Risks During Electronic Evidence Discovery in Litigation
According to FTI Consulting (www.fticonsulting.com),
a consulting firm with expertise on computer forensics issues, a majority of
U.S. corporations have inadequate document-retention policies and will likely
incur inflated legal costs when faced with the restoration and review of computer
and e-mail files during electronic evidence discovery.
Electronic evidence discovery is a key component of most litigious
or investigative proceedings, and organizations should expect it to be a pivotal
issue during an investigative process. FTI sees a sharp disconnect between the
capabilities of IT systems and the business and legal needs of an organization.
FTI noted 10 key document-retention issues that typically expose
corporations to inflated litigation costs:
- Lack of a central corporate repository. Information is spread
across servers, backup tapes, and individual user-maintained archives, usually
resulting in considerable overlap. If this information needs to be reviewed
(e.g., as part of legal proceedings), a company faces increased time and higher
costs to filter through layers of information and duplication.
- Lack of a corporate document management policy. Employees save
any and all documents, with no organizing principle, significantly magnifying
and complexity of sifting through information.
- Intermingling critical and less critical documents. Little distinction
is made between the relative importance of stored information, making it difficult
for attorneys to determine what is considered privileged information. Consequently,
computer forensics teams are often forced to sift through information to ensure
no privileged information is inadvertently disclosed.
- Intermingling business and private use. Employees often use business
computers for private use, forcing corporations facing litigation to spend
resources separating company data from employees’ private data.
- Lack of distinction between disaster-recovery backup and business archiving.
Corporations save too much unnecessary information for too long, adding
to inefficiencies during information restoration and review. Most corporations
save absolutely everything in preparation for disaster recovery and rely on
the same store of information as a long-term business archive; in fact, different
information is needed for each.
- Backup systems that cannot easily be restored. Corporations regularly
update software and hardware with little regard to their existing backup collection.
When faced with litigation, a corporation is obligated to pay for restoring
or recreating data from a legacy system. Accomplishing this can often take
several months and millions of dollars.
- Ad hoc caches of backup or miscellaneous information. Most companies
have ad hoc stores of information and usually are unsure of whether they contain
new or duplicate information. If backup data exists, a corporation has a legal
obligation to review the content for relevance.
- Insufficient recognition of laptops. Laptop computers can represent
a significant proportion of a corporation’s information. In addition
to the ongoing risk of loss and theft, laptops typically are ineffective at
deleting information. During litigation, “forensic copies” of
laptops can be requested to recapture deleted information, adding another
layer of complexity and cost.
- Automated processes. Companies are unsystematic about what information
they automatically save and delete. When companies enter into litigation,
they are under strict legal obligation to ensure that they preserve all relevant
information. Upon determining that a loss of information (spoliation) has
occurred, a judge can automatically instruct the jury to assume the worst;
for example, that inadvertently deleted records contained unfavorable information.
Depending upon the seriousness of the infraction, this can even lead to a
- Manual systems. Despite great advances in integration and enterprise
resource planning (ERP) systems, many companies use a mix of automated and
manual processes (e.g., the spreadsheet used to transform data from the inventory
system before loading it into the general ledger). Such manual processes often
suffer from a lack of documentation, lack of retention, and a lack of systematic
application. This inevitably makes reconstructing what happened more difficult
FTI said corporations can take proactive steps to avoid these
problems before an investigation or litigation begins. They should start by
instituting a comprehensive document-retention policy, which means clearing
out unnecessary information in a responsible and legal manner and saving important
information. Moreover, since most major corporations will face some type of
litigation in the general course of business, consideration should also be given
to an incident response plan that can be swiftly instituted once the litigation
process begins. A well-crafted policy can save a corporation significant costs
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