eDiscovery: when knowledge doesn't always equal power.

• Author: Barnett, Benjamin R.
• Position: LITIGATION

As the digital age reshapes the practice of law, financial executives who best understand the challenges of electronic discovery and the resources needed to strategically address them will be better equipped to manage what could likely be an uncertain future.

While knowledge is often equated with power, one current exception in the field of modern United States litigation is electronic discovery, or eDiscovery. Since the Federal Rules of Civil Procedure were amended in December 2006 to address eDiscovery, many companies have implemented systems to address its costs and challenges.

Yet nearly every month brings a news story about a large company sanctioned for destroying data or violating a discovery order. Despite having vendors to address eDiscovery problems and setting up internal task forces to map data systems, companies continue to see their eDiscovery costs escalate. The question arises: Why hasn't the internal knowledge of a company's own systems and data helped reduce costs and avoid protracted eDiscovery battles?

Stock answers, while undoubtedly valid, offer little value in terms of strategic planning and preparation. Plaintiffs' lawyers ask for everything under the sun and employ discovery strategies aimed at inflicting maximum burden and cost on companies. That's not likely to change. The rules favor broad discovery and are divorced from the evidentiary rules at trial. Absent legislative or judicial action, this isn't likely to change any time soon.

Rather, the real near-term solution is for companies to better harness what they know about their data and systems in a way that is meaningful for litigation.

A skeptic might ask what a finance officer is supposed to do about a problem managed primarily by colleagues in an organization's legal and information technology departments. The short answer is: Plenty.

Few events can have as immediate and profound an effect on corporate budgets as eDiscovery gone awry in litigation. As such, each of these departments and their personnel has a professional and financial stake.

Here are seven concrete steps companies can take to better understand and manage eDiscovery in the future.

1. Treat Litigation as What It Is: A Business Function Recognize that litigation--and the eDiscovery that comes with it--is here to stay and should be treated as a business function. No one other than lawyers wants to be in the business of litigation. But if you are in business at any significant level, there will be...