Is Your Legal House in Order?

May 1st, 2005

By Michael Binko, APR
CEO and President, Kaulkin Information Systems
May 2007

Supreme Court eDiscovery Ruling Impacts Data Management Strategies for Businesses

In December of 2006, critical changes to the Federal Rules of Civil Procedure (FRCP) were turned into law when the Supreme Court ruled that electronically stored information (ESI) must be made available to litigants in civil court proceedings.

At that moment, the landscape for future litigation/arbitration and the manner in which businesses of all sizes should handle data archives changed significantly.

The amendments to the FRCP, which are often collectively referred to as the “eDiscovery Ruling,” establish best-practices and processes related to ESI and point to the significance of ESI in the discovery process of civil proceedings. The eDiscovery Ruling goes on to identify various ways that information and archived data must be made available to counsel during discovery periods, and emphasizes how technologies can play a critical role in determining adherence to the rulings or legal liability.

In general, these requirements suggest that companies should do the following:

  • Maintain an electronic inventory system to identify what and where electronic documents are stored
  • Document your process/procedure for storage of electronic documents
  • Keep an archive of electronic data for a reasonable amount of time in anticipation of potential litigation.

Broad Impact Across Industry Sectors

The eDiscovery Ruling has impact across all business sectors; however, it is particularly important for industries like ARM that are prone to litigation, consumer watch-dog groups, and regulatory scrutiny.

Many companies do not yet understand the ramifications. According to a recent survey1, more than half of CIOs and information technology (IT) managers do not even realize they and their company could now be found guilty of “virtual shredding,” just as a by-product of the way they back-up or store information.

An IT team member can no longer simply re-use or record-over archived data on a regular basis. Instead, a formally-identified regimen of business rules, processes, workflow, and document management is now suggested for all companies. Information (documents, e-mails, IMs communications, etc.) now must be archived for a reasonable period of time and accessible to counsels on both sides of the table during discovery stages of litigation.

New Sheriff in Town

It is clear that the eDiscovery Ruling opens the door for adverse impact on companies that might be sued or involved in legal situations. The good news is that the Supreme Court has also given fairly straight-forward guidelines as to how businesses can protect themselves and become less at-risk by “policing” their own database technologies, workflow/business process management techniques and various IT archiving strategies.

These resulting tasks for CEOs/CIOs and IT teams may seem like a grim cloud of Big Brother scrutiny; however technology solutions such as Software-as-a-Services (SaaS) offer eDiscovery support at affordable costs and with significantly more flexibility than traditional enterprise software – particularly for small-to-medium enterprises (SMEs).

These technologies allow companies finding themselves on the outside looking in to quickly catch up; nonetheless, great care should be taken in planning and implementation. The devil truly is in the details and challenges will continue to be squarely placed on SMEs to plan and police properly.

Cost is Not the Issue – Team Approach is Critical

New technology platforms such as SaaS, ASP, and outsourced solution services, make IT costs no longer the critical factor in enterprise process management, and should not be a limiting factor for eDiscovery compliance. Instead, the fundamental aspect of preparation, planning, and implementation for eDiscovery – just as with most other business challenges – is teamwork.

Executive, legal, operations, IT, and possibly even board members all need to be active in mapping out the strategies and ensuring the proper rollout of best-practices. Many companies who begin to look at their operations for eDiscovery quickly realize that many areas of their business would experience significant productivity gains through better data management, workflow and business process management.

So, while the effort to address eDiscovery is not minimal, the task affords an opportunity to take a step back and look at your business from a broader perspective.

Mike Binko is President and CEO of Kaulkin Information Systems, provider of secure, affordable document management and workflow systems. Mike can be reached by email, or at 301-907-0840 ext. 115.

1 Annual Socha-Gelbmann Electronic Discovery Survey

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