Living Dangerously: Several Months after the Amended Federal Rules of Civil Procedure Took Effect, Many Companies Remain Woefully Unprepared for Electronic Document Discovery Requests

Article excerpt

Any organization--large or small, public or private, for-profit or not-for-profit--can be smacked with an electronic discovery order at any time. According to research from the Enterprise Strategy Group, 47 percent of U.S. businesses with 20,000 or more employees, and 56 percent of those with between 1,000 and 4,999 employees, received requests to produce electronic documents related to a lawsuit in 2006.

The amendments to the Federal Rules of Civil Procedure (FRCP), which went into effect December 1, 2006, require U.S. businesses to implement policies and procedures for producing their electronically stored information in the event of a federal lawsuit. Under the amended federal court rules, companies are responsible for preserving electronic documents, making disclosures regarding their electronic systems, and producing those documents within 30 days of a request related to an investigation or lawsuit.

Recent studies have revealed that far too many businesses are woefully unprepared to comply with the FRCP requirements today--more than six months after the new rules took effect.

Surveys: Firms Unsure, Unprepared

Recent research reveals that many organizations--especially smaller ones--seem to be burying their heads in the sand when it comes to preparing their business for possible e-discovery requests. Few are taking the steps necessary--and required by the FRCP--to manage their electronically stored information properly enough that they could quickly produce it in the event of an investigation or litigation.

For example, in a survey of 166 U.S. professionals involved in the information and storage management fields conducted in March and April 2007 by Xiotech Corp., a file management technology provider, only 39 percent said they had a system in place for implementing legal holds to prevent the accidental deletion of critical records. Fewer than 25 percent said they had taken steps to comply with the new FRCP amendments. In fact, of the respondents who said the average size of their company's typical lawsuit exceeded $100,000, only 40 percent said they had taken such steps.

Another survey from e-discovery management software vendor Discovery-Box and Strategic Discovery Inc., which helps businesses respond to e-discovery challenges, revealed that 83 percent of IT decision-makers are unprepared for litigation under the FRCP because their organizations lack a comprehensive document preservation system. The survey of 336 senior technology executives--58 percent of companies represented have more than 5,000 employees and 8 percent have fewer than 500 employees- conducted during a technology conference in May showed just how unprepared most firms are for e-discovery issues. According to the survey, only 17 percent of respondents said their companies have a comprehensive system in place to prevent employees from deleting data that is required for litigation or investigations. Even more startling, 67 percent said they were either not aware of or were unfamiliar with the process used by their firm to collect electronic data for lawsuits.

Considering that all U.S. organizations are subject to the FRCP guide lines, the survey had few positives. For example:

* 67 percent of respondents said it would be extremely or somewhat difficult to find e-mails and documents if a legal issue arose.

* 43 percent of those who were ordered to hold records for litigation admitted they were not able to collect all the documents requested.

* 23 percent were unaware that the FRCP were amended in December 2006 to include new document preservation and electronic system disclosure requirements for litigation.

* 58 percent said they were given no or unclear instructions on legal holds, or their execution of the legal hold was flawed.

The Discovery Obligation

Unless individuals and organizations suddenly stop filing lawsuits, e-discovery is not a problem or issue that will go away. …


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