Master Data Management

Drew Macaulay (Global) - eDisclosure: Convergence of IT and Law

The widespread increase in complex litigation and regulatory investigations has affected corporations of varying sizes across a wide range of sectors. From litigation around cross-border contracts that have gone awry to investigations into the appropriateness of sale of financial products in varying jurisdictions, today's multinational firms must be prepared to respond to these matters quickly and efficiently. Failure to cooperate with regulators conducting an investigation or to follow the relevant procedural rules for litigation processes can result in significant financial penalties, sanctions and reputational damage. It is clear that in order to minimise this risk, a corporation must be prepared the meet the procedural and logistical challenges involved.

While the ways in which the situations above should be addressed from a legal standpoint vary greatly, a consistent requirement in responding to these issues is the need for information. Contemporaneous documents need to be provided to the law firm advising the company concerned, potential witnesses will need to be interviewed based on the content of these documents; and a subset of information will often need to be disclosed to opposing parties or regulators.

The challenges and cost of retrieving, reviewing and producing this electronic data (a process called electronic disclosure) is compounded by the ever-increasing volumes of information created by today's businesses, and the relative ease with which electronic documents and communication can be stored compared with the paper-based archiving systems of the past.

This new paradigm has meant the process of responding to litigation or an investigation is no longer simply a matter of locating potentially relevant hard copy documents in the company archives and handing them over to external counsel for review, but a multi-faceted project in which lawyers, corporate IT and electronic disclosure specialists each play a crucial role in the success of the exercise.

So what actually happens?
The process typically starts with the identification of the people whose information (normally email and other electronic documents) may be potentially relevant and the preservation and collection of this data to ensure it is not accidentally or intentionally deleted. Once these activities have been completed the collated data is filtered using advanced data processing techniques to identify which documents should be reviewed by external counsel based on criteria relevant to the case, such as date ranges and/or key words or concepts. This approach typically reduces the amount of documents reviewed by external lawyers, and therefore the cost of the exercise as a whole.

Once the set of potentially relevant documents has been finalized there will typically be an initial document review stage where each document responsive to the search terms and/or date ranges is loaded to an electronic disclosure review system and assessed for relevance. This stage can be conducted by external counsel or outsourced to a specialist document review firm which works under the instruction of external counsel, but at a lower cost. In recent years, software has been developed which attempts to "learn" which documents are relevant based on a small set of sample documents which are reviewed by a human. The system then extrapolates these decisions across the larger document population.

Those documents that are deemed relevant during the initial review stage (either by human review or by the use of computer-assisted review) are then further analysed by external counsel to identify which documents assist in putting the company's case, or are detrimental to it as well as any that can be withheld for "legal privilege". The relevant documents are then disclosed to the regulator or opposing party in the litigation.

Who needs to be involved?
As noted above, there are a number of groups involved in these projects. In-house lawyers will be integral to the process from start to finish, providing a central point of contact within the company and communicating with departments from whose staff data and witness interviews are required. In addition to these responsibilities, in-house counsel will be faced with co-coordinating the company's IT involvement and providing regular updates to the company's management team.

An external law firm will be involved to provide legal advice and to co-ordinate the external aspects of these projects. They will often be involved in selecting the specialist technical consultants who may be called in to preserve, collect and filter the information before it is reviewed - and to ensure that the processes implemented will deliver results and meet the expectations of the court or regulator concerned.

Electronic Disclosure is a complex process with a large number of variables, and as such, it is likely that complications will occur. A corporation may not have an accurate picture of the location of data on the company IT infrastructure, the documents concerned may be located in countries with heavy data privacy restrictions such as Germany or Switzerland, or the documents concerned may be in multiple languages. Solutions for all of these issues exist, but they must be addressed early on in the process or delays and additional costs will be incurred.

By Drew Macaulay, Director at First Advantage Litigation Consulting


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