Biederman and Burke: Quality ESI governance good strategy

May 18, 2016
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“We have cupcakes for Brenda’s birthday in the break room!” While everyone likes cupcakes, emails like these, if not managed appropriately, can have significant costs in litigation and beyond. No matter how much one likes cupcakes, no client likes them enough that they want to pay their litigation team to sift through multiple emails announcing their break room activities. Yet, without quality information governance policies, even sophisticated entities will pay to store, process, gather, and review such documents.

Many companies keep too much and use too little of their electronically stored information. According to a recent study by AIIM and Iron Mountain, businesses, on average, estimate that only 42 percent of their ESI is useful to their business, meaning that 58 percent is useless. Good information governance entails creating processes by which companies can reduce the amount of unnecessary data they keep while using the remainder more efficiently. It consists of a set of interwoven policies carefully designed to help companies defensibly and responsibly reduce the amount of their useless data while being mindful of their regulatory and business requirements to keep data for specified periods of time. The same AIIM study found that only 10 percent of the businesses surveyed have comprehensive information governance policies in place that are respected and actually enforced. It also confirmed what we see every day — one of the biggest risks of poor information governance is excess litigation costs or damages.

Simply put, a company’s failure to properly implement and utilize meaningful information governance policies can cost resources and money if the company becomes involved in a lawsuit. By one estimate, the cost of processing and reviewing one gigabyte of data can exceed $3,500. The average employee sends or receives about three GB of email per year (employees send or receive 121 emails per day/31,566 emails a year (reasonably assuming about 10,000 emails per GB (which can vary wildly based on the contents of the email)).

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Let’s look at the cost of a small case with 100 GB, or two years of emails for 16 employees. If your litigation team processes and reviews this data in a traditional linear fashion (document by document) and 58 percent of this ESI is useless, you will pay approximately $203,000 to collect and review the 58 GB of useless ESI. These costs compound if a company is involved in multiple lawsuits. In that instance, a company’s same useless ESI may be re-collected and re-reviewed at a cost of $3,500 per GB in each litigated matter.

Effective information governance policies allow organizations to retain useful data and purge needless content. It is proven that companies that decrease the amount of useless ESI in their possession will save money in litigation costs, but companies also reap other substantial benefits including lower business costs, better efficiency and better security. Further, in the event of litigation, by not paying for the processing and review of useless ESI, companies save litigation resources for important, substantive issues rather than for discovery vendors.

Further, quality information governance policies protect litigants from spoliation and other sanctions. For example, Indiana Rules of Trial Procedure 37(e) states, “[a]bsent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an electronic information system.” Courts take information governance and this rule seriously. For example, in Miller v. Federal Exp. Corp., 3 N.E.3d 1006 (Ind. Ct. App. 2014), Federal Express was not sanctioned for deleting data in accordance with its document retention schedule and before litigation was reasonably anticipated.

Good information governance also spares companies and their employees from embarrassment in the document collection, document review and/or deposition process. Without proper information governance policies, employees may use their work email for personal purposes and that personal information will get collected, reviewed and sometimes even produced in litigation. This information is invariably part of the 58 percent of a company’s useless ESI, yet in a contested lawsuit it may result in embarrassment and additional costs. It’s also unhelpful in the litigation.

Information governance policies are good business, cut litigation costs, protect employees and allow companies the ability to purge useless information without fear of litigation sanctions. Such policies, however, must be well conceived, implemented and enforced to achieve these results. Companies should consult the appropriate experts in the field to avoid some of the common pitfalls and to prevent their good intentions from being undermined. Speaking of good intentions, where are those cupcakes?•


Raymond J. Biederman and Sean P. Burke are founding partners and directors of the law firm of Mattingly Burke Cohen & Biederman LLP and ESI consultant Proteus Discovery Group LLC. Through both companies, they bring their experience with ESI to work with lawyers and clients in order to manage data protocols and discovery. The opinions expressed are those of the authors.


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