Monday, December 10, 2007

Business leaders face severe risk from lack of ownership of ESI policies

A new independent study highlights gap between those who set electronically stored information (ESI) policies and those who bear responsibility; opening companies to risk of brand reputation damage and substantial financial loss

Minneapolis – Dec. 12, 2007 CEOs and other business leaders are likely to bear business risk when their organizations lack policies on handling electronically stored information (ESI) – despite the fact that they are rarely involved in developing or enforcing that ESI policy. This is the key finding in a new independent study commissioned by Kroll Ontrack ® , the leading provider of paper and electronic discovery, computer forensics, and courtroom and presentation services.

The report finds that less than half of organizations (43% in the US, 48% in the UK) have a strategy or policy in place on how to deal with ESI in litigation or internal investigations. In the US, 41% of respondents said their organizations give responsibility for developing that policy to the in-house legal department. However, almost a fifth of respondents (19%) said the CEO should be held accountable if that policy results in government fines, court imposed sanctions or damage to reputation. In the UK, a quarter of organizations (25%) said their legal department was given primary responsibility for developing policy, yet 39% said their CEOs should face the consequences of that policy.

“These statistics are alarming but not surprising. The explosion of electronic information and the onslaught of new rules, regulations and laws have made it incredibly difficult for companies and counsel in the US and UK to keep up,” said Kristin Nimsger, president, Kroll Ontrack. “There is no clear definition of who should be developing or enforcing ESI policies, which precipitates a lack of ownership. However, with the size of fines and severity of sanctions possible, this issue has moved from an IT or legal issue to a threatening business issue, for which today’s executives and boards need to be involved.”

Kroll Ontrack’s research also shows that only 25% of in-house counsel say they are fully up-to-speed with case law, developments and regulations relating to ESI. Less than half (43%) believe they have a fairly good understanding but could benefit from more knowledge, and 31% of respondents feel they have little understanding or have never heard of it.

The situation is even more serious in the UK, where only 17% of in-house counsel report they are fully up-to-speed with case law, developments and regulations relating to ESI. Less than half (42%) feel they have a good understanding but could benefit from more knowledge. More than a quarter (26%) state they have a low level of understanding, while 14% say they know little, if anything about ESI or have never heard of it. With the changes to the Federal Rules of Civil Procedure (FRCP) in the US regarding electronic discovery and the Practice Direction of the provisions relating to disclosure of electronic documents under the Civil Procedure Rules in the UK, in-house counsel that are not fully aware of the requirements and complexities risk putting their organizations in jeopardy if they do not rely heavily on outside law firms and or experts.

US legal teams are far more concerned than their UK counterparts about the reality of the ESI explosion, with over a fifth (21%) stating that managing colossal volumes of data will be their biggest challenge over the next five years. By contrast, the UK’s primary concern was the lack of training in legal trends. This statistic highlights one of the significant differences in the adoption and acceptance of technology and innovation in the legal practice in the US and UK.

This survey was conducted by Canvasse Opinion on behalf of Kroll Ontrack. A total of 402 interviews of in-house counsel were conducted within commercial businesses, 200 of which were in the US and 202 in the UK. Interviews were carried out between September 13 and October 10, 2007.

The Legal Technologies division of Kroll Ontrack provides corporations, law firms and government agencies with technology and services for large scale electronic and paper-based discovery, computer forensics, trial graphics and presentations as well as electronically stored information (ESI) and jury consulting. Helping customers quickly and cost-effectively find, review, manage, produce and present relevant evidence, Kroll Ontrack is recognized as the leading electronic discovery provider by AmLaw Tech (2002, 2003, 2004, 2005, 2006 & 2007).

About Kroll Ontrack Inc.

Kroll Ontrack provides technology-driven services and software to help legal, corporate and government entities as well as consumers recover, search, analyze, produce and present data efficiently and cost-effectively. In addition to its award-winning suite of software, Kroll Ontrack provides data recovery, advanced search, paper and electronic discovery, computer forensics, ESI consulting, and trial consulting and presentation services. Kroll Ontrack is a technology services division of Kroll Inc., the global risk consulting company. For more information about Kroll Ontrack and its offerings please visit:;;;

Media Contact:

Ben Blomberg, 952-516-3617,