Sub-Prime Scandal Focuses Attention on E-Discovery

E-discovery is firmly in the spotlight following the arrest of two former Bear Stearns fund managers yesterday for alleged securities fraud.

The two former execs, Ralph Cioffi and Matthew Tannin, were taken into custody for their alleged roles in the collapse of two hedge funds which triggered the sub-prime mortgage crisis. Media reports suggest that an email allegedly sent by Cioffi to Tannin may be the smoking gun in the case, underlining the growing importance of e-discovery.

I think that it’s one of the few resources that regulators have access to that can generate leads for them,” says Denise Valentine, senior analyst at the Aite Group, adding that this is unlikely to change anytime soon. “People are people, they talk [via email], they are reflexive in their responses and how they behave.”

Against this backdrop, vendors are ramping up their e-discovery efforts, fusing more and more email retrieval features into traditional storage offerings. Symantec, for example, is planning to boost the e-discovery capabilities on its Enterprise Vault product later this year, and EMC is working on a similar enhancement to its Documentum archive.

Symantec’s rival Atempo is also getting in on the legal act, overhauling its Digital Archive for Messaging (ADAM) product earlier this week. Originally sold as an archiving product for email and instant messages, Atempo has now added an e-discovery module to the ADAM software.“We automatically archive the email for e-discovery purposes and we index it so that you can search on keywords,” says Karim Toubba, Atempo’s vice president of marketing and product development. “For example, if you are in a lawsuit, we will bring back all the emails during a specific period that you have cited.”

Priced at $80 per mailbox, the ADAM e-discovery and compliance option is based on technology from Atempo’s acquisition of Lighthouse Global earlier this year.

“The Lighthouse technology that we acquired has some strong capabilities in the multi-tenancy world,” says Toubba. “[So] we’re selling it to a lot of service providers that want to offer e-discovery as a service.”

The exec was nonetheless unable to say which companies Atempo has sold its e-discovery software to, although some users have already voiced their concern about shifting critical operations such as e-discovery over to a third party.

Third party e-discovery remains a good option for firms lacking in-house IT and legal resources, and also offers peace-of-mind, according to Aite Group’s Valentine.“Using a third party can sometimes offer some benefit when you’re dealing with clients,” she says. “You can say, 'we use a third party, so we have an additional layer of oversight’.”

One vendor that has recently thrown its weight behind outsourced e-discovery is Autonomy Corp., which bought email archiving provider Zantaz for $375 million in July 2007.

Earlier this month, on June 11, Autonomy announced an end-to-end hosted e-discovery solution. The service combines Autonomy’s enterprise desktop application monitoring service, Introspect, its Aungate analysis software, and the Zantaz Enterprise Archive Solution (EAS), among other elements. The result, Autonomy claims, is a more complete and fully integrated e-discovery service than those that merely gather evidence from email.

At least one analyst agrees with this stance, and says that the ability to gather data automatically up front will help distinguish this service from others. “Other hosted platforms are usually silo’d, from players who just do host review,” says analyst Greg Buckles of DCIG. Standalone host review, he says, involves organizing electronic evidence, not gathering it. With Autonomy, there is automation at the front end to help gather email and other data from corporate sources.

On the downside, this kind of service is expensive. Autonomy won’t reveal any pricing, and Buckles acknowledges that this kind of large-scale hosted system can run into the millions. That’s why it generally fits only the largest firms that must handle multiple legal cases at one time. Still, he notes that large outfits like Autonomy appear to be considering a move to SaaS services with subscription pricing in order to accommodate demand from smaller firms. “Companies are starting to look at alternative pricing to get smaller companies involved,” he says. What’s more, the meeting of enterprise software with e-discovery is bound to produce some interesting product combinations.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.