Proliferation of e-mails, IM making it harder for companies to comply with requests from courts, regulators
With e-mails, instant messages and electronic data now an everyday part of conducting business, executives are increasingly worried that they may not be able to promptly provide requested documents to courts and regulators.
According to a poll released today by Deloitte Financial Advisory Services, close to 18% of surveyed managers said their companies aren’t ready to deal with complex discovery requests. This is understandable, given that nearly 40% told Deloitte that data volumes are increasing in size and becoming unmanageable.
“By and large, companies aren’t ready to handle e-discovery appropriately,” said Tony Reid, a principal in the forensic and dispute services practice of Deloitte Financial Advisory Services. “It’s a problem. There’s a lot of cost and risk associated to it.”
The greatest risk, though, comes from non-compliance. With the amending of the Federal Rules of Civil Procedure in late 2006, companies must be able to quickly access so-called unstructured data in the event of litigation (a process called e-discovery). Companies can also be required by regulators to produce data.“A lot of it has to do with the sheer volume of information,” Mr. Reid noted. The volume of data at companies is doubling in size every 18 to 24 months, making electronic discovery ever more cumbersome.What’s more, some businesses have barely begun to address the issue. Nearly 12% of companies surveyed by Deloitte said they don’t have any policy in place to share clear guidance with their information technology departments or other employees on document retention and destruction. About one in ten have no policies in place but do distribute specific directives when litigation arises.The main concern of executives has to do with the expense of going through a large volume of files due to vendor or in-house costs. They also worry about exposure to sanctions due to errors by their vendor of electronic discovery services or their own errors. Executives also fear that they might fail to meet deadlines set by a court in providing specific documents. That deadline is usually 90 days.
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