Why Records Management?

Recent events are changing the corporate e-discovery climate, causing some business leaders to question the effectiveness of an ad-hoc, “on-the-fly” approach. As high profile cases, including Qualcomm (“Qualcomm and Attorneys Sanctioned for ‘Monumental’ E-Discovery Violations,” Findlaw, 2008  ) and Morgan Stanley (“Morgan Stanley to Pay Millions for E-Mail Mismanagement,” E-Discovery Law, September 2007), have highlighted, waiting until the subpoena arrives and assuming that IT can quickly and easily make the requested materials available--and have the ability to preserve them--is an increasingly tricky bet.

IT analysts, such as Gartner, have long advocated the cost and risk savings available by taking a proactive approach to e-discovery and using an archive with solid records management policies. However, despite numerous cost justification case studies, the adoption rate of this technology has been relatively slow. But this might change in short order, as recent e-mail and IT-related fiascos, including Bear Stearns (“Two former Bear Stearns hedge fund managers indicted,” Los Angeles Times, June 20, 2008) and the White House (“Where Are the White House E-Mails?” Time, Jan. 23, 2008), have left corporations scrambling. It seems that nothing speeds corporate action faster than legal challenges with major cost and negative publicity implications.

Will the “summer of shame” (sub-prime fallout and the continued government e-mail scandal) finally turn the procrastinators into proactive managers of electronic records? Or will we continue to see corporations wait for the inevitable subpoena to  happen before taking action and pay the price? Only time will tell, but one fact is clear: In today’s corporate climate, electronic records management solutions have never been more in demand.

FRCP and Today’s Judicial Climate

The December 2006 amendments to the Federal Rules of Civil Procedure (FRCP) established a series of expectations about how litigants in federal court will handle Electronically Stored Information ( ESI) in both pre-trial presentation and e-discovery. With the majority of discovery requests pertaining to ESI, standardized expectations and procedures needed to be established.

These amended FRCP arrived on the heels of several widely reported corporate scandals and e-discovery debacles revolving around e-mail or electronic communication and aimed to put an end to confusion and inconsistent treatment of ESI. In one foul stroke, regulators and courts put an end to the habitual corporate excuse of “I can’t find it” and reset expectations regarding e-discovery.

The results of this change in expectations by the courts were highlighted during Qualcomm v. Broadcom last year. In September 2006, Qualcomm’s lawyers issued an expert declaration stating they had not participated in the Joint Video Team, a video compression technology initiative whose members were required to disclose any related patents (“Qualcomm’s Hard-Learned Lessons,” Law.com, March 5, 2008). The problem was that the plaintiff, Broadcom, found 46,000 electronic documents indicating otherwise. The mistake cost Qualcomm their copyright suit and millions of dollars--plus their attorneys were referred to the California State Bar Association for possible further sanctions.

e-discovery beyond e-mail

E-mail should be considered as the first candidate when it comes to managing information risk. It is subpoenaed in 75 percent of e-discovery cases. The key to managing risk is to ensure that the appropriate teams--IT and legal departments (at a minimum)--work together to establish records retention policies that reflect the business’s regulatory obligations, business continuity needs and litigation risks and its IT infrastructure. While we’re not suggesting that IT managers go to law school and General Counsel takes a crash course in IT, we are stressing that the legal team and business users need to decide what records need to be retained, for how long and in what format.  IT has a limited and technical role to play in determining records retention policy. Once the policies have been established, IT needs to look at the requirements from a technical perspective.

As you develop your policies, remember that today’s corporate ESI revolves around so much more than e-mail. New communication formats have emerged or grown in recent years--IM, texting, blogs, wikis, etc. Corporations should overhaul their records management policies to apply uniformly to all forms of electronic records, not just e-mail.

A Cost-Saving Solution For All

Those hesitant about records management costs should consider the alternative of ad hoc solutions--especially in today’s increasingly litigious environment. A Gartner study projects that in 2008 and 2009, companies without an active policy and strategy for content archiving solutions will spend a third more on e-discovery than those with such solutions in place. What’s more, analysts and consultants suggest that there are some 15,000 regulations worldwide mandating the retention and management of electronic records. This number is projected to double in the next few years. Bottom line, the volume of ESI, the complexity of regulations and the demands of e-discovery mean that a silo approach to records management for specific regulations or record types is impractical and expensive. Comprehensive electronic records management solutions should be capable of supporting current and future regulatory and technology needs.

Will high-profile cases move companies to minimize their risk?

The month of June brought high-profile legal battles to the surface. Two former Bear Stearns fund managers were indicted for allegedly misrepresenting the condition of a subprime mortgage fund to shareholders, noting supposed e-mails that indicated knowledge the fund was in trouble. And the controversy over allegedly missing White House e-mails--473 days worth of messages between 2003 and 2005--continued to unfold.

As the Wall Street financial institutions of this world head to court, it’s a safe bet that electronic documents will be primary exhibits in the search for the truth. Justice may be blind, but judges aren’t--and none will accept “I can’t find the document” as an excuse.

Ways to save

In addition to protecting a company from unnecessary litigation-related expenses, a good records management policy enables companies to save on online storage costs and redundant backup tapes. Good records management also frees up IT support resources from the time-consuming task of data retrieval and preserves employee productivity by eliminating the need for wasted time spent deleting e-mail.

In summary, every IT manager, general counsel, CFO, CIO--and increasingly, CEO--should ask themselves if they have a plan to respond to the growing complexities of managing electronic records.  In today’s tightening regulatory world and tightening budgets, a good records management policy delivers protection of profits and costs--a concern of every executive.

The Author

Joining AXS-One in 2004, Marie-Charlotte Patterson brings to AXS-One 20 years of international marketing and operational management experience in the software industry, with specific domain expertise in the content management and archiving sector.

She is responsible for the company's worldwide marketing, product management and knowledge transfer operations. Marie joined AXS-One from IXOS, a German-headquartered provider of enterprise content management (ECM) solutions that was acquired by Open Text in 2003, where she was responsible the organization's worldwide marketing and business development functions. Prior to IXOS, Marie held senior-level marketing and business development positions in the U.S. and Europe with Macro 4, a publicly traded systems management and document archiving software provider.