Companies will pull the most outrageous crap imaginable when responding to legal requests. It may be hard to prove they lied, but they will obstruct. Consider Google in a recent case.
The case was a suit between Sprint Nextel and some of its affiliates over the Sprint-Clearwire WiMax venture. Google was one of the investors in venture and was served with a subpoena calling for documents related to the transaction. Google's response was that it would be an unreasonable burden for the company to search its own electronic files. According to Google's counsel, "Google can perform such a search, but because of its e-mail system, it cannot do so as easily and inexpensively as other, similarly situated companies." Click here to see the motion to compel that followed. (PDF)
(Note: This may have been obstructionist on Google's part, but presumably it's not evil. After all, it's Google philosophy that you can make money without doing evil. Of course, it's also Google philosophy that "It's best to do one thing really, really well" and "Google does search." Something in this doesn't add up. We'll have to look into it further, but we're not in a position to do that research as easily and inexpensively as some similarly situated columnists.)
All of this is why I get the sense that companies will be expected to take available technological measures to preserve documentation for legal proceedings and to search them thoroughly. There are many types of products involved in this, including search and legal hold. The usual way that electronic documents are searched is that the attorneys for both sides agree on search terms or keywords, a simple search is executed and voila. As you know from your own keyword searching, the answer is probably in there, along with a large number of false positives. And more than a few documents that could be relevant, but that didn't strictly meet the search terms, will be missed.
What is done with these documents once they are found? The rule is that they have to be preserved so that they will be available for the legal case and not destroyed or modified. The old-fashioned way to do this is to make copies of the documents returned by the search, put them on CD-ROMs and store them in a (physical) file folder in the lawyers' offices.
Corporate counsel is most worried about false positives, in other words, sending out documents that are unrelated to the matter but that may reveal confidential information. The other side is most concerned about false negatives, when relevant documents aren't found in an electronic search.