Category Archives: Information Management

Industry Experts: Proportionality Principles Apply to ESI Preservation and Collection

By John Patzakis

Under Federal Rule of Civil Procedure 26(b)(1), parties may discover any non-privileged material that is relevant to any party’s claim or defense and proportional to the needs of the case. Lawyers that take full advantage of the proportionality rule can greatly reduce cost, time and risk associated with otherwise overbroad eDiscovery production. In a recent webinar, eDiscovery attorney Martin Tully of Redgrave LLP, addressed how to use processes and best practices to operationally attain this goal, particularly in the context of preservation and collection. In addition to being a partner at the Redgrave firm, Tully is currently the chair of the Steering Committee of the Sedona Conference Working Group on Electronic Document Retention and Production (WG1), providing additional import to his comments on the subject.

During the webinar, Tully noted that the “duty to preserve is directly aligned with what is within the scope of discovery….so if something is not within the scope of discovery – that is its either not relevant or its not proportional to the needs of the case — then there should not be an obligation to preserve it in the first place.” Tully discussed at length the recent case of Raine Grp. v. Reign Capital, (S.D.N.Y. Feb. 22, 2022), which holds that under FRC 26(a), parties “have an affirmative obligation to search for documents which they may use to support their claims or defenses.” In meeting these obligations, the court provided that a producing party may utilize search methodologies, specifically mentioning search terms. Tully explained that the court—in addressing the concept of reasonable, proportional discovery under the Rules – provides that producing parties are obligated to search custodians and locations it identifies on its own as sources for relevant information as part of its obligations under Rule 26, but that such identification and collection efforts should be proportional.

Further to these points, Tully weighed in on overbroad practice of full-disk imaging, noting that it should not be the default practice for eDiscovery collection: “Too often there is a knee jerk approach of ‘let’s just take a forensic image of everything – just because.’” According to Tully, alternative and more targeted search and collection methods were more appropriate for eDiscovery and can better effectuate proportional efforts: “Indexing in-place is key because it doesn’t just preserve in-place and reduce costs, but it can give you insight (into the data) to further justify your decision not to collect it in the first place, or if you need to, you are in much better shape to go back and collect the data in a tailored and focused way.”

Co-presenter Mandi Ross, CEO of Insight Optix also provided keen insight, outlining her typical workflow applying the aforementioned proportionality concepts through custodian and data source ranking and keyword searching performed in an iterative manner to identify key custodians, data sources, and the potentially relevant data itself. To effectuate this, Mandi noted that the enterprise eDiscovery collection and early data assessment process should enable a targeted, remote, and automated search capability, with immediate pre-collection visibility into custodial data.

In fact, both Tully and Ross emphasized in their comments that none of the cost-saving, targeted collection efforts permitted under the Federal Rules can be realized without an operational capability to effectuate them. Ideally, the producing party can employ a defensible, targeted, and iterative search and collection process in-place, prior to collection to effectuate the proportional discovery process approved by the court in this decision. However, without such a capability, the alternative is an expensive, over-collection effort, where the data is searched post collection. Enabling the search iteration and targeted collection upstream brings dramatic cost savings, risk reduction, and other process efficiencies.

A recording of the webinar on proportionality can be accessed here.

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Filed under Best Practices, Case Law, Case Study, eDiscovery, eDiscovery & Compliance, Enterprise eDiscovery, ESI, Information Management, Preservation & Collection, proportionality

Usage-Based Pricing Model Increasingly Driving eDiscovery Software Growth

by John Patzakis

Legal Tech software CEOs often grapple with two competing challenges: Growing revenue in a manner that supports how customers buy their products for their individual cases, while at the same time maximizing shareholder value by recording recurring revenue, which the investor community typically favors. Recurring revenue generally comes in the form of fixed annual or monthly subscription licenses.

However, eDiscovery software providers are increasingly aligning their SaaS pricing strategy with the amount of product usage their customers consume. Instead of paying a fixed rate, the pricing is based upon actual usage. The benefits of this approach include a shorter and simpler purchasing process and increased customer satisfaction and retention.

In the eDiscovery space, customers often prefer to pay by “matter”, i.e., per lawsuit or legal case. Law firms and service providers typically utilize eDiscovery SaaS software specific to an individual case on a pass-through cost basis, where their end-client ultimately pays for the services. In the case of corporate law departments, oftentimes the organization prefers to purchase annual subscriptions for eDiscovery and apply the license over multiple matters in the course of the year. However, such buying decisions vary by organization, with corporate counsel sometimes deferring eDiscovery workflow and tech decisions to their law firms, which favors a usage-based pricing model.

While tech companies with recurring annual term revenue will typically garner higher valuations, eDiscovery software firms with usage-based pricing models are now seeing similarly elevated valuations. Investors are recognizing the very unique economics and buying dynamics specific to the eDiscovery software space. But it is incumbent on eDiscovery software execs, their investment bankers, and board members to educate the broader market on this dynamic unique to the eDiscovery space. In some situations, investors new to this space attempt to apply a steep discount to usage-based SaaS revenue, as it doesn’t fit in with their “paint by the numbers” ARR models. Rick Weber, Managing Director of Legal Tech investment banking firm Arbor Ridge Partners notes, “while the usage model is not annual recurring, it is ‘monthly re-occurring,’ and thus projections and modeling can be made based on company history and industry norms and should be treated like ARR contracts.”

In fact, usage-based pricing is now gaining wider acceptance in the broader SaaS software market beyond legal tech. Cloud infrastructure providers AWS and Microsoft Azure are obvious examples of successful usage-based pricing strategies, but many startups and medium sized companies have successfully implemented the model as well. While usage-based revenue may seem less predictable compared to other pricing models, companies using this model are often growing faster, retaining more revenue, and valued at high revenue multiples. But again, this realization requires a closer look by investors and an intelligent education effort by the companies and their advisors.

One caveat for investors is to confirm that the value of the SaaS usage offering is mostly based upon proprietary software tech versus services that are dressed up as SaaS. Some eDiscovery service providers attempt to position their services as SaaS, without a true standalone propriety software component. An analysis of the cost of sales/gross margins and assessment of the actual proprietary nature of the software is determinative. Gross margins should be at least 80 percent. And while some services are often provided in conjunction with a SaaS usage-based offering, a qualifying factor is whether the software is also separately offered purely as a traditional license to end users without any services required, which is how many customers will opt to buy.

But for true usage-based SaaS offerings, the flexibility, simplicity and supporting of legal customers purchasing dynamics are key to rapid growth and customer satisfaction. As summarized by Weber, “many of the PE firms and investors that have made big bets on such companies in recent years seem to understand the nuance and opportunity while many still lag behind and simply need to think outside of their box.”

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Filed under Best Practices, Cloud Data, Corporations, eDiscovery, Enterprise eDiscovery, Information Management, SaaS, Uncategorized

Dark Data is an Unmet Cyber Security Challenge

By John Patzakis

Enterprises today are creating and storing massive volumes of unstructured, data distributed across the enterprise at a very fast pace. IT experts refer to this data type as “dark data.” Research advisory firm Gartner defines dark data as “the information assets organizations collect, process and store during regular business activities, but generally fail to use for other purposes.” according to Rahul Telang, professor of information systems at Carnegie Mellon University, “[o]ver 90% of the data in business is dark data.”

Dark data exists due to organizational silos and a highly distributed and mobile workforce, a trend that proliferated during the COVID pandemic and has now solidified as the new normal. As a result, there is a proliferation of unmanaged data stored in file shares, laptops, unarchived email accounts, shared cloud drives such as OneDrive and Dropbox and many other repositories. According to Anthony Juliano, CTO of Landmark Ventures, “dark data is exploding rapidly with the dissolution of the perimeter; it’s a largely unaddressed risk vector. A vast majority of the CIOs and CISOs I speak with are now prioritizing solving this problem not only going forward, but also backwards – and it’s not easy.”

Cyber security platforms generally have a good handle on perimeter integrity, encryption, and other key priorities such as zero day network attacks and malware. However, while these measures are clearly important, distributed dark data is largely a blind spot for cybersecurity tech, and as such organizations have very little visibility into the content of such data. GDPR, CCPA and other recent privacy regulatory requirements add increased urgency to this challenge.

CISOs and legal and compliance executives often aspire to implement information governance and security programs like defensible deletion, data migration, and data audits across their unstructured data to detect risks and remediate non-compliance. However, without an actual and scalable technology platform to effectuate these goals, those aspirations remain just that.

One tactic attempted by some CIOs to attempt to address this daunting challenge is to periodically migrate disparate data from around the global enterprise into a central location, such as an archiving platform. But boiling the ocean through data migration and centralization is extremely expensive, highly disruptive, and frankly unworkable for numerous reasons. While such a concept may seem like a good idea when drawn up on the whiteboard, originations quickly learn that you cannot just migrate hundreds of terabytes of distributed dark data to an archive, mainly due to network bandwidth and other logistical constraints, as well as the reality that you are merely copying and duplicating the data being migrated, which actually makes the situation worse.

Another tactic is data loss prevention (DLP). Again, this approach is thwarted by the new normal of a distributed, global workforce. Additionally, DLP tools are traditionally hampered by an inability to have deep content insight to unstructured data, resulting in false positives, inaccurate classification and unacceptable disruption to employee and business workflows.

What has always been needed is gaining immediate visibility into unstructured distributed data across the enterprise in-place, through the ability to search and report across several thousand endpoints, file shares and other unstructured data sources, and return results within minutes instead of days or weeks. None of the other approaches outlined above come close to meeting this requirement and in fact actually perpetuate information security and governance failures.

Born and bred to address global eDiscovery challenges, X1 Enterprise platform (X1E) represents a unique approach to dark data, by enabling enterprises to quickly and easily search across multiple distributed endpoints and data servers in place through a true distributed, parallelized computing architecture. Legal, security and compliance teams can easily perform unified complex searches across both unstructured content and metadata, obtaining statistical insight into the data in minutes, instead of days or weeks. With X1E, organizations can also automatically migrate, collect, or take other action on the data as a result of the search parameters. Built on our award-winning and patented X1 Search technology, X1E is the first product to offer true and massively scalable distributed searching that is executed in its entirety on the end-node computers for data audits across an organization. This game-changing capability vastly reduces costs while greatly mitigating risk and disruption to operations.

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Filed under CaCPA, Cyber security, eDiscovery & Compliance, GDPR, Information Governance, Information Management

Moving Beyond Litigation Support

By Sonam Sharma, Senior Manager, X1
(Originally published on ILTAnet.org, February 19, 2021)

The age-old adage of change being the only constant has never been truer than in today’s times. With pandemic induced disruptions fast-tracking an already burgeoning impact of technology in day-to-day proceedings of your business and having a likewise impact in the lives of our clients, the ability to manage and react to this change must make all the difference between the longevity of your business and ensuring that you stay ahead of the market.

Over the last decade, a lot of energy has been spent towards understanding the pain points of the lawyers while constantly examining ways to reinvent to stay ahead of the competitors of varying scale, capabilities, and customer base. Change is inevitable but the transformation is a conscious choice. To navigate through a highly fluctuating market, we are witnessing law firms embracing change and revisiting their litigation support services and strategies to develop a unified and client-centric approach for their organizations. A focus on operational efficiency is becoming more about survival and excellence rather than a good-to-have organization priority.

So, what is this change that we are talking about?

The Legal industry is a fast pace world. Clients are rapidly outgrowing conventional models, largely as a result of how they are using technology in their everyday lives. As the expectations of the clients are ever-evolving, legal professionals need to find ways of delivering more seamless and client-centered experiences.

Client-facing services roles such as litigation support, legal assistants, and paralegals are the first points of contact for the commencement of legal work. These professionals play an important role in ensuring case proceedings go as smoothly as possible. However, due to the lack of synergies and functional silos between these groups the operational model can become obsolete/misaligned. “Over time, to maintain the efficiency of teams, it is important to focus on communications and the improvement of processes and procedures,” said Ardian Triantoro, Practice Support Manager, Schulte Roth & Zabel LLP.

To mitigate risks arising from process inefficiencies and to overcome organizational barriers, law firms need to bolster their capabilities by combining teams dealing with legal operations (such as clerks, paralegals, attorneys, and technical support).  and develop communication strategies between them. The goal is to streamline the legal operations workflow to provide a connected experience to the client.

There’s no better time to start the transformation than now!

The more progressive law firms are methodically building and systematically delivering work in-house. Leveraging a base of existing skills, experience, and vendor relationships, organizations have merged their Litigation Technology Support and operational support teams into the Practice Support department to deliver value to customers.

Leading law firms such as Kirkland & Ellis, Latham & Watkins, Baker & McKenzie, Schulte Roth & Zabel, LLP have implemented new ways to approach critical back-office operational functions. “For the law firms, it is not just about implementing the technology but to shift the focus from commoditized services to high-value expertise to recalibrate a more predictable pricing model that generates a cost-effective outcome of the case,” said Jared Michael Coseglia, Founder & CEO of award-winning legal staffing firm TRU Staffing, Inc.

So where can you start?

To prepare for the future, you should begin with a focus on the following areas:

  • Process: Strategize the ebbs and flows! Develop a communication map to help attorneys and staff members better understand the firm’s operating functions and how it fits together. Design effective processes that drive transparency and have a clear description of tasks and outcomes.
  • People: A starting point for assessing the firm’s capabilities is to determine skills, competencies, the talent available and create a capability map. Align skills with the evolving business needs and identify partnership opportunities with a focus on enabling attorneys to focus on long-term strategic decision-making; and
  • Technology: Understand the business needs and align the technology with the law firm organizational framework so that it is supporting the firm’s overall business objectives. It is about using technology to improve the old ways of working.

The more things change, law firms will see increased benefits from…

  • Seamless Client Service: Today, clients expect effortless experience from start to finish. It is critical to serving as a team member to the clients. By streamlining the processes internally, the practice support department acts as an all-in-one suite that law firms can leverage to build a repeatable and defensible process for optimal service delivery.
  • Efficiency Across Legal Ecosystem: Litigation professionals are masters in their field and have worked with a multitude of attorneys on countless cases over time. By utilizing in-house expertise, law firms can establish robust business practices to allow for quick and effective decision-making.
  • Reduced Costs: Staying on top of technology and constantly building expertise enables law firms to design custom-tailored solutions designed for cost efficiency and operational excellence.

Key Takeaway:  The problem is that this is easier said than done, but the actual mantra is not perfection; it is an iterative progression!

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Filed under Best Practices, eDiscovery, Information Management, law firm, Uncategorized

Meeting Modern Discovery Demands with RelativityOne Collect and X1

By John Patzakis

As we’ve all heard time and again, 2020 was a transformative year—and in our space, it has had a huge impact and really changed the way people work.

With widespread teams, evolving data types, growing data volumes, and deadlines getting shorter—well, the entire e-discovery process has the potential to spiral out of control.

But not for those who are well prepared to meet these modern challenges.

Here at X1, we’ve been working hard on giving modern organizations the technology they need to get data identified, collected, and ingested with maximum effectiveness for years. Now, with X1 integrated into RelativityOne via RelativityOne Collect, users of the industry-leading SaaS e-discovery platform can accomplish this in more targeted and faster ways than ever before.

Let’s take a look at what this integration means, and why it offers non-negotiable capabilities to today’s legal teams.

A Remote Workforce

Work from home has rapidly accelerated and will likely not dramatically reverse in the foreseeable future. Many of us will continue to work remotely for months to come—or perhaps permanently.

These trends were already ramping up, but 2020 hammered the accelerator on telecommuting and remote working. According to Global Workplace Analytics, before the COVID-19 pandemic, just 3.6 percent of US workers worked from home multiple days a week. That number is now estimated at 25-30 percent.

This may be a boon for work-life balance, but it poses big complications for data collection in response to litigation and investigations. Historically, this process has required disk imaging or other methods that often prompted collections to be performed in person. In a shared office, that might be easy to accomplish (in fact, it might be too easy, resulting in vast over-collections of data in many cases). But with everyone working from home and confronted by concerns about social distancing, travel restrictions, and possible quarantines, it quickly became untenable last year.

Thanks to those circumstances and the increased use of the cloud for data storage, demand for web-enabled collections is up—by a lot.

RelativityOne Collect gives legal teams the ability to index and search on data in place, analyze the contents of a data source, and categorize data quickly to identify what warrants collection and what can be eliminated—all before it’s pulled from the source and brought into a workspace, and from anywhere. Previously, RelativityOne Collect was able to directly connect with Office 365 and Slack sources to perform these remote collections; with the integration of X1’s innovative endpoint technology, Collect can now gather data from additional sources like email and files on laptops, servers, or network locations.

Then, the targeted data is seamlessly imported into Relativity—no extra processing, downloads, uploads, or risky data hand-offs required.

This means a streamlined process that can be performed from anywhere, on multiple custodians at a time, and across many of the most common data sources. Forward-thinking teams are saying goodbye to cumbersome and expensive ESI collection and processing tools in favor of this bright new world.

Proportional Data Decisions

Another trend that began to take hold over the last decade is the move toward targeted collections. Gone are the days when full disk imaging was standard practice. Today’s sources are far too densely packed with data to assume everything needs to be captured for every matter. Over-collecting means not just increased costs for data storage on your matters, but huge amounts of time wasted on reviewing unnecessary documents—and all of this adds up to proportionality violations.

The courts agree: Complete disk imaging is by and large unwarranted in civil litigation. (In particular, see Diepenhorst v. City of Battle Creek.)

Instead, what is needed is a middle ground approach in the form of a targeted, automated, and remote collection that provides documentation for defensibility and an emphasis on speed to review.

With traditional processes, there is an inability to quickly and remotely search across and access distributed unstructured data in-place. e-Discovery teams may end up spending weeks or more collecting data, with traditional workflows taking as long as 30 days to complete before data is available for review.

In addition to putting deadlines and case strategy efforts in jeopardy, these delays can increase the risk of errors and security vulnerabilities as data is moved between systems and team members rush to get things done. With X1 endpoint collections integrated into Collect, data can be accessed, searched upon, culled, and ingested directly into your review workspace with no go-betweens required—so your targeted data sets are defensible and in good hands from start to finish. Oh, and that 30 days is cut down to mere hours.

This enables much needed efficiencies in the e-discovery process in the face of growing data volumes, widespread teams and data sources, and diversified data types, because you can target which data you bring into your workspace before it’s published (and have detailed reports on those decisions to back up your final collection). You’ll see benefits not just in greater speed to review, but also greater speed in review, because you’ve eliminated a lot of inefficiencies from the get-go. Plus, you’re protecting potentially privileged or secret information that doesn’t need to be pulled into a project in the first place.

Process Democratization

Finally, there’s a third evolving trend in the collection space. For a long time, there has been a perception that doing collections is difficult, and requires a lot of specialized training or certifications. With the proliferation of the cloud and new data sources, however, this has started to shift. Most e-discovery cases do not require collection by a certified forensics examiner, especially since not every drive needs to be imaged. Instead, as the industry has moved more toward targeted collections, the accessibility of the process has greatly improved.

Additionally, today’s legal teams are under great pressure to do more with less—less money, less time, and less help. As a result, they need to be empowered to perform some collections themselves even if they don’t have that highest degree of training and expertise. Fortunately, cases using targeted e-discovery collections and collections from cloud sources don’t generally require such extensive training.

When organizations are given the tools to do some of this work internally, they can save forensic resources for when they’re truly needed (on really hairy or dicey matters).

RelativityOne Collect’s easy-to-use interface lets any individual perform those type of targeted e-discovery and cloud collections with minimal training. And as a growing number of organizations are experiencing a greater need to remotely collect from computer endpoints as well, Relativity and X1 have partnered to build an integration to help in-house teams do that, too. 

So, while numerous courts have held that custodian self-collection is simply not defensible, capable and well-equipped legal teams can and do collect data from custodians in a defensible and secure manner. Then, those same team members can take what they’ve learned from this at-a-glance view of the origins of their data sets, and bring that knowledge to the rest of the e-discovery or investigation project.

The result is streamlined, end-to-end e-discovery in a single, secure, and easy-to-use platform.

And we will be demonstrating this integration live on our February 24 joint webinar with Relativity: “RelativityOne Collect and X1: Streamlining the Global Collection Process.” Please join us by registering here.

This blog post is also prominently featured on the Relativity blog site here.

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Filed under eDiscovery & Compliance, Enterprise eDiscovery, Information Management, law firm, Preservation & Collection