Monday, October 4, 2010

Corporations are preparing for discovery with policy creation, but failing to implement and optimize effective processes and technology

Kroll Ontrack’s fourth annual Electronically Stored Information (ESI) survey indicates a broadening gap between it and legal and a lack of implementation of cost controls

Minneapolis, MN – October 4, 2010 – Seventy-seven percent of companies are not confident in the repeatability and defensibility of their Electronically Stored Information (ESI) Strategy, attributable to the fact that more than half (56 percent) of companies do not have or do not know if their organization has a data map or inventory of where all their data is stored, only one-third (38 percent) have tested their policies, and nearly half (45 percent) do not know if their policies have been tested. Companies are creating policies, but are not taking the important next step of making sure all the necessary protocols have been followed and testing and modifying policies as needed. This is a key finding from the Fourth Annual ESI Trends Report, an independent study commissioned by Kroll Ontrack, the leading provider of information management, legal technologies, and data recovery products and services.

This year's survey revealed more than half of companies (52 percent, an increase from 46 percent in 2009) in the United States now have an ESI Discovery Strategy - a pre-defined, systematic process for identifying, preserving, collecting, analyzing, filtering, processing, reviewing and producing ESI in preparation for or in response to litigation, investigations or regulatory matters. However, corporations and their in-house counsel are falling short on the implementation and optimization of effective processes and technology.

"Over the past decade, the number of discovery cases increased exponentially, and as such, the act of producing ESI for a suit or an investigation has prompted a cultural shift in the law, technology and the way organizations conduct business," said Kristin Nimsger, president of Kroll Ontrack. "Furthermore, protecting an organization's ESI while managing it for legal and regulatory demands has become increasingly complex and burdensome and often detracts focus from an organization's core business priorities. While it is encouraging to see more organizations making ESI Discovery Policies a priority, they need to ensure their policies can be implemented effectively. Without testing their policies, organizations cannot be confident in the repeatability and defensibility of their ESI Discovery Strategy."

Also revealed in this year's survey was the fact that companies are taking little action to address subjects such as early data assessment (EDA) technology and social networking, despite the industry's attention to these topics. In fact, nearly three quarters are not taking advantage of EDA technology to get a better understanding of their data early on in litigation. The survey results also showed a decline in the number of organizations that have updated their ESI Discovery Policies to address social networking sites and use. In addition, 55 percent of companies either did not update their policies or did not know if they were updated, marking a significant increase from last year when only 19 percent reported the same.

"The emergence of new technologies and user habits translates to an increase in ESI volume and variability and adds another layer of complexity when responding to ESI requests," said Jason Straight, vice president of business development, Kroll Ontrack. "With the increasing prominence and usage of new technology and communication channels as well as the issues that arise in addressing ESI requests from these mediums, it is critical for companies to revisit their policies every six months to ensure they are up-to-date and thus effective. In addition, implementing key discovery management tools, such as an archiving platform, legal hold tool and EDA technology can better ensure compliance with legal and regulatory requirements, help organizations avoid discovery missteps that have significant financial impact, and reduce the cost of discovery - the ultimate goal."

While economic conditions may have hindered organizations from revisiting proactive plans or closing the loop on their strategies, findings indicate that discovery spend remained relatively constant from 2009 to 2010, despite tight budgets at many organizations. The 2010 survey revealed corporations are still spending upwards of $1 million per organization on average annually, with nearly half of companies (40 percent) budgeting for discovery as a component of their overall litigation spend. However, half of organizations (52 percent) are not deploying or do not know if they are deploying discovery cost-control measures such as data mapping, bringing aspects of discovery in-house and/or implementing a data archiving tool. Given the continued demand for more control over discovery costs, companies can and should be taking a more proactive approach to achieve their cost-savings goals.

Although corporations have created and implemented new policies around managing ESI, there is still much room for improvement. For example, the 2010 survey exposed a broadening gap between these two departments as IT outpaced legal in several key areas, showing more awareness of implemented company technologies and whether or not their ESI Discovery Policy had been tested. This is a significant shift from the inaugural 2007 survey when legal bore the brunt of this burden and the last few surveys when IT stepped up to the plate to assist in-house counsel with this task. This demonstrates that legal cannot lose sight of the value of their involvement in managing ESI for discovery requests, which is a legal-driven process.

"Litigation is no longer an occasional, unpredictable event. Today, corporations must manage data in a way that contemplates the distinct possibility - even probability - that they will need to respond to a request for ESI from a government agency or an opposing party in a lawsuit," concluded Nimsger. "Corporations can minimize risk and costs by managing data in a manner that contemplates legal requests for ESI, making the right technological investments and making the most of those investments."

To see the results in entirety, visit

This survey was conducted by Echo Research Inc. on behalf of Kroll Ontrack. A total of 203 online interviews were conducted among IT and in-house counsel at commercial businesses in the U.S. Interviews were completed in June 2010.

The Legal Technologies & Consulting division of Kroll Ontrack provides corporations, law firms and government agencies with technology and consulting services for large scale paper and electronic discovery, computer forensics, and litigation readiness and incident response matters. Through the acquisition of TrialGraphix (September 2007), the leader in jury consulting and trial presentation services and technology, Kroll Ontrack now offers a wide range of trial services such as jury research; witness preparation; trial consulting; graphics; and presentation technology for mediations, arbitrations, and trial. Helping clients quickly and cost-effectively find, review, manage, produce and present relevant evidence, Kroll Ontrack has been recognized as the leading electronic discovery provider by the Am Law Tech Survey for eight consecutive years (2002, 2003, 2004, 2005, 2006, 2007, 2008 and 2009).

About Kroll Ontrack Inc.
Kroll Ontrack provides technology-driven services and software to help legal, corporate and government entities as well as consumers manage, recover, search, analyze, produce and present data efficiently and cost-effectively. In addition to its award-winning suite of software, Kroll Ontrack provides data recovery, data destruction, paper and electronic discovery, document review, computer forensics, secure information services, ESI and jury consulting, and trial presentation services. Kroll Ontrack is the technology services division of Kroll Inc., the global risk consulting company. Kroll is a subsidiary of Altegrity, an industry-leading provider of information solutions. For more information about Kroll Ontrack and its offerings please visit:;