E-discovery moves in-house

More companies are seeing the wisdom of putting the function under internal IT control

When Jonathan Chow, chief information security officer at NBC Universal, found his department's services in increasing demand, that wasn't necessarily a good thing.

He says demand for e-discovery services was increasing 30% to 50% annually in the early and middle parts of the past decade, and he was seeing a dramatic rise in the hours spent supporting e-discovery as his department collected and culled through some of the electronically stored data needed by the company's legal staff.

The information security department, part of corporate IT, owns the e-discovery function and uses it not just for litigation support, Chow explains, but also for M&A activities and internal investigations generated by HR or corporate security, for example.

Jonathan Chow
"For my team, the decision to take e-discovery in-house was about efficiency," says Jonathan Chow, chief information security officer at NBC Universal.

"We used to handle those occasional queries on an ad hoc basis, but as the number of e-discovery requests grew, this became a much larger and much more time-/resource-intensive process to manage," he said via e-mail. "It was obvious that we could more affordably conduct our e-discovery in-house, assuming we could find the best solutions to support our process."

So Chow moved e-discovery in-house in 2007.

Others are following a similar course. Analyst firm Enterprise Strategy Group (ESG) and Clearwell Systems Inc., an e-discovery software company in Mountain View, Calif., surveyed about 100 Fortune 2,000 enterprises and government agencies late last year and found that some 73% plan to bring e-discovery in-house.

Discovery is the part of the pretrial process in which both sides request information, data and documents from each other as each tries to find, or discover, facts pertinent to the case. Electronic discovery is the part of this longstanding legal process that refers to any information stored electronically.

High costs, increasing reliance on e-discovery

Several factors are driving this trend of bringing the e-discovery function in-house, including an anticipated rise in lawsuits, investigations and inquiries, as well as the high costs of outsourcing the task. Whatever the drivers, the shift means that IT departments are now implementing and maintaining the systems, and in some cases administering the searches themselves.

"A decade ago, e-discovery was more the exception rather than the norm, so companies did not have to go through it regularly. They weren't familiar with it, they didn't have the staffing, nor did they want the staffing to support it, because it wasn't something that happened frequently," explains Brian Babineau, a senior consulting analyst at ESG.

"Now it's become mainstream. Now every litigation or regulatory action is asking for some electronically stored information, and because of that frequency and because it's becoming more of a standard business process, it now makes sense to evaluate whether you should staff it and build some competencies internally," he says.

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