In late August, scientists at Rice University and Hewlett-Packard reported that they have succeeded in building reliable miniature digital switches that could shrink to a significantly smaller scale than currently possible. IBM and Intel are pursuing competing technologies. If the new technology fulfills its promise, it will be possible for a single microchip to store as much as today’s highest capacity disk drives within 5 years. Ultimately, an individual could store several hundred movies on a single chip. Prior to this recent breakthrough discovery, chip makers were beginning to believe that the laws of physics and finance would eventually slowdown the pace of storage enhancements and potentially end the validity of Moore’s law. Moore’s Law is named after Gordon Moore, the co-founder of Intel, who famously observed in 1965 that the chip industry could roughly double the number of transistors printed on a wafer of silicon every 18 months.

The vast amounts of data that will be able to be stored cheaply with this technology will naturally cause the amount of electronically stored information maintained by individuals and organizations to dramatically increase. As a result, the amount of electronically stored information subject to e-discovery requests will also dramatically increase. Currently, it is estimated that anywhere from 60 to 90% of litigation costs are related to e-discovery. This will continue and probably increase significantly unless organizations truly begin proactively addressing their information needs through electronic discovery readiness and electronic records management and retention policies. Records that are not needed for business operations or for legal reasons should be purged to reduce the amount of information extracted, hosted, reviewed and produced. In this environment, reducing the universe of documents to be reviewed in litigation and reducing the amount of information to be accessed by the corporation will be of the utmost importance.

On the operations side of the house, coherent and comprehensive electronic records management will be a must. The absence of a comprehensive electronic records management policy will lead to the inability to easily access corporate information, reduced employee productivity, higher monetary costs due to the storage of unnecessary records and searching for records in response to e-discovery and the failure to adhere to regulatory retention requirements. These costs are currently significant. For example, the average employee wastes up to 2.5 hours a day looking for misplaced documents or records on organization information systems, the average computer user spends about 7.5% of their time on a PC looking for misplaced records, organizations incorrectly file anywhere from 2 to 7% of their records resulting in a cost of $180/per document to recreate the lost record, the average organization loses over million records a year at a cost of $5 million, and 90% of organization records are never referred to after the initial creation and communication. These costs will only grow as the ability to store more information continues to become easier and cheaper.

On the legal and e-discovery side, the costs could explode in the next few years. The average custodian in litigation currently has between 5 and 10 GB of data or 375,000 to 750,000 pages of data. Factoring collection, culling, processing, hosting and review costs, the cost per GB can run as high as $40,000. A medium sized case with 10 custodians can be safely assumed to cost anywhere between $1.2 and $1.5 million. It is probably a safe assumption that the new Nanotechnology developments by Rice will lead to at least a quintupling of the amount of data held by the average custodian. Based on the average custodian having anywhere between 25 and 50 GB of data now, the cost of e-discovery compliance for the average 10 custodian case in the future will cost approximately $6.5 million.. Fortunately, most of this additional data will not be needed for business or legal purposes. Therefore, aggressive electronic record management policies and electronic discovery readiness policies and annual compliance programs that can be implemented at a cost of in the thousands to low tens of thousands can substantially reduce the universe of documents and potential e-discovery costs. Current e-discovery case studies indicate that up to 50% of email and 25% of unstructured electronically stored information is kept beyond its useful retention period. Legally defensible policies that reduce the universe of documents could lead to e-discovery savings of $300,000 to $600,000 on the average case today and $2 to $3 million reduction in the e-discovery world of the future brought to us by Rice, HP, Intel and IBM.