Managing the e-mail (June 2008)

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Managing the e-mail (June 2008)

E-mail, now a primary channel of business discourse, finds itself subject to new scrutiny and new schemes to manage its risk.

By Lauren Bielski, senior editor

How e-mail went from an expedient tool to an archive of record and a “Wild West of records management.” What steps to take now

When you, as a manager, think about the possibility of getting sued, the content in your company’s e-mail system might not come flooding—flight or fright style—to mind first or even second in a mounting list of concerns. Then again, perhaps it should, because you might need to turn over specific e-mails in court.

First, a bit of back-story for the unfamiliar: The year 2006 has e-mail-related significance to compliance officers and legal experts. This is because, generally speaking, it was when changes to the Federal Rules of Civil Procedure (FRCP) codified how those electronic missives flurrying among our Outlook, Entourage, and similar in-boxes should be managed in what experts refer to as both “pre-” and “post-discovery” condition. (Meaning, how, as a matter of general daily practice a bank should be storing and managing e-mails “pre” suit, and, how they should retrieve e-mails and documents should a suit occur.)

Since the new eDiscovery rules, activity has jumped up. Indeed, among small businesses with less than 5,000 employees, the percentage of respondents who said that their company had been involved in a legal proceeding necessitating e-record search and retrieval rose to 64% from 56% from 2005 to 2007, according to Milford, Mass.-based Enterprise Strategy Group (ESG), which looks at storage and information management topics.

Among enterprise enterprises with 20,000 or more employees, the effect was more pronounced, up 20 percentage points to 67% from 47%. It could be that employees are simply more aware of the steady state of litigation. However, Brian Babineau, a senior analyst at ESG, believes survey results point to an increase in discovery, that is, searching for e-mails, attachments, and related transaction detail in response to a request by attorneys representing private parties or governmental entities taking part in a legal proceeding.

Since 2006, then, many in banking who have legal, IT, and compliance responsibilities have been thinking about how to make the communication tool less one of expedience and more of an archive. After all, e-mail has come to undergird business, become a kind of fingerprint of its activity.

Blame it on Martha
In some sense, e-mail’s presence in the court is merely a sign of changing business habits and practices. “Today, e-mail is a leading source of documentation about transactions and work flow, and it stands as a key source of transaction commentary and validation,” says eDiscovery expert and attorney Craig Ball.

In another sense, the radical rise in the importance of e-mail can be explained directly by “Marthagate,” Enron, and other cases that established precedent in recent years, says ESG’s Babineau. “When e-mail proved to be so useful in court, more attorneys began using it. Now, it’s use has become a norm,” he adds.

The ESG analyst says in the months ahead, subprime-related legal matters will force most institutions that lend—regardless of size—to begin rethinking how they handle e-mail. Basically, the “it’s just too hard to manage” excuse won’t hold (as it hasn’t for Wall Street for some time).

Stephen Ludlow, senior program manager, eDiscovery solutions at enterprise content management vendor, OpenText, based in Waterloo, Ontario, Canada, agrees that subprime litigation will be a driver both for more suits and for more types of organizations to adopt e-mail-specific management systems as well as improving their overall records- management strategies.

Not that banks, particularly large ones, haven’t been, in some sense, ready to rumble, prepared for e-mail’s new legal exposures. As part of the general cost of e-mail management and preparedness for eDiscovery, companies generally have to figure out such details as whether to outsource the eDiscovery process, in effect, paying outsiders to search the electronic files in the event of a suit, which is costly.

“Leaders in the financial services industry are beginning to take an enterprise management approach and are in-sourcing,” Ludlow says. By now the most sophisticated of these have effective, reasonable enough, semi-automated systems in place—a golden triangle involving IT, compliance, and legal experts—working in more coordinated ways to tame this growing, wild info beast. Typically, this effort is part of a larger risk management practice.

The ideal system, Austin-based attorney Craig Ball says, produced results whereby an e-mail system is protective of the company on one hand, but capable of producing evidence of key financial transactions that might benefit a client in a legal dispute should one happen.

Should you own your e-mail?
But what’s most interesting about e-mail, according to Ball, is its personalized and idiosyncratic nature, making it, in his view, the Wild West of records management.

“People tend to manage their e-mail content in distinctive ways. Some are obsessive hoarders, creating storage challenges for their IT staffs; others toss everything after an initial read. Some are category and taxonomy mavens; and others just leave it in a large undifferentiated mass and so on,” Ball observes.

“You can have two employees sitting a cubical apart and their record retention ‘policy,’ such as it is, will be very, very different. This sense of personal possession of records is really new to banks and businesses,” says Ball. “I can’t imagine another kind of record or something in a paper file being held onto so personally.”

This ownership stake—and the personal, panicked responses that may occur when trouble hits—is at the heart of why e-mail is so hard to get a grip on. But it’s an issue banks need to address.

“I’ve seen situations where very good rules engines have been interfered with, effectively widening the scope of retention,” Ball says.

“What you want is a clear reason for keeping what is, in fact, kept. An organization needs a consistent practice, and decisions around selective retention shouldn’t be emotionally driven. If you have everything [in terms of e-mails] or you have nothing, then you’ve missed the point.”

How much technology needed?
Unsurprisingly, a whole ecosystem of technologies designed to semi-automate e-mail management has made its way into the marketplace. Some are expressly designed to tackle eDiscovery (or at least wear that label) and others are more general purpose, including enterprise content management systems and related storage technologies, as is the case with Stephen Ludlow’s enterprise content management firm. These include software for e-mail and database archival as well as file system archival software, case management software, solutions for data restoration, and search-and-review software that tracks key words.

Stephen Catanzano, president and CEO of SafeCore, a managed services provider based in Medford, Mass., is familiar with the argument that automation connected to records management and e-mail management in particular is a “nice to have, but not strictly necessary.”

“Sure, the real need depends on the bank’s size and scope of business, but unless a bank is extremely small and simple in its operations, it is pretty difficult to handle retention and destruction in a proper way—and you’re taking up valuable man-hours to do it,” says Catanzano.

Beyond internal complexity, there is the prevalence of lawsuits, another factor. “With hedge funds routinely collapsing and all the problems in real estate, my thinking is that e-mail automation and policy will need to be given serious effort,” says ESG’s Babineau.

Such discovery-related requests after the subprime fall might include a look for electronic mortgage documents sans signatures—or without documentation of credit checks, says Babineau. When asked about vendors to watch in the space, he mentioned Iron Mountain, Clearworth, and Kazeon. (See box, p.46.)

A leg up in records management
Even those who aren’t in hot water, or even contemplating a warm bath, can benefit. While e-mail isn’t everything, it is a big thing as far as records management is concerned. “My theory is, if you can tackle e-mail management, you can handle nearly everything else about structured and unstructured electronic documents in the workplace,” says Ball.

Despite the increased call for e-mail in the courts, Ball notes that most banks, as with most companies of all sorts, build a return-on-investment case for all of these tools and techniques around employee productivity and reduced IT storage requirements.

“A litigator likes to think that he or she drives the majority of business decisions, but in the end decisions around IT installations in compliance comes down to revenue, cost control and reasonable risk management,” he says. Ball goes on to say that while technology in eDiscovery isn’t strictly called for, volumes of e-mail and the very real risk associated with a free form e-mail policy should prompt companies to begin thinking about putting solutions in place. BJ

Reader Resources

ABA
ABA published the ABA Toolbox on Records Management in May. Tool 6 deals specifically with e-mail. ABA Members can find this helpful guide at www.aba.com/members+only/ recordsmgmt_toolbox.htm#RMWkgGrp

Enterprise Strategy Group
www.enterprisestrategygroup.com

Forrester Research, Inc.
www.forrester.com

Iron Mountain, Inc.
www.ironmountain.com

Kazeon Systems, Inc.
www.kazeon.com

Mary Mack’s Sound Evidence Blog
www.discoveryresources.org

OpenText
www.opentext.com

SafeCore
www.safecore.com

Vetting your eDiscovery vendor, a lawyer’s perspective
http://www.abanet.org/lpm/lpt/articles/ftr07043.html

The electronic version of this article available at: http://lb.ec2.nxtbook.com/nxtbooks/sb/ababj0608/index.php?startid=44