Most companies are taking this new reality seriously. Companies are committing necessary resources to develop compliance and risk management policies in order to respond to and manage the cost of litigation. These legal actions impact operational costs while taking up corporate time, energy, and resources that are better used for selling, marketing, research and development, employee retention, or other business driven priorities.
Confronting this spike in legal work is driving up budgets for eDiscovery as it has become a critical part of every company's response to litigation. This is forcing companies to address the challenge of identifying, collecting, preserving and processing their electronically stored information (ESI) regardless of where it resides on their corporate network by automating some or all of their in-house eDiscovery processes.
However, as companies are coming to find out, conducting a corporate eDiscovery fire drill every time they need to respond to legal inquiry is costly and impractical. Companies no longer have the staff or budgets to dedicate to meet the growing number of legal requests they receive from the courts for their electronically stored information. Equally problematic, courts no longer give companies open-ended time frames in which to produce this information.
This is forcing companies to adopt a more proactive stance and deploy eDiscovery solutions before they receive the legal discovery request. So as companies start to bring in-house eDiscovery and compliance solutions like Kazeon Systems' Information Server, companies can know ahead of time where their data resides, categorize and classify document and email content and then only produce the information that the is required for the 26(a) initial disclosures or 26(f) meet and confer, instead of delivering a week's or month's worth of backup data.
But as companies become more proactive, they are running into an unexpected problem: how to pay for eDiscovery. Historically budgeting for eDiscovery has come out of some sort of emergency funds. It may come from the external law firm budget or it may come from the IT budget, but this is a zero sum game. So now what companies are finding out is that as they go through a more formal process to procure and deploy a proactive eDiscovery solution, they find out they have not properly budgeted for this expense.
IT and corporate general counsel both play a role in eDiscovery but have budgets that they manage separately. As a result, current line items in their budgets do not neatly map into eDiscovery solutions. Line items like archiving, compliance and security tend to appear in IT budgets while a line item for external law firms shows up on the General Counsel's budget. So who must pay for the eDiscovery solution since technically it is applicable to both?
eDiscovery is as much a part of the new business reality as new federal and state regulations. So while companies have already started to put in place processes to reduce the risk associated with eDiscoveries, they must include a new line item in their budgets to pay for the up-front expenditures needed to minimize downstream costs and risks. A proactive approach to controlling the risks associated with eDiscovery provides recognition to the importance of protecting your company's assets and reputation as well as your bottom line. This starts by creating a line item in your budget for eDiscovery which ultimately prevents your company from failing to fund an event that is, in all likelihood, inevitable.
]]>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:
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.3. Developing an adequate records management program.
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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