Amid continuing pressure to cut or contain costs and an expected increase in the number of lawsuits and regulatory inquiries involving electronically stored information, companies are bringing some electronic discovery processes in-house.

That’s according to a survey of more than 100 IT and legal executives involved in e-discovery processes at Fortune 2000 companies and government agencies conducted by Enterprise Strategy Group and Clearwell Systems.

The vast majority of companies are already bringing, or plan to bring, some e-discovery tasks in-house, according to the report, “Trends in Electronic Discovery: A Market Perspective.”

While most organizations have outsourced e-discovery processes because they lacked internal resources and wanted to shift some of the risk to a third party, the volume of matters involving ESI now dictate more specialized staff, according to the survey.

Nearly half of respondents (48 percent) already have active projects today to bring certain tasks in-house, while another 36 percent say they’ll have a plan in place over the next 12 months.

Kamal Shah, vice president of marketing at Clearwell Systems, says the trend toward bringing e-discovery processes in-house is driven by three main factors: reducing costs, reducing risk, and getting more control of the process.

“In the last 12 months there have been a number of landmark case decisions where the courts have thrown out the ‘my dog ate my homework’ excuse,” holding enterprises ultimately responsible for e-discovery failures even when third parties are involved, he says.

The majority of those polled want to bring the initial phases of e-discovery-identification and collection (66 percent) and processing and analysis (69 percent) in-house. Those are also the most cumbersome, resource intensive, and therefore expensive tasks, since corporate counsel and IT have to sift through terabytes of information to locate any ESI that may be relevant to a given request and perform early case assessment, according to the report.

Meanwhile, 41 percent of companies are looking to bring aspects of ESI preservation and legal hold management in-house, tasks that can carry the most risk if not executed properly, according to the study. Only 31 percent plan to bring some review/production processes in-house.

Not surprisingly, the majority of respondents expect the number of lawsuits and regulatory inquiries they face to increase in 2010, with 13 percent expecting an increase of 50 percent or more. While most respondents believe those increases will be driven by higher litigation, 46 percent expect to receive more regulatory inquiries.

Despite pressure to reduce costs in other areas, the survey shows legal and IT departments increasing spending on e-discovery. Roughly 80 percent of respondents cited an increase in e-discovery spending in 2009—one-third did so by more than 20 percent. That trend is expected to continue, with nearly 40 percent forecasting a 20 percent or greater increase in e-discovery spending in 2010.

Shah notes that e-discovery technology is becoming a line item in enterprises’ budgets. Among those surveyed, 87 percent plan to budget for technology to support e-discovery processes in 2010.

In addition to bringing all or a portion of the electronic discovery process in-house, 34 percent of respondents plan to hire more people and dedicate additional staff to deal with the expected e-discovery increases in 2010, while 30 percent plan to negotiate better deals with service providers.

Another indication that Companies are hiring specialized staff to handle e-discovery: 22 percent of those polled hold the title “Electronic Discovery Manager”—a title that Shah says didn’t even exist a few years ago.

The full report is available for download here.