The e-discovery market is consolidating and its growth slowing according to a recent Gartner report. 

Gartner, in a December 2008 report, Gartner MarketScope for E-Discovery Software Product Vendors, reports several findings:

  • Spending on e-discovery software technology and services will grow between 25% and 35% annually, down from 50% growth. Corporate insourcing is one reason for the declining growth.
  • By year-end 2009, there will be 25% fewer EDD vendors.
  • It remains difficult to compare products.
  • “[W]e have also seen companies and law firms changing their tactics and the overall volume of litigation decreasing due to the excessively high cost of e-discovery.”
  • Assessments of EDD software vendors include Anacomp, Autonomy, CA, Clearwell, FTI, Guidance Software, IBM, Interwoven, Kazeon, PSS, and Recommind.

The Gartner report is available for registration at the Clearwell site or for purchase at Gartner.

What I find interesting is that the litigation support and EDD market has long been fragmented. When I arrived at a law firm in 1989 I analyzed the lit supp vendors, which was exactly the type of work I had just done at strategy consulting firm Bain & C0. I was amazed at how fragmented the market was.

The explanation I came up with then is the same that I think applies today: purchasers are very fragmented. That is, few law firms – or law departments for that matter – buy EDD services on an institutional basis. Individual lawyers at firms and departments typically select vendors. There is a slow movement by corporations to institutionalize buying. Consolidating the number of buyers likely would do more than any other single factor to drive further vendor consolidation. Doing so would likely also continue to drive prices lower.