Ask the Magic 8-Ball; “Is Predictive Defensible Disposal Possible?”


The Good Ole Days of Paper Shredding

In my early career, shred days – the scheduled annual activity where the company ordered all employees to wander through all their paper records to determine what should be disposed of, were common place. At the government contractor I worked for, we actually wheeled our boxes out to the parking lot to a very large truck that had huge industrial shredders in the back. Once the boxes of documents were shredded, we were told to walk them over to a second truck, a burn truck, where we, as the records custodian, would actually verify that all of our records were destroyed. These shred days were a way to actually collect, verify and yes physically shred all the paper records that had gone beyond their retention period over the preceding year.

The Magic 8-Ball says Shred Days aren’t Defensible

Nowadays, this type of activity carries some negative connotations with it and is much more risky. Take for example the recent case of Rambus vs SK Hynix. In this case U.S District Judge Ronald Whyte in San Jose reversed his own prior ruling from a 2009 case where he had originally issued a judgment against SK Hynix, awarding Rambus Inc. $397 million in a patent infringement case. In his reversal this year, Judge Whyte ruled that Rambus Inc. had spoliated documents in bad faith when it hosted company-wide “shred days” in 1998, 1999, and 2000. Judge Whyte found that Rambus could have reasonably foreseen litigation against Hynix as early as 1998, and that therefore Rambus engaged in willful spoliation during the three “shred days” (a finding of spoliation can be based on inadvertent destruction of evidence as well). Because of this recent spoliation ruling, the Judge reduced the prior Rambus award from $397 million to $215 million, a cost to Rambus of $182 million.

Another well know example of sudden retention/disposition policy activity that caused unintended consequences is the Arthur Andersen/Enron example. During the Enron case, Enron’s accounting firm sent out the following email to some of its employees:

 

 

This email was a key reason why Arthur Andersen ceased to exist shortly after the case concluded. Arthur Andersen was charged with and found guilty of obstruction of justice for shredding the thousands of documents and deleting emails and company files that tied the firm to its audit of Enron. Less than 1 year after that email was sent, Arthur Andersen surrendered its CPA license on August 31, 2002, and 85,000 employees lost their jobs.

Learning from the Past – Defensible Disposal

These cases highlight the need for a true information governance process including a truly defensible disposal capability. In these instances, an information governance process would have been capturing, indexing, applying retention policies, protecting content on litigation hold and disposing of content beyond the retention schedule and not on legal hold… automatically, based on documented and approved legally defensible policies. A documented and approved process which is consistently followed and has proper safeguards goes a long way with the courts to show good faith intent to manage content and protect that content subject to anticipated litigation.

To successfully automate the disposal of unneeded information in a consistently defensible manner, auto-categorization applications must have the ability to conceptually understand the meaning in unstructured content so that only content meeting your retention policies, regardless of language, is classified as subject to retention.

Taking Defensible Disposal to the Next Level – Predictive Disposition

A defensible disposal solution which incorporates the ability to conceptually understand content meaning, and which incorporates an iterative training process including “train by example,” in a human supervised workflow provides accurate predictive retention and disposition automation.

Moving away from manual, employee-based information governance to automated information retention and disposition with truly accurate (95 to 99%) and consistent meaning-based predictive information governance will provide the defensibility that organizations require today to keep their information repositories up to date.

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Coming to Terms with Defensible Disposal; Part 1


Last week at LegalTech New York 2013 I had the opportunity to moderate a panel titled: “Defensible Disposal: If it doesn’t exist, I don’t have to review it…right?” with an impressive roster of panelists. They included: Bennett Borden, Partner, Chair eDiscovery & Information Governance Section, Williams Mullen, Clifton C. Dutton, Senior Vice President, Director of Strategy and eDiscovery, American International Group and John Rosenthal, Chair, eDiscovery and Information Management Practice, Winston & Strawn and Dean Gonsowski, Associate General Counsel, Recommind Inc.

During the panel session it was agreed that organizations have been over-retaining ESI (which accounts for at least 95% of all data in organizations) even if it’s no longer needed for business or legal reasons. Other factors driving this over-retention of ESI were the fear of inadvertently deleting evidence, otherwise called spoliation. In fact an ESG survey published in December of 2012 showed that the “fear of the inability to furnish data requested as part of a legal or regulatory matter” was the highest ranked reason organizations chose not to dispose of ESI.

Other reasons cited included not having defined policies for managing and disposing of electronic information and adversely, organizations having defined retention policies to actually keep all data indefinitely (usually because of the fear of spoliation).

One of the principal information governance gaps most organizations haven’t yet addressed is the difference between “records” and “information”. Many organizations have “records” retention/disposition policies to manage those official company records required to be retained under regulatory or legal requirements. But those documents and files that fall under legal hold and regulatory requirements amount to approximately 6% of an organization’s retained electronic data (1% legal hold and 5% regulatory).

Another interesting survey published by Kahn Consulting in 2012 showed levels of employee understanding of their information governance-related responsibilities. In this survey only 21% of respondents had a good idea of what information needed to be retained/deleted and only 19% knew how  information should be retained or disposed of. In that same survey, only 15% of respondents had a general idea of their legal hold and eDiscovery responsibilities.

The above surveys highlight the fact that organizations aren’t disposing of information in a systematic process mainly because they aren’t managing their information, especially their electronic information and therefore don’t know what information to keep and what to dispose of.

An effective defensible disposal process is dependent on an effective information governance process. To know what can be deleted and when, an organization has to know what information needs to be kept and for how long based on regulatory, legal and business value reasons.

Over the coming weeks, I will address those defensible disposal questions and responses the LegalTech panel discussed. Stay tuned…

The Dangers of Infobesity at LegalTech


LegalTech just concluded in New York and one of the popular hot buttons many vendors were talking about was the idea that too much corporate, especially valueless, ungoverned, unstructured information is both risky as well as costly to organizations… I agree. The answer to this “infobesity” (the unrestricted saving of ESI because storage is supposedly cheap and saving everything is easier than checking with others to see if its ok to delete) is a defensible process to systematically dispose of information that’s not subject to regulatory requirements, litigation hold requirements or because it still has business value. In a 2012 CGOC (Compliance, Governance and Oversight Counsel) Summit survey, it was found that on the average 1% of an organization’s data is subject to legal hold, 5% falls under regulatory retention requirements and 25% has business value. This means that 69% of an organization’s ESI can be disposed of.

Several vendors at LegalTech were highlighting Defensible Disposal solutions, also known as defensible disposition and defensible deletion, as the answer to the problem of infobesity. Defensible Disposal is defined by many as a process (manual, automated or both) of identifying and permanently disposing of unneeded or valueless data in a way that will standup in court as reasonable and consistent. The key to this process is to be able to identify valueless information (not subject to regulatory retention or legal hold) with enough certainty to be able to actually follow through and delete the data. This may sound easy… its not. Many organizations are sitting on huge amounts of data because their legal department doesn’t want to be accused of spoliation, so has standing orders to “keep everything forever”. Corporate legal has to be convinced that the defensible disposal processes and solutions billed as being the answer to infogluttony can actually tell the difference, accurately and consistently, between information that should be kept and that information that’s truly valueless.

To automate this defensible disposal process, the solution needs to be able to be able to understand and differentiate content conceptually; that an apple is a fruit as well as a huge high tech company. The automated classification/categorization of content cannot accurately or consistently differentiate the meaning in unstructured content by just relying on keywords or simple rules.

An even less consistent approach to categorization is to base it on simple rules such as “delete everything from/to Bill immediately” or “keep everything to/from any accounting employee for 3 years”. This kind of rules based retention/disposition process will quickly have your GC explaining to a Judge why data that should have been retained was “inadvertently” deleted.

To truly automate disposal of valueless information in a consistently defensible manner, categorization applications must have the ability to first, conceptually understand the meaning in unstructured content so that only content meeting your intended intentions, regardless of language, is classified as “of value” to the organization not because it shares a keyword with other records but because it truly meets your definition of content that needs to be kept. Second, because unstructured data by definition is “free-flowing” (not structured into specific rows and columns) extremely high categorization accuracy rates and defensibly can only be achieved with defensible disposal solutions which incorporate an iterative training processes including “train by example” in a human supervised workflow.

Do organizations really have formal information disposal processes…I think NOT!


Do organizations really have formal information disposal processes…I think NOT!

Do organizations regularly dispose of information in a systematic, documented manner? If the answer is “sure we do”, do they do it via a standardized and documented process or “just leave it to the employees”?

If they don’t…who cares – storage is cheap!

When I ask customers if they have a formal information disposal process, 70 to 80 percent of the time the customer will answer “yes” but when pressed on their actual process, I almost always hear one of the following:

1.    We have mailbox limits, so employees have to delete emails when they reach their mailbox limit
2.    We tell our employees to delete content after 1,2, or 3 years
3.    We store our records (almost always paper) at Iron Mountain and regularly send deletion requests

None of these answers rise to an information governance and disposal process. Mailbox limits only force employees into stealth archiving, i.e. movement of content out of the organization’s direct control. Instructing employees to delete information without enforcement and auditing is as good as not telling them to do anything at all. And storing paper records at Iron Mountain does not address the 95%+ of the electronic data which resides in organizations.

Data center storage is not cheap. Sure, I can purchase 1 TB of external disk at a local electronics store for $150 but that 1 TB is not equal to 1 TB of storage in a corporate data center. It also doesn’t include annual support agreements, the cost of allocated floor space, the cost of power and cooling, or IT resource overhead including nightly backups. Besides, the cost of storage is not the biggest cost organizations who don’t actively manage their information face.

The astronomical costs arise when considering litigation and eDiscovery. A recent RAND survey highlighted the fact that it can cost $18,000 to review 1 GB of information for eDiscovery. And considering many legal cases include the collection and review of terabytes of information, you can imagine the average cost per case can be in the millions of dollars.

So what’s the answer? First, don’t assume information is cheap to keep. Data center storage and IT resources are not inexpensive, take human resources to keep up and running, and consume floor space. Second, information has legal risk and cost associated with it. The collection and review of information for responsiveness is time consuming and expensive. The legal risks associated with unmanaged information can be even more costly. Imagine your organization is sued. One of the first steps in responding to the suit is to find and secure all potentially responsive data. What would happen if you didn’t find all relevant data and it was later discovered you didn’t turn over some information that could have helped the other side’s case? The Judge can overturn an already decided case, issue an adverse inference, assign penalties etc. The withholding or destruction of evidence is never good and always costs the losing side a lot more.

The best strategy is to put policies, processes and automation in place to manage all electronic data as it occurs and to dispose of data deemed not required anymore. One solution is to put categorization software in place to index, understand and categorize content in real time by the conceptual meaning of the content.  Sophisticated categorization can also find, tag and automatically dispose of information that doesn’t need to be kept anymore.  Given the amount of information created daily, automating the process is the only definitive way to answer ‘yes we have a formal information disposal process’.

Defensible Disposal means never being accused of spoliation for hosting “Shred Days”


U.S District Judge Ronald Whyte in San Jose reversed his own prior ruling from a 2009 case where he issued a judgment against SK Hynix, awarding Rambus Inc. $397 million in a patent infringement case. In his reversal this month, Judge Whyte ruled that Rambus Inc. had spoliated documents in bad faith when it hosted company wide “shred days” in 1998, 1999, and 2000. Judge Whyte found that Rambus could have reasonably foreseen litigation against Hynix as early as 1998, and that therefore Rambus engaged in willful spoliation during the three “shred days” (a finding of spoliation can be based on inadvertent destruction of evidence). Because of this recent spoliation ruling, the Judge reduced the prior Rambus award from $397 million to $215 million, a cost to Rambus of $182 million.

Two questions come to mind in this case; 1) why did Rambus see the need to hold “shred days”?, and 2) did they have an information governance policy and defensible disposal process? As a matter of definition, defensible disposal is the process (manual or automated) of disposing of unneeded or valueless data in a way that will standup in court as reasonable and consistent.

The obvious answer to the second question is probably not or if yes, it wasn’t being followed, otherwise why the need for the shred days? Assuming that Rambus was not destroying evidence knowingly; the term “shred-days” still has a somewhat negative connotation. I would think corporate attorneys would instruct all custodians within their companies that the term “shred” should be used sparingly or not at all in communications because of the questionable implications.

The term “Shred days” reminds many of the Arthur Andersen partner who so famously sent an email message to employees working on the Enron account, reminding them to “comply with the firm’s documentation and retention policy”. The Andersen partner never ordered the destruction or shredding of evidence but because anticipation of future litigation was potentially obvious, the implication in her email was “get rid of suspect stuff”. The timing of the email message was also suspect in that just 21 minutes separated Ms. Temple’s e-mail message to Andersen employees on the Enron account about the importance of complying with the firm’s document retention policy from an entry in a record of her current projects in which she wrote that she was working on a case involving potential violations of federal securities laws.

The Rambus case highlights the need for a true information governance process including a truly defensible disposal strategy. An information governance process would have been capturing, indexing, applying retention policies, protecting content on litigation hold and disposing of content beyond the retention schedule and not on legal hold… automatically, based on documented and approved legally defensible policies. A documented and approved process which is religiously followed, and with proper safeguards goes a long way with the courts to show good faith intent to manage content and protect that content subject to anticipated litigation.

Knowledge Management is Dependent on Effective Information Governance


Last week I presented at the Janders Dean Legal Knowledge & Innovation Conference in Sydney Australia. This conference is one of the leading knowledge management and technology forums for the legal industry in the world. The forum was extremely interesting with a great venue and agenda.

Much of the content was directed at knowledge management within law firms and corporate legal departments i.e. how knowledge is created, collected, and shared within these organizations to maximum benefits and ROI.

The whole event was somewhat hair-raising for me in that I found out I was to travel to Sydney to speak at this forum the Thursday before the Monday I was to leave. It occurred to me on the Saturday before that I was to present at this forum and I had no idea what I was to speak on much less have the time to create an effective presentation. After looking at the agenda on-line I determined that 1) It was for the legal industry and 2) knowledge management was somehow involved.

That Saturday and Sunday I put together a presentation addressing what I thought would add to the discussion which included eDiscovery, Information Governance (because it’s the same as knowledge management – right)and some local Australian precedents. As I landed in San Francisco on Monday to catch my flight to Sydney I noticed an email from the Janders Dean organizer asking me for my presentation so the forum laptop could be loaded and ready to go with all presentations. Thinking that for once I was ahead of the curve I happily replied to the email with my presentation.

Dreading the 15 hour flight in “Economy” I noticed the departure board at the airport was now saying my 10:30 pm flight to Sydney was delayed for 11 hours due to weather and would take off at 9 am Tuesday morning (by the way, as I boarded the next day, the crew admitted it was not weather, but an equipment problem in Chicago). As I was furiously burning up my laptop keyboard looking for a room for the night I got a very nice email from Janders Dean telling me my presentation I had sent off really didn’t hit the mark and was much too eDiscovery heavy…the audience is knowledge management professional, not attorneys.

After getting the last available room in San Francisco (my 747 flight crew slept on the floor in the airport that night) I tried to put together something more “knowledge management (?)” focused and send it off before I got on my flight the next morning. Turns out the Janders Dean organizer (Justin North) was completely right in very politely telling me my first presentation attempt was not a fit. The forum was heavily weighted towards non-attorneys specializing in knowledge management.

The above description was a long winded opening to allow me to get to my main point (and complain about my travel experiences), which is this; really effective knowledge management is dependent on effective information governance. The creation and dissemination of knowledge within an organization is impossible without the ability to create, store, and share useful information while disposing of useless information.

Content auto- categorization and indexing techniques are the first step in getting control of an organization’s information. If a system can conceptually understand and auto- categorize content as it occurs so that all content in the enterprise is searchable and managed via the correct retention periods including immediate deletion of useless information, then information is much more available to be turned into real knowledge within the organization.