Working backwards from a figure of $4 billion to be spent on e-discovery software and services

The e-discovery niche, according to the ABA J., Vol. 95, Aug. 2009 at 29, is crowded with about 600 vendors. They are jostling for pieces of a large pie. George Socha, a consultant deeply involved in research about e-discovery vendors, projects that “[C]ommercial spending in this young niche is expected to increase this year by 20 percent to $4.05 billion.”

Stay with the $4 billion projection. If US law firms of the size to handle lawsuits that unleash significant e-discovery have revenue on the order of $100 billion (I think the AmLaw 100 brought in last year about the $82 billion) and we roughly attribute half of that revenue to litigation, then a tenth more goes to vendors of e-discovery software, hardware and services. My assumption is that the costs of e-discovery vendors are passed through to clients, mostly law departments.

What is unknown is the portion of e-discovery costs paid directly by legal departments as compared to paid through law firms as their disbursements.