ESI and E-disclosure Survey: Policies without Tools

December 8, 2010

Kroll Ontrack’s Fourth Annual Electronically Stored Information (ESI) Survey indicates that companies are under-utilising technology and cost control measures designed to reduce e-disclosure costs. The survey also indicates a broadening gap between IT and legal and a lack of understanding about social networking platforms. Other key findings from the survey commissioned by Kroll Ontrack include:

·         over 50% of companies in the UK and USA have an Electronically Stored Information (ESI) Disclosure strategy in place, but very few have revisited existing policies to address new communication methods such as social networking (30% in the UK and 21% in the USA) and new storage technologies such as cloud computing (28% in the UK and 16% in the USA)

·         more than half of companies in the UK (50%) and USA (63%) believe their ESI Disclosure strategy for responding to litigation or regulatory matters is repeatable and defensible

·         while 45% of the UK and 38% of USA companies have tested their policies, nearly a third of companies in the UK (32%) and half in the USA (45%) do not know if their policies have been tested

·         nearly three quarters of companies (70% in the UK and 72% in the USA) have not used or are not aware of using ECA technology to reduce the burden of e-disclosure and get a better understanding of their data early on in litigation. 

Creating and Testing Disclosure Policies 

This year’s survey revealed that more companies are creating policies for ESI Disclosure to govern the process of locating, collecting, filtering, reviewing and producing ESI in preparation for or in response to litigation, investigations or regulatory matters. However, many companies are not taking what Kroll consider to be the important next step of testing, modifying and implementing policies – all of which is increasingly complex to manage thanks to growing volumes of data, and demands a proactive approach.  

‘With the new Practice Direction 31B for the disclosure of electronic documents effective since 1 October 2010 in the UK, it has become imperative for organisations to be more aware of their existing policies surrounding ESI disclosure. The best way to do that is by having a disclosure response strategy in place that is periodically tested and updated,’ said Tracey Stretton, legal consultant at Kroll Ontrack. 

Addressing ESI Challenges with Tools and Technologies

Despite the disclosure industry’s attention to early case assessment (ECA) technology and new communication platforms such as social networking, the summary of the survey suggests that companies are lagging behind in addressing these areas.  

‘The emergence of new communication and storage technologies makes the accessibility, admissibility and disclosability of ESI very complex. It is essential for companies to revisit existing policies every six months to ensure compliance with regulatory requirements and disclosure obligations when they arise,’ said Martin Carey, managing director, Kroll Ontrack.  

Controlling Disclosure Costs

While economic conditions may have hindered organisations from re-visiting proactive plans or testing them, the survey findings indicate that disclosure spend remained relatively constant from 2009 to 2010, despite tight budgets. UK corporations within the survey are on an average still spending almost £700,000 per organisation annually, but only 29% of the UK companies (40% in the USA) budget for disclosure as a component of their overall litigation spend. 

Kroll suggest that, In a climate where in-house legal departments are striving to do more with less, companies can and should be taking a more proactive approach to reducing their disclosure costs by utilising technology and best practice processes (such as archiving technologies, data maps, ECA tools and other innovative new technologies like prioritisation technologies) to reduce disclosure-related costs.  

Closing the Gap between IT and Legal Departments

Although many surveyed corporations have created and implemented new policies around managing ESI, the 2010 survey exposes a gap between IT and legal departments. In the UK, legal has shown more awareness of company technologies such as archiving platforms, legal hold tools and ECA technology. In the USA, it is IT that has shown more awareness in these key areas. This is a significant shift from the inaugural 2007 survey, when legal was primarily responsible for disclosure preparedness and management and in the last few surveys IT assisted in-house counsel with this task.

‘In the face of active judiciaries and widespread concern about the spiraling costs of e-disclosure and litigation, companies need to take every opportunity to improve their e-disclosure methodologies and technology tools. With increasing regulatory scrutiny, it has also become essential for companies to actively manage their ESI to comply with regulations and use innovative technologies to carry out compliance audits,’ concludes Carey. 

To see the survey results in their entirety, visit

The survey was conducted by Echo Research Inc. and Research Plus Ltd. on behalf of Kroll Ontrack. A total of 200 online interviews were conducted among IT and in-house counsel at commercial businesses in the UK and 203 at USA corporations with 500-1000 individuals and 1000 plus employees were surveyed. Interviews were completed between June and September 2010.