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Companies Must Prepare For ‘E-Discovery’

Litigation in the electronic age is fundamentally different from 20, or even 10 years ago, experts say.
The culprit – an exponential increase in the number of virtual "documents" stored in countless hard
drives is threatening to overwhelm those who must sift through mountains of potential evidence.

By Michael Bartlett, Newsbytes

Billions of these virtual documents are created each year, including e-mail and instant messaging
transmissions. According to an October 2000 study by the University of California, Berkeley, 93 percent
of all corporate documents are created electronically, and only about 70 percent ever make it to a
printer.

"Companies should delete what is not necessary for regulatory
compliance. They need a systematic plan for deleting
non-litigation-related documents," said Jonathan Redgrave,
who is of counsel to the Washington, D.C., office of the law
firm Jones, Day, Reavis & Pogue.

Redgrave, who serves on Jones Day’s "e-discovery"
committee, told Newsbytes the standard for saving documents
used to be everything necessary to have a record of regularly
conducted business.

"E-mails are a world away from that standard," he said.

E-discovery is coming to the fore because more people are
focusing on it, Redgrave said. He warned, however, that many
corporations are not getting their hands around it.

"E-mail has replaced the water cooler for chit-chat. The
difference is, no one was around the water cooler with a tape
recorder," Redgrave said. "E-mail stays around for a long time
because it is very difficult to truly get rid of digital data.
Forensic specialists can retrieve data from a hard drive that
people thought was erased."

Those who made the rules of discovery – where the opposing sides in a legal dispute request documents and other evidence
from each other in advance of trial – never anticipated the tremendous numbers of documents stored electronically, he said.

"There are terabytes of data today – hundreds of millions or billions of pages. The ‘Best Practices’ for paper retention were
developed in the 1930s, ’40s and ’50s," he said. "Now, companies need to develop policies for what to keep and what not to
keep."

David Schultz served as a civil litigation attorney for eight years in Minneapolis. He now works as a legal consultant for a
company called Ontrack Data. He helps lawyers – and companies – figure out how to use electronic evidence.

"There are fundamental differences between e-documents and hard copy," said Schultz. "Volume is one thing. Corporations did
not keep that many documents because they took up physical space. Now, companies save nearly every electronic document
because it can be stored on a hard drive."

Schultz tells his clients if someone has 4 gigabytes of text stored on his hard drive, that equals about 2 million pages of text. If
graphics or PowerPoint presentations are included, then the page total is slightly less.

"We tell them that figure to make them think about what it means. In litigation, you don’t usually stop with one person’s
documents, you have to look at the documents from several different people," he said.

Multiply 2 million pages of text by numerous involved parties and you have a frightening picture, he added.

According to Jones Day’s Redgrave, the recent allegations of conflict of interest against Merrill Lynch stem from people being
casual or careless in e-mail. He said analysts made comments about stocks in casual e-mail to their friends that were completely
different from what they said in their public analysis of the same stocks.

"Other examples include an internal e-mail at Microsoft," said Schultz. "The e-mail said, ‘It seems clear to me that it will be hard
to increase browser market share on the merits of [Internet Explorer 4] alone. It will be more important to leverage the [operating
system] asset to make people use [Internet Explorer] instead of Navigator.’"

Schultz also recalled the Linnen case – a drug manufacturer involved in one of the first Fen-Phen cases to go to trial.

"Someone in the accounting department at American Home Products, which was one of the defendants, sent an e-mail that
said, "Do I have to look forward to my waning years writing checks to fat people with a silly lung problem?"

"That kind of a thing enrages people," said Schultz.

So what can companies do? According to both Redgrave and Schultz, companies must not only do a better job of deleting
electronic documents, they must train employees not to leave a potentially damaging virtual trail.

"Companies need to develop a policy regarding electronic documents, and they must train their employees on how casual
language could be misinterpreted down the road," said Redgrave. "Many people do not even think about how the loose or
inappropriate language they are using in e-mail – say during the development of a new product – could be seen by just about
anyone it is forwarded to."

"People must be trained to be attentive to what they are saying, how they are saying it and whom they are saying it to,"
Redgrave added.

Litigators need to learn document management, Schultz insisted. He said they must control liability before it arises. They should
go to their clients’ offices and gather the general counsel and IT managers from all the branch offices and talk about how
documents are retained.

"It is important to cut down on the amount of documents and e-mails that must be gone through in case of litigation," said
Schultz.

Big Brother Is Watching

Schultz said a recent study of 2000 organizations by the American Management Association found that 62 percent of employers
said they monitored employee Internet connections, 46 percent monitored storage and review of e-mail messages, and 36
percent monitored storage and review of computer files.

"It is a great idea for companies to monitor such things," said Schultz. "Employers need to be more aggressive about managing
liability on the front end. They need to monitor not just e-mail – and e-mail is a big issue – but also Internet activity and even
Word documents."

"People are candid with e-mail, but this is true in Word documents, also," he continued. "When a computer is on a network, with
many redundancies built in, even if someone deletes an e-mail or a document from his hard drive, and then from the recycle
bin, it’s still not gone."

"Deleted files can be brought back, and courts have ruled that such evidence is discoverable," Schultz added.

Schultz acknowledged that talk of employee monitoring raises concerns of George Orwell’s "Big Brother," but he said companies
have the right to watch what is theirs.

"With privacy, it comes down to whose hardware and software is being used. Courts have held that an employer has the right to
monitor employees’ e-mail and Internet use – at least in the U.S."

"It is important to have a written policy to make sure employees do not have an expectation of privacy," Schultz added.

In some cases, home computers are searchable, he said.

"If someone used their home computer for work and dialed in to a network, its contents can be searched. There is some
protection for personal data, such as if you use Quicken, your financial data is protected."

Anil Phull, a senior analyst with the Yankee Group who specializes in security services, said many companies are using
monitoring programs today that were designed to catch spies.

"There is a program called ‘Silent Runner’ that was developed for the CIA and the National Security Agency," said Phull. "It
looks for relationships in an organization, such as traffic between two people, between one person and one computer, or
between one person and the outside."

Phull said he used Silent Runner when he was in the U.S. Navy. At first, the program was used to find people who were leaking
classified information.

"We found instead that it works well with banks and on Wall Street," he said. "It takes a huge amount of information and reduces
it to relationships and trends."

E-mail monitoring programs can be "trained" to look for specific words and phrases, which makes it appealing to employers who
wish to monitor their traffic for so-called "inappropriate behavior," said Phull.

"The more intelligent software can pick out specific words in a message. It can look for what it is told is ‘inappropriate’ or
‘suspicious’ behavior."

"And the software is getting more advanced," he added.

Some employees might try using Instant Messaging if they fear their employers are monitoring their e-mail, but Phull said this is
a false sense of security. He said some Instant Messaging programs have the capacity to save chat sessions.

"It actually is easier to monitor Instant Messaging than e-mail," he said. "Instant Messaging is short burst of traffic, all in clear
text."

"I think you’ll see a lot more Big Brother software," said Phull. "Some security folks already are monitoring a lot of things."

Jones Day is at http://www.jonesday.com .

Ontrack Data is at http://www.ontrack.com .

Reported by Newsbytes.com, http://www.newsbytes.com .

http://www.newsbytes.com/news/02/176746.html

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