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”.