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Does US e-discovery process needs to change course in wake of FRCP amendment?

Michael Clark, an industry analyst and principal of EDDix LLC, has just published the survey results on the critical e-discovery issues facing Fortune 1000 corporations in the coming year. The study provides new insight on the priorities and challenges ahead for organizations as they move beyond Federal Rules of Civil Procedure (FRCP) compliance and begin to implement repeatable e-discovery processes.  

“The results of this study illuminate a nascent trend we are tracking closely – law departments are assuming a much higher profile role when it comes to litigation risk management and response,” said Clark. “As talented as outside counsel may be, they arrive after the fact and are often limited in scope to a single case. There are institutional issues – policy, process and infrastructure – that give rise to risk and cost that can only be addressed from within.”

The survey solicited information from corporate counsel and litigation support professionals that oversee electronic discovery efforts for more than 50 Fortune 1000 companies. The survey results forecast an increased focus by corporations on taking more direct control of the overall process for discovery and review of electronically stored information (ESI) in 2007. A significant component of accomplishing this, according to legal professionals, is the improvement of existing processes for discovery. Nearly half of corporate legal teams surveyed acknowledged that steps are needed to improve, streamline and automate the discovery process in their company. In addition, nearly half of the respondents indicated that the processes and collaboration with their outside counsel and vendors needed to improve.

Recent developments such as amendments to the FRCP and an increased demand for electronic information from regulatory agencies have motivated corporations to take more direct control of the discovery process – including collecting, processing, analyzing, and producing the necessary electronically stored information (ESI) – during litigation, investigations and regulatory compliance. To accomplish this, the survey results indicate that a majority of corporations are purchasing or using a hosted e-discovery solution through a legal service provider. For example, 54% of respondents already use document discovery and review technology for litigation purposes, and 72% of respondents said they use e-discovery already for internal investigations.

Even as many corporations transition control of e-discovery in-house, respondents indicated that they are relying more heavily on legal service providers and their law firms to assist in key portions of the discovery process, such as data processing and analysis. Additionally, when compared to outside counsel and legal service providers, legal teams rated themselves the lowest in their capability to find, retrieve, organize and analyze documents.

“Meaningful change begins with problem recognition and assessment, so in this regard the research results are encouraging” said Michael Clark. “For example, less than one-third of law departments rated their early case assessment capabilities as 'very effective and efficient,' and only one-third thought their processes for implementing and managing litigation holds were effective. Clearly the GCs understand there is not only room but need for improvement and they are actively seeking help in establishing best practices.”

The complete survey findings along with relevant commentary will be available from EDDix in January 2007.

In a related development, another set of US industry analysts – Enterprise Strategy Group – report that the traditional discovery processes involving corporate counsel and external attorneys is becoming increasingly complicated as attorneys need to rely on IT departments to search desktops, servers, backup tapes, email applications and other data center systems. Findings from a recent white paper by the firm show that 91 percent of organizations with a workforce over 20,000 employees have been through an electronic discovery event involving e-mail in the past twelve months, and that regardless of revenue or number of employees, 46 percent have been through an electronic discovery event over the same time period.

In order to identify digital information as part of a legal discovery request companies must review enormous amounts of enterprise data located on file systems and applications on primary data storage systems, backup tapes and tape archives. The recent (1st December 2006) amendments to the Federal Rules of Civil Procedure (FRCP) underline the increasing amount of legal requests involving digitally stored information. To comply with these new requirements, organizations will need to review their discovery processes to depend more on information technology to uncover relevant email, files and other data.

According to Enterprise Strategy Group, 56 percent of the enterprises responding to a recent survey have found that retrieving data from offline media such as backup tape to be a significant challenge when producing electronic records. The survey also showed that 50 percent found that lack of effective software tools to search and retrieve information was a significant challenge. Additionally, the survey revealed that organizations misunderstand the role of electronic discovery in their organization. For example, many organizations believe that electronic discovery is only a requirement of the financial services industry, when in fact, the percentage of non-financial firms that have experienced an electronic data discovery request over the past twelve months include the following:

•    Telecom, 63 percent
•    Government, 62 percent
•    Energy, 50 percent
•    Health Care / Life Sciences, 42 percent
•    Manufacturing, 40 percent
•    Education, 38 percent

According to Brian Babineau, analyst for Enterprise Strategy Group “Amendments to the Federal Rules of Civil Procedure (FRCP) will keep electronic discovery at the forefront of general counsel and IT department’s minds and budgets for the foreseeable future. In fact, these amendments should serve as a catalyst for many executives, including general counsel, to sponsor IT initiatives that can facilitate the identification and location of all enterprise data.”

Enterprise Strategy Group's newly released report Leveraging IT and Electronic Discovery Technology to Meet the Expected Challenges Posed by Recent Changes to the Federal Rules of Civil Procedure can be downloaded for free at

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