Bloomberg Law
July 27, 2015, 8:23 PM

Calculating the Size of the Opaque eDiscovery Market

Gabe Friedman

Estimating the size of the eDiscovery market is notoriously difficult, which helps explain why there have been three vastly different recent estimates of its size:

• In May,Gartner pegged the global market for eDiscovery software at an estimated $1.8 billion .

• This month, Markets and Markets, a research report publishing company, looked at the global market for eDiscovery software and services and came up with a $7.01 billion figure, which it projected would increase to $14.26 billion by 2020.

• Last week, Robert Hilson estimated the eDiscovery market connected to U.S. litigation alone, including everything but preservation, is about $41.2 billion — slightly higher than the gross domestic product of Libya.

Some of the differences are explained by methodology: Gartner only looked at software while the other two looked at software and services. The largest estimate by Hilson, director of marketing at Logikcull, also tried to include document review, often described as the most expensive part of eDiscovery.

Still, Big Law Business tried to reconcile the three estimates and found several experts who offered the same explanation for why the estimates were so far apart: It’s not possible to accurately measure the size of the eDiscovery market because pricing is not yet uniform, and there’s little agreement about the measurement standards that should be used for any calculation.

“These are all what you would call, technically, wild ass guesses,” said George Socha, of Socha Consulting, about the three recent estimates.

Between 2003 and 2009, his company published the Socha-Gelbmann Electronic Discovery Survey, which sought to estimate market size. Ultimately, Socha decided to cease publishing the survey because of concerns about accuracy.

Trying to estimate the size of the market based on the overall number of cases and an average eDiscovery cost per case is wrong because no two cases have similar eDiscovery costs, Socha said. Many users still demand custom eDiscovery solutions, which make estimated average costs per case in accurate, he explained.

Law firms and corporate law departments are also likely to record costs for eDiscovery software differently. For instance, a lot of software offers both cybersecurity and eDiscovery and the costs could be recorded under either account.

With vendors, particularly those that manage the process, there’s a great deal of variation in the way eDiscovery is measured and defined. Some companies may include paper scanning as eDiscovery. Other large companies report lump eDiscovery revenues into other revenue streams.

“The question is, ‘How did they arrive at the estimate?’” said Socha, about all the estimates. “My guess is that there were extrapolations based on assumptions,” adding that the estimates were probably off by orders of magnitude.

Hilson, who arrived at his $41.2 billion estimate by looking at the volume of U.S. litigation, and making assumptions about the total costs of civil litigation, said his figure was published in a blog post that was meant to be provocative.

“The biggest problem is there’s no transparency into eDiscovery costs in general,” he said.