Companies are advised to have electronic data policies to manage
the storage of information to aid e-discovery in case of disputes
or court cases. Both the chief executives who bear responsibility
for compliance and many legal departments who implement policies
are not knowledgeable enough, according to a survey by e-discovery
specialists Kroll Ontrak.
"Clearly in the UK, in-house counsel and their external counsel
are lacking significantly in their training and understanding of
rules and regulations regarding their electronic information," said
Martin Carey, managing director of Kroll Ontrack in London. "They
do not yet seem to be grasping the fact that all this data is no
longer just information; rather it can now all be considered as
evidence. This fact alone shows a severe lack of ownership and
understanding."
The UK's Civil Procedure Rules govern e-disclosure, a process by
which a company's documents are trawled for evidence in disputes or
investigations. Information contained in electronic documents and
emails can be vital in instances of competition or fraud
investigations.
Kroll Ontrack found that there had been 50,000 changes to
financial regulator the Financial Services Authority's rule book
since 2001, a massive burden with which companies are not keeping
up.
Its survey found that only 17% of in house lawyers believe that
they know the case law well enough and 26% say they have a low
level of understanding of the issues, while 14% of the lawyers said
they knew little or nothing about the rules.
"These statistics are frightening yet not surprising," said
Kristin Nimsger, president of Kroll Ontrack. “The explosion of
electronic information and the onslaught of new rules, regulations
and laws have made it incredibly difficult for companies and
counsel to stay on top of everything."
The research showed that though chief executives of companies
will bear the responsibility for breaches of data handling, they
are not involved in creating or implementing policy, which is often
delegated to the IT department.
"The fact that there is no clear definition of who should be
developing or enforcing the policies shows there is a lack of
ownership," said Nimsger. "With the size of fines and severity of
sanctions that can be imposed, this has moved from being a concern
for IT or the legal team to a core business issue in which today’s
executives and boards of directors must now be involved.”
Recent research by KPMG Forensic found that just 17% of surveyed
in house lawyers thought that the creation of rules governing
e-disclosure in the Civil Procedure Rules had had a positive
impact.
KPMG Forensics's Paul Tombleson told OUT-LAW Radio that
e-disclosure can be incredibly expensive. "Figures that we've
compiled suggest that a large proportion of cases would be above
£500,000 from an e-disclosure perspective, and quite a number would
be above £1 million," he said.
