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E-discovery Developments: Rewriting the Rules on Records Management

A host of legal rulings over the past decade mean companies must think before they press “delete.”


hocking as it may be to senior management, the mundane task of keeping records has become a flashpoint, as legal authorities react to the age of information.

A legal or regulatory investigation, lawsuit or a government audit has a voracious appetite for records. Records often show what people did and what they were thinking when they did it.

But the quantity of records in any enterprise is swelling thanks to the incessant growth of computer processing and storage capacity, increasing modes and usage of digital communications and the proliferation of multimedia applications. According to a 2008 study by International Data Corporation, around 1,200 exabytes (1.2 trillion gigabytes) of digital data will be created this year. But managing all those records is challenging. It is easy to lose them or render them practically unfindable.

In a surprising way, the rise of electronic records is changing the law. Legal authorities are increasingly suspicious, even frustrated, when an enterprise (private or public sector) fails to keep good e-records. For the authorities, the attitude is that all those computer records are critical for accountability and dispute resolution, and therefore they should be kept available for electronic discovery. Further, if records have been buried or destroyed, authorities are prone to sense wrongful intent.
As more legal rulings declare that e-records must be retained and organized, corporations and government agencies are in a quandary. Trying to keep everything forever is absurd. Traditional record retention practices, which were developed when paper dominated, now seem out of date, but there is little consensus on what practices to follow instead.
Meanwhile, though courts are not the most tech-savvy institutions, neither are they clueless. The court system is learning fast about topics such as digital forensics and backup tapes. Leading judges such as U.S. Judge Shira Scheindlin are issuing thoughtful opinions on the growing responsibility of counsel to locate and preserve e-evidence as soon as a lawsuit is anticipated – and those opinions quickly become famous via the Internet.
Two other ideas are gaining currency among judges. One is that the discovery of electronic records should be a cooperative process, where litigants are expected to be candid and forthcoming, even in an adversarial court system like the U.S. Another is that records should be found and revealed in phases, such that the easier-to-find records (e.g. more recent emails) are divulged promptly, and other records are resurrected later, but only if the progress of the lawsuit justifies the effort.

Although U.S. courts have been at the vanguard of e-discovery, the phenomenon is global, as the timeline below shows.

What does the future hold? First, the interest of legal authorities in electronic records will only grow. Second, as businesses continue to embrace social networks such as Twitter and rich media such as video conferences, the quantity of e-data will continue to skyrocket. 

At the same time, the cost of storing and searching records will continue to fall. Technologies such as cloud computing promise to make enterprise archiving more effective for internal control and for responding to e-discovery. It’s not all good news, though. The pressure on corporations and governments to improve the way they preserve data is only going to increase.

From authorities, one message rings clear: they tolerate early record destruction less today than in the past. For management, this message means the enterprise must re-examine its policies on which records to keep and how long to keep them. Although no single solution fits every enterprise, simply to stick with historical practices is dangerous. Those who do not up their game should expect to be penalized (see the implications in the Philip Morris case on our timeline).

What’s more, among enterprises that hold records, an old idea is losing favor. The idea that records are dangerous – and should be purged quickly – holds less merit. Plentiful, computer-searchable records are a valuable asset, which can help management maintain control and be marshaled to defend against bogus allegations.

Many enterprises are retaining more records, especially emails, for longer time periods. These records can constitute a valuable day-to-day journal of activity. Retained records present the opportunity to demonstrate that a corporation is a good organization, employing good people, trying to do their best. Sure, people will make unfortunate utterances in email. But in an enterprise of largely well-intentioned people, there should be a negligible number of smoking guns.


Published April 2010

© Copyright 2010. The views expressed herein are those of the author and do not necessarily represent the views of FTI Consulting, Inc. or its other professionals.

About The Author

Adam Cohen
Senior Managing Director - FTI Technology

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