Compliance with government and legal requirements is a daily occurrence for most firms. This article spotlights a compliance issue that is increasingly becoming more important and will be part of all future planning: e-discovery.
So what is e-discovery? It is the legal requirement that firms be able to provide outside entities relevant internal documents in a timely manner. It has impact in the areas of document management, litigation, database management, searching techniques, social networking, international and government compliance.
However, its greatest impact may be in providing the impetus and necessary funding for several information technology initiatives and legal reform.
A more detailed definition of e-discovery from Wikipedia suggests that “e-discovery refers to discovery in civil litigation which deals with information in electronic form. In this context, electronic form is the representation of information as binary numbers. Electronic information is different from paper information because of its intangible form, volume, transience, and persistence. Also, electronic information is usually accompanied by metadata, which is rarely present in paper information. Electronic discovery poses new challenges and opportunities for attorneys, their clients, technical advisors, and the courts, as electronic information is collected, reviewed and produced.”
Essentially, the world of individuals sorting through bankers boxes for evidence has entered the electronic age. PricewaterhouseCoopers in its e-discovery service brochure offers the following title: “2,000,000 files on 240 Computers in 3 Countries. By Monday. How?”
The title encompasses many of the issues of e-discovery. The first is the large volume of electronically stored information usually involved in the process. Second is the wide distribution of these data, including different operating systems and databases. Third, multinational companies exist in different jurisdictions (nations) with different laws. Fourth is the time factor — that is, needing it sooner rather than later. The final issue is the problem of searching the data. To make matters worse many large companies face even greater demands as the ESI sources grow with MySpace, Facebook, IM, text messages and Twitter brought to the workplace by new employees. These join the already massive e-mails and other documents held by most firms.
On top of these problems, the current legal situation regarding e-discovery is such that firms are settling civil cases out of court. The driving force behind these settlements is that compiling with broad preservation requests and/or other ESI issues involved with e-discovery are more costly than settling. Current applicable laws including the amended Federal Rules of Civil Procedure that became effective December 2006, and the court cases have placed the burden of maintaining a database of ESI and the dissemination of relevant ESI to opposing counsel on the individual companies.
Thus, a civil suit involving an employee discharge may require the sued firm to produce ESI regarding anything the opposing counsel may deem relevant to their case. Such a broad request as the opposing counsel looks for smoking guns is burdensome to firms, to say the least.
With the year 2008 showing such burdens of the e-discovery law becoming extremely costly, there have been efforts to help the discovery process become efficient. The Sedona Conference Cooperation Proclamation attempts to makes the early case assessment part of a civil trial as a time of cooperation between the parties. By resolving what ESI are necessary and obtainable for the case, costs and time can be minimized. Another effort is the Seventh Circuit Court electronic discovery pilot program where lawyers are working in a pilot program whose guidelines are designed to make the e-discovery process more effective. However, these are the exceptions rather than the rule, and the e-discovery legal situation is still precarious for most firms.
Returning to the topics suggested by the PWC brochure and the author’s original suggestion of e-discovery’s main influence, individual companies’ solutions to these problems and outside e-discovery vendors are making great strides. Cloud computing, software as service, and virtualization of firms’ networks are actually aiding in data management since the data is more centrally stored and thus more easily catalogued and retrieved. The project’s ability to aid in complying with e-discovery rules is an additional factor in the decision for firms to pursue these information technology projects.
Various vendors are creating software solutions to the e-discovery issues. This software, while designed to facilitate the e-discovery process, provides additional benefits to the firm, once the infrastructure is in place. For example, LiveOffice provides a turnkey solution for e-mail archiving that also meets e-discovery requirements. Thus, the firm will not only be able to protect itself but can use its ability to search and retrieve search results for many other purposes. These software solutions for e-discovery compliance as they are implemented will result in a much more effective firm.
The same is true as the refinements of search technologies take place as a result of the needs of e-discovery. The standard search method of using key words has proven wanting for the needs of e-discovery. This has raised semantic searching to the forefront of search technology. Semantic Search uses semantics (the science of meaning in language) to produce highly relevant search results. The goal is to deliver the information queried by a user rather than a list of loosely related keyword results. The long-term effects of such refinements in search capabilities will prove invaluable.
This article only brushes a small portion of the topic of e-discovery. However, firms such as Protiviti and CaseCentral and organizations such as Authority on Managing Records and Information offer Web sites that will offer additional information on the topic. The author hopes this article motivates the reader to pursue additional information on e-discovery; its time has certainly come.
Kurt Fanning is an associate professor of accounting at Grand Valley State University, Seidman College of Business.