eDiscovery & ECM: natural partners in Content Lifecycle Management and FRCP Compliance

By Dave McCann, President & CEO, Daticon EED, and John Jessen, Founder and Chairman, Daticon EED

Today’s rapid rate of information proliferation, combined with legislative changes that require corporations to better manage that information, has created a business process challenge for the Fortune 1000 that can only be addressed by software technology and service providers under the watchful eye of corporate counsel and their outside law firms. These challenges have created an opportunity to integrate electronic discovery services and tools with Enterprise Content Management (ECM) platforms that are prevalent in the Fortune 1000. These two technologies are natural partners, in that the eDiscovery process begins where the ECM platforms end, together creating an automated end-to-end document work flow that starts with content creation in the corporation and ends with long-term information management, with content potentially detouring along the way for external legal review and production. The content lifecycle far exceeds the short time that outside counsel manages a subset of content on a specific matter. For maximum efficiency and defensibility, the end-to-end lifecycle should be managed with new centralized automated processes and practices for corporations that govern the technology and practices of their service providers and law firms.

New rules, new obligations
Corporate IT, business unit managers, and corporate counsel are finding more reasons to sit down together and better plan for the consistent handling of their company’s data during litigation. This new and critical activity is added to the normal daily workload — without regard for budget constraints — already faced by IT and corporate legal.

The December 2006 changes to the Federal Rules for Civil Procedure (FRCP), as well as Sarbanes-Oxley Section 404, HIPAA and other industry-specific regulatory and legislative obligations, have created new information management responsibilities for corporations. Corporations must create a process that allows them to:

• Know where critical documents are located
• Have better controls over information retention
• Find and produce information for opposing counsel and the court

So much information, so little time — and no increase in budget!In the past, law firms and their corporate clients could assert that requested documents were “unreasonably hard to find” or “would take a long time,” and the courts might tolerate such delays. As a result of the 2006 changes to the FRCP, the federal courts require defendant corporations to disclose where information is and how soon it can be provided to opposing counsel. Key mandates from 2006 include:

• An agreed-upon timeline and form for document production
• A much earlier meeting with opposing counsel (“meet and confer”) to discuss information discovery feasibility — which means legal discovery planning must take place prior to that meeting
• A much higher standard of what is reasonable and defensible behavior in the discovery and retention of business relevant documents, now referred to as Electronically Stored Information (ESI)

New information management trends
Meanwhile, on the corporate IT information management side of the equation, several important technology deployment trends are playing out. These trends define the “new information landscape” in which these new Federal Rules will be operating:

Most Fortune 1000 organizations have deployed, or will deploy, an email management platform to better classify and retain business-critical email. Not all corporations are doing this, and some continue to trigger deletion after 30 days, but a more sophisticated approach to retention and deletion is emerging.

Many Fortune 1000 corporations are standardizing the management and classifi cation of electronic documents into a smaller group of ECM platforms, such as IBM FileNet P8 or IBM Content Manager. This is more complex than email retention in that it seeks to increase efficiency by reducing the cost of capturing and retaining the right metadata for business-critical documents. The ECM classification model may lead to an emergence of a thoroughly, automated metadata model that will be of long-term value to the legal department and outside counsel.

As corporations proceed along the technology paths in the first two trends, they realize that millions of documents and emails are left uncaptured and unclassified. A specific litigation or investigation may involve many employees whose access to multiple sets of information in multiple systems becomes an expensive trail to follow. For example, a case may require a corporation to review a five to seven year period and restore backup tapes.

The costs of litigation, and the savings in being prepared
Corporate America spends over $30 billion (that’s right, billion) engaging in litigation battles every year (not including the costs of judgments and settlements!). Corporations in particularly litigious industries can have 10 to 40 major lawsuits ongoing at any one time, and the cost of legal discovery and, most importantly, legal document review performed by qualified lawyers, can exceed $10 million per lawsuit. Corporate America wants to reduce these costs, but doing so requires implementing processes and technologies that will manage the end-to-end document lifecycle, from inception through case resolution. Complicating matters, the average Fortune 1000 corporation has only 25 to 50 in-house attorneys and paralegals. If two or more substantial cases hit at once, the legal and IT departments can find themselves overloaded very quickly. They quickly discover that traditional legal department applications and new ECM systems are two islands of automation, completely disconnected from each other.

Lawyers, eDiscovery firms and ECM vendors are all beginning to realize they are holding pieces of a workflow jigsaw puzzle that must be put together more effectively under the pressures of the FRCP amendments.

But there’s good news — implementing such measures can mean a 20% reduction in total discovery and review cost over 4 years, which could save the average large company some $4 million or more.

The corporate eDiscovery team
Who should drive legal eDiscovery process improvement? In our two decades of helping companies and law firms in literally thousands of matters, we’ve found that companies who bring all the key stakeholders to the table in a joint effort to develop corporate eDiscovery strategy are by far the most successful.

• Corporate counsel should drive the process and involve key stakeholders
• Records management/compliance directors
• IT Department
• Outside counsel
• eDiscovery experts

What the early movers are doing
Leading corporations are taking the following steps to reduce the long-term costs of eDiscovery and prepare for potential litigation (as required by the FRCP amendments):

• Change internal legal practices to mitigate costs and liability before the next lawsuit hits, and before outside counsel is engaged.
• Establish a cross-functional team to define a set of procedures before automating those procedures.
• Identify a trusted advisor to provide best practices recommendations for eDiscovery procedures.
• Finalize a set of procedures independent of a given law firm (most corporations contract litigation out to four or more different law firms based on the type of dispute).
• Revisit the technology the legal department is using with a view to (1) increasing and automating access to content across the company, and, (2) integrating with existing ECM platforms.
• Look for ways to reduce the initial data set dispatched to a third party hosting site for outside counsel access and document review.
• Look for ways to reduce the greatest cost of eDiscovery—the time attorneys spend sifting through both relevant and irrelevant documents.

Understanding your needs, finding the right advisor
There is a lot of discussion in the industry about who can best advise companies strug¬gling to make these changes. Is it the law firm? Is it a legal review services provider? Is it the ECM vendor? Is it the email management vendor? Is it an analyst firm like Gartner or Forrester?
The reality is that each corporation will arrive at a different conclusion based on internal competencies, and they will seek out a partner who can best fill the capability gaps.

The shape of things to come
The rise of defining, mandating and planning information management factors such as metadata and retention/deletion policies will dramatically affect the industry. The idea of metadata for all content is going to become more prevalent. Increasingly, disputes in the courts are centering on whether corporations have made adequate and reasonable efforts to preserve and capture the appropriate metadata. Accusations of spoliation (the failure to preserve and capture) are clearly on the rise.

The role of the eDiscovery manager/director in the legal department will expand. Though not all companies have created this role, we believe that every member of the Fortune 1000 will do so within the next 24 months. These individuals will face quite a challenge — understanding the rules and case law, as well as email management platforms, ECM systems and records management solutions, so they can chart the corporate position on eDiscovery. These positions will be challenged, and it will be up to the courts to decide whether the efforts taken were reasonable and within the spirit of the rules. This person will also be critical in determining if IT is setting the right direction to help reduce future costs — a likely ally will be the internal ECM team. We have seen that legal eDiscovery vendors like Daticon EED are being brought into this process more frequently as well, by companies as well as law firms. In the near future corporate America is going to manifest a strong desire for an alternative to outside counsel to assist them in designing centralized eDiscovery processes and practices that reduce the risk and cost associated with litigation, in both the discovery and review process. If unstructured data is growing at a rate of 80% per year (according to AIIM)…well, anyone can do the math. There must be new efficiencies. Service and technology providers that classify and reduce evidence sets at a more economical cost per terabyte, while retaining all the appropriate documents for the lawyers to find and annotate, will be the most successful.

Ignore this trend at your own risk
As one of our clients, the vice president of litigation at a major insurer, recently said, “The Federal Rules of Civil Procedure are the Y2K for corporate legal. We have a duty to protect our corporations, as well as a heightened responsibility to develop plans and internal systems.“
John Jessen, Daticon EED founder and chairman, and technical advisor to the Sedona Conference, put it this way: “Corporations must put in place new procedures and systems to successfully defend themselves and, more importantly, to reduce the rising costs of eDiscovery. The $20-billion-a-year legal document review workflow is the next candidate for better automation, and the next subject of cost reduction to help corporate America deliver higher returns to its shareholders.”

eDiscovery & ECM: a natural partnership that may be our best hope
As enterprises try to get control of unstructured content across all business units, and ECM providers add capabilities to help them, it makes sense for ECM repositories and eDiscovery applications and methodologies to intersect. But the perfect set of applications does not yet exist.

Daticon EED believes that in the next three or four years a portfolio of applications will emerge that combine to solve the procedural steps. Some workflows will stay inside the firewall. Some will stay outside the firewall and data movement across the firewall will increasingly be automated and encrypted. (Today, a significant amount of evidence collection and movement is done with hard drives and physical transportation!)

Legal department in the Fortune 1000 are going to be at the forefront. The IT department can conceive of innovation, but legal will have the final say. This will cause disruption in the current landscape of legal technology providers. Current corporate legal technology is largely run client/server. Web oriented client architectures will take over. Old-fashioned corporate legal (“thick”) applications, running on their own proprietary data structures, will be replaced by software components that interact with the market-dominant ECM backbones and object models being deployed .

The need to federate access and control business content in all repositories will continue to increase. IBM has been a leader in this field with its content federation approach. Corporations, because of mergers and acquisitions, typically run six or more different vendor content repositories, including email archives. This will not change overnight. Nor will mergers and acquisitions stop. So the need for corporate legal access and reliance on content federation — the ability to access content anywhere — will only increase.

For more information, please contact:
Dennis Palmer, Client Communications Manager
T: 206.629.6773, E: dpalmer@eedinc.com, W: www.eedinc.com