Think of DolphinSearch as a computer-age Sam Spade.
Rather than enduring countless potential paper cuts by sifting through boxed files, this firm turns on a "conceptual" search engine to rapidly comb millions of e-mails and computer files for evidence. The six-year-old start-up often finds a smoking gun to prosecute a legal case by pulling the technology trigger.
Scanning through quantities of data, the company's proprietary search technology quickly finds the relevant information and bundles it into an unintimidating, easily digestible package. Clients then securely review that evidence on the Internet.
"The old way was having 17 paralegals sitting in a room for months, poring over millions of documents," says Ryan Granard, chief information officer of DolphinSearch. "Now we can process a typical job of 100 gigabytes of data in three to four days."
Subject to unprecedented e-mail and technology-process scrutiny, the litigation-prone are driving the dramatic growth in the field of electronic forensic search. "Litigation increasingly is focusing on electronic records as evidence," says analyst Peter Gerr of Enterprise Strategy Group in Milford, Mass. "In cases ranging from Merrill Lynch to Enron, e-mail is a key witness."
The proliferation of e-mail and reams of computer-based documents have made electronic discovery—or "e-discovery"—a booming market. A recent Socha-Gelbmann Electronic Discovery Survey found that this market jumped from $70 million in revenue in 2000 to an estimated $429 million in 2003. And the market is projected to grow to $1.2 billion by year's end and reach $1.9 billion by 2006.
"There's plenty of opportunity for companies to come into the market," says George Socha Jr. of Socha Consulting LLC in St. Paul, Minn. "No one vendor can dominate because these companies cater to law firms and corporate lawyers handling lawsuits. You are working either for one side or the other."
Ventura, Calif.-based DolphinSearch is one of roughly 300 vendors offering electronic-discovery services and software. Although several companies—including Electronic Evidence Discovery, Inc., Kroll Ontrack Inc. and LexisNexis Applied Discovery—have captured early market share, no player is dominant, analysts say, so DolphinSearch has a chance to pull ahead.
Granard and DolphinSearch think that now is the time to capture a bigger piece of the market. To better position itself, the small business invests heavily in IT to meet the data-crunching demands of its clients. Last year, DolphinSearch upgraded its infrastructure to the tune of $1.8 million; that investment included a state-of-the-art storage area network, which replaced about 100 older servers with nearly 600 new blade servers. The company also put in place authentication, encryption and firewall tools to further secure Web access to its search findings.
DolphinSearch currently hosts 60 terabytes of data for existing customers. And when a big job comes along, the company can handle several hundred terabytes of data almost immediately, Granard says. If DolphinSearch needs to expand capacity, it can quickly add more blade servers on its racks.
Neal Lawson is a director at LECG, a legal advisory service based in Emeryville, Calif., that regularly hires DolphinSearch for litigation research in the financial services, health care, insurance and pharmaceutical industries because of its reliable technology and business processes. "I've looked at a lot of competitors, but I keep coming back to DolphinSearch not only because they have great technology, but because they have a small army in place that is very responsive," Lawson says. "They are realistic and up-front with expectations. Then they jump through hoops and always beat those expectations."
Granard reviews technology resources and capacity every three months to ensure that DolphinSearch's tech infrastructure can handle new business opportunities as they emerge and to arm its 62 employees with the technology tools to respond immediately to customer demands. "The big thing is agility and having the ability to scale very quickly," he says.
To maintain 24-hour, seven-day-a-week reliability, the company installed a duplicate data center so that, if one goes down, the other remains operational. Eliminating downtime is important because DolphinSearch's customers access its findings via the Web.
"We are dealing with mission-critical, time-sensitive data," says Elizabeth Given, DolphinSearch's acting CEO and COO. "From the standpoint of a court order, you have to find data at a moment's notice, so 24/7 availability is key."
DolphinSearch's recent technology investment positions the company for prospective market opportunities, Given says. She points to new laws such as the federal Sarbanes-Oxley Act, which requires archiving company communications to help prevent accounting scandals like Enron's.
DolphinSearch's technology is based on neural networks, an artificial intelligence technology patterned on the human brain's decision-making ability. Search engines such as www.google.com search for keywords alone or perform Boolean searches for keywords plus connecting terms such as "and," "or" and "not." DolphinSearch conducts those types of searches, but specializes in "context searching," which the company claims is more accurate. Searching through corporate-merger files, for example, DolphinSearch technology would turn up e-mails that contain sentences such as, "It looks like the two companies will dance together," Granard says.
The technology can also analyze behavior patterns, he adds. If company executives need to research electronic documents on potential fraud, the technology should flag correspondence between employees who typically don't communicate with each other. If an employee suddenly is talking with someone in finance, that's an unusual pattern that may indicate fraud.
DolphinSearch technology can handle all types of media storage, from hard disks to CDs. The company's search technology can discover e-mail relationships and keep e-mail threads intact. It also can remove duplicate copies of documents found in backup copies of data. Once the data is processed, DolphinSearch librarians can help law firms or corporate clients analyze search results, Granard says.
To ensure high levels of service to internal and external customers, Granard requires his staff to follow rules or "standard operating procedure" on all facets of the IT operation—from help-desk requests to fixing a router. His team holds a weekly meeting to review processes. And if problems or service gaps occur, employees must determine what went wrong and how to prevent a recurrence.
"As you move from a mom-and-pop shop to a world-class organization, you must develop structure and process," Granard explains. "You have to be in tune with the sales and finance folks—what they need and where they're coming from—so you can create roadmaps for the future."
Although technology and process are key focuses for small businesses in the electronic-discovery market, Given cautions them—particularly the start-ups—to remember to take care of their customers and employees. That means providing good service to customers while listening to employees' needs, rewarding them for their efforts and helping them grow through training or promotions.
"With start-ups, it's important to create a sense of teamwork and make sure people are confident in the company," Given says. "You need to create an environment where employees proactively participate and address challenges as they come. You have to grow their skills, reward them and be open about the progress of the company."