Out-Law News 2 min. read

Could your business fulfil a demand for electronic evidence?


Nearly every business-led court case in the developed world now involves legal discovery of electronic information, according to a US study by Gartner, but over half of IT organisations and in-house legal teams are not geared up to handle requests for electronic evidence.

Electronic discovery, or e-discovery, is the gathering of digitally stored business documentation relevant to a civil lawsuit, a prosecution or a government investigation into a regulatory violation.

Like the legal discovery of paper documents, e-discovery requires that a party to a legal proceeding produce, in a timely manner, any electronic document the court may deem relevant.

E-discovery can be costly and time consuming but the possible consequences of failing to prepare adequately for an e-discovery action can be disastrous, says Gartner. Companies have been sanctioned for failing to preserve electronically stored documents, even when the documents had not yet been requested, but the need to produce them had been ‘reasonably anticipated’.

The analyst firm predicts that in 2006 at least 75% of all global companies will be involved in legal or regulatory action that requires a systematic approach to legal discovery. Within this, IT will play a crucial role.

Gartner predicts that through 2010, companies that have not adopted formal e-discovery processes will spend twice as much on gathering and producing documents as they will on legal services. 

“Chief Information Officers (CIOs), general counsels, IT security professionals, records and email administrators and operations staff all need to understand IT’s function in legal discovery,” said Debra Logan, research vice president at Gartner. “IT plays a crucial role in how content that becomes evidence is created, preserved, collected and turned over to the appropriate authorities.”

According to Ms Logan, the situation is further complicated by the lack of established standards for e-discovery.

“There is currently no clear model for e-discovery,” she said. “It really is down to the individual organisation to decide on how to proceed in conjunction with its legal counsel. Counsel must monitor the changing legal landscape and provide the best possible advice to the IT organisation about how to manage its assets and define its processes for regulatory and legal purposes.”

To help reduce the costs and risks associated with e-discovery, Ms Logan advised that IT departments should:

  • Be proactive in creating good compliance practices. Having the kinds of compliance processes that regulators, auditors and lawyers expect will make investigations and discovery actions easier and less costly.
  • Work with your legal and compliance colleagues, and use records management programs to reduce the overall amount of discoverable material. By evaluating documents for regulatory, legal or business continuity purposes, and making the appropriate decisions about them, companies will decrease the amount of information that they hold, streamlining the discovery process.
  • Conduct an inventory of all IT assets. Include information assets, storage devices, backup devices and off-site storage.
  • Document previous discovery actions and debrief with counsel after each one. Use this information to create repeatable procedures. In certain industries, the IT organisation may even want to consider creating special positions for this purpose.
  • Familiarise yourself with the e-discovery vendor landscape. It is growing and confused, with the usual characteristics of early stage markets (that is, players from diverse and often marginally relevant segments claiming expertise in the area). There are only a handful of players that provide end-to-end discovery services.
  • IT managers should work with the legal department to understand how much they are spending on discovery, who is providing services to them and how they are evaluating their options. The IT department is best equipped to help the legal department deal with the many technical issues surrounding e-discovery.
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