UK firms falling short on EDI discovery readiness

By | 11th November 2009

The 3rd Annual Electronically Stored Information (ESI) Trends Report by Kroll Ontrack reveals that there is a significant gap between the existence of corporate document retention policies and ESI discovery readiness strategies.

According to the Kroll Ontrack news release, ESI management is top of mind for corporations but effective implementation is falling.

This year’s survey also reveals 77% of US companies and 56% of U.K. companies believe their ESI discovery policy or strategy is repeatable and defensible. However, only 57% of US and 39% of UK corporations have a mechanism to preserve potentially relevant data when litigation or a regulatory investigation is anticipated.

“Without an identified means to suspend the expulsion of potentially responsive data, many companies are not positioned to execute proper preservation protocol or claim their ESI discovery readiness policy is effective,” says the report.

Now why does this matter? At this point, many people will curl up and want to go home but please bear with me because the whole concept of litigation readiness is hugely important to clients and lawyers alike. To be simplistic, if a company finds itself faced with a regulatory investigation or a claim for damages and is unable to find the relevant documents to support or rebut the issues facing it, the company’s lawyers are likely to face an uphill struggle.

Litigation readiness is a wide subject but one which is becoming increasingly vital for the future wellbeing of corporates faced with litigation and/or regulatory problems.

I am convinced that it is a subject to which I will have to return again and again in the context of electronic documents. For present purposes, however, I will confine my remarks to some of the basic points to bear in mind. In no particular order, you may wish to consider:

  • The need to advise clients to have a clear document retention and destruction policy.
  • The need to ensure it is followed.
  • It is vital to ensure documents are not automatically destroyed eg when an employee leaves. Equally, it is vital to retrieve laptops, PDAs etc when an employee leaves.
  • Document management is key to the ability to fight litigation
  • Importantly, ensure any litigation hold is effective. There are different rules in the US from England and Wales. For example, there is a tension between Data Protection Act obligations and disclosure requirements, particularly in relation to requests from the US.
  • Contemporaneous documents are vital when witnesses cannot recall. The recent case of Earles v Barclays Bank PLC is on the point. It is a decision of His Honour Judge Simon Brown QC, sitting as an Additional High Court Judge in the Mercantile Court in Birmingham and is dated 8th October 2009. The judge is a noted proponent of e-disclosure in appropriate circumstances. (see ‘Watch out! Costs about!’, 29th October)
  • While there is no duty on a client to preserve documents prior to proceedings (and it is difficult to persuade the court to draw adverse inferences from their loss or destruction in such circumstances), the position is very different once proceedings start or litigation is contemplated. Adverse inferences may well be drawn if the documents are not available, although in this country there are no punitive damages as in the US although the court may penalise in costs or strike out a pleading.
  • Consider privilege.
  • Limitation. How long do I keep my records? See retention and destruction policy above.
  • Parties must now think more widely than just about disclosure of emails and must search media other than merely PCs.
  • They should be transparent about key word searches.
  • Consider whether you should disclose metadata.
  • Agree how the e-documents are to be produced for inspection
  • Consider how best to reduce cost of e-disclosure.

Best practice may include:

  • Use of technology can help with document management and document retention.
  • Use of technology to reduce volume of e-docs held.
  • Have a disclosure plan in readiness.
  • Consult with other parties on the scope of disclosure.
  • When appropriate, use technology to identify relevant documents and minimise review time.
  • Use technology to review and analyse the documents.

By thinking about these issues and applying the simple ideas above, the cost of disclosure can be reduced as can the time spent on review.

However, systems must be in place before the litigation starts to ensure that costs are saved. It is more difficult to retrieve the situation once the proceedings are under way, threatened or contemplated.