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The little-known market of electronic discovery (eDiscovery), which involves compiling, storing and securing digital information, is emerging as a key opportunity for channel players.

Growth in the market is being fueled by the need for corporations to comply with recent amendments to the Federal Rules of Civil Procedure (FRCP) covering the discovery of digital information.

Those amendments, which took effect in December 2006, compel companies to do precise and exhaustive recordkeeping. Under the new rules, for example, a judge or jury can assume a company is hiding information if it can't provide emails deemed relevant to a lawsuit in which it is involved.

That development has turned many companies to seek help from VARs and other channel partners knowledgeable about this developing vertical market.

For example, FRCP rule changes have been a main driver of sales at Mimosa Systems, a Santa Clara, Calif.-based provider of live content archiving solutions.

“During the past 12 months sales of our NearPoint for Microsoft Exchange Server have tripled, largely due to FRCP changes,” said Bill Tolson, director of compliance and legal solutions marketing at Mimosa Systems. The NearPoint platform delivers a solution for email information archiving, eDiscovery, regulatory compliance and business.

More and more companies are investing in eDiscovery technology as they become aware of the substantial cost and risk of not doing eDiscovery well, said Tolson. “Gartner estimates that the average eDiscovery ‘event' costs $1.5 million, and the number of events is on the rise,” said Tolson. “Poor eDiscovery can cost companies huge sums of money and even threaten their very existence.” 

As a result, technology spending on Discovery is expected grow from $1.4 billion in 2006 to more than $4.8 billion in 2011, according to a recent report from Forrester Research. Another report, from Palo Alto, Calif.-based Radicati Group, forecasts that the email archiving market will increase from an estimated $1.2 billion in 2007 to almost $5.5 billion in 2011.

That signals plenty of opportunity for VARs who partner with vendors to tailor solutions.

“One of the more important emerging trends in eDiscovery is that corporations are taking greater control and demanding more visibility into the litigation readiness process,” said Robert Ballou, CEO, ONSITE³, an Arlington, Va.-based provider of litigation support and electronic evidence solutions for law firms and corporations.

“Historically, corporations outsourced discovery management almost entirely to law firms,” said Ballou, noting that this approach is changing as companies look for ways to reduce their cost and increase their return on discovery services.

Ballou said companies are looking for eDiscovery tools that are standards-based. One emerging standard is The Electronic Discovery Reference Model (EDRM) Extensible Markup Language (XML) standard.

That standard is designed to improve systems interoperability and the transfer of electronically stored information (ESI) between applications involved anywhere within the discovery process. ONSITE³ recently announced that its Electronic Evidence Enterprise eDiscovery platform and its eView document review platform are compliant with the EDRM standard.

eDiscovery has experienced a big change since the FRCP amendments, said Bob Little, vice president of marketing for RenewData, an Austin, Texas-based provider of e-discovery services for law firms and corporations.

“In the past, most of our work was project-based,” said Little. “Law firms would call us in because of a lawsuit involving one of their clients. Now, because of the changes to the FRCP rules, we are getting a lot more continuous work directly from corporations that are taking a proactive approach to eDiscovery.”

In the past year, RenewData has seen an explosion in corporate business, according to Little." I'd say our business is pretty evenly split 50/50 between proactive corporate work and project work for laws firms," he explained.

To comply with the new amendments to FRCP, organizations have been forced to improve their discovery processes to uncover and secure relevant email, files and other data, Little said.

He added that amendments have spurred many corporate executives, including general counsel, to sponsor IT initiatives that streamline the identification and location of all enterprise data.

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