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eDiscovery for Dummies - What You Need to Know!

  

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This is the first article of a series on eDiscovery where we will try to explain you why it is one of the major drivers for archiving employee-generated content and what you need to do to avoid painful fines in case of an eDiscovery request.

The volume of email is skyrocketing, growing by 500% over the last 10 years, which poses storage and operational challenges for data security and system performance. Add in increased legal and regulatory requirements, and you understand why leading industry analysts believe every organization should archive its email. One word that we hear a lot in the cloud computing, data storage and legal sectors is “eDiscovery”. What I’ll try to do is to bring some light over this small and insignificant – at first sight – word that could cost you serious amount of money and eventually put you out of business!

What is eDiscovery/Electronic Discovery and why does it matter?

eDiscovery is the process of gathering, reviewing and producing documents in electronic format. Federal, state, and corporate governance regulations require most companies to comply with specific regulatory guidelines to retain electronically stored information for 2-7 years and be able to produce it within days.

Some facts about eDiscovery:

• eDiscovery requests are expected to triple in 2010 – FINRA took $50 million in fines in 2009, up from $28 million in 2008. The issue is that 93% of corporate counsels acknowledge that they are not prepared for the growth in electronic discovery regulations and requirements. Another issue is that backup tapes are not compliant with eDiscovery requirements for email, IM and other employee-generated content.

• Enterprises will spend about $4,6 billion in 2010 on eDiscovery. But, 7 out of 10 businesses that experience eDiscovery event go out of business. As you can understand, the expenses associated with finding emails for electronic discovery is potentially crippling.

• eDiscovery today represents 35% of the total cost of litigation. Companies that fail to produce emails in a timely or appropriate manner face the risk of failing millions of dollars in sanctions and fines, and lost corporate reputation and face embarrassment.

• eDiscovery is cited as one of the biggest money wasters in the legal world. 70% of money spent on eDsicovery is wasted because, more often than not, lawyers are as to the efficient eDiscovery practices.

• Companies with $1 billion in revenue face multiple legal matters. Those companies spend between $2,5 and $4 million each year on legal discovery of electronic files alone.

• The new FCRP rules – like many other compliance rules – are being enforced. UBS Warburg and Merck were fined $29,2 million and $253 millions in litigation that required eDiscovery of files.

What is ESI?

ESI means Electronically Stored Information. It can be involved in any case of litigation. ESI consist in any types of document different from paper having an intangible form, volume, transience and persistence. ESI and discoverable materials, meaning that they can have the same value/weigh/impact as any paper documents (contracts, letters, etc).

Why do you need to have ESI readily accessible and easily retrievable?

One of the major reasons implying that all ESI must be readily accessible is the FRCP or Federal Rules of Civil Procedures, applying to any organization by the way! The Federal Rules of Civil Procedure govern the conduct of actions brought in Federal district courts. It states that any organization subject to litigation must be able to locate, retrieve and respond to data requests in a timely fashion. A “data request”, in case of litigation, would be the opposite party asking you to provide a certain amount of Electronically Stored Information within a specific – legally defined – timeframe; implying that your corporate data (emails, SMS, IM, social media content) is stored in a central repository and is easily accessible any time.

Here are one or two real-world examples:

• If today, you would be asked to produce all emails from 2001 between the VP of marketing and the product manager, how would you do? And, how long would it take you to recover all the emails?

• Another one. How would you do and how long would it take to produce all the social media communications (Facebook, Twitter, LinkedIn…) related to your organization?

That’s it for this week. Next week, we will dig into the Social Media case and I'll explain you why social media communications are as discoverable as any other ESI.