Discovering E-Discovery

Storage vendors love e-discovery buzz. Here's why you may want to listen

November 8, 2006

4 Min Read
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Electronic discovery, or e-discovery, has activated the latest fear campaign by storage suppliers. For them, the subject could fuel legions of product and service sales. But how seriously should IT managers take their claims?

Is the legal sky really falling? Consider some evidence, if you will. Legal experts say there's a definite increase in the amount of litigation in which companies worldwide are engaged. An annual survey of corporations recently conducted by international law firm Fulbright & Jaworski LLP, for instance, revealed that 70 percent of 455 respondents from a range of U.S. and U.K. corporations reported their firms had filed at least one lawsuit or arbitration motion within the last year. On average, U.S. companies with annual sales of $1 billion or more are engaged in 556 open legal cases, with about 50 new suits added yearly.

The same survey results show regulatory compliance plays a big role in the growing volume of corporate litigation, both in Europe and the U.S. Twenty-one percent of U.S. companies surveyed and 40 percent of respondents in the U.K. reported an increase in regulatory legal activity at their companies.

Indeed, the wider record shows that regulatory violations not only log lots of corporate counsel time, but also account for a growing tally of fines and corporate humiliations. (See Regulators Rip Records Managers.)

Despite all this, the Fulbright & Jaworski survey showed that just 19 percent of all respondents believe they are "well prepared" to handle upcoming e-discovery challenges. Over half the respondents reported they were "somewhat prepared."

Figure 1:

By the way, we at Byte and Switch are conducting our own poll on the issue. Weigh in!

What's it all add up to? Surely it makes sense for any organization to think more about getting better control over email, documents, and other data that could comprise legal evidence.

One thing, though: Suppliers are inciting a sense of urgency about it all by pointing to the December 1 deadline for amendments to the U.S. Federal Rules of Civil Procedure (FRCP).

The new rules are aimed at enabling corporations to engage in more extensive pretrial preparation for lawsuits, in which corporate counsel on both sides can meet and discuss the electronic evidence for a given case. (See FRCP Tip Sheet and Retention Rules Set to Change.)What is the real risk of failing to meet the new standards?

One lawyer, who also runs a firm devoted to helping companies with e-discovery, says failure to be ready for the new FRCP could lead to two kinds of exposure. First, if you're not able to produce electronic evidence easily, you might wind up losing ground in court.

"The new rules provide safeguards for corporations in the e-discovery process. Firms have an opportunity to set the ground rules [in litigation]," says James K. Wagner Jr., a lawyer and co-founder of DiscoverReady LLC. "If you don't have a well defined process, that puts you at a strategic disadvantage."

What's more, Wagner says, not having solid e-discovery can put the company in a bad light. "While there is a potential upside to having no information sharing, the downside is that people can assume the worst for your motivation," he says. He points to recent fines as exemplary of the very negative results produced when companies fail to provide solid electronic evidence.

What is the right response? We say common sense. Developments in the volume and style of corporate litigation surely indicate that if your electronic act isn't together, it's a good idea to start changing that situation. But if you're in a highly regulated industry, chances are you're way ahead on this one.As to the December 1 deadline, it will probably advance the cause of better data management for some firms, but not to the extent that suppliers predict. True, vendors of email management, archiving, enterprise content management, indexing, deduplication, and hosting wares have made e-discovery their battle cry and December 1 a doomsday target in sales pitches. But the real drivers for e-discovery are the larger scope of corporate litigation and regulatory mandates. Those are the forces for change, and they're already well underway.

Mary Jander, Site Editor, Byte and Switch

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