tool that allows users to view files in their native form, add Bates numbers, redact privileged information, and still not change that native file, will be . well, it will never be. After all, adding Bates numbers and redacting information necessarily entail changing the file.

DK: We'll also see some tentative moves toward "software as services," "on demand computing" or what used to be known as the "application service provider" model. There are many significant questions that have to be answered, but this approach makes sense for certain parts of the electronic discovery process. To greatly simplify, this approach can be thought of as a form of outsourcing. A third party provides you with access, generally through your Internet browser, to all the software that you need to use. The software will be running on the provider's optimized hardware environment and your data will be stored on its servers. You will pay a service fee, usually based on your actual usage. Creating a network environment to handle electronic discovery in house is not an option for many law firms. There are sad stories from firms that have tried to do so. An outsourced model makes good sense, at least conceptually, and there has definitely been talk about it in 2004. Because of the thorny questions raised by this approach, however, we will likely see only some tentative steps in this area in 2005, but I recommend that you make it a priority to follow this trend.

GS: Nothing new here, at least not if we are talking about on-line review of electronically stored information. Fios and others have been offering this for years. Now, if you are talking about all or a large part of a law firm's IT operations, West tried this several years ago with WestWorks, an effort that was ahead of its time but a concept whose time, I agree, may soon be upon us. For a more detailed discussion, test your Google skills; see if you can dig up an article written earlier this year by Tom Gelbmann (who incidentally is the co-author of the Socha-Gelbmann Electronic Discovery Survey).

DK: My last one is an observation and a recommendation more than a prediction. It's very clear that even the largest electronic discovery vendors and service providers do not see themselves as one-stop shops. There are simply too many sectors in the electronic discovery for any one provider to have the expertise to do them all well. Electronic discovery is evolving into an area where "partnering" and personal relationships count for far more than product reviews and marketing brochures. The "who" questions will become increasingly important in 2005. Putting together good partnerships will be a key to success.

GS: Here are a few suggestions along those lines: Try to find a provider who fits your needs - computer forensics? Volume processing? Web hosting platform? Look for a provider that uses the right tools for your job. Make sure the provider knows how to use those tools and use them well. If you are lucky, you might find one vendor that meets all your needs. But don't count on it.

DK: In many ways, George, I don't see much mystery about 2005, although I'm sure that we'll see some surprises. The winners in 2005 will be those who make the efforts to learn all that they can, develop personal relationships and potential partners with those in the electronic discovery space, and, perhaps most important, seek out and listen to the wishes, concerns and recommendations of their clients. It will be a year to get out from behind your desk and work with people rather than paper.

GS: I tend to agree. Which means it also is a good year to roll up your sleeves and try to figure out, for yourself, what this electronic discovery stuff really is all about.

Open Mike Archive >>

 
Dennis Kennedy

http://www.denniskennedy.com

Dennis Kennedy is a well-known legal technology expert and computer lawyer based in St. Louis, Missouri. A frequent author and speaker, he was named the 2001 TechnoLawyer of the Year by TechnoLawyer.com for his role in promoting the use of technology in the practice of law. His blog (www.denniskennedy.com/blog/) and web page, Legal Technology Central (www.denniskennedy.com/legaltechcentral.htm) are highly regarded resources on technology law and legal technology topics. He has collected one hundred of his articles in an e-Book called "Dennis Kennedy's Legal Technology Primer." For more information about Dennis and other resources, please visit www.denniskennedy.com and www.denniskennedylaw.com.
   
George Socha

http://www.sochaconsulting.com

George Socha is a former litigation attorney offering services as an electronic discovery special master, expert witness, and advisor to law firms and their clients, corporations and other organizations, and legal vertical market software and service providers in the areas of electronic discovery, automated litigation support, and the use of technology to enhance the practice of law. He is co-chair of the ABA Pretrial Practice & Discovery Committee's Electronic Discovery Subcommittee, co-chair of the ABA Committee on Corporate Counsel's Subcommittee on Litigation Technologies, co-chair of the Minnesota State Bar Association Technology Committee, and a member of the board of directors of the Minneapolis Chapter of the Information Systems Forensic Association. For more information about George as well as additional electronic discovery and automated litigation support resources, please visit www.sochaconsulting.com.
   
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