Research Report. Abstract: e-discovery Market Trends. A View from the Legal Department. October 2011

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1 Research Report Abstract: e-discovery Market Trends A View from the Legal Department By Katey Wood and Brian Babineau With Bill Lundell and Jennifer Gahm October Enterprise Strategy Group, Inc. All Rights Reserved.

2 Introduction Research Objectives Research Report: e-discovery Market Trends: A View from the Legal Department In order to assess the state of enterprise e-discovery operations and priorities over 2011 and beyond, ESG recently surveyed 48 general counsel representing large midmarket (500 to 999 employees) and enterprise-class (1,000 employees or more) organizations. All respondents were personally responsible for or familiar with their organizations 2010 legal services and e-discovery spending, as well as their 2011 budget and spending plans at either an organizational or a business unit/division/branch level. Specifically, the survey asked the following questions with respect to e-discovery and legal services: What are current trends in the volume of corporate legal or regulatory matters, and the percentage of those involving electronically stored information (ESI)? What is the internal strategy for corporations in managing e-discovery processes among cross-functional business units? Who leads decision-making in both internal and outsourced resourcing? What are current corporate expenses associated with e-discovery, as well as for legal services in general? Is performance being tracked, measured, or evaluated in terms of outcomes, and how? What are corporate selection criteria for law firms and legal service providers? What are customer priorities in service delivery? To what extent are corporate litigants performing e-discovery internally, and how? What are their greatest challenges in the process? What provisions are they making for court defensibility? Which e-discovery technology and methods are corporate litigants using, planning to adopt, or rejecting? What are the most important go-forward priorities within the enterprise for internal e-discovery and better overall litigation preparedness? Survey participants represented a wide range of industries including manufacturing, financial services, communications and media, health care, retail, government, and business services. For more details, please see the Research Methodology and Respondent Demographics sections of this report.

3 Research Methodology To gather data for this report, ESG conducted a comprehensive online survey of general counsel, attorneys, and legal department executives from private- and public-sector organizations in the United States between April 28, 2011 and July 6, To qualify for this survey, respondents were required to be senior legal professionals personally responsible for or familiar with their organization s e-discovery processes. All respondents were provided an incentive to complete the survey in the form of a written executive report of the findings. After filtering out unqualified respondents, removing duplicate responses, and screening the remaining completed responses (on a number of criteria) for data integrity, we were left with a final total sample of 48 general counsel, attorneys and legal department executives. ESG would like to extend its thanks to Kahn Consulting, Inc. and Peter Pepiton, Esq., ediscovery Director, Dinsmore & Shohl, for their assistance with execution of the survey. Please see the Respondent Demographics section of this report for more information on these respondents. Note: Totals in figures and tables throughout this report may not add up to 100% due to rounding.

4 Respondent Demographics The data presented in this report is based on a survey of 48 qualified respondents. The figures below detail the demographics of the respondent base, including individual respondents current job responsibility, respondent organizations total number of employees, primary industry, and annual revenue. Respondents by Job Responsibility Respondents current job responsibility is shown in Figure 1. Figure 1. Survey Respondents, by Job Responsibility Which of the following best describes your current responsibility within your organization? (Percent of respondents, N=48) Other, 6% General counsel, 27% Legal support staff, 19% Legal department executive, 8% In-house attorney (responsible for e- discovery), 21% In-house attorney (responsible for litigation), 19% Source: Enterprise Strategy Group, Respondents by Number of Employees The number of employees in respondents organizations is shown in Figure 2. Figure 2. Survey Respondents, by Number of Employees How many total employees does your organization have worldwide? (Percent of respondents, N=48) 20,000 or more, 25% 500 to 999, 17% 1,000 to 2,499, 10% 10,000 to 19,999, 8% 5,000 to 9,999, 17% 2,500 to 4,999, 23% Source: Enterprise Strategy Group, 2011.

5 Respondents by Industry Research Report: e-discovery Market Trends: A View from the Legal Department Respondents were asked to identify their organization s primary industry. In total, ESG received completed, qualified respondents from individuals in 17 distinct vertical industries, plus an Other category. Respondents were then grouped into the broader categories shown in Figure 3. Figure 3. Survey Respondents, by Industry What is your organization s primary industry? (Percent of respondents, N=48) Other, 21% Business Services (accounting, consulting, legal, etc.), 6% Manufacturing, 33% Government (Federal/National, State/Province/Local), 6% Communications & Media, 6% Health Care, 6% Financial (banking, securities, insurance), 8% Retail/Wholesale, 13% Source: Enterprise Strategy Group, Respondents by Annual Revenue Respondent organizations annual revenue is shown in Figure 4. Figure 4. Survey Respondents, by Annual Revenue What is your organization s total annual revenue ($US)? (Percent of respondents, N=48) $20 billion or more, 21% Not applicable (e.g., public sector, nonprofit), 4% Less than $100 million, 2% $100 million to $499 million, 21% $10 billion to $ billion, 6% $5 billion to $9.999 billion, 10% $1 billion to $4.999 billion, 21% $500 million to $999 million, 15% Source: Enterprise Strategy Group, 2011.

6 Respondents by Corporate Legal Headcount The number of employees in respondent organizations corporate legal departments is shown in Figure 5. Figure 5. Survey Respondents, by Number of Employees in Organization s Corporate Legal Department To the best of your knowledge, how many employees work in your organization s corporate legal department, including attorneys and support staff? (Percent of respondents, N=48) 150 or more, 8% 1 to 10, 25% 100 to 149, 2% 51 to 99, 17% 25 to 50, 13% 11 to 24, 35% Source: Enterprise Strategy Group, 2011.

7 Contents List of Figures... 3 List of Tables... 3 Executive Summary... 5 Report Conclusions... 5 Introduction... 6 Research Objectives... 6 Research Findings... 7 e-discovery in the Enterprise: Trends, Budgeting, and Decision Making... 7 e-discovery Outsourcing: Selection, Accountability, and Evaluating Outcomes Litigation Response: Internal Operations and Methods Conclusion Corporate e-discovery Profiling: Who is the Poster Child for Litigation Preparedness? Research Methodology Respondent Demographics Respondents by Job Responsibility Respondents by Number of Employees Respondents by Industry Respondents by Annual Revenue Respondents by Corporate Legal Headcount... 35

8 List of Figures Figure 1. Number of Legal and Regulatory Inquiries/Matters Handled in Figure 2. Change in Number of Legal and Regulatory Inquiries/Matters, 2009 vs Figure 3. Amount Paid to Outside Counsel for Litigation and/or Compliance Responses, 2010 vs Figure 4. Percent of Organization s Total Legal and Regulatory Inquiries/Matters That Will Involve the Discovery of ESI in Figure 5.Tracking of e-discovery-related Expenses, Figure 6. Amount Spent on e-discovery Internal and External Processes, Technologies and Services, 2010 vs Figure 7. Organization s Strategy with Regard to Managing e-discovery Processes Figure 8. How Organizations Select e-discovery Services Specialists, Today vs. 24 Months from Now Figure 9. Importance of Law Firm s Ability to Manage e-discovery Processes Figure 10. Tracking the Efficiency and/or Accuracy of e-discovery Document Review Figure 11. Methods of Tracking e-discovery Document Review Figure 12. Measures Requested of Outside Counsel(s), Past 12 Months vs. Next 12 Months Figure 13. Most Important Priorities Facing Organizations External e-discovery Processes Figure 14. Incorporating e-discovery into Case Assessments Figure 15. e-discovery Insight Used in Case Assessments Figure 16. Goals for Incorporating e-discovery Processes into Case Assessments Figure 17. Group(s) Responsible for Collection and Preservation of ESI Figure 18. Usage of Technologies to Help Facilitate Collection and Preservation of ESI Figure 19. Usage of Methods/Solutions to Help Facilitate Collection and Preservation of ESI Figure 20. Challenges with Identifying and Collecting ESI Figure 21. How Organizations Maintain Defensibility in Collecting and Preserving ESI Figure 22. Current Legal Hold Notification and Tracking Process Figure 23. Plans to Change Legal Hold Notification and Tracking Process Figure 24. How Organizations Plan to Change Legal Hold Notification and Tracking Process Figure 25. Most Important Priorities Facing Organizations Internal e-discovery Processes Figure 26. Plans to Improve Identification and Overall Knowledge of ESI Data Sources Figure 27. Survey Respondents, by Job Responsibility Figure 28. Survey Respondents, by Number of Employees Figure 29. Survey Respondents, by Industry Figure 30. Survey Respondents, by Annual Revenue Figure 31. Survey Respondents, by Number of Employees in Organization s Corporate Legal Department List of Tables Table 1. Percent of Organization s Total Legal and Regulatory Inquiries/Matters That Will Involve the Discovery of ESI in 2011, by Total Annual Revenue... 9 Table 2. Tracking of e-discovery-related Expenses in 2010, by Total Annual Revenue Table 3. How Organizations Select e-discovery Services Specialists Today, by Total Annual Revenue Table 4. Tracking the Efficiency and/or Accuracy of e-discovery Document Review, by Total Annual Revenue Table 5. Measures Requested of Outside Counsel(s) over the Past 12 Months, by Total Annual Revenue Table 6. Group(s) Responsible for Collection and Preservation of ESI, by Total Annual Revenue Table 7. Usage of Methods/Solutions to Help Facilitate Collection and Preservation of ESI, by Total Annual Revenue Table 8. Current Legal Hold Notification and Tracking Process, by Total Annual Revenue Table 9. Most Important Priorities Facing Organizations Internal e-discovery Processes, by Total Annual Revenue... 30

9 All trademark names are property of their respective companies. Information contained in this publication has been obtained by sources The Enterprise Strategy Group (ESG) considers to be reliable but is not warranted by ESG. This publication may contain opinions of ESG, which are subject to change from time to time. This publication is copyrighted by The Enterprise Strategy Group, Inc. Any reproduction or redistribution of this publication, in whole or in part, whether in hard-copy format, electronically, or otherwise to persons not authorized to receive it, without the express consent of the Enterprise Strategy Group, Inc., is in violation of U.S. Copyright law and will be subject to an action for civil damages and, if applicable, criminal prosecution. Should you have any questions, please contact ESG Client Relations at (508)

10 20 Asylum Street Milford, MA Tel: Fax:

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