Evaluating e-Discovery Solutions to Reduce Cost and Risk, and Comply with the FRCP

All too often, failures to preserve and produce ESI occur when organizations rely on error-prone, manual electronic discovery processes. Clearly, a deeper understanding of how to evaluate e-discovery technology solutions is sorely needed. The following is an examination of the most important criteria for evaluating an e-discovery solution that will maximize cost savings, reduce risk and improve business efficiencies for you or your clients.

Demand for e-Discovery Cost Savings

The need to reduce e-discovery costs and complexities associated with FRCP compliance is one of the most important evaluation criteria that legal practitioners and IT personnel should consider. Many companies face what I call a 'risk of extortion by discovery.' Let's suppose that a case would cost a company a total of $4.5 million, including $3.5 million for traditional e-discovery costs. If the dispute is over a matter with a value less that that, the case will never get its day in court because the benefits do not outweigh the burden ' the e-discovery costs are prohibitive. It's reasonable to expect that many companies are predisposed to settle a lawsuit, in part to avoid the cost of the discovery process.

Recent amendments to the FRCP have caused companies to focus on their e-discovery efforts, but they have not achieved the ends of FRCP Rule 1, whose objective is to secure the inexpensive and speedy administration of justice. The lack of adequate classification protocols to deal with the exploding volume of ESI is dramatically increasing e-discovery costs. For example, attorney-client privileged material is often intermingled with e-mails and other e-files; separating the two is complex, time-consuming and enormously expensive.

When you consider that a small case would have somewhere around 2.5 million e-mails and documents, or 50 GB of data, among its information corpus, and the average billing rate for an attorney is approaching $350 per hour, the price tag for such discovery can be substantial. Cost awareness among in-house attorneys, law firms and the judiciary is driving the need for less complex and more automated clustering and classification of relevant evidence for early case assessment.

Shift to Proactive e-Discovery

With the explosive growth in the volume of ESI, the necessity is for it to be managed proactively with automated tools that help control costs. This means IT and legal departments will increasingly need to collaborate to deploy e-discovery solutions that use real-time policy management for archiving, retrieving, reviewing, retaining, deleting and producing electronic data in a legally defensible fashion. An automated, proactive e-discovery solution is critical for early case assessment ' to find a 'smoking gun' or to determine if there is enough evidence to make a case.

Furthermore, a proactive approach can go a long way in helping to protect a company's brand, such as in the case with publicized investigations or scandals. Having the technology in place to quickly provide authorities with necessary information can at a minimum put the company in a cooperative light, or as in the case with Soci't' G'n'ral, can help exonerate the company when rogue employees threaten the integrity of the organization. In the latter case, an e-mail archival system already in place was leveraged by Soci't' G'n'ral to show that a trader had acted alone in unauthorized trades and tried to conceal his behavior (see, www.infoworld.com/article/08/02/20/Poor-IT-security-in-Societe-Generale-fraud_1.html).

e-Discovery has the potential in these situations to neutralize the media and reduce the risk of shareholder impact. But what will this type of solution ultimately look like?

The ideal e-discovery solution will conceptually analyze and intuitively present information and follow traffic patterns of data, such as the path of an e-mail attachment. With the right e-discovery solution, companies can track who has read, heard, forwarded and retained any piece of information. They can also detect the influence of content, including who within the enterprise has taken, re-purposed, been persuaded, or even plagiarized what an employee has heard or seen.

But most e-discovery software products on the market today fail to uncover the meaning of information because they rely solely on identifying keywords. Automation and conceptual analysis add considerable value by providing a rapid contextual overview of the dataset. This helps attorneys to more efficiently draft an appropriate strategy for document review and initial case negotiations.

To control costs and adequately preserve, protect and produce information in compliance with a legal hold, companies must to be able to index all potentially relevant enterprise information once, understand it conceptually, and automate its processing for multi-purpose business needs. By indexing all information just once, companies gain huge efficiencies in pattern litigation and dramatically lower costs for better return on investment.

Desktops and Laptops:
The Achilles' Heel of Legal Holds

In addition to enterprise servers, companies must now produce ESI on desktops, laptops and other mobile devices. This can be a major pain point for enterprises. Many custodians tend to travel, so it's difficult to put a legal hold on traveling laptops.

Many current solutions on the market are inherently flawed, as they require user intervention and compliance that run the risk of spoliation. Many also require the imaging of hard drives, snap shots of folders and remote spidering of desktops ' all of which capture irrelevant and personal data, resulting in over-retention and network overload.

Depending on the particular case, it may be a mistake to rely on end-users to refrain from deleting e-mails required for litigation hold. The industry suffers from error-prone policies about when and how to initiate a proper legal hold.

A Consolidated Software Platform

Another important trend influencing how firms evaluate e-discovery solutions is the fact that enterprise search, archiving, e-discovery, analytics and real-time policy management are converging. These areas ideally work better in an integrated fashion. For example, enterprise search solutions without access to all the corporate archives may not be able to find all information legal teams need, thus increasing risk.

Consequently, forward-thinking companies are standardizing on a consolidated platform that integrates these areas to reduce complexity, improve interoperability, and ultimately, save time and money. A consolidated software platform that can manage all archived and enterprise data, including rich media like voicemails and IMs and across languages, through a single-index can, in turn, provide conceptual and contextual understanding of any piece of electronic information.

Real-time information management from the desktop to the network can reduce overall exposure to potentially damaging information, particularly e-mails, enabling it to be detected and properly classified at the time of creation ' and produced in a timely manner for litigation. This also protects employees from inadvertently deleting or misclassifying content, which can be equally hazardous to a company.

Furthermore, a consolidated e-mail archive with sophisticated search capabilities allows companies to make informed business decisions in advance of most legal issues. For example, part of the decision-making process involved in declining an insurance claim could be to review all e-mails and phone conversations with the client to make sure that they were made aware of relevant policy exclusions. This turns archiving and e-discovery into a business tool as well as a vital risk control measure.

The Future: Safe Harbors
And New XML Standard

Much of the FRCP debate so far has been focused on the negative impact of recent amendments, compared with the positive presence of legal 'safe harbors.' Over the next year or two, however, legal cases will emerge showing that well-prepared companies can utilize safe harbor to reduce cost and risk. And this can only happen if a company has a clearly defined system and process for document capture, storage, retention, retrieval, production and disposition.

The new Electronic Discovery Reference Model ('EDRM') XML standard for e-discovery provides a monumental leap forward for the industry, enabling IT departments, legal teams and service providers to reduce valuable time and resources spent converting and transferring ESI from one software application to another. In addition, the single data format alleviates the corporate risk of manipulated or even lost data that is sometimes a result of converting information from one format to another. It bears repeating that 'unstructured' or 'human-friendly' data (e-mail, instant messages, documents, voice recording, etc.) is at the heart of every business. Such data is also at the heart of civil procedure.

It's within this context that legal and IT professionals should consider the shift to more proactive e-discovery, the need for automated compliance across all information types and devices (i.e., laptops and desktops), and the rising demand for a consolidated information risk management software platform as essential criteria with which to evaluate an e-discovery solution.

All too often, failures to preserve and produce ESI occur when organizations rely on error-prone, manual electronic discovery processes. Clearly, a deeper understanding of how to evaluate e-discovery technology solutions is sorely needed. The following is an examination of the most important criteria for evaluating an e-discovery solution that will maximize cost savings, reduce risk and improve business efficiencies for you or your clients.

Demand for e-Discovery Cost Savings

The need to reduce e-discovery costs and complexities associated with FRCP compliance is one of the most important evaluation criteria that legal practitioners and IT personnel should consider. Many companies face what I call a 'risk of extortion by discovery.' Let's suppose that a case would cost a company a total of $4.5 million, including $3.5 million for traditional e-discovery costs. If the dispute is over a matter with a value less that that, the case will never get its day in court because the benefits do not outweigh the burden ' the e-discovery costs are prohibitive. It's reasonable to expect that many companies are predisposed to settle a lawsuit, in part to avoid the cost of the discovery process.

Recent amendments to the FRCP have caused companies to focus on their e-discovery efforts, but they have not achieved the ends of FRCP Rule 1, whose objective is to secure the inexpensive and speedy administration of justice. The lack of adequate classification protocols to deal with the exploding volume of ESI is dramatically increasing e-discovery costs. For example, attorney-client privileged material is often intermingled with e-mails and other e-files; separating the two is complex, time-consuming and enormously expensive.

When you consider that a small case would have somewhere around 2.5 million e-mails and documents, or 50 GB of data, among its information corpus, and the average billing rate for an attorney is approaching $350 per hour, the price tag for such discovery can be substantial. Cost awareness among in-house attorneys, law firms and the judiciary is driving the need for less complex and more automated clustering and classification of relevant evidence for early case assessment.

Shift to Proactive e-Discovery

With the explosive growth in the volume of ESI, the necessity is for it to be managed proactively with automated tools that help control costs. This means IT and legal departments will increasingly need to collaborate to deploy e-discovery solutions that use real-time policy management for archiving, retrieving, reviewing, retaining, deleting and producing electronic data in a legally defensible fashion. An automated, proactive e-discovery solution is critical for early case assessment ' to find a 'smoking gun' or to determine if there is enough evidence to make a case.

Furthermore, a proactive approach can go a long way in helping to protect a company's brand, such as in the case with publicized investigations or scandals. Having the technology in place to quickly provide authorities with necessary information can at a minimum put the company in a cooperative light, or as in the case with Soci't' G'n'ral, can help exonerate the company when rogue employees threaten the integrity of the organization. In the latter case, an e-mail archival system already in place was leveraged by Soci't' G'n'ral to show that a trader had acted alone in unauthorized trades and tried to conceal his behavior (see, www.infoworld.com/article/08/02/20/Poor-IT-security-in-Societe-Generale-fraud_1.html).

e-Discovery has the potential in these situations to neutralize the media and reduce the risk of shareholder impact. But what will this type of solution ultimately look like?

The ideal e-discovery solution will conceptually analyze and intuitively present information and follow traffic patterns of data, such as the path of an e-mail attachment. With the right e-discovery solution, companies can track who has read, heard, forwarded and retained any piece of information. They can also detect the influence of content, including who within the enterprise has taken, re-purposed, been persuaded, or even plagiarized what an employee has heard or seen.

But most e-discovery software products on the market today fail to uncover the meaning of information because they rely solely on identifying keywords. Automation and conceptual analysis add considerable value by providing a rapid contextual overview of the dataset. This helps attorneys to more efficiently draft an appropriate strategy for document review and initial case negotiations.

To control costs and adequately preserve, protect and produce information in compliance with a legal hold, companies must to be able to index all potentially relevant enterprise information once, understand it conceptually, and automate its processing for multi-purpose business needs. By indexing all information just once, companies gain huge efficiencies in pattern litigation and dramatically lower costs for better return on investment.

Desktops and Laptops:
The Achilles' Heel of Legal Holds

In addition to enterprise servers, companies must now produce ESI on desktops, laptops and other mobile devices. This can be a major pain point for enterprises. Many custodians tend to travel, so it's difficult to put a legal hold on traveling laptops.

Many current solutions on the market are inherently flawed, as they require user intervention and compliance that run the risk of spoliation. Many also require the imaging of hard drives, snap shots of folders and remote spidering of desktops ' all of which capture irrelevant and personal data, resulting in over-retention and network overload.

Depending on the particular case, it may be a mistake to rely on end-users to refrain from deleting e-mails required for litigation hold. The industry suffers from error-prone policies about when and how to initiate a proper legal hold.

A Consolidated Software Platform

Another important trend influencing how firms evaluate e-discovery solutions is the fact that enterprise search, archiving, e-discovery, analytics and real-time policy management are converging. These areas ideally work better in an integrated fashion. For example, enterprise search solutions without access to all the corporate archives may not be able to find all information legal teams need, thus increasing risk.

Consequently, forward-thinking companies are standardizing on a consolidated platform that integrates these areas to reduce complexity, improve interoperability, and ultimately, save time and money. A consolidated software platform that can manage all archived and enterprise data, including rich media like voicemails and IMs and across languages, through a single-index can, in turn, provide conceptual and contextual understanding of any piece of electronic information.

Real-time information management from the desktop to the network can reduce overall exposure to potentially damaging information, particularly e-mails, enabling it to be detected and properly classified at the time of creation ' and produced in a timely manner for litigation. This also protects employees from inadvertently deleting or misclassifying content, which can be equally hazardous to a company.

Furthermore, a consolidated e-mail archive with sophisticated search capabilities allows companies to make informed business decisions in advance of most legal issues. For example, part of the decision-making process involved in declining an insurance claim could be to review all e-mails and phone conversations with the client to make sure that they were made aware of relevant policy exclusions. This turns archiving and e-discovery into a business tool as well as a vital risk control measure.

The Future: Safe Harbors
And New XML Standard

Much of the FRCP debate so far has been focused on the negative impact of recent amendments, compared with the positive presence of legal 'safe harbors.' Over the next year or two, however, legal cases will emerge showing that well-prepared companies can utilize safe harbor to reduce cost and risk. And this can only happen if a company has a clearly defined system and process for document capture, storage, retention, retrieval, production and disposition.

The new Electronic Discovery Reference Model ('EDRM') XML standard for e-discovery provides a monumental leap forward for the industry, enabling IT departments, legal teams and service providers to reduce valuable time and resources spent converting and transferring ESI from one software application to another. In addition, the single data format alleviates the corporate risk of manipulated or even lost data that is sometimes a result of converting information from one format to another. It bears repeating that 'unstructured' or 'human-friendly' data (e-mail, instant messages, documents, voice recording, etc.) is at the heart of every business. Such data is also at the heart of civil procedure.

It's within this context that legal and IT professionals should consider the shift to more proactive e-discovery, the need for automated compliance across all information types and devices (i.e., laptops and desktops), and the rising demand for a consolidated information risk management software platform as essential criteria with which to evaluate an e-discovery solution.