STUDY SHOWS EVEN LESS ATTENTION IS NOW BEING PAID TO ELECTRONIC RECORDS

March 2004

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There is much to be Gained

Chances are that the letter you wrote, the memo from your co-worker, the meeting you scheduled, and the article you are now reading, have all been recorded on a computer - if not your computer, then certainly someone else's computer. All of this information is discoverable in litigation, and can be used as evidence.

Most lawyers continue to emphasize paper-based records in their discovery. On the surface, this appears cheaper and easier, but this is usually not the case.

For even a modest-sized commercial dispute, paper based records are not cheaper because paper is expensive to copy, transport, and sort. In contrast, the equivalent of whole rooms of paper records can be electronically copied in minutes, placed in a small briefcase, and searched/sorted within minutes. Consider the storage possibilities of the following electronic media:

           Media                             Capacity              Pages

3 ½ inch floppy disk               1.44 MB                   350

Compact disk or CD                 700 MB               50,000

DVD                                      4.7 GB              350,000

DAT tape                                20 GB           1,500,000

DLT tape                                80 GB          6,000,000

Hard disk                               200 GB         15,000,000

At a maximum paper rate of about 4000 pages per box, even a single CD holds at least 12 boxes of records - a single DVD holds at least 85 boxes.

Electronic Discovery has Huge Advantages

Electronic records have other important advantages involving the quality of your investigation and discovery. Specifically:

Electronic records that were thought to be lost or destroyed can often be recovered. A trained computer technician with the proper tools can obtain records that your opponent may not even know exist.
Valuable information such as the time, creation date, revision date, and author's name are usually imbedded in the electronic version of a document. With newer versions of Microsoft software, the electronic version may track every change to a document, and who made each of those changes.
Even if the information described in item 2 above cannot be used, comparison of most recent versions of records with the earlier versions that remain on backup media can explain when a critical document was altered or a critical event occurred.
In the case of emails that have since been deleted, backup versions can show casual and candid writings that have been frozen in time.

However, to get this information, one needs to ask for it, and be persistent and thorough in receiving all that is available. Our experience is that the vast majority of lawyers give up way before all important records are obtained. The reason is that most people stop at only active files, and forget (or more accurately, never thought about) about the rest.

Here are the places where your smoking gun evidence could be:

Active Files - Active data is the information readily available to users. This is what most people think of when electronic discovery is mentioned. Active files include word processing documents, spreadsheets, emails, databases and accounting records.
Back-up Data - Back-ups provide a historical snapshot of whatever is stored the moment the back-up is created. Back-ups are particularly useful for (i) recovering data that has since been deleted, and (ii) reviewing how something progresses over the time covered by the back-ups. If your dispute involves changed versions over time, or missing pieces of what happened, back-ups are often worth the discovery cost. Back-ups have the advantage of (i) capturing older data that remains available, and (ii) capturing versions of data that are frozen in time.

Back-up information is periodically copied to removable media in case of a system failure. Most businesses have routine and automatic processes to create comprehensive backups of data on both individual computers and centralized servers. Because the tapes often used for backups are inexpensive, some businesses keep backups for several months to several years before the back-up media is rotated into the queue as new backups are created.

File Clones - Many software manufacturers (including Microsoft) include automatic backup features that periodically save copies being worked on by a user. Usually, the file clones are not saved in the same directory as the active file. Users are often not aware that the extra copy exists. Since file clones are usually saved on a local computer and not placed on the network server, documents or portions of documents that are not being saved centrally may still exist as a file clone on an individual user's hard drive.
Residual Data - Residual data appears to be gone, but is recoverable from the computer system by those who have the proper tools and training. Residual data includes "deleted" files, buffer data, swap files, and other information needed at one time by the computer system. This information remains available until it is overwritten by new information. Because hard disk sizes are growing faster than most users needs, more and more "unused" disk space has become the holding area for massive amounts of residual data.

The Opportunity is Increasing

Because the proliferation of electronic information, most companies need to pay greater attention to (electronic) document retention. However, according to a recent survey by Cohasset Associates, the majority of companies are not giving this adequate attention. Specifically:

47% of businesses do not include electronic records in their document retention (and destruction) schedules and policies.
59% of businesses do not have any formal email retention policies.
65% of businesses do not have systems to hold or automatically include electronic records requested in litigation (This is why electronic records require specific emphasis in your production requests.)
There has been essentially no improvement in electronic record management since the first study conducted in 1999. In most areas, even less emphasis is now being placed on electronic records management.

The reason electronic records are receiving even less attention than before is the same reason that electronic records are proliferating. Simply put, electronic record storage is getting less costly and more compact. Businesses usually spend attention on problems, and electronic record storage is no longer a "problem" in non-legal circles.

In the "old" days, management of paper records was driven largely by space requirements and cost. Businesses kept records nearby for as long as space permitted. As space became scarce and the records still served a business purpose, the paper was transferred to another location where more (and usually cheaper) space was available. However, as noted in the list at the beginning of this article, electronic record storage can keep multiple rooms of records in a small drawer. There is no longer an immediate space or cost reason for discarding records…and so many businesses are simply storing more.

Keeping additional records in this fashion is a poor approach. For this reason, electronic discovery of original and backup information can be even more fruitful. Because (i) computers are able to search and sort through electronic data quickly, and (ii) electronic records can be copied quickly and cheaply, the additional discovery need not incur additional resources from what you are already spending.

Fulcrum Inquiry is a financial consulting firm that assists clients investigate and resolve disputes. We apply computer expertise in all of our engagements and investigations. Our capabilities include electronic discovery, computer forensics, and data mining of computerized information.