By Tony Caputo, CEO of CloudNine

eDiscovery is not for the faint of heart.  The pressure to innovate and conquer new challenges is ever-present, and just when you’ve solved one batch of problems, more are waiting to take its place.  As Hamlet said, “The readiness is all”, and he was right – above all else, we must be ready for whatever obstacles lie ahead.  

This week, ILTACON 2019 will intersect professionals across the legal spectrum with advanced technologies to help shape a smarter, more efficient legal community.  Participants at every level will come in search of innovation and information to continue the path of progress.  Legal tech suppliers, including CloudNine Discovery will arrive to showcase their contribution of technology and partnerships formed to create higher-value solutions for the market.  

Although technologies like artificial intelligence and data analytics are grabbing many of today’s headlines and investment dollars, the eDiscovery market is still attracting a staggering amount of money, and it’s growing each year.  According to Rob Robinson’s Complex Discovery “eDiscovery Market Sizing:  Past and Projected”, the combined eDiscovery software and services market spend grew from $4.73 billion in 2012 to $10.11 billion in 2018.  Projected spend for 2019 is $11.41 billion and by 2023, it could be at $18.7 billion or more.  

Document review software and services are still the biggest revenue generators in eDiscovery.  For many years, outside counsel law firms have felt the sting of losing profitable review projects to eDiscovery vendors that run review projects more like a manufacturing process than an artisan’s workshop.  Innovative law firms have fought back, building in-house review operations and innovation incubators that have kept them competitive and relevant.  

My prediction is that the review platform will continue to dominate the eDiscovery tech market.  Complex Discovery agrees, showing that actual dollar spend on review software and services will continue to increase, growing from $7 billion in 2018 to $12.15 billion in 2023.  eDiscoveryvendors and law firms alike can be assured that there will be plenty of review business in the years to come.  However, the most efficient operations will have a distinct advantage over those with outdated technology and a more manual, less cost-effective approach.  Corporate legal operations professionals, now in charge of eDiscovery spend at many larger corporations, will make sure that costs are reduced while quality stays intact.

With billions of dollars at stake in eDiscovery, it’s easy to understand the substantial M&A and investment activity which continues to transform the industry.  More than 30 eDiscovery companies have been acquired, merged or received outside investment in 2019 so far, with more coming.

Understandably, M&A and investment activity among eDiscovery suppliers raises questions about continuity and stability.  Legal consumers want to know that the product and service providers they prefer and trust will be available in the future.  Diversification of providers is one avenue to protect against this concern, spreading the risk by using more than one resource.  Otherwise, there are many vendors capable of ramping up quickly with a quality result, so clients who are impacted by an M&A event can quickly find capable assistance elsewhere.

Compliance with government regulations around data privacy is gradually becoming an eDiscovery issue in both Europe and the U.S.  In May 2018, the General Data Protection Regulation (GDPR) came into force as a regulation in the European Union (EU).  GDPR is a law on data protection and privacy for all individual citizens of the European Union and the European Economic Area. However, GDPR also addressed the transfer of personal data outside the EU and can punish American and other non-EU-based companies that violate privacy rights of EU citizens.  With a maximum fine of 20 million Euros, GDPR has painful teeth and has sparked massive proactivity from an information governance standpoint.  

GDPR’s direct impact on eDiscovery remains to be seen.  However, the scope of data GDPR applies to is extremely broad, and private citizen consumers can bring litigation actions for remedy directly.  Therefore, the risk of non-compliance and possibility of exposure are formidable for companies holding customer and employee personal data, so GDPR commands both respect and fear.

The United States has not produced any Federal privacy legislation like GDPR yet.  The California Consumer Privacy Act (CCPA) goes into effect in January 2020 and it will be the first data privacy law in the country.  CCPA is a tough privacy law because it applies to every person living in California.  CCPA will certainly affect the eDiscovery world, but it’s too soon to tell exactly how.  About 7-10 states also have CCPA-like bills in process, too.  The American eDiscovery industry must wait on the edge of its seat to see how these new regulations impact their work.

Whether in the EU or the U.S. or elsewhere, corporate General Counsels and eDiscovery professionals should be advocating compliance in order to reduce future eDiscovery consequences.  Early identification and thorough understanding of data are crucially important.  Law firms should be advising their corporate clients to be in a compliant position, providing assistance to get them help when possible.  Overall, increased data governance is a must; companies and law firms alike must know what privacy data they have and proactively protect it throughout its lifecycle.  

If all else fails and litigation arises, the ability to find relevant data will become crucially important.  Companies that have ignored or deprioritized compliance will find this process much more painful.  eDiscovery product and service vendors can play a crucial role in this process by providing quick and scalable tools and techniques to search for, isolate and organize data.  All businesses must think about their compliance obligations under the new laws.

The future of eDiscovery is bright and exciting, but still immense and daunting.  As the industry gets bigger, it could conceivably become too large and less nimble which we must prevent.  eDiscovery professionals are obligated to adapt to new trends and regulations, to develop new tools and techniques.  M&A activity and government regulations will certainly disrupt many best laid plans and routines, but we can prepare for many of these occurrences with preventative measures and proactive information governance.  The readiness is all, so let’s be as ready as possible for the exciting gauntlet that eDiscovery will undoubtedly provide.

I look forward to connecting with peers at ILTACON 2019 this week to discuss the compelling eDiscovery topics that affect us all in different ways. My aim is to take those conversations forward to drive innovation and build collaborations and partnerships that will last. Hope to see you in Orlando!

Tony Caputo is CEO of CloudNine, a leading provider of eDiscovery software including CloudNine Explore™, LAW™, Concordance® and Review™.  Tony is a 20+ year veteran of the legal tech and eDiscovery industries, having held prior leadership roles at Omnivere, Recommind, Strategic Business Performance, and Hudson. Tony and the CloudNine team will be exhibiting at ILTACON this week (booth #624) where it will be showcasing technology enhancements for all products.  Email [email protected] to connect with Tony or for more information.