IN-HOUSE LAWYERS can take a reactive approach
and deal with lawsuits as they pour in, or they can be
proactive and prepared for litigation and regulatory enquiries. But many corporate legal departments are not as
ready as they could — and should — be, according to the
recently released results of a survey by KPMG Forensic
and New York-based market research organization, Harris Interactive Inc.
Between December 2008 and April 2009, Harris
conducted 218 interviews of representatives (mainly
in-house lawyers and heads of legal departments) from 215 companies—most of
them on the Forbes 2000 list—in
Europe, the Americas, the Asia-Pacific region and the Middle
East and Africa.
While 81 per cent and
76 per cent of respondents
indicated they were well
prepared for litigation and
document disclosure requests related to litigation
respectively, about 32 per
cent — identified (without
being prompted) some logistical concern regarding the
collection, review and disclosure of electronic data and documents. Again, unprompted, some 25
per cent of respondents cited a compliance concern about the same issues.
When asked how concerned they were on specific issues, 60 per cent of respondents identified costs, 56 per
cent cited security issues, 55 per cent and 54 per cent
were concerned about the consistency of records management policies and data volumes respectively - and
half of the respondents expressed concern about their
legal department’s ability to find data.
As the quantity of electronic records is growing at
“an exponential pace,” they are “too often... not appropriately discarded and, as a result, many organizations
have created massive, potentially dangerous data landfills,” says KPMG Forensic (Canada) in its foreword to
the report. “As litigation in Canada carries with it an
obligation to disclose all documents that are relevant
to an action, an organization’s document landfill represents a risky mound that needs to be excavated and
examined in some fashion—especially if there are
regulatory enquiries or if other investigative procedures
are undertaken.”
In terms of risk management, in-house counsel can
help to ensure that employees are properly trained in
electronic communication, says Sonia Bjorkquist, a
partner in the litigation department of Osler, Hoskin &
Harcourt LLP in Toronto.
“People in organizations tend to have the impression
that e-mails are not permanent and they can be more
flip in their correspondence than they ordinarily would
in sending someone a formal letter. But when we man-
age a big litigation and receive a dump of electronic data
from a company, we find all sorts of things
that people would be surprised had not
been permanently deleted.”
“Think about how your e-mail
message would look if it was re-
produced in the newspaper,” was
one of the messages she deliv-
ered at a seminar on litigation
readiness in Toronto hosted
by KPMG LLP and Osler’s
litigation department for
their clients in late March.
But in-house lawyers have
to keep other matters in mind.
“They need to consider the
volume of electronic informa-
tion requested in responding to
a lawsuit and how to find that data
quickly when they need it,” explains
Bjorkquist, who has defended complex
product liability cases for corporations in vari-
ous sectors. “It’s making sure that everyone in an organi-
zation understands the importance of good communica-
tion and records management. The legal team needs to
be focused on centralized decision making, and having
teams in place with the right people ready to deal with a
crisis when it happens.”
In its international survey, KPMG Forensic found that
though a typical in-house lawyer at a major global or-
ganization could likely identify several concerns about
readiness and data challenges in responding to liti-
gious and regulatory matters, corporate counsel is not
likely to have many “clear ideas” about how to improve
the situation.
“One common reason for this mixed response by in-house lawyers is a lack of clarity internally over who
should take responsibility for these matters,” says the
report, which explains that when data management involves legal matters, “it will typically be the legal department taking ultimate responsibility.” END
