Forensic Update

Reflections on information management within the legal and regulatory arena

Archive for June, 2010

Despite risks, case law, and prominent headlines, in-house Legal & IT disconnect is increasing

Posted by Johnny Lee on June 17, 2010

The second annual survey from software provider Recommind polled senior Information Technology (IT) managers at large enterprises and found a troubling trend. The results indicate that in-house legal and IT teams are growing even further apart on matters related to eDiscovery and regulatory compliance.

The disconnect seems to include more than the traditional “separated by a common language” symptoms that have defined historical tensions between the groups.  The survey results seem to indicate that these groups are both failing to collaborate on everything from buying decisions to “live fire” exercises.

Leaving aside the obvious conclusion that this disconnect creates risk for the organization, what’s equally troubling is that these risks are increasing precisely when the regulatory and litigation environments are primed for an explosion of new activity—from FCPA actions to new regulations in a host of industries, ranging from healthcare to financial services.  The survey’s authors properly conclude that the remedy consists of establishing policies and procedures that focus upon making these exercises a creature of routine operations and reinforcing these through training and education.

Click here for the official survey results.

Posted in eDiscovery, Litigation Hold, Records Retention | Tagged: , , , , , , , , , , , , , , | Leave a Comment »

Fraud in the economic recovery…

Posted by Johnny Lee on June 9, 2010

Fraud-in-the-Economic-RecoveryDon’t let fraud dampen your recovery

Amid signs of recovery, businesses are readying themselves for renewed growth. Many are hoping to take advantage of opportunities that arise from the flow of federal stimulus money. Others are looking for a chance to snap up struggling companies or distressed assets. What some may not be prepared for, however, is a potential increase in fraud.

Fraud in the economic recovery explores both private sector fraud and fraud committed against the government and how these are likely to be affected as the economy improves. From examining emerging examples of fraud to identifying fraud prevention techniques, this paper provides a solid foundation for companies hoping to avoid the dark side of a revitalized economy.

Posted in Computer Forensics, Fraud, Investigations | Tagged: , , , , , , , , , , , , , , | Leave a Comment »

Seventh Circuit results from phase one of Electronic Discovery Pilot Program

Posted by Johnny Lee on June 3, 2010

The Seventh Circuit has recently completed the first phase of its Electronic Discovery Pilot Program.  This phase lasted seven months and consisted of  applying the Electronic Discovery Pilot Program Committee’s “Principles Relating to the Discovery of Electronically Stored Information” in the trenches of the Seventh Circuit.  This phase is just the first step in “multi-year, multi-phase process to develop, implement, evaluate, and improve pretrial litigation procedures that would provide fairness and justice to all parties while seeking to reduce the cost and burden of electronic discovery consistent with Rule 1 of the Federal Rules of Civil Procedure.”

Last month, the Committee released its 425-page report that reveals a series of interesting trends, despite the rather limited sample (of the U.S. litigation arena) involved.  Among the key findings were that 100% of the participating judges either “agreed” or “strongly agreed” that a more efficient eDiscovery process resulted from the use of so-called “eDiscovery liaisons” (as articulated by Principle 2.02 of the Committee’s Principles).  Likewise, an overwhelming majority of the judges thought that the Principles increased (a) counsels’ “level of attention to the technologies affecting the discovery process” and (b) counsels’ “ability to resolve discovery disputes before requesting court involvement” (90% and 92%, respectively).

Equally revealing results indicate that a significant portion of the responding attorneys (43%) reported that the Principles “increased” or “greatly increased” the fairness of the discovery process.  Moreover, 22% of responding attorneys said that the Principles increased their ability to zealously represent their clients.

The second (of three total) phases will begin on July 1, 2010.  This phase may actually be expanded to include broader sampling from both cases and participating judges.  The Committee also intends to “lengthen the implementation period for Phase Two so the Principles will be tested more comprehensively than in Phase One.”

The full report, with appendices, can be found here.

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Grant Thornton “Focus on Forensics” White Paper

Posted by Johnny Lee on June 3, 2010

In a struggling economy, the inevitable discoveries of fraud are significant. Asset tracing is a challenging, but necessary method used to help identify recoverable assets from today’s fraudsters. But not all assets are created equal – there are both known (traceable) and unknown (unidentified source) assets that must be tracked in order to see the full picture of complex fraud today.

In the March issue of Focus on Forensics, Kelly Gentenaar, senior manager in Grant Thornton’s Forensic Accounting, Fraud and Investigations Services practice discusses the two distinct analytical options used by investigators in a systematic three-step approach to follow the money trail and determine unknown stores of wealth.

Read more in “Tracking transactional footprints in a globalized world.”

If you would like to subscribe to Focus on Forensics or another Grant Thornton LLP publication, please fill out this subscription form.

Posted in Computer Forensics, eDiscovery, Forensic Accounting, Investigations | Tagged: , , , , , , , , , , , , , , | Comments Off on Grant Thornton “Focus on Forensics” White Paper

18 good reasons that eDiscovery continues to cost so much…

Posted by Johnny Lee on June 2, 2010

JusticeJohn Barkett, partner at Shook, Hardy & Bacon and member of the Association of Certified E-Discovery Specialists (“ACEDS”) Advisory Board, has documented an exhaustive list of practical reasons that electronic discovery continues to produce such expensive results.  His recent article, available on the ACEDS website, explores eighteen discrete reasons that reveal not only why electronic discovery is so expensive but what companies and counsel can begin to consider to address this significant expense.  Hat tip to Messr. Barkett for a great write-up and a concise distillation of some key trends and their root causes.

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More Sanctions for Counsel’s Failure to Understand Client’s Retention Practices

Posted by Johnny Lee on June 1, 2010

In yet another example of a growing body of case law related to forensics and sanctions, a federal Court has ordered sanctions in the form of cost sharing (specifically, half the costs related to forensic searches).  The court held that sanctions were appropriate because counsel failed to “fulfill its obligation to find all sources of relevant documents in a timely manner.”

This decision, GFI Acquisition, LLC v. Am. Federated Title Corp.(SDNY Apr. 7, 2010),  demonstrates the ongoing trend (at least in the Second Circuit) that counsel must take steps to both request potentially responsive information and to be prepared to open those steps to inquiry.  This guidance unfolds logically from the lineage of the recent Pension Committee decision, but it also seems to lower the bar that the Rimkus decision sought to raise (relative to what steps counsel must take to stay “in bounds” and avoid spoliation claims).

What is instructive about the GFI Acquisition decision is that the Second Circuit considers it necessary for counsel to follow due diligence steps relative to the method and manner of client communications.  Additionally, this court seems to be emphasizing that the parties’ good faith duties to extend to the lengths to which counsel goes to identify all potentially responsive information sources and to which counsel familiarizes herself on the “client’s document retention policies, as well as client’s data retention architecture.”

Click here for the full decision.

Posted in eDiscovery, Litigation Hold, Records Retention | Tagged: , , , , , , , , , , , , , , | Leave a Comment »

 
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