Monday, December 1, 2008

e.Discovery Planning

E-Discovery is a topic that is quickly becoming a more common conversation point. The average person really does not know what E-Discovery is and why it is important. The same can actually be said for a large amount of businesses out there today. E-Discovery is not a topic that most companies spend a lot of time talking about. That is until they find themselves part of a situation that makes them understand what E-Discovery is and they soon realize the importance of having a plan for preserving and gathering electronic data that may be used as evidence in a legal proceeding. What data would be important to preserve? The most common type of E-discovery evidence would be e-mail. A lot of transactions and conversations take place via e-mail. Companies such as internet service providers have more of a dilemma, as it is difficult for them to maintain large amounts of data, and they are often presented with requests to preserve information. Many ISP's only keep information for short periods of time due to storage space limits. Other types of data that could possibly be of importance could be database files, documents, picture files, audio, and video files. Many times there is more than is apparent on the surface of a file. The ability to hide incriminating evidence within an audio file or photo is not something that most people are aware of. Instant messaging data is also growing fast. So it becomes apparent that as technology evolves and companies are involved in legal proceedings more and more emphasis is going to be placed on E-Discovery. Many companies will experience this first hand, some will learn from the mistakes of others. Most large companies could potentially have several legal proceedings going on at any given time. This makes it necessary to implement some type of strategic plan for discovering electronic evidence.

A plan for discovering electronic data or evidence is known as Proactive E-Discovery. As mentioned earlier companies are beginning to realize the importance of E-Discovery. Electronic data is one of the most difficult forms of evidence to destroy completely. As data makes its way from system to system it creates another point of presence in which the data can be discovered or hidden. Data itself is growing rapidly, and this further complicates the matter. So why is it so important to have a plan in place for discovering electronic data? An answer that is becoming more and more a reality is "because you have to". A situation such as a legal proceeding could require the presentation or disclosure of relevant data in a very short time frame. According to the Federal Rules of Civil Procedure, data must be produced within 120 days. As part of the discovery phase of a legal proceeding it is required that known information such as data be presented to the opposing counsel. If there is not a plan in place for retrieving this data it is possible that a company could be levied with fines or sanctions for not complying or being unable to comply.

Having had the opportunity to begin studying this field as part of perusing a bachelor degree in computer and digital forensics it has become clear to me the focus the legal system is beginning to put on data that can be stored electronically, and the ability to quickly discover and present that data. As mentioned before the Federal Rules of Civil procedure have been modified, putting focus on the need for companies to know what they are storing and to have a procedure in place to quickly discover the necessary data and present it as evidence to legal counsel. Knowing what is stored is an issue companies will struggle with as any data that is stored can potentially be called into question and become part of an ongoing investigation. A major driving force behind the scramble to implement E-Discovery plans is the potential for sanctions. Courts have a good amount of leeway when imposing sanctions. These sanctions can amount to million dollar penalties that could potentially bankrupt an organization. In general the sanctions can be determined by the severity of the failure to comply and the actions taken by representatives to either help or hinder the discovery of data. The following link is an article that talks about the World Trade Center Insurer, and their legal counsel that were hit with E-Discovery sanctions:

The E-Discovery business is the real deal, and as more and more companies are penalized for failing to comply, more and more companies will be looking to adopt policies and procedures that will allow them to know what it is they are archiving, and exactly how they will go about discovering and presenting this data. Their efforts will likely save them millions of dollars and the ugly embarrassment of their names being publicized as having violated E-Discovery regulations. E-Discovery compliance will also continue to grow and become more main-stream as society continues to move in the direction of electronic lifestyles. The more electronic data there is in the world, the more important E-Discovery will become.

1 comment:

Matt Davis said...

At some point, e.Discovery needs to be tied to an organization's data retention policy - which hopefully is tied to data classification. Ultimately, these retention policies will have to start converging minimum retention concepts e.g. for financial data, with the concept of maximum data retention. This is based on many reasons such as some of the costs outlined in your post, legal risks of storing discoverable information too long, and regulations like PCI that require data only be stored as long as there is need.

For example, I spoke with one company who stores basically indefinitely and was subsequently in a bad position to produce, at a high cost and to their disadvantage, salary information from 16 years ago on a pension dispute. I suppose that can work in your favor, but I'd bet that more often than not it doesn't.