Tuesday, October 21, 2008

Corporate Electronically Stored Information (ESI) policies are on the rise, but so are e-discovery risks

Kroll Ontrack annual study reveals in-house counsel understand value in ESI preparedness but still struggle to gain executive support

Minneapolis – Oct. 21, 2008 – Companies in the US and UK are increasingly well prepared to handle demands for ESI, but one in four organizations (28 percent in the US, 23 percent in the UK) cite increasing volumes of data as a major challenge for the next five years, proving that ESI preparedness is no simple task. Furthermore, the evolution of technology and case law make this topic increasingly more difficult to tackle. This is a key finding from the second annual independent study, the ESI Trends Report, commissioned by Kroll Ontrack®, the industry's leading provider of paper and electronic discovery, computer forensics and ESI consulting, jury consulting and courtroom presentation services.

This year's survey also revealed that 70 percent of companies in the US and 53 percent of those in the UK now have ESI policies in place, still leaving 28 percent of US and 40 percent of UK organizations at risk of substantial reputational damage and financial loss during litigation or internal investigations that require electronic discovery. Worryingly, 31 percent of US companies and 27 percent of those in the UK cite a lack of time and resources as a barrier to effective implementation of ESI strategies. As the volume of data continues to increase, demands on such time and resources will also inevitably rise.

"Litigation always has been, and will continue to be, a reality of conducting business. What is changing, however, is the focus on ESI. Modifications in regulation, paired with the proliferation in the number of electronic devices and high profile subprime and financial suits, have brought this issue to the forefront. As such, organizations are starting to take action," said Kristin Nimsger, president of Kroll Ontrack. "The best way to manage electronic discovery is to prepare for it before litigation occurs. Knowing what kinds of ESI you have, where it is stored, and how to access it, can significantly reduce the time, cost and effort required to respond to a legal crisis."

Kroll Ontrack's research also reveals a shift in allocation of ESI responsibility, as companies in both the US and the UK are increasingly looking to IT departments for policy development and enforcement. In 2007, 14 percent of UK respondents attributed primary policy enactment responsibility to IT staff. This figure increased to 25 percent in 2008. An even greater change took place in the US, with IT departments now taking primary responsibility of ESI policy creation in 35 percent of companies (up from 18 percent in 2007).

"The shift in responsibility represents a more mature, collaborative approach to e-discovery. The undoubtedly complicated and technical nature of ESI requires a close alliance between legal and IT to ensure ESI strategies are adequate, all-encompassing and feasible," said Michele Lange, director of Legal Technologies, Kroll Ontrack.

Though companies are increasingly looking beyond the boardroom for development of ESI strategy, there remains a belief that CEOs and board directors should ultimately be accountable for negative consequences resulting from ESI policies. This is particularly evidenced in the UK, where 54 percent of companies said that their CEOs and board directors should be held accountable if their respective ESI policy results in governmental fines, court imposed sanctions or reputational damage. This is despite the fact that only 20 percent of UK companies allocate actual responsibility for policy development to such senior figures.

"The risk of litigation and the corresponding cost of electronic discovery do not diminish in a downward economy. Businesses should not only have a strategy in place to potentially avoid discovery fouls and corresponding financial implications, but should also include their CEOs in policy discussions so they are informed and supportive of the respective policies. If and when a policy is called into question is no time to play catch-up," added Nimsger.

To see the results in entirety, visit https://www.krollontrack.com/library/esitrends_krollontrack2008.pdf.

This survey was conducted by Research Plus on behalf of Kroll Ontrack. A total of 403 telephone interviews were carried out amongst in-house counsel within commercial businesses, 203 of which were in the US and 200 of which were in the UK. Interviews were completed between July 7, 2008 and Aug. 1, 2008.

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: www.krollontrack.com; www.ontrackdatarecovery.com; www.engeniumsearch.com; www.trialgraphix.com.

Media Contact:

Ben Blomberg, 952-516-3617, Ben.Blomberg@krolldiscovery.com