eDiscovery; Proactive Approach or Corporate Fire Drill

If your company strategy toward Electronic Discovery (eDiscovery) process amounts to nothing more than a corporate fire drill, you are not alone; but the potential costs and risks associated with this reactive approach are staggering.

An eDiscovery process can touch many areas within your company, and meeting the obligations of the Federal Rules of Civil Procedure (FRCP) regarding eDiscovery processes can be a daunting task. According to the National Law Journal over 90 percent of business documents today are created and stored electronically. When you factor in the many avenues in which corporate data is created and stored, whether it is e-mail, spreadsheets, or electronic documents, the need for adopting a proactive eDiscovery process becomes apparent.

It is well established that not having a formal process towards eDiscovery is a costly and risky strategy. Studies performed by DCIG have shown that costs can approach $2000 per gigabyte of information for collecting and preserving electronic data. This does not include the costs associated with a legal review that a proactive approach to eDiscovery can help mitigate

Traditional reactive approaches to eDiscovery expose companies to skyrocketing costs as they try to wade through the processing and review of e-mail and documents which too often cause delays in determining which documents are subject to discovery. A proactive approach towards eDiscovery shortens the time it takes to identify, collect, process, and analyze electronically stored e-mail and documents thereby reducing costs and delays in responding to eDiscovery requests.

In developing a proactive approach to eDiscovery, there are several areas which a company needs to consider:

    1. Is a company better served through outsourcing eDiscovery to a third party? Or is bringing up-front eDiscovery in house through the use of an eDiscovery tool such as Kazeon Systems’ IS1200 a more prudent option? When making this decision companies need to consider all issues and risks and decide which model best fits their corporate strategy. Usually the decision is one based on cost and control. How can a company have the most control over its data and implement the eDiscovery process for the lowest cost?

    2. Does your company have a good understanding of the laws pertaining to eDiscovery? The revised FRCP governs eDiscovery in legal proceedings. Ensuring there isn’t any legal counsel confusion regarding eDiscovery is critical during these times since, in order to comply with FRCP, there are steps that companies need to take including:

    • Verifying that electronically stored information (ESI) is accessible and discoverable
    • Faster, hassle-free information for 26(a) initial disclosures
    • Prepare for 26f meet and confer to define scope
    • Knowing the guidelines on when cost or effort is excessive and not justifiable in producing an e-document
    • The loss of evidence through routine e-mail purging

3. Developing an adequate records management program. If you do not have a good handle on your electronically stored information, then any eDiscovery request is going to be a costly and time consuming effort. Companies no longer have open-ended time frames in which to answer an eDiscovery request and there have been high profile examples in which civil penalties have been levied against companies for delays in responding to eDiscovery requests. One such example as reported by the New York Times was Morgan Stanley’s $15 million agreed upon fine with the SEC for failing to produce e-mails in a timely manner.

    4. Finally, companies should develop policies and procedures to ensure they have a plan in place when eDiscovery occurs. This should be a combined effort between corporate management, corporate IT and legal counsel to ensure a good understanding of the challenges in responding to eDiscovery requests. A consistent approach to these types of requests will go a long way in making sure management, IT and legal are all on the same page when a company needs to perform an eDiscovery.

Legal fire drills generate a lot of activity and sometimes solve the problem but they are no longer a viable substitute for a well managed and documented corporate eDiscovery process. Companies must understand that a reactive approach to eDiscovery results in unacceptable delays and could lead to critical omissions and/or revelations. These may damage the organization’s reputation in the market while also increasing costs and taking up valuable time. By following the above suggestions your company can begin to implement a thoughtful and prudent pro-active eDiscovery infrastructure that will benefit not only your ongoing information management initiatives, but help you respond to reactive eDiscovery requests with unprecedented completeness and accuracy across your enterprise.

 

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