Demand for data storage and retrieval products will increase thanks to new rules governing how digital documents are gathered for civil cases in U.S. federal courts.
Among other things, the amended Federal Rules for Civil Procedures (FRCP) delineate how enterprises must respond when compelled to produce documents in a lawsuit. They also let judges decide whether a records request puts an undue financial burden on an enterprise.
The updated FRCPs take effect in federal courts on Dec. 1, but individual states are in various stages of implementing some or all of the same rules in their own court systems. California, New Hampshire and Maryland are in the process of adopting these so-called "e-discovery" rules; changes took effect in Idaho July 1. New Jersey's new rules went into effect on Friday.
The rule changes focus new attention on technology to catalogue, retrieve and restore documents stored on backup tapes or hard drives. These e-discovery rules, on top of data retention requirements under Sarbanes-Oxley for public firms, HIPAA for health-care enterprises and other regulations, should further spur the already robust data storage and retrieval market. The e-mail archiving market -- most of the documents sought in a corporate lawsuit are e-mails -- is expected to grow to US$7.8 billion by 2010, from $796 million by the end of 2006, according to research firm The Radicati Group Inc.
Zantaz Inc., a seller of information retention and discovery management software and services, unveiled this week a tape cataloging service. Cataloging backup tapes can help an enterprise comply with one new e-discovery requirement, said Francis Lambert, senior compliance advisor at Zantaz, in Pleasanton, California. It requires that the IT staff of a company being sued meet with the company's lawyers and opposing counsel early in the discovery process after the suit is filed. The IT professionals need to be able to explain where records being sought are located, in what format and how they can be retrieved, said Lambert.
This puts a new onus on an enterprise to get a handle on its document system, he said. "It's important that the IT people be able to inform the company and their counsel what's in their system. They need to better arm themselves for their pretrial conference," Lambert said.
Better cataloging can save the cost of restoring documents from dozens of tapes if the enterprise is able to identify the one tape that contains the requested documents.
New technology has made tape restoration less expensive, said Kris Haworth , the managing director of the Law and Economics Consulting Group, which advises clients on compliance issues.
The firm is advising clients being investigated by the U.S. Securities and Exchange Commission for allegedly backdating stock options. Since some of those cases date to the mid-1990s, a lot of e-mails are on backup tapes, she said.
"It used to be $1,000 a tape to restore, but now it's in the hundreds of dollars," Haworth said.
Judges have the authority to decide that requested documents are inaccessible because reproducing them would impose an "undue burden" on the company asked to provide the information. But as the cost of data retrieval goes down, "it's going to become very difficult to argue that the data is inaccessible," Haworth said.
The new rules could also spur sales of hard disk storage hardware for data protection and retrieval, said Manish Goel, vice president and general manager of data protection and retention at Network Appliance Inc., a Sunnyvale, California-based storage device maker. Seventy to 80 percent of the files stored on enterprise networks are "unstructured data," Goel said, such as Word documents, PDFs (Portable Document Formats), Excel files. Network Appliance introduced software modules Aug. 14 to its Information Server 1200, designed to find that unstructured data, which the company introduced in November 2005.