Six months after new federal e-discovery rules took effect in the U.S., some businesses are still unclear on what they have to do to comply.
Under the Federal Rules for Civil Procedure (FRCP), which took effect Dec. 1, 2006, businesses need to have policies in place on how they will produce electronic documents they hold in the event of a federal court lawsuit.
But an analyst with the research firm Gartner says it may take "many more years" for companies to come fully into compliance.
"Some of them are lured into a kind of false sense of security," said John Bace, senior vice president of research at Gartner. "They think, 'We have only had to do e-discovery one or two times in the last 10 years so I don't know if we need to go through all of this rigamarole.''
Large enterprises usually have systems in place because they get sued a lot, said Bace. While some firms are diligently implementing changes, others aren't paying enough attention to these issues.
Xiotech, a vendor of file management technology, said that in a survey of 166 businesses conducted in March and April, only 39 percent said they had a system in place for document "holds," a demand that they protect important information from being deleted. Less than 25 percent said they had taken steps to comply with the new FRCP rules.
But companies can be hit with an e-discovery order regardless of their size. Forty-seven percent of U.S. companies with 20,000 or more employees, and 56 percent of those with between 1,000 and 4,999 employees, received document discovery orders in 2006, according to Enterprise Strategy Group.
When crafting their FRCP policies, companies need to delineate how they store and retrieve electronic documents, including e-mail messages, voicemails, and even instant messages. If hit with a lawsuit requesting e-documents, companies have to meet soon after the filing to present an inventory of what electronic documents they have that may be relevant and say how quickly they can produce them.
Burgess & Niple, a civil engineering firm in Columbus, Ohio, is "close" to reorganizing all its digital records, said Fred Mau, the firm's chief technology officer.
Mau, who began streamlining the company's data storage long before the new rules took effect, realized he needed a better way to organize e-mail.
"There is e-mail squirreled away all over the place, on the file servers, on the drives, on PCs, and if somebody lays a discovery motion on me I've gotta go find all that," he said. As a solution, the company used Zantaz software to replace the employee system of saving e-mail in Outlook's PST file format.
Even though the Dec. 1 deadline has passed, companies should still take time to organize their systems, said Bob Little, vice president of product marketing at Zantaz, which licenses e-discovery software or offers it as a subscription-based service.
The sense of urgency around FRCP reminds Little of the urgency around Sarbanes-Oxley or the Y2K computer glitch. "There was an awful lot of noise being made about 'You need to do something now. This is a revolution.' And the reality is that it's not. It's an evolution of standards and practices that companies should be doing."
Zantaz introduced a new software suite Monday tied to new versions of Microsoft enterprise software products, including Microsoft Exchange Server 2007, SharePoint Portal Server 2007, and Internet Information Server 7.0.
As it is, more business lawsuits are filed in state courts than federal, which may explain the lack of urgency, said Gregg Davis, chief information officer for Webcor Builders, a construction company.
But state rules are similar to federal rules and some states are specifically adopting the new FRCP rules. Businesses need to include FRCP compliance in their ongoing IT planning, Davis said. "It will take time for this to fully filter down, but IT managers and CIOs should have this in mind."
Multiple software companies have begun offering e-discovery software or services, but some focus on different areas, such as e-mail archiving, data protection, or deduplication, said Gartner's Bace. "This is a hot market but it's fragmented."
Recommind, for instance, provides e-discovery technology to law firms and the legal departments of enterprises. Recommind introduced a new e-mail discovery product Tuesday.
The market will remain unsettled for a while, said Marie-Charlotte Patterson, vice president of market strategy at AXS-One, a records compliance management firm.
"No one company addresses all the e-discovery requirements from A to Z, so companies may be working with more than one vendor," said Patterson.