Business Case

A company’s ability to leverage information is a key determinant in success, both in the marketplace and in the courtroom. Experts say that companies regularly involved in litigation should follow best e-discovery practices.

Companies that embrace electronic discovery and data mining can not only reduce their pre-trial costs in the long run but they can also gain the upper hand in the courtroom.

Experts say the use of such technology in Canada’s legal profession is still in its infancy compared to that in the United States, but, make no mistake, the days of manually poring through stacks of paper files to prepare for a case are gone forever.

The objective of data mining is to extract valuable information from the reams of data at your disposal — to discover “hidden gold” — while e-discovery is essentially the exchange of information.

“When two sides are litigating and they’re asked to present documents, 98 per cent of documents today are electronic. It used to be you’d hand over 20 boxes [of paper], but now it’s much more sophisticated and complicated, and the amount of data is tremendous,” says Lloyd Rosler, Toronto-based vice president of e-discovery services at KPMG Forensic, a subsidiary of KPMG LLP.

He says many companies have giant data warehouses where they’ve accumulated scores of data and documents, but the ability to leverage that information efficiently is a key determinant in its success, both in the marketplace and in the courtroom.

Rosler says considering the “huge” amounts of data in question, finding a needle in a haystack, by comparison, would be easy.

“If you have 250 gigabytes of data, and you’ve got two lawyers working on it, to review all the documents could take months or years. It can be very time-consuming,” he says.

Rosler says the amount of information lawyers have to deal with in the 21st century “runs the gamut,” but too many of them aren’t up to speed on the time- and money-saving benefits of technology. “There are many lawyers in Canada who don’t know what’s going on and don’t realize how important [technology] is,” he says.

Adopting software that “whittles down the haystack” and identifies relevant documents and files to the case is the best course of action, he says.

“Failure to comply with e-discovery requirements can have drastic consequences for the firm and the client. If one side doesn’t produce documents, and the court believes there’s a lack of fair play, the judge could award the judgment to the other side,” he says.

The good news is there are a growing number of firms specializing in e-discovery and data mining are entering the market. He says several of the newcomers have relayed stories of well-established law firms coming to his team in need of immediate help after underestimating the complexity of e-discovery.

David Stewart, national leader of Deloitte’s analytic and forensic technology practice in Canada, says it’s hard to pinpoint the cost of e-discovery because so much depends on the amount of data involved, the litigation, how many custodians are involved, and how well defined the search terms are.

He says small searches could be as cheap as several thousand dollars while complex ones could run to six figures. But to provide an idea of the scope involved, he says if you printed off all the documents and e-mails from a laptop with a 40-gigabyte hard drive, the stack of paper could be as tall as the CN Tower.

Stewart says one of the biggest challenges in setting up e-discovery infrastructure in Canada is that there aren’t many experienced professionals to hire. “There’s not a lot of skilled labour here that have done hundreds of e-discovery jobs like they have in the U.S.,” he says.

Stewart says it’s particularly important for companies that are regularly involved in litigation, such as pharmaceutical, manufacturing, and financial-services firms, to ensure they follow best e-discovery practices.

“If you don’t have a strategy in place to deal with evidence in your systems, you can get caught where you’re ill prepared to respond to the requirements of the legal action,” he says. “You have to think about how you collect, preserve, and store information. A lot of firms are spending significant dollars on how they manage e-mail on a go-forward basis. There are technology costs and human-capital costs. You may have to rejig some of your processes and how you back up your information.”

It’s one thing to find and produce documents, such as e-mails, but it’s another to be able to prove that the version in question is the original and hasn’t been tampered with.

Robert Childress, president of Wave Software, an Orlando, Fla.-based e-discovery software firm, says it’s imperative to have a mechanism in place that preserves a file and can create a second set that a lawyer can review without worrying about spoiling it.

He likens the situation to a bloody glove found at a crime scene. “Most software today makes a copy of that glove or cuts it up in little pieces and puts it in little bags and sends it all over the world. What we do is we preserve the original glove, the original fingerprint, without making a separate copy. You’d hate to go to court and know you were looking at a red glove but it was a blue glove in question,” he says.

He says his company’s Trident product can tell you who looked at a particular e-mail file, who touched it, and how or whether it’s been perfectly preserved. “When you go to court, you’re confident nothing has been changed or altered or [has] tampered the data. If you cut your hand on the glove, it would be spoiled. We preserve that,” he says.

Childress says his firm expects to do about $5 million in new business this year, a drop in the bucket in an industry various surveys have pegged at a $6-billion sector that’s growing at 30 per cent annually.

Patrick Burke, assistant general counsel for California-based Guidance Software, says it’s both a legal and technological challenge for lawyers to search through the computers of their clients to find anything that might need to be produced to the other side.

The obligation to do so, however, kicks in well before one might see the inside of a courtroom. He says lawyers in the U.S. begin the process when they could “reasonably anticipate” litigation, and new legislation in Canada, due to come into effect shortly, will make the situation very similar on this side of the border.

Burke says Guidance’s products allow companies to search all the computers connected to their networks and look for particular files that have keywords or other search criteria in them — all from one central location
Burke says in-house lawyers need to establish an e-discovery process, including having legal and information-technology teams work together, for the collection and preservation of electronic data. That includes determining their capability to reach all the computers and servers in the company, search them, and collect data in a way that doesn’t change it.

“Together, they have to work out a process by which every time they have a need to collect, they follow a repeatable process, they do things in the same way every time, and they have a checklist. You want to be able to show when [the data] was actually created and collect it in a way that you can prove it wasn’t changed — a forensic collection,” he says.

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