25% of US and UK Organizations Cite Increasing Data As Major Challenge for Next 5 Years

Companies in the US and UK are increasingly well prepared to handle demands for ESI (Electronic Stored Information), 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, Inc., provider of paper and electronic discovery, computer forensics and ESI consulting, jury consulting and courtroom presentation services.

                   Understanding of ESI
    In general, awareness of ESI developments
      has grown in both the U.S. and the U.K.,
       although it is growing faster in the U.K.

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.

This survey was conducted by Research Plus, Inc. 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.

To see the results in entirety