U.S. businesses are going to have to change the way they handle electronically stored information when new federal rules go into effect Dec. 1.
The new regulations, adopted by the U.S. Supreme Court in April, say businesses must be able to quickly find such data when required by the federal court.
That means that every electronic document stored by businesses-e-mail, instant messages, financials, voice mail and all text and graphical documents-must be easily retrievable.
"No, the world isn't going to change on Dec. 2," Andrew Cohen, senior legal counsel for data storage giant EMC, in Hopkinton, Mass., told eWEEK.
"Lawyers aren't going to look at their caseloads and say, 'Well, this changes my whole approach.' But [the new regulations] will become a model for the way litigation is carried out in federal court-and eventually in state courts."
For businesses, it means making changes in the technology used to store the information.
"We have had to change and upgrade quite a bit of our storage system over the last couple of years," said John Greiner, who handles legal records for New York City.
"It's meant a lot of extra hours for our staff because it means we can't just save our data on tape or on disk anymore and make sure it's safe. We have to be able to get pretty granular about how to access it."
New rules approved by Supreme Court in April
The new regulations were part of a spate of amended federal court rules the Supreme Court issued in April.
Among them was a package of changes to the Federal Rules of Civil Procedure. Rules 26 and 34 through 37 cover the issue of e-discovery of critical evidence.
According to people involved in the move to get the rules adopted, the match that lit all this was struck in March 2000, when then-Vice President Al Gore reported that he could not immediately produce e-mails related to a probe by the Department of Justice into his fund-raising activities.
At the time, White House counsel Beth Nolan said the White House e-mails were recorded on a series of 625 tapes that would take up to six months to be searched.
Setting up the tape-searching equipment alone would take two months, Nolan claimed.
Shortly afterward, a movement was started to shore up the court rules in this area, led by Thomas Allman, senior counsel at the Chicago firm of Mayer, Brown, Rowe & Maw.
The 2003 Zubulake vs. UBS Warburg case added an extra push. In that case, the defendant (UBS Warburg) claimed that old, deleted e-mails requested by the plaintiff regarding a gender discrimination and retaliation dispute were stored on 94 separate backup tapes, and the cost of retrieving them $300,000 -- making the recovery of the information "unreasonable."
After several months of hearings, the court ultimately ruled that the plaintiff was to participate in the cost of restoration of the evidence, although the defendant was to bear the major part of the expense: UBS had to pay 75 percent and the plaintiff 25 percent of the cost of restoration.
Also, the court ruled that the defendant must pay "for any costs incurred in reviewing the restored documents for privilege."
The new rules are designed to halt problem situations like Zubulake vs. UBS Warburg before they start.
Essentially, businesses engaged in federal court proceedings are now required to have full knowledge of the whereabouts of all their electronic data to produce evidence needed in a reasonable amount of time.
In litigation, for example, this would mean producing within 30 days relevant e-mails, text documents, spreadsheets or IMs that were originated months or years ago.
The rules also dictate that two businesses involved in litigation must agree no later than 30 days before the first court date exactly what electronically stored evidence will be in play.
However, there is a caveat: Businesses do not have to keep everything. The rules say that documents deleted in the course of regular business are immune in the case of a litigation.
"What a business needs to show is a repeatable, predictable process of data storage and accessibility," said Allman, the principal author of the new rules.
"If e-mail or any other documentation is killed out of the system as a result of regular practice -- such as a monthly or yearly purge of old documents -- then that is acceptable to the court as being in the course of regular business."
The new regulations have spawned a rash of new storage hardware and software that identifies, classifies and makes accessible unstructured data such as e-mail. Major players such as IBM, Network Appliance, Hewlett-Packard, Symantec and other large IT companies offer their own compliance packages, and the rules also are giving rise to new companies looking to serve the niche market.
New companies stepping into the breach
The leader in the e-mail archiving market, according to IDC, is Pleasanton, Calif.-based Zantaz.
In a September 2006 report, IDC ranked Zantaz first in the market with a 26.8 percent market revenue share, and 2004-2005 growth of 64.8 percent.
Zantaz was one of the first companies to dedicate itself to e-mail archiving, electronic discovery and litigation support, and archive-on-demand.
"The rules make sense from a legal standpoint," Zantaz vice president of product strategy Joe Romanski told eWEEK. "They look at what digital data is reasonably accessible -- tape storage is often not considered reasonably accessible.
"We handle all kinds of digital archiving, but we also offer ways for customers to access tape quickly. We've packaged all of it up with different levels of accessibility, according to the business needs of the company."
Level 1 (for a $50 to $75 charge per tape), Romanski said, is describing what's on the tapes ("this saves lots of time and money so as not to waste it during the heat of battle"), what types of servers on which the data is stored, and the time/date ranges.
Level 2 ($250 per tape) offers a list of specific files on the tapes themselves, whose mailbox they were in, size of the files and what kind of file (text, attachment, photo, etc.) it is.
Zantaz, like other companies in its space, also offers media restoration services (moving data off tape and onto disk, for example) for $250 to $350 per tape.
Among others finding their own niches are Azaleos, which provides an appliance and Web-based service that handles all the archiving and classification of e-mail for Microsoft Exchange Server, and Solix Technologies, which specializes in classifying active or non-active business information and making it available across all IT platforms.
In addition, Fortiva offers a complete message archiving and compliance solution of its own.
"Weve partnered with Google to provide our search component," said Sai Gundavelli, founder and CEO of Solix Technologies, in Sunnyvale, Calif. "We can find anything within a storage system, and quickly."
OpenText, a veteran document company in Waterloo, Ontario, has a long history of e-mail documentation and provides a full-scale compliance package.
"The heart of all this is for businesses to have a system in place they can rely upon," said Bill Forquer, vice president of marketing at OpenText. "The courts, I'm afraid, will insist."
Go here for a PDF copy (60 pages) of the new federal e-discovery rules. Rule 26 starts on Page 4.
Five tips for deploying a successful e-discovery solution:
1. Get cross-functional: Get IT and legal departments to talk to each other as well as with records management and business line representatives.
2. Separate backups from archives: Mixing them makes e-discovery more difficult and expensive.
3. Deploy ILM (information life-cycle management) methodology: Policy-manage information with a "big buckets" approach and then move the data into more granular "little buckets."
4. Don't boil the ocean: Focus on efforts that provide the greatest return, such as e-mail management.
5. Deploy search technology: Powerful tools such as federated search can dramatically enhance e-discovery capabilities.
Source: Andrew Cohen, senior legal counsel, EMC