To date in 2018, the major development in the world of eDiscovery has been an increased focus on personal data privacy—both abroad and, more recently, at home. But software developments and vendor consolidation are also continuing to shape our industry.
Here are five of the biggest challenges and developments we’ve dealt with so far this year.
1. The rise of the General Data Protection Regulation (GDPR)
The top trend, by far, has been the GDPR. The new law, which went into effect on May 25, 2018, unifies data privacy laws across the European Union. As we noted in an earlier blog post, the GDPR requires businesses to take a series of steps to protect the personal data of European residents and to ensure that EU residents—not businesses—exercise control over their data. Some businesses may be required to appoint a data protection officer. Organizations that fail to comply with the GDPR risk penalties of up to 20 million Euros or 4 percent of annual corporate turnover, whichever is higher. The possibility of these harsh consequences has kept the GDPR in the news and on the top of everyone’s mind.
2. An increased domestic interest in privacy
In the wake of the GDPR, privacy initiatives are also underway in the U.S. In April, the Personal Data Collection and Protection Ordinance, a bill that would require businesses to obtain consent from Chicago residents to use, disclose, or sell their personal information, among other things, came before the Chicago City Council. It’s not the only domestic initiative: on June 28, 2018, Governor Jerry Brown signed the California Consumer Privacy Act of 2018 into law. This law, which will become effective on January 1, 2020, is designed to give California consumers more control over how organizations that do business in California (and earn more than $25 million in annual gross revenue) use and share their personally identifiable information. Penalties can reach $7,500 per violation.
3. A reckoning with Office 365
As enterprises continue to adopt Office 365, Microsoft has pledged to continue to increase the software’s capabilities. Organizations that continue to store data on premises should consider migrating their data to the cloud to facilitate discovery with O365’s tools; they should also look to partner with vendors experienced in using these tools to perform targeted searches and collection of ESI.
4. A slow, but steady, growth in the use of technology-assisted review (TAR)
Parties are continuing to—albeit slowly—adopt TAR, for reviewing both their own productions as well as incoming productions. After a relatively quiet 2017 on the TAR case law front, 2018 kicked off with a new opinion from the Northern District of Illinois. In the ongoing In re Broiler Chicken Antitrust Litigation, Special Master Maura Grossman offers practical guidance on using TAR. The opinion addresses continuous active learning (CAL), email threading, deduplication, keyword searches, culling, and more. Parties may seek to limit the risk of disputes by adopting this opinion’s quality-control and quality-assurance protocols. Subsequently, in Entrata, Inc. v. Yardi Systems, Inc., the District of Utah denied a motion to compel the results of a party’s TAR process to assess its production because the defendant could not point to any deficiencies in the plaintiff’s production. Meanwhile, an English court reached the opposite conclusion, requiring manual review in a case where a party failed to act transparently in its use of TAR, raising questions about the “adequacy of the claimants’ disclosure process.”
5. More private equity investment—and consolidation—in the eDiscovery industry
The trend of private equity firms investing in eDiscovery vendors has continued apace, signaling confidence that the demand for eDiscovery services and technology will remain strong. For example, in January, JLL Partners bought Xact Data Discovery. In March, GI Partners arranged a merger between Consilio and Advanced Discovery. Also in March, Peak Rock Capital helped CloudNine buy the LexisNexis eDiscovery platform. In April, funding from Knox Capital helped HaystackID acquire Envision Discovery and Inspired Review. And in May, Leeds Equity Partners invested in Exterro. And those are just a few of the deals that have been struck in the first half of the year. We anticipate this trend will continue.
Given the challenges of the first two quarters of the year, we hope that the rest of the year proves to be smooth sailing. In our volatile industry, we suspect that’s not likely. We’ll keep our finger on the pulse and continue to apprise you of new developments as they arise. In the interim, please get in touch if you’d like to discuss how any of these trends could affect your eDiscovery strategies and workflows.