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A Supercharged Search Engine for Lawyers

By Alex Salkever In the future, June 18 may be remembered as the final nail in Gordon Gekko's coffin. When the finance kingpin ruled Wall Street -- O.K., only in Wall Street the movie -- the thought of investors suing behemoth banks and brokerages generally elicited howls of derision. And in those days, private conversations were just that. But on the 18th, the National Association of Securities Dealers told its 5,300 members that they would have to log and archive all instant-message conversations at work and store them for three years. These most private, casual of electronic conversations are now becoming grist for lawyers who sue brokers and investment banks with increasing vigor.

As any securities lawyer can tell you, back in the 1980s the deck was clearly stacked against investors. Arbitration boards rarely found in their favor. And when cases did hit the courts, brokerages and investment banks often played hardball by piling massive quantities of paper documents, much of them irrelevant, onto plaintiffs' lawyers in response to requests for information known in the legal trade as "discovery." The paper-bombing practice was referred to as dumping, and it was entirely legal.

How the worm has turned. The dot-bomb stock market and the exposé of improprieties and allegations of criminal behavior at a handful of big public companies have awakened blistering public outrage. This vocal and politically dangerous upwelling forced the Securities & Exchange Commission and Congress to reshuffle the deck more in favor of investors. The Sarbanes-Oxley Act, which is already being phased in, sets higher standards for corporate behavior. And new SEC regulations have put brokerages on notice not to tout stocks they actually think are dogs, among other sins.

MILLIONS OF FILES. Perhaps more important than any legislative heat, however, has been a sweeping revolution in technology and a switch in discovery from paper to electronic documents. Courts can require companies to turn over all sorts of electronic records, even those instant message conversations that now must be stored on backup servers and cataloged in a way that's easily searchable should a legal brouhaha ensue.

Search is the key. A handful of companies, such as startup Fios, Applied Discovery, and Kroll OnTrack (KROL) offer specific services geared toward electronic discovery that catalog and categorize massive numbers of files copied from hard drives of litigants. The tally often runs into the millions. Files are organized by type, date, keyword, and other criteria that provide far more capability to search for complex terms and patterns than on the average Web search engine.

For example, on most high-powered electronic-discovery software you can search for all e-mail and PDF documents containing a certain name and a specific phrase between a certain range of dates. That's crucial when "you are combing through millions of pages worth of material in seconds," says Jim Mitchell, a partner at Huron Consulting Group, a 400-person firm with offices in seven major cities around the country specializing in helping with electronic discovery and other legal support for big cases.

EASY TO NAVIGATE. In this pack, Fios Inc. in Portland, Ore., has the early electronic-discovery technology lead. That's largely because in April Fios became the first to offers a capability it calls "contextual searching."

Here's how it works. A client on either side of the legal aisle hires Fios, which then copies and cleans up hard drives, eliminating copies and system files irrelevant to the case. Fios charges $4 per megabyte for the process. It may not sound like much, but many cases can range into the millions of megabytes or more. As part of the deal, Fios gives customers Web access to the information using a tool it calls Prevail. It has a Windows-like interface, so navigating within Prevail is similar to navigating file trees on a Windows desktop.

The secret sauce, however, is contextual searching. Fios says it's the only e-discovery company now offering this capability. Think of this as a search engine on steroids. The contextual-search function lets you find things you don't even know you're searching for.

BEYOND GOOGLE. It does this through sophisticated algorithms modeled on human speech and thinking. Designed by the information algorithm wonks at Engenium in Dallas, the mathematical formulas translated into computer code quickly scan the structure of each documents and judge how each individual word is related to any other word in the document cache. The system does the same for groups of words.

So if you type in a search term or a set of terms, the system can pull out other related information not contained in your search terms. Contextual searching isn't keyword-based, like Google. It's concept-based, a much trickier challenge, but it can yield much greater results.

Here's an example. Say you want to search for documents on sedimentation, water rights, run-off, and environmental impact. When you ask Prevail to do a contextual search for those terms, the engine might also return other unexpected terms such as riparian (an obscure word used to describe lush vegetation on the sides of waterways). And it might return the name of someone who you hadn't expected to be involved in these matters.

"THAT'S BIG." According to Fios product manager Matt Deniston, contextual search on Fios' Prevail can even pull up code words for secret projects that might not be readily associated with the search terms. This could be particularly useful for searching IM conversations, which are far less structured, might be grammatically incorrect, and reflect the context of a situation far more than other forms of electronic communication.

Client confidentiality means attorneys can't talk about how they've used Prevail and contextual search for specific cases. But Huron's Mitchell positively gushes over how well the system worked when he first tried it out on a big securities suit involving a publicly traded company. "It was bringing up material that hadn't been looked at when you search exclusively on those key terms," says Mitchell. "That's big."

Big enough to keep privately held Fios growing at a triple-digit clip, with revenues landing in the $10 million to $20 million range for 2003. That comes from 150 customers, many of whom rank among the largest law firms in the country. Expect other electronic-discovery companies to take the same route with new forms of search capability designed to unmask the secrets of corporate scofflaws. Salkever is Technology editor for BusinessWeek Online and covers computer security issues weekly in his Security Net column

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