Records management key to navigating lawsuits

Posted on Jul 17, 2010 in Records Management News

Julius Mel­nitzer, Finan­cial Post · Wednes­day, Jul. 7, 2010

Com­pa­nies that lack a well-managed records-management pro­gram (RMP) are putting them­selves at enor­mous risk in the event of lit­i­ga­tion, says Christo­pher Olsen, the prin­ci­pal sys­tems engi­neer at Lock­heed Mar­tin Cor­po­ra­tion, and one of the world’s most expe­ri­enced doc­u­ment reten­tion and e-discovery experts.

Mr. Olsen defines records man­age­ment as a sys­tem­atic orga­ni­za­tion of infor­ma­tion that rep­re­sents an organization’s deci­sion, poli­cies, activ­i­ties and cor­po­rate assets aimed at pro­tect­ing the organization’s records to assure their integrity and authenticity.

“A records-management pro­gram there­fore allows for the inten­tional destruc­tion of records that no longer have value to the orga­ni­za­tion with the aim of reduc­ing oper­a­tional and legal costs,” Mr. Olsen said.

Mr. Olsen, whose expe­ri­ence includes a stint as direc­tor of the Cen­tral Intel­li­gence Agency’s RMP, was the keynote speaker at the recent Legal IQ e-Discovery Canada con­fer­ence, co-sponsored by the National Post.

More than 89% of U.S. com­pa­nies, he noted, have been involved in lit­i­ga­tion and some 51% have expe­ri­enced reg­u­la­tory inves­ti­ga­tion. Com­pa­nies with over US$1-billion in rev­enue spend an aver­age of US$31.5-million on legal mat­ters, man­age 556 cases simul­ta­ne­ously, and 50% start more than 50 new cases each year.

“The num­ber of com­pa­nies with over 50 law­suits dou­bled last year and 40% of com­pa­nies had at least one US$20-million claim on their books,” Mr. Olsen told the con­fer­ence. “The world­wide aver­age legal spend for cor­po­ra­tions is US$15.8-million, of which 67% goes to lit­i­ga­tion costs exclud­ing set­tle­ments and awards.”

Despite the fact that U.S. plain­tiffs file 18 mil­lion civil law­suits each year, most com­pa­nies don’t have a viable doc­u­ment pol­icy in place, and those that do either fail to enforce their document-retention poli­cies or keep them up to date, he told Legal Post in an inter­view. “In fact, most don’t know where all of their infor­ma­tion is located.”

Mr. Olsen said sur­veys sug­gest two-thirds of record man­agers believe C-level man­agers are “clue­less” about the con­nec­tion between good records man­age­ment and reduc­ing lit­i­ga­tion risk.

“There are already 16,000 reg­u­la­tions in place world­wide gov­ern­ing records reten­tion and these will dou­ble in the next three years,” Mr. Olsen said.

An effec­tive RPM facil­i­tates eas­ier and more timely iden­ti­fi­ca­tion of and access to nec­es­sary infor­ma­tion, mak­ing e-discovery response more effi­cient and cost-effective.

“A good records-retention pol­icy is the foun­da­tion for a stream­lined, cost effec­tive and effi­cient e-discovery process,” said Susan Nickel of Toronto’s Wortz­man Nickle, an e-discovery law firm.

The wrench in the works, how­ever, is email, which Mr. Olsen calls the “800-pound gorilla of e-discovery.”

“Busi­ness exec­u­tives now aver­age 100 emails daily,” Mr. Olsen said, “and email use is grow­ing about 20% each year.”

Estab­lish­ing a legally cred­i­ble email reten­tion pro­gram starts with ensur­ing that it works seam­lessly with exist­ing tech­nol­ogy. It must also ensure that mes­sag­ing that doesn’t com­ply with the pro­gram is detected before it is sent, and that approved con­tent is pro­tected from unau­tho­rized inter­cep­tion. Email archiv­ing and a backup email sys­tem are also essential.

“Com­pa­nies can con­trol dis­cov­ery costs by reduc­ing email vol­ume through adher­ence to reten­tion and destruc­tion poli­cies, and by more effi­cient index­ing and search­ing of archived emails,” Mr. Olsen said. “In fact, an email archiv­ing and sim­ple clas­si­fi­ca­tion sys­tem can reduce email hold­ings by two-thirds.”

Most orga­ni­za­tions err, how­ever, by rely­ing on peo­ple to cat­e­go­rize their emails.

“Most indi­vid­u­als want to have as lit­tle as pos­si­ble to do with clas­si­fy­ing or cat­e­go­riz­ing doc­u­ments,” Mr. Olsen said.

“If you are able to search only by time peri­ods, e-discovery demands will require you to do a huge amount of recall that will have to be reviewed by some­one at $200 to $600 hourly,” Mr. Olsen said. “That’s expen­sive for email that may have no rela­tion­ship to the case at hand. On the other hand, auto-categorization allows you to search in a nar­row envi­ron­ment, because your record man­agers have devel­oped a superb under­stand­ing of how the infor­ma­tion has been categorized.”

Fail­ure to cat­e­go­rize also cre­ates prob­lems when if a court issues a “lit­i­ga­tion hold” or preser­va­tion order.

“If all a com­pany does is have indi­vid­u­als throw emails into the elec­tronic fil­ing sys­tem so that no one knows where any­thing is, a lit­i­ga­tion hold could freeze busi­ness oper­a­tions,” said Kelly Fried­man, a lit­i­ga­tion part­ner at Ogilvy Renault’s Toronto office.

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BEST PRACTICES

1 Con­cen­trate on the biggest prob­lem, email.

2 Intro­duce a sim­ple cat­e­go­riza­tion scheme.

3 Work with IT to bring in email archiving.

4 Exam­ine the use of tech­nolo­gies such as search tools and ven­dor clas­si­fi­ca­tion prod­ucts to cull the remain­ing email into categories.

5 Audit the cat­e­gories for consistency.

6 Rou­tinely destroy all infor­ma­tion no longer of busi­ness value.

Source: Christo­pher Olsen

Read more: http://www.nationalpost.com/todays-paper/Records%20management%20navigating%20lawsuits/3244202/story.html?goback=.gmp_1782584.gde_1782584_member_24388817#ixzz0tx7UgpPx

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