There comes a point in time where you have to shake your head and say that we’ve created something that is unsustainable. Whether it was the Dot Com bubble in the 90’s or the Housing bubble this decade, there is a point in which you have to stand back and say that reality is going to cause a backlash at some point and cause the bubble to burst. It is August 2009, and I’m calling it: “Electronic Discovery Is A Bubble” and in the next couple of years, if not sooner, it is going to burst.

Why is it a bubble?
First of all, the basic “idea” behind e-discovery is something that is difficult, if not impossible to accomplish. That idea is that electronically stored information (ESI) can be captured, indexed, encoded, filtered and searched so that you can find that smoking gun that every lawyer dreams of finding. Craig Ball, in the August 2009 issue of Law Technology News, gives some good examples of how difficult this process is.
Secondly, it is too expensive. Just with the Dot Com and Housing bubbles, you cannot expect clients to continue to pay exponentially for the cost of processing, indexing and reviewing ESI if that cost is greater than the reward. In other words, why would your client pay $1 million in E-Discovery costs for a reward of $500 thousand?
Zubulake vs. Rule 1, FRCP
In the same issue of Law Technology News, David Waxse, U.S. Magistrate Judge, District of Kansas, gives us his favorite quote, and I find it to be a great quote to use when discussing E-Discovery and the overall cost:

Our job is to secure the ‘just, speedy, and inexpensive determination of every action.’ — Rule 1, Federal Rules of Civil Procedure

Compare this quote to the rules set forth in Zubulake or in the new California E-Discovery rules (here’s a great [PDF] overview from Winston Strawn attorneys), you’ll find that the two concepts do not mesh.
I’m not saying that E-Discovery is going away, what I’m saying is that there is going to come a “correction in the market” over the next few years that will burst the bubble in the cost of collecting and analyzing ESI. Whether it is through reduction in cost by companies doing ESIwork in-house, through outsourcing, settling costly ESI matters early, or by courts revising laws to prohibit costly E-Discovery requests or shift the cost burden across the parties, you are soon going to hear a “pop”.
  • I'm totally behind you on this one. Unfortunately, there is a serious need for e-discovery and the cost is not entirely ridiculous.
    What feeds the problem is the lack of best practices or the like. As long as a company's electronic records are an unmanageable mess, the e-discovery will be an unmanageable expense.
    My concern is that the bubble will burst before a reasonable solution is embraced. Will that leave us with more oversight legislation regarding e-records? Increased fines? Relaxing of e-discovery expectations, allowing possibly crucial records to slip between the cracks?

  • Spot on! And I think the bubble's bursting will be the grand opening for RIM professionals. Quality records and information management strategy and programs are the true antidote to exorbitant e-discovery costs.

    RIM consultants be at the ready – your time has come!

  • I think both Moshe and Julie have the right ideas here. Things have to get better on both the front end of EDD and the back end of EDD. Unfortunately, this means better guidelines and processes throughout the cycle of records management, retention, and discovery. Unfortunately, I think that what will result will be a frustration on the backend of the process (big popping E-Discovery bubble) rather than companies, firms and courts taking a more careful and long-term approach to the problem.

  • A major issue driving e-discovery costs is the fact that the attorneys do not understand the e-discovery trenches. Too many lawyers blindly rely on the e-discovery tech community–not many of whom are known for transparency–for what can and should be done on a given e-discovery project.

    In my humble opinion, here are two interrelated steps that will help improve the delivery of e-discovery services and help firms and clients better manage costs:

    1. Lawyers need to visit the e-discovery sausage factory and see how it is made. This will help lawyers train themselves on how e-discovery projects are actually done, and then lawyers need to convey this to judges in simple plain English.

    2. Lawyers and law firm clients must demand transparency from the e-discovery community so they really understand the steps involved. Insist that your e-discovery vendor allow you to tag along on a evidence preservation project and then visit the e-discovery vendor’s facility to see how the evidence is actually crunched, culled and produced.

    These two steps will go along way to helping firms and client gain a greater understanding of the process, and once they see the process, they can make informed decisions on the approach to take, and where to spend the e-discovery budget.

    Thanks and please keep the great blog posts coming!

    Mark Walters