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Two recent lawsuits have rattled the legal services industry and turned law firm CIOs into VIPs.
In both suits, rulings on electronic data discovery, known as EDD or e-discovery, essentially decided the cases. The message to CIOs at law firms: Step up your technology efforts concerning e-discovery, or your corporate clients will lose cases -- and you will lose clients and stature.
E-discovery is the modern digital version of the discovery phase of any legal proceeding, in which witnesses are interviewed, physical evidence such as weapons are examined and documents are pored through. Previously these documents were housed in cardboard boxes; today, the majority are digital.
Focus On: Legal Services |
Top Business Challenge: To keep pace with the fast-changing field of e-discovery (EDD) while continuing to manage an explosion of digital content
Solution: Software and services that handle hard copy, EDD and e-mail
How IT Can Help: By ensuring that client information is easy to locate and retrieve
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In the eyes of the law, electronic discovery is no different from any other form of discovery; preventing the opposing legal team from seeing a relevant document is a violation, regardless of document form. The problem is one of scale. "One major issue is sheer volume," says William Gregory, CIO at Hogan & Hartson LLP, a Washington, D.C.-based law firm with $550 million-plus in annual revenues and more than 1,000 lawyers. "We're putting up SANs [storage area networks] to handle the volume of information. We're talking terabytes, and ... we're not alone."
The industry rule of thumb on data holds that each person involved in a lawsuit may have as much as 2 gigabytes of relevant documents. Multiply that by the number of individuals involved in typical corporate cases, and the storage-and-retrieval needs boggle the mind.
Whether they're working for individuals or alongside corporate legal departments, law firms are charged with identifying all the data that may be pertinent to the case. They use this information to build their own argument, and they must make it available to their opponent.
As two recent bellwether cases made clear, the failure to do so carries a harsh penalty. In the first, a Florida jury ordered Morgan Stanley to pay investor and Revlon Inc. Chairman Ronald Perelman a stunning $1.45 billion, more than half of which constituted punitive damages. The jury sided with Perelman, agreeing that Morgan Stanley defrauded him when he sold camping-gear maker the Coleman Company Inc. to the former Sunbeam Corp. in 1998. The judge essentially told the jury that Morgan Stanley's failure to produce e-mail records, and the firm's lies about its efforts to do so, was proof that the bank defrauded Perelman.
"Morgan Stanley just got nailed, and it was largely because they didn't fulfill their electronic discovery obligations," says George J. Socha Jr., principal of Socha Consulting LLC in St. Paul, Minn., who advises firms on digital discovery. In partnership with Thomas Gelbmann of Gelbmann & Associates, also in St. Paul, Socha produces the annual Socha-Gelbmann Electronic Discovery Survey, which is closely watched in the legal community.
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