e-Discovery In 2016 and Beyond

FRCP Amendments

The 2006 e-discovery amendments to the FRCP had a profound impact on litigation and helped create the e-discovery industry we know today, an industry that International Data Corp. (IDC) estimated recently grew to over $10 billion in worldwide revenue last year. See, “Worldwide eDiscovery Services Forecast 2014-2019.”'

The e-discovery provisions to the Federal Rules were amended again on Dec. 1, 2015, after a laborious multi-year process.

Will the New Rules Have The Same Kind of Impact?

I don't think so. First of all, the 2006 amendments helped define ' and thus, establish ' an industry. For instance, before the 2006 amendments, some argued (admittedly, unsuccessfully) that many forms of electronic data were beyond the scope of discovery.

These amendments merely fine-tune what the 2006 amendments created. Nevertheless, this doesn't mean there won't be some impact.

Courts have already taken different paths in interpreting the rules, and I predict there will be judicial disagreement on cooperation, proportionality, and sanctions as more courts interpret the new rules.

Symbiosis

e-Discovery software and services go hand-in-hand. It's difficult to accomplish much with one but not the other. In the IDC study cited above, the $10 billion in e-discovery revenue was comprised of about $2 billion in software revenue, and about $8.2 billion in e-discovery services revenue. Software and services are two vital parts of the same industry.

What makes e-discovery software different from the software operating the ignition on your car or your child's Elmo toy is that e-discovery software is a tool for providing professional services. As such, e-discovery software is not only used differently ' it's bought and sold differently as well.

Historically, e-discovery software was purchased on a project-by-project basis. Corporate information governance (IG) initiatives have hoped to change that by making e-discovery a mere component of comprehensive IG initiatives. In addition, your child probably won't recover costs for the use of her Elmo in litigation, and no one's going to have to testify in court about Elmo (most of the time, anyway). e-Discovery software is different.

Industry Consolidation

After a brief hiatus, e-discovery industry consolidation has picked up again, especially among service providers. What was once a localized, decentralized industry of Mom and Pop service bureaus is rapidly becoming the domain of regional, national, and international players.

I expect this trend to continue.

Business has become more international in nature, which means litigation has become more international, which means e-discovery has become more international. Having an international footprint is quickly becoming a prerequisite for e-discovery service providers in major complex litigation.

At the same time, technological advances are making the economies of scale such that it's very difficult for small companies to compete against massive behemoths.

International Growth

International e-discovery is not only becoming a bigger part of the industry in general, it's also the fastest growing part of the industry.

For instance, at my company, kCura, developers of the e-discovery software Relativity, I am also seeing international e-discovery and e-disclosure use increase ' with some of our hosting partners building businesses that include cross-border litigation as a core competency. While I continue to see explosive growth domestically, the number of international Relativity seats grew approximately three times as fast as U.S. seats last year.

The Evolving Legal Cloud

From Ashley Madison to Sony, data breaches have caused embarrassment and cost billions of dollars. In addition, international debates on data privacy have gripped the world as the United States reacted to the attacks of 9/11, and the Snowden-NSA revelations caused many nations to argue the United States had gone too far in its response.

From the General Data Protection Regulation in the European Union to the Marco da Civil da Internet in Brazil, nations around the world have made moves to strengthen data privacy and protection laws, and these moves have created new challenges for e-discovery practitioners. Although cloud computing has caused security concerns for many, it also offers answers to many of these cross-border data challenges.

In addition, in Microsoft Corp. v. United States, a case pending before the Second Circuit Court of Appeals, the US government's legal right to seize data held by a US corporation on Irish soil exemplifies some of the challenges of cloud computing in e-discovery.

However, this legal cloud phobia is really misplaced. First of all, the cloud is fait accompli. The toothpaste is out of the tube, and it's not going back. Second, hosted e-discovery provides different security options for different needs. There will be some instances when on-premises e-discovery software makes sense from a privacy and security standpoint, such as when jurisdiction restrictions on data transfers come into play.

Beyond 2016

In essence, I predict a world of e-discovery where the Federal Rules amendments will affect ' but not change fundamentally ' the way litigators conduct e-discovery. I see continued consolidation among companies providing e-discovery services, and I believe international markets outside the United States are the new growth regions for e-discovery.

With this backdrop, I believe the legal cloud will continue to evolve to meet the needs of legal clients ' not because the traditional legal industry necessarily wants to, but because it has to in a 21st Century digital world. Old notions of data security are going out the window as cloud deployments become a more viable ' and necessary option.

David Horrigan is e-discovery counsel and legal content director at kCura. An attorney, industry analyst, and award-winning journalist, he is a former reporter and assistant editor at The National Law Journal.