New Legal Discovery Mandates Transcends Traditional Search Capabilities

Information Management Special Reports, February 5, 2008

In May 2005, a judge fined Morgan Stanley $1.5 billion for failing to properly preserve information related to an active litigation. A jury awarded $800 million in punitive damages when that same firm repeatedly failed to produce electronic data in a timely manner, and another jury awarded $29 million in the largest sex discrimination verdict in U.S. history after UBS Warburg could not produce copies of relevant information. According to most industry experts, these punitive fines are just the tip of the iceberg. As of December 1, 2006, new Federal Rules of Civil Procedure (FRCP) amendments have raised the bar by increasing the possibility of such fines for noncompliance. But according to a recent ComputerWorld survey, 32 percent of IT professionals believe their companies are not prepared to comply, and an even larger number are not sure how the new rules for legal discovery will impact them.¹

Legal discovery, or e-discovery, as it’s often termed, is defined as the act or process of finding or learning something that was previously unknown. In this case, litigators are referring to evidence related to a case. When your IT group becomes involved in a legal discovery - and it really is a matter of when and not if - you will be cordially compelled to hand over any emails, files and other data requested within a limited time frame, often within 99 days. A recent survey of 840 companies by the ePolicy Institute and the American Management Association found that one out of every five organizations has received subpoenas for such information and, according to an online article from Law.com, more than 90 percent of new business records are created electronically.²

Now for the really bad news. Of that 90 percent, 90 percent is probably at risk for spoliation. That’s a nasty little legal term used by lawyers and courts to reference the withholding, hiding or destruction of evidence relevant to a legal proceeding. Some people go to jail for such violations while others simply lose their jobs. Either way, spoliation can and should be avoided at all cost. To do so requires an understanding of the new legal discovery amendments and, most importantly, the limitations that current technologies have in meeting those requirements. Prior to the advent of the new FRCP amendments, IT and legal professionals predominately relied upon enterprise search solutions to discover and manage files related to pending litigations. But traditional search technologies, which were invented to index Internet content, are no longer adequate to fully comply with the new rules, specifically rules 26, 34 and 37. This article will examine the limitations of current search-related technologies and recommend IT best practices for file content discovery and management using newer technologies and solutions.

Let’s start with Rule 26, which states that a premeeting must occur between the companies involved in the lawsuit - not just between the lawyers, but also between the IT departments. Each of the companies must represent where and how data is stored, and that technologies are in place to provide access to that information. Most enterprise search solutions are quite adequate at meeting this requirement.

Rule 34 requires that organizations deliver the content in the format the requestor defines. Typically, the default is the native format, because it often contains hidden metadata that is erased when files convert to formats such as PDF. While most enterprise search solutions support a wide variety of file types, these solutions do a poor job of finding and extracting file system metadata. Also, their underlying indexing technologies are often too slow, too expensive, or require too much storage overhead when the universe of data grows beyond a few million files. Remember, slow often means late, which leads to spoliation, which can result in hefty fines, job loss and in some cases even criminal charges being filed against the IT personnel responsible.

Lastly, Rule 37 codifies the standards around legal hold. When a lawsuit is ongoing, a company must stop destroying all information related to the case, regardless of systematic destruction policies. Many companies have automated systems to delete data after a specific period of time has elapsed, usually for compliance reasons such as HIPAA, SOX or SEC regulations. However, when that data is pertinent to pending litigation the automated destruction of that data must be put on litigation hold. Anther issue with traditional search solutions is that they do not offer file-level policy management, file tagging or the ability to facilitate the copying of the files for the opposing legal counsel’s use. Just remember that finding the data is just the first step; producing it and preserving it is also required for FRCP compliance.

E-discovery 2.0

Page 1 of 4.