AS COMPANIES CONFRONT A FLOOD OF DATA AND RISING E-DISCOVERY COSTS,
CFOS NEED TO TRY NEW APPROACHES TO LIMIT RISK.
Data, Data Everywhere
Companies are drowning in e-mail, files and other types of electronic information, and the flood of
data is driving up both costs and risk related to the discovery process during litigation. Yet many
organizations are frustrated as their attempts to address this problem get bogged down. Fixing this
issue requires a group effort among a number of different stakeholders within the company, as well
as letting go of well-intended but ineffective strategies.
T&R: Why is accumulating
too much electronic data a
problem now?
Diamond: Companies are creat-
ing more electronic documents
than ever. The average employ-
ee sends and receives more than
167 e-mails per day, and saves
many of those on the e-mail
server or on his or her desktop.
Unstructured data, such as loose
files and images, are growing
at a pace of more than 40% per
year. Worse, organizations are
doing a poor job of deleting
older information. Electronic
information accumulates like
snow on a glacier, with a new
layer added every year.
to subpoena not only records,
but also documents and social
media postings. Given the accumulation of paper and especially electronic documents, the
likelihood of finding something
damaging is high. Regulators
found embarrassing or damaging documents at Toyota, BP
and Goldman Sachs. Often,
the most damaging documents
were not even considered official business records by the
companies. Mark Diamond is founder and CEO of Contoural, which provides records information management and litigation readiness consulting services
to more than 20% of the Fortune 500, as well as smaller
companies and public sector
organizations.
eral Judicial Center. The danger
is that companies that settle all
the time build a reputation as
soft targets.
T&R: What part does
regulation play?
Diamond: Companies have
long been required to retain
business records. What has
changed is regulators’ interest in
those records. The Obama administration has increased regulatory inquiries and government
investigations. Government
investigators have broad powers
T&R: E-discovery costs have
been onerous for a while. Are
they getting worse?
Diamond: Yes. There were
more settlements of civil lawsuits last year than any other
time. We believe that when
faced with e-discovery costs
that are higher than the claims
themselves, many companies
decide to settle claims. Last year,
more than 38% of all settlements
in civil litigation were either influenced, or strongly influenced,
by the potential discovery costs,
according to a study by the Fed-
T&R: What about WikiLeaks?
Diamond: Both governments
and corporations face a new
information security and pub-
lic relations threat: large-scale
leaks of e-mails, files and other
sensitive electronic documents
intended to embarrass, harass
or damage an organization.
Governments have already
been the victims of leaks from
sites such as the WikiLeaks
document archive, and, at the
time of this writing, WikiLeaks
was rumored to be readying a
“megaleak” from a U.S. bank.
Some fear that “WikiLeaking”
may become a common tactic to
hurt companies and other orga-
nizations. It appears that most
of the documents come from
disgruntled employees or other
individuals with access to large
amounts of information. What
makes WikiLeaking different is
the sheer quantity of documents
Image by Janet Hamlin
