Companies of all sizes are facing increased litigation risks and costs today. A great way to reduce those risks and costs is by adopting a proactive eDiscovery approach. If you're not sure what "proactive" eDiscovery means, this article not only offers a good definition, but also explains the trends that make proactive eDiscovery inevitable, how to implement a proactive solution that can save you money, and how to get started now.
Getting a Handle on eDiscovery
"Discovery" is the legal process that all companies facing lawsuits are required to go through in order to produce relevant documents for the court to consider. Generally, any company with $1B in revenue faces multiple legal matters. They may be spurious, or legitimate-but for good-sized companies, they're inevitable. What's notable is that those companies spend between $2.5 million and $4 million a year on legal discovery of electronic files alone.
What's driving those costs? Part of it is an increase in the number of lawsuits. Part of it is the new regulations that enterprises have to comply with in the wake of Enron, WorldCom, and Tyco. But probably the most important factor driving the increase in legal discovery costs is the rapid growth of electronic data that is generated and stored by companies as part of their ongoing business operations. While technology has made our lives at work easier and more productive, it has also contributed to the proliferation of electronically stored information (ESI). To make things more complicated, as much as 90 percent of all that information is unstructured and unmanaged. Most companies do not have well defined information management policies in place to manage the explosive growth of this data. This is a recipe that can lead to huge litigation costs later for companies when they have to reactively dig through mountains of information to provide timely responses for eDiscovery requests.
Couple the explosive data growth with the new Federal Rules of Civil Procedure (FRCP) and you will realize that companies need to pay attention-as UBS Warburg and Merck learned-paying $29.2 million and $253 million respectively for non-compliance in litigation that required eDiscovery of documents.
Clearly the new FRCP rules-unlike many other compliance rules-are being enforced.
eDiscovery is the process of using technology to identify, collect, preserve, process, review, and produce all the ESI that is relevant to a particular legal matter. "Reactive" eDiscovery means waiting until you face a legal matter, and then scrambling to find what you need scattered around the enterprise. "Proactive" eDiscovery means putting processes in place in advance to classify, organize, and manage (retain/delete) information so that when you're faced with a discovery request, you can respond quickly, easily, and at a much reduced cost. A crucial component-one that significantly reducing a company's risk and cost-is to dispose of old and obsolete data that the company is no longer required to retain. Last but not least, a proactive approach also helps you assess your risk before the first discovery meeting with your opposing counsel.
When you can react faster and more intelligently, you have a significant strategic advantage over the opposing party in a legal matter. And the best part about proactive eDiscovery? The fact that you can leverage what has been gained through proactively managing your information to:
- Organize storage resources better
- Cut down on the separate information "silos" in different departments that are redundant, wasteful, and prove difficult for IT management
- Comply with industry-specific regulations (such as HIPAA, SEC Rule 17a-4, Sarbanes-Oxley, etc.)
- Strengthen human resources in managing discrimination or sexual harassment
- Better manage executive committee goals for Six Sigma realization
- Guide IT in identifying unapproved or inappropriate material that has been downloaded to corporate servers (and dispose of it accordingly)
- Ensure that intellectual property is safe and protected
All of this results in tremendous risk reduction and significant cost savings.
Moving from a Reactive to a Proactive Approach
The vast majority of companies are still reacting to eDiscovery requests.
Given the benefits of proactive eDiscovery, however, and the growing awareness of those benefits, it's not a question of if the majority of enterprises will adopt a proactive approach, but when. The tipping point probably isn't more than 18-24 months away (see image, above).
So how do you get prepared? How can you move from treating each discovery request as a one-off, ad-hoc reactive project to adopting a business process that embraces eDiscovery as a best practice?
The next article in this series will explore how.
About the Author
Ursula Talley is vice president of marketing for StoredIQ, a provider of enterprise-class intelligent information management solutions. For more information, please visit http://www.storediq.com.
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