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The CEO of a large corporation had "that look" on his face. Sitting next to him, the CFO and CIO both recognized that look - exasperation. In the past three years, the expense of the company's IT department had increased threefold. The CEO demanded an explanation for why IT expenses tripled while the number of employees stayed the same. The answer was simple: company employees were using their computers for more tasks, resulting in higher costs of managing new data. The problem was exacerbated by legal requirements of Sarbanes-Oxley and lawsuits that required preserving vast amounts of computer data. Across the country, another CEO was solving this problem. His general counsel and CIO were sitting at a table as an ESI Consultant from Kroll Ontrack presented various scenarios, asking the general counsel and CIO how they would respond in each situation Problems Revealed The general counsel and CIO disagreed about the first steps if the company were sued. The legal department couldn't do the technical evidence gathering, and the IT department didn't have the budget, employees or training to gather electronic evidence – they were already overwhelmed with managing the company's increased technological support needs. Most importantly, they realized that the general counsel had no idea where to find electronic evidence and the CIO had no procedures to ensure that evidence would be preserved and unneeded data would be destroyed. This company, a global manufacturer and distributer, had high risks and high costs. Data was not preserved and destroyed according to legal requirements and the exponential growth of computer data resulted in increased costs of data storage, system problems and the need for human resources to maintain the burgeoning IT system that was getting out of control. The company hired Kroll Ontrack's ESI Consulting team to analyze their IT systems for legal compliance and recommend "best practices." The analysis revealed some shocking company practices. Data Horror Stories The company also had only one copy of some important human resource files. These files were on one PC, not backed up, and the IT department had no idea they existed. In addition, only one person had the password to some highly sensitive financial files. The files were so well encrypted that if that employee left the company, the company would probably never be able to access those files again. Finally, an unused PC was found under someone's desk. The computer had ten years of highly sensitive company financial information that should have been destroyed and ten years of recent financial information that should have been secured in a safe place. Cost Reduction and Risk Mitigation "Any company can reap these same benefits," said Richard Kessler, Kroll Ontrack ESI Managing Consultant. "If companies wait to get their data in order until after they encounter legal trouble, the legal and financial consequences are much, much higher." According to Kessler, four steps can help remedy most problems. First, the general counsel and CIO should establish a written plan for disclosing, preserving, collecting, searching and reviewing ESI in response to a lawsuit. Without this plan, companies are destined for chaos and high expenses when litigation is initiated. Second, the company should identify how long each type of data should be retained, and destroy it after that. This reduces the cost of storing and maintaining unneeded data. It also reduces the amount of evidence the company may have to produce in a lawsuit. Data should only be retained for the period required by court rules (e.g., evidence in litigation), regulatory requirements (e.g., IRS rules), statutory requirements (e.g., Sarbanes-Oxley) and business needs (e.g., current or future projects), often delineated in company policy. Third, the company should have a "data map and application inventory" in place before being served with a lawsuit because the Federal Rules of Civil Procedure allow little time to prepare ESI disclosures before the first meet and confer conference. Fourth, consider implementing best practices in each of these steps by having an experienced professional walk you through the process. The costs and risks associated with reinventing the process are far more expensive than hiring someone to help establish sound policies. A Kroll Ontrack ESI Consultant will bring processes and tools, refined by years of litigation experience, to help the company regain control of its data and substantially reduce its costs and risks. In the end, some CEOs will wait until a lawsuit ensues before analyzing the growing amount of data in their companies. Forward-thinking CEOs will work to gain control over ESI, therefore reducing costs and preparing for potential litigation. Litigation support is not a commodity service, and neither is e-discovery. Tactically responding to production requests and preparing for trial can be extremely costly. One way to reduce litigation costs is to utilize case intranets (a portal open only to internal users) and extranets (a portal open to users outside firm or corporation). These organizational case collaboration tools streamline workflow, decrease litigation costs and allow legal teams to work more efficiently. Firms and corporations should leverage these tools to improve workflow and control costs of litigation. Primary benefits of intranets and extranets include:
The type of organization that utilizes these tools varies, but is mostly large or midsize firms that manage complex legal matters, heavy litigation loads or face a high volume of cases. The "5 C's" form the key components when considering which case collaboration tool to implement: centralization, communication, collaboration, convenience and customization. By utilizing case intranets and extranets, firms and corporations gain an efficient and cost-cutting way to effectively manage litigation teams and case documents. Advance Your E-Discovery Knowledge Visit www.krollontrack.com/certification-courses to learn more or register for an upcoming course. Meet our representatives at the following events:
Visit www.krollontrack.com/upcoming-events for more information on these events and others.
This newsletter is written by Gina Jytyla and Joni Shogren, Kroll Ontrack staff attorneys, with assistance from Meridith Socha and Kelly Kubacki, law clerks. Ms. Jytyla can be contacted at gjytyla@krollontrack.com. For more information about electronic discovery and computer forensics services, contact Kroll Ontrack at 800 347 6105 or visit www.krollontrack.com.
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