This post was written by Joe Raczynski, technology manager for Large Law Firms, Thomson Reuters

“Not preparing for eDiscovery will cause your company to spend millions meeting an eDiscovery request via a lawsuit or investigation or worse – losing a multi-million or multi-billion dollar lawsuit because you cannot retrieve data in time to satisfy a judge.”

These were the ominous words from Curtis Preston, CEO of Truth in IT, Inc., who presented last week at an electronic backup and cloud conference called “The Truth About Backup.” He led a session delving into implications of storing information and eDiscovery.

Adverse inference
In a case which highlights the storage issue, Morgan Stanley was sued by Coleman Holdings. Morgan Stanley had to produce emails, but the issue was that they had backup tapes in a wide array of backup and tape formats, as well as varying types of email, e.g., Exchange and Lotus Notes. As a result, Morgan Stanley asserted that “email searches could be conducted only at enormous cost,” while the judge said “archive searches are quick and inexpensive. They do not cost ‘hundreds of thousands of dollars’ or ‘take several months.’” Another issue that befell Morgan Stanley was that 1,423 backup tapes appeared after they said they had searched everything.

The result? Morgan Stanley simply had too many systems that were not easily aligned and searchable. Technically, the adverse inference order entered March 1, 2005, “reversed the burden of proof on aiding and abetting and conspiracy elements [of the claims against Morgan Stanley] and included a statement of evidence of [Morgan Stanley’s] efforts to hide its emails to be read to the jury, as relevant to both [Morgan Stanley’s] consciousness of guilt and the appropriateness of punitive damages.”

Coleman Holdings was awarded $1.57B because Morgan Stanley had very poor backup policies and procedures.

Save your company money:
Since not having data readily accessible and retrievable is a liability, here were a few points Preston outlined to assist:

  • Keeping multiple years of data in backup format costs more than keeping it in archive format due to the duplicate nature of email
  • Backups also cost much more to search than archives if you are given an e-discovery request
  • If keeping emails (or any data) for more than a year, it should be in an archive system, not a backup system
  • You must have an archive system that allows you to search in a matter

Other highlights:

  • Do not keep anything unless you have reason to
  • Establish an expiration/deletion policy
  • Document the policy, which needs to include actual erasure, not just expiration
  • Follow the policy
  • Document that you’ve followed the policy
  • Do this now, before you get the request

The primary theme throughout this discussion was preparedness. Establish clear policies that build or use cloud systems, allowing users to conduct simple searches for relevant data. Remember, backup should be used to restore data completely lost, while archiving is for retrieving data which is used less frequently but still fully accessible.

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