A small minority of IT managers said they would "bet their pay cheque" they would be able to produce information for legal discovery/disclosure, according to a survey. (iStock)

If Richard Nixon were in power today, the infamous blank segments on the Watergate tapes would have resurfaced on some backup system deep in the White House archives. And with today's ability to store, duplicate and archive just about anything that's written or said in electronic form, Enron's well-publicized document-shredding episode would have been an exercise in futility.

Electronic-discovery is the term for the process in which electronic data is sought, located, secured and searched for use in a civil or criminal legal case. It can include offline and online searches, be specific to a computer or an entire network.

When brokerage firm Morgan Stanley claimed it had lost all of the email correspondence stored on its servers in the World Trade Center attack, it ended up facing disciplinary charges of $12.5 million.

In today's world of backup systems and copying information ad nauseam to multiple recipients, it's next to impossible for information to disappear into the void. It's simply buried somewhere on a server, handheld device, a laptop or whatever else you use for communications.

The fact that information has such remarkable staying power is strengthening the case for electronic-discovery in legal proceedings. While there was a time one could claim that relevant data was either lost or destroyed, that argument is becoming less and less plausible to the judicial powers that be.

E-discovery in action

A number of wake-up calls in recent years have set the business community thinking about their own e-discovery capabilities and practices.

In 2001, for example, investment banker Laura Zubalake was awarded $29 million US in a sexual discrimination suit against UBS Warburg — in large part because the employer had lost and/or destroyed emails relating to the case in defiance of a court order. The Zubalake Decisions, as they are known, proved to be a landmark case in establishing the e-discovery ground rules in the U.S. and the world.

The Broadcom versus Qualcomm patent infringement case launched in 2005 also made senior executives blanch, when Qualcomm's attorneys failed to turn over 46,000 emails that were considered relevant to their defence. The cost to Qualcomm was $8.5 million in attorneys' fees, among other headaches.

When brokerage firm Morgan Stanley claimed it had lost all of the email correspondence stored on its servers in the World Trade Center attack, it ended up facing disciplinary charges of $12.5 million.

"That was one of the biggest wake-up calls, because Morgan Stanley hadn't produced information in a timely fashion, although it was available on backup tapes," says Mathew Lodge, senior director of Information Risk Management for Symantec Corporation in Cupertino, Calif.

While e-discovery horror stories like this have not hit Canada as of yet, "what has happened in the U.S. has sent a chill through the corporate community," says Norman G. Letalik, a partner with law firm Borden Ladner Gervais (BLG) in Toronto.

And by all accounts, that community is ill-prepared.

A 2008 Symantec Survey of IT managers conducted by Applied Research West Inc. indicated that only 15 per cent of the IT managers surveyed would "bet their pay cheque" that they could produce information for legal discovery/disclosure if required to do so.

The case of the unstructured data

At the heart of the e-discovery challenge is the fact that a vast majority of information in storage is in the form of unstructured data.

Unstructured data is any piece of information that can't be neatly indexed in a row or column in a database. It can include emails, instant messages, images, graphics, forms, PDF files and anything else that contains difficult-to-index components such as words, images or graphics.

Craig Smith, vice-president of customer development for Xenos in Toronto, explains: "Think of structured data as all numbers in rows and columns. In the early days of databases, it was a very neat way of classifying information and retrieving precisely what you wanted."

Given that numbers are a universal language, indexing and finding structured data is pretty simple. Add words to the equation however, and it's an entirely new ball game, Smith, whose company helps business organize their data, says. "Suddenly, you hit a layer of complexity. As a simple example, take the word 'glass.' Are you meaning a sheet of glass, a drinking glass, or an eye glass? As you can see, the difficulty in retrieving what you want can be gigantically difficult."

The volume of unstructured data being generated by businesses is also rising at an exponential rate.

A December 2007 report by IDC, a provider of market intelligence for the IT industry, stated there is a significant shift in the types of data being stored, with file-level (or unstructured) data expected to account for 54 per cent of all information in storage in 2008. By 2011, that number is expected to reach over 75 per cent.

Letalik notes that one of the most obvious proliferators of unstructured data these days is email. "When it comes to e-discovery, that's where all the juicy stuff is. That's often where you need to look for the smoking gun."

But there is a problem with that.

"A lot of that information ends up in backup tapes with no indexing, because backup systems after all were designed for disaster recovery, not e-discovery," Letalik explains. "So when you have to find an email on a certain date that contains these key words, it's not easy."

Putting e-discovery in its place

Tackling the e-discovery challenge is not a cheap proposition, however, says Letalik. And in these trying times, convincing companies to get on board can be a tough sell.

'These days, the right search tools can make it far easier to find those smoking guns.'—Norman G. Letalik, lawyer

"It's a difficult time to think about putting new systems in place; and indexing costs are huge," he says. "It's hard to convince a CFO it's a worthwhile expenditure; and IT departments see it as a royal nuisance since they have better things to do. Once you find yourself in the middle of a court process, however, the requirement to produce everything relevant becomes incredibly burdensome."

He notes that there is help available, since much of the legwork can be outsourced. There is a growing community of specialists in forensic technologies — including intelligent search software and early case-assessment tools — that can work with IT departments.

"These days, the right search tools can make it far easier to find those smoking guns," Letalik says.

Bringing in experts can help ease the burden on a company's own IT department, but a big part of dealing with stored data and making sure things don't go awry involves ensuring that the movement of information is also managed so it doesn't end up on someone's home PC, Lodge explains. "Data loss prevention technology, for example, can help businesses keep track of information and where it goes."

Another strategy is to revamp archiving practices and shrink down an organization's storage requirements, Lodge adds. "There are ways to remove duplicates and compress files [called single-instance storage] so you have one copy of a file regardless of where it occurs. At the same time, you can create a built-in text index of all the times it was used. The easiest place to start is email archiving."

Smith offers up three best practices that can also help the cause. "First, create a centralized view of all your important information so you can get a handle on everything that is distributed across desktops. Second, start indexing your unstructured data to make it easier to retrieve. Third, institute policies on where and how you store information."

As the volume of ad hoc communications and e-documentation continues to mushroom, businesses of all sizes will need to figure out better ways to get their archiving systems to cough up the right goods when needed. If they don't, companies will likely find out that the price tag of even the smallest legal actions can far outweigh the money they try to save by not putting the proper systems and information management practices in place.