I got the chance to attend several sessions at the New York IQPC e-discovery event this week for some interesting perspectives on bringing e-discovery to the enterprise.

Recommind’s Craig Carpenter hosted a panel on Information Governance featuring Scott McVeigh, Director of RM at Aramark and Dawson Horn, Senior Litigation Counsel of Tyco, focusing on the benefits of litigation preparedness and getting organizational support from management and stakeholders. This issue came up more than once during the conference – the challenge of obtaining executive approval and participation from IT, legal, HR, compliance, procurement, RM and other stakeholders in planning, designing and deploying comprehensive information systems. McVeigh encouraged users to be vocal about the need for change, (over the course of several years if necessary), and to invoke C-level names to achieve organizational buy-in.

Autonomy’s Deborah Baron interviewed Karla Wehbe, Senior Information Resources Manager at Bechtel, for a case study of how the company is promoting document re-use by collaborating with outside counsel on a new methodology for ediscovery review. After parting ways with its prior law firm and losing access to previously reviewed documents, Bechtel established an information-centric approach to the process, facilitating re-use of reviewed documents through additional coding from outside counsel. The company claims that 5-75% of reviewed documents are now reusable.

Benefits include better control of document categorization and retention policy, as well as the ability for the company to “tell a story” with its evidence that can be communicated across cases. Wehbe acknowledged an initial “identity crisis” from outside counsel as the corporation established more control, but claims that they are now advocates of the process, and it has built trust and cooperation between them. An interesting example of the changing nature of the attorney-client relationship in corporate law. I am curious as to what their billing arrangement is.

Ian Campbell of iConect was joined by Kurt Michel of Content Analyst, VP of litigation for Phillips North America Timm Miller and Morgan Lewis Associate Denise Backhouse for a discussion of collecting ESI internationally, including EU data privacy regulations, the Hague evidence convention, blocking statutes, and the precedent set by the 1987 Supreme Court case Aerospatiale v. United States for requiring discovery even in defiance of blocking statutes from the jurisdiction of the data.

The difference in global collection philosophy is staggering (at least to this provincial American). Backhouse was asked (facetiously we hope) if it wasn’t enough for both parties just to agree “not to tell” about breaking regulations during discovery, and responded that that would violate the fundamental human right to privacy – literally a foreign concept to those of us accustomed to living under the Patriot Act. Not only could a company not access or even put a litigation hold on employee email in many EU countries, according to Backhouse even board meeting notes would be forbidden since they would identify attendees, potentially revealing where they were employed at the time.

The panel concluded that international e-discovery is not a checklist, but a carefully-negotiated balance between compliance and avoiding sanctions. We continue to follow this with interest, particularly the pending updates from the UK Civil Procedure Rules Committee, as Nick reported from the Thomson Reuters E-disclosure Conference in London.

Unfortunately I missed the judges’ panel, but the sessions I did attend were informative and underscored some of the trends we’ve been seeing in the market. Namely: the rise of Information Governance, the shifting of roles between e-discovery vendors, service providers, general counsel and law firms as technology moves in-house, and the increasingly (complicated) global nature of e-discovery.

We’re now hard at work on our 2010 long-form report on E-discovery and E-disclosure, featuring 25+ vendor profiles and comprehensive coverage of this fast-paced market – publication is slated for late Q1 2010, after Legal Tech. Stay tuned.

This Thursday I’ll host a short webinar to discuss some of the findings from our recently-published report on the emerging Information Governance market.  This report looks at how archiving, records management and e-discovery technologies are coming together to help organizations get a better handle on internal data for litigation readiness and compliance purposes.

The webinar is free and open to anyone, so please feel free to join if you’re interested in this topic.

During the webinar, I’ll outline some of the trends we uncovered while doing our research for this report, look at the vendor landscape and M&A activity in this area, and briefly discuss some of the technologies that we think will be important in this sector moving forward.

Here’s the info and registration link:

The Rise of Information Governance webinar

Thursday, September 24, 2009

12:00 – 1:00 PM EDT

Register here

Recorded versions of our webcasts are available on our site a short while after the events are over.

451 clients will have seen my report of Autonomy’s Q2 results last night, so I’m not talking too much out of school here, but one of the more interesting things for the longer term from its conference call was the identification of three phases of evolution from basic eDiscovery through information governance.

The spot in the call where this was examined was given over to COO Andrew Kanter, who is a lawyer. He didn’t elaborate on it as we has clearly reading from a script (so much so that he said “click,” at the end of each slide ;)), but nevertheless I though it was interesting to note and pass on.

The three phases, which the company believes will encompass roughly five years at most large organizations are:

1. Archiving and basic e-discovery as companies deal with litigation or are not in compliance
2. Legal hold and early case assessment – part of what it calls advanced e-discovery – when companies come to the conclusion that manual methods of legal hold – sending emails out to the employees saying not to delete things – don’t work.
3. The third phase is information governance, i.e. the policies and technologies meant to dictate and manage what corporate information is retained, where and for how long. 
   

At the moment, the company is seeing ongoing work in phase one and the start of work in phase two. It has one unnamed client doing phase-two work – a Wall Street institution – with 70,000 desktops and 490TB of data to manage across six geographies. Autonomy says the number of potential deals in its pipeline for phase two has increased in the last quarter, but its timelines are still a bit fuzzy. But it seems like Autonomy is not seeing any phase three, i.e. full-on, enterprise-wide information governance work at the moment.

We have seen this movement from e-discovery to information governance in our own research, but we’ve also noticed how early we are in that process. In fact Kathleen Reidy is about to publish our report on information governance that picks up directly from where our December 2008 report on e-Discovery and e-Disclosure left off. In this new report we will examine various approaches to information governance and how it will impact the market for archiving, content management, search and e-Discovery going forward. Kathleen or I can provide more detail should you require it.

As something of a follow-up to the special report we did last fall on the market for eDiscovery tools and technologies, we’ve begun work on a similar report meant to look more deeply at that first process phase in the EDRM — Information Management.

Information management sounds like a nice manageable topic, doesn’t it?

We’re looking specifically at the market for technologies meant to help organizations manage unstructured info (often ad-hoc, like email and unmanaged docs) more effectively so that eDiscovery won’t be such a firedrill if and when it occurs.

eDiscovery isn’t the only reason to get a better handle on this ad-hoc, unstructured info — there are compliance-related reasons in some cases and the costs and risks associated with storing lots of stuff for long periods of time when it should have been culled or deleted.  Conversely, not retaining information or at least having a documented retention and disposition plan is also risky.

As we’ve noted before, some are calling this “information governance.”  So is this a report on the information governance market?  Is there such a thing?

Here are some of the things we’re learning so far with our research:

• There’s no question that governance is a hot issue with many organizations.  Getting a better handle on email is the biggest pain point.  Check out this recent AIIM survey for some interesting data on this.
• Better preparedness for eDiscovery is the biggest driver, followed by the complexity of compliance, the need to reduce costs, and security concerns (security-related governance is really a separate market and not one we’re looking at here).
• One of the fundamental questions seems to come down to whether organizations want to take an archive-based approach to governance or one that is tied to an ECM platform.
• Since email is the big problem, email archives are a big part of the solution for many companies.
• Email archives are expanding to handle more diverse content types with more sophisticated retention, classification, legal holds and eDisco tools.
• The disconnect with this approach seems to be when emails or other content actually are records and need to be managed as such.  How data moves from one system (e.g., archive to records management system) or is managed in-place in an archive by an RM system seems to be mostly an unexplored issue for most organizatins at this point.
• Because of this, ECM vendors paint archive-only vendors as “point tools.”  ECM vendors see governance as an ECM problem and come at with platforms that generally include both archiving and records management.  But the archives from ECM vendors are generally newer or not traditionally as competitive in pure archiving scenarios.

All of the above makes for quite an interesting, if difficult to label, market.  We’re not really writing a report on the ECM market, since the archives are so critical to handling email especially, the major problem area, and most of the leading email archiving vendors are not full ECM vendors.  But there is definitely an ECM and records management component to this so we’re not just profiling the email archiving market.  In fact, we’re trying to only profile those vendors that can manage multiple content types and, ideally, do so across repositories.

Which I think leaves us talking about the information governance market.  This concerns me a little bit, as I worry that “information governance” is a vague tag and not really an identifiable sector.  But I see no other easy way to describe the intersection of vendors and technologies we see coming at this problem from different areas of strength.

I’d love any comments on what others think about this – is information governance a market?

George Socha released the 78-page EDRM search guide draft v. 1.14 on February 6^th for public review and comment. The guide is meant as educational commentary for legal professionals and litigation software and service providers, including guidelines in developing “appropriate and effective search methods.” The guide is the work of 18 people from 15 organizations – some of the boldfaced company names I picked out from the document changes being Autonomy-Zantaz, Clearwell Systems and Vivisimo, as well as a number of law firms and others.

The guide offers a step-by-step scenario of litigation response involving two fictitious companies and their alliterative employees (e.g. Alex Arnold of Alpha Corporation and Bonnie Benson of Beta Corporation) embroiled in an intellectual property dispute.  This example is used to illustrate the workflow that goes along with the EDRM. It was instructive and sometimes entertaining, for those of us who read mystery novels and are interested in the chase, anyway.

It also includes an in-depth primer on search methodologies and syntax, which tickled my librarian bone. This section would be at home in a library school curriculum, right down to the search query treatment of diacritics. Of course the flip side of this is that average users might find it too technical.  Overall it’s a good read for anyone interested in search and information retrieval. Later sections deal with search documentation and validation of results.

I found the guide to be comprehensive in addressing the litigation response process and strategies for defensibility. It is straightforward in listing the actions that professionals in each role (general counsel, outside counsel, custodians, IT personnel, witnesses) must take, and overall it achieves a good balance of outlining the legal process and the resulting steps taken with each fictitious party’s ESI.  I think it elegantly addresses one of the big criticisms of e-discovery products, references and approaches – namely that they are not always a happy marriage of IT and legal expertise, or do not encourage collaboration and mutual understanding between these two groups.

Rob Robinson of Orange LT has logged some early commentary on the guide here. Like Rob, I was a little surprised that there was not a section for judicial rulings regarding search. On the other hand it’s nice to read practical advice that is not mired in legal-speak. There are certainly plenty of other sources that provide history and explanation, and with the rapid succession of decisions being handed down lately it might be difficult to keep it current for the sake of the guide.

By way of follow-up, I wanted to answer the questions that I didn’t get to here, so that everyone can share. I haven’t answered absolutely every one here – I don’t have a figure for market growth rate, for example.

Q: Do law firms, enterprises, etc prefer choosing a service that is on-premise vs. SaaS? Why?

I answered this on the call, but it obviously varies depending on the size of the company involved, the amount of times they’ve done eDiscovery, whether they’re a law firm or not. Bear in mind that the early days of eDiscovery were dominated and to some extent still are – by services companies like Fios and Kroll Ontrack that provide outsources data processing. So the common FUD tactic used by on-premise vendors to knock SaaS, i.e. that customers won’t like their data leaving their premises and ending up on someone else’s server, doesn’t- or at least shouldn’t – really apply here. Sensitive data has been removed from organizations for eDiscovery purposes for more than a decade like that already.

The larger companies will, on the whole, still prefer eDiscovery to be handled in house in terms of the software they use, though you should remember they almost always engage outside counsel, and the two of them need to be working with compatible systems, so large organizations are starting to have purchasing influence over the technology used by law firms.

One key thing for vendors to remember is that if they’re selling their eDiscovery as something to be used in a reactive eDiscovery process which almost all of them are to one extent or another – it’s hard to sell a reactive product to the enterprise if it isn’t quick to deploy — and that’s where SaaS and appliance have an advantage.

Q: You mentioned IT organization not be capable of pulling together different apps…do you see this a benefiting ECM vendors re: single repository play or is a federation across the data stores more likely?

If ECM vendors can solve a problem of both the legal and IT department simultaneously then it obviously should be good for them. How they do that could be either way. Some of the larger vendors will go all out tp optimize their own repositories so that the full benefits of their particular eDiscovery offering can only be had by putting all the content in their repositories. But others are proving successful with ‘manage in place’ federation architectures too. It’s not a case of one or the other winning overall, we don’t think.

Q: The sector seems quite fragmented do you envision a lot of consolidation? Which vendors do you think could possibly be acquired and how should a buyer consider picking the right vendor?

A: We envisage some consolidation certainly, though a lot has already happened. I’m not going to name names on the blog, beyond what I said on the call, that among acquirers we would expect HP and Symantec to feature, though there are others mentioned in the report. There are also segments and companies mentioned as potential targets in the report too.

As for how a purchaser should pick a vendor – I’m assuming the questioner means in the light of potential consolidation – then you need to do some homework on the stage the company is at, the amount of investment its taken on and has left, profitability or otherwise, the history of the management and so on. At the end of the day, if it gets bought, it then depends which company it gets bought by; if it’s one that just grabs the customers, I’m sure competitors will be offering favorable deals to switch before the ink is dry on the deal.

Q: One of the companies I noticed was not mentioned in the presentation was H5? Is this a company that you follow? How is the business model of this firm different?

Yes, H5 is in the report. It does have a slightly different model from other software or service providers we’ve looked at in that it offers a combination of consulting services and automated review as an alternative to outside attorney review. Plus, it offers up-front scope model, rather than billable hours.

Q: How does eDiscovery tie into other Security tech like Log Managements, or storage of Emails, IM etc? Should eDiscovery be the central control point for Enterprise security?

This is a very interesting question. And one that I’ll deal with in a separate post soon. Watch this space.

Q: How important do you feel legal holds solutions are?

They’re an important part of the preservation stage of the EDRM, but technically not that hard ti implement. Autonomy and Recommind are two vendors that have recently introduced such a function into their eDiscovery offerings.

Q: How do you think demand for eDiscovery solutions will be impacted in tight IT spending environment?

There will be tension between eDiscovery as capital expenditure versus operational expenditure, as there always is, but obviously large scale cap ex spending is something all organizations are trying to avoid right now. It’s hard to see however how in highly litigious industries eDiscovery can be anything other than non-discretionary spending. There will be pricing pressure on some vendors and companies will do whatever they possible can to reduce data volumes if they’re still being charged by the gigabyte. That model will also be called into question by the largest customers.

Q: Could you comment on the kind of data that is fair game in a discovery process? for example, what about IMs or even data that is stored in the cloud like salesforce.com transactions?

A: Anything stored electronically is fair game in an eDiscovery process. With something like data in a Salesforce.com database that’s obviously a lot easier to extract than if some instant messaging systems, And if your organization relies on one of the free pubic IM tools, like AIM, then you could have great difficulty  retrieving it, unless the logs are stored locally on desktops, as it can be quite easily, with iChat on Macs, for example.

Q: Where can I get access to this presentation and report?

The report information is here and the presentation will be emailed to you – drop us a note at this address. The webinar will be available for download very soon too. I’ll put a link up here as soon as I have it.

Q: Why can’t I hear anything?

A: We got this question a few times. So I’d like to apologize and say thanks to all of your that persevered with our audio problems – we couldn’t get he webinar tool’s audio channel to work, despite it having worked perfectly in two prior run-throughs. I have much more sympathy than before now for vendors doing live demos – I feel your pain

I heard from veterans that this year’s LegalTech New York was smaller than last, but I can’t say that knowledge made it any less intimidating for a first-timer. Several in the booths told me that despite the lower numbers, the quality of customer was going up – there were fewer tire-kickers and swag-grabbers and more substantial customer prospects. An encouraging sign in a down economy.

Not surprisingly, in the booths and in the conference halls one of the biggest themes was cost. This jibes with a key finding from our December report on e-discovery and e-disclosure, basically that they’re out of control. Another of our projections, the moving of e-discovery in-house in corporations, was a concurrent theme as one of the best means of reducing those spends.  Vendors seem to be moving further leftward in the Electronic Discovery Reference Model (EDRM) towards the earliest stages of data creation in order to capture more of the revenue from this, also as we reported.

The YouTube town hall meeting gave good insight into what issues are important to the legal community in dealing with the challenges of e-discovery.  Some of the hot-button issues:

• Federal Rule of Evidence 502
• the Sedona Conference Cooperation Proclamation.  
• Search methods in review, their transparency and defensibility.
• International e-discovery considerations such as cultural differences, data privacy and the importance of Unicode in multilingual review.
• Monica Bay, editor-in-chief of Law Technology News (LTN) made points in a youtube question about jargon involved in vendor claims (some that resonated with my own experience) – namely that the same ten terms of jargon are used by all vendors to describe their considerably different products, and these are often not well understood by potential buyers. In my experience, terms such as concept search can be confusing and early case assessment can vary greatly in definition and execution from vendor to vendor, but now seem to be offered by many of them with minimal explanation.

To build on that point, it’s a common complaint in any market that vendors are “selling what they have,” versus what the customer needs, but in such a critical area as e-discovery this can be downright dangerous. The consumer needs to be armed with information and expertise in order to make an informed choice – probably one of the reasons that service providers and consultants remain some of the most trusted entities in the field.

The hottest topic NOT discussed in the panels and sessions (at least the ones I attended) was the Autonomy-Interwoven acquisition and what it will mean for the market, about which 451 subscribers can learn more here and here.

Overall the show brought together some of the best minds in the industry for a slightly dizzying wealth of legal and market information. Let me not forget a big “thank you” to the several vendors who met with me to discuss their products and views on the market landscape over the three days. Here’s looking forward to next year.

For additional perspective, see the excellent coverage from Rob Robinson of Orange LT, Whit Andrews at Gartner, and Sean Doherty at Law.com

It might be overshadowed by the ramp-up to LegalTech, but a big project of the Sedona working group on e-discovery will be kicking off later in February, the 2009 Text Retrieval Conference (TREC) Legal Track.  For going on 18 years, TREC has been a workshop for encouraging research in information retrieval.  The three-year-old legal track is organized through the National Institute of Standards and Technology and co-coordinated by Jason Baron, director of litigation at the National Archives.

Participating teams work with a test case to evaluate the most effective search protocols for finding relevant documents in e-discovery, i.e. what finds the responsive documents best?  Concept search, expert human reviewers, Boolean keyword search using “x and y or z” or other methods?  I spoke with Jason Baron briefly about this year’s TREC, which will switch test collections from the tobacco litigation “Master Settlement Agreement” repository to the Enron collection of email and attachments.  He believes it will increase participation by reducing the need to search OCR’d documents.

Most of the participants in past years have not been vendors, but a few we know of are H5 and Clearwell Systems.  It’s certainly a worthy goal to find the most effective methods and work towards improving standards in how we approach sifting through legal documents for relevancy.  You’d think more vendors would be willing to put their tools to the test for the greater good, “walking the walk” if you will.  Instead their absence is a reminder that e-discovery is still a wild west scenario with no “standards sheriff” in town.

How likely is it that vendors will put their products to the test in an attempt to back up claims and find better methods in review and analysis of Electronically Stored Information for trial?  We hope that more of them will answer the call.  It’s a good time to prove your chops if you’re in e-discovery – anyone going to LegalTech next week will be able to attest to the dizzying number of vendors making the market ripe for consolidation, which we have already partly seen through the high volume of acquisitions in the last few years.  It remains to be seen how many of the smaller fish will still be left swimming at year end given the economic climate and fierce competition.  Proving their mettle and working toward the common good wouldn’t hurt any.

I will be at LegalTech from February 2-4 talking to vendors about their products and their own methods for finding responsive documents.  If you would like to get in touch or schedule a meeting, I can be reached here.

I have been somewhat remiss in promoting this, but I’m presenting a webinar tomorrow, Wednesday about our recently published report on eDiscovery and eDisclosure.

We’ll be going over some of the key findings of the report including our mapping of vendors to stages in the EDRM process.

Registration is here.

Date: January 28, 2009

Time: 9am PT / 12pm ET / 5pm UK

More information on the report itself is here and you can buy it as a one-off report here.

We wouldn’t want to be left out of the new year preview craze and we do publish fairly lengthy end-of-year reviews and year-ahead previews, along with an M&A Outlook, for 451 clients — the full text of the information management reports are here and here and the M&A Outlook for Software starts here (451 Group client log in required for these).

One of my thoughts in our 2009 preview on information management is the title of this post.

I don’t think ECM (enterprise content management) has ever been a particularly well defined market.  It started out earlier in this decade as an idea, a way to talk about the need to rationalize repositories and content apps.  Then it became a market category, a way to talk about content management vendors (mostly those focused on document management really) whether there was really an “enterprise” component to deployments or not.

I think the “ECM” moniker may be nearing the end of its usefulness now (if it was ever apt or useful in the first place).  WCM (web content management) has already splintered off as it became clear that web content is really not just another type of content to be managed by a central repository.  Today WCM is more about online marketing and often ties at least as much to marketing automation and CRM products as it does to other document management apps in an enterprise.

Other “ECM” vendors are focused on TCM (transactional content management), the business process apps (claims processing, loan origination and so forth) that have been the bread and butter for ECM vendors like EMC Documentum and IBM FileNet for years.  We’re seeing more sophistication here, more ties to enterprise business apps (e.g., HR, financial) and more attempts at end-to-end offerings that include capture and document output/presentment.

The other, perhaps bigger, trend for the year ahead is the focus on ‘information governance’ (the IG in the title above) the term many vendors are applying to efforts and product lines aimed at proactive information  management for compliance and eDiscovery purposes.  Information governance from a product perspective generally includes archiving (mostly email), records/retention management and eDiscovery tools.  Here we find ECM vendors like EMC, IBM and Open Text, as well as CA, Symantec, Autonomy and others that have no stake in “ECM” of the TCM variety at all.

What do we mean when we say “ECM” these days?  Vendors like Autonomy and Symantec don’t generally claim to be in the ECM business, but yet they will be increasingly competing with the likes of IBM FileNet, EMC and Open Text for ‘information governance’ business.  It will be interesting to watch how the competitive dynamics (and nomenclature) shakes out in the year ahead.