Many organizations are struggling with e-mail retention
and e-discovery rules.
Since the e-discovery amendments to the Federal Rules of Civil
Procedure went into effect in December 2006, there has been much
public discussion about the need for organizations to produce electronic
evidence — including e-mail, instant messaging (IM) logs
and other electronically stored information — during litigation.
Yet the majority of businesses admit they are not ready to do so,
and many say they weren’t even aware of these responsibilities.
More than 69 percent of respondents to a recent survey by Osterman
Research said they were not “litigation ready.” Only
6 percent claimed they could immediately and confidently handle
e-discovery requests. More than half thought they were at risk
of not being able to enforce a litigation hold, which is a court
order requiring document retention.
The study was commissioned by Contoural, a Mountain View, Calif.-based
provider of consulting services for litigation readiness. Conducted
in June 2007, the survey questioned more than 100 IT managers in
medium and large enterprises about their litigation readiness status
and practices.
The E-Discovery Challenge
The study indicates many organizations are experiencing a major
disconnect between their IT departments and legal teams. Nearly
40 percent of IT managers surveyed said they have received no clear
guidance from legal on how to support e-discovery procedures, nor
had legal contributed the budget dollars necessary to accomplish
the goals.
“Companies are facing increasing challenges in meeting e-discovery
requirements. It is extremely important that IT and legal forge
strong and supportive connections,” said Mark Diamond, CEO
and president of Contoural. “The courts are increasingly
putting IT on the stand and asking for enforced policies and procedures
around records management.”
More than 51 percent of organizations surveyed had not yet identified
anyone in their IT departments prepared to testify in court regarding
electronically stored information — what records are retained,
where the records reside, how they are protected, and how the information
could be retrieved if necessary under court order.
“The challenge of understanding and implementing the new
FRCP requirements has caused a great deal of concern among corporate
legal counsel, partly because meeting that challenge requires cooperation
between different departments — including IT, records management,
legal and the business units — to make it happen. These survey
results indicate that many businesses are clearly still struggling
to meet the requirements,” said Arthur L. Smith, a member
of the Dispute Resolution Practice Group at Husch & Eppenberger
in St. Louis and an expert on issues relating to e-discovery.
When asked about the most painful issues for IT in complying with
e-discovery requests, respondents most frequently mentioned the
lack of enterprise search tools and the absence of automated e-mail
and file archiving solutions, Only a quarter of the companies surveyed
had deployed an e-mail archive solution. To recover e-mail messages,
nearly one-half (48 percent) said they would need to retrieve messages
from backup tapes.
Managing Data
E-mail retention is a significant challenge: According to analyst
firm Enterprise Strategy Group (ESG), organizations will archive
more than 7,000 petabytes of e-mail over the next four years. In
addition, ESG says that approximately 77 percent of companies responding
to e-discovery requests have had to produce e-mail. IT professionals
are being asked to implement systems to archive and manage electronic
information to comply with the FRCP as well as government regulations
such as Securities and Exchange Commission (SEC) rules 17a-3 and
17a-4.
“Whether it is for compliance, electronic discovery or IT
efficiencies, customers derive measurable benefits by archiving
e-mail and other content,” said ESG Analyst Brian Babineau.
Because not all information is created equal, organizations need
to manage and retain it based on its value. In fact, a recent survey
by ESG noted that 63 percent of organizations require the ability
to set different retention policies based on content or source.
While certain content needs to be maintained for years, such as
orders and contracts, other data such as personal e-mail and newsletters
can be eliminated more quickly. Effective information management
requires classification of data into relevant categories and enforcement
of policies for those categories.
“Having a sound records management policy and system in
place are the important first steps towards meeting the e-discovery
challenge posed by the FRCP amendments,” Smith said. “Organizations
that have not yet started this process should make it a priority
or face leaving themselves open to significant risks.”
Time Is Money
In the past, most organizations have responded to e-discovery
requests reactively. However, the FRCP now requires that e-discovery
issues be addressed early in the litigation process, forcing organizations
to take a proactive approach to records retention and management.
And while the amended rules recognize that electronic files are
much more dynamic than paper records, the timetable for e-discovery
is often short and sanctions can be costly.
The implications of rapid information retrieval extend beyond
e-discovery. SEC rules 17a-3 and 17a-4 require that e-mails and
other records be kept for three years, stored in a format that
cannot be overwritten or erased, and made readily accessible if
regulators ask for them. In one case, the SEC fined several brokerage
firms because they couldn't retrieve certain customer e-mails within
the required time frame. It wasn't that the firms hadn't stored
the e-mails; they just couldn't retrieve them quickly enough.
“One out of two organizations has to produce an e-mail as
a result of a legal or regulatory inquiry. Utilizing intelligent
e-mail archiving solutions can facilitate stringent processes for
compliance, corporate governance and litigation readiness,” said
Babineau.
Back to Menu
Back to Archive
