According to National Law Journal (2006), about 90% of business documents are stored in electronic form, while between 60 and 70% of corporate data reside in e-mails or in attachments.

Recent government regulations, the amendments to Federal Rules of Civil Procedure (FRCP), effective December 1, 2006, mandate a completely new level of corporate electronically stored information (ESI) treatment and litigation readiness. An amended Rule 33(d) states that the business should be able "to afford to the party serving the interrogatory reasonable opportunity to examine, audit or inspect such records and to make copies, compilations, abstracts, or summaries." Rule 34(b)(i) stipulates that "a party who produces documents for inspection shall produce them as they are kept in the usual course of business or shall organize and label them to correspond with the categories in the request".

This paper discusses the ways to make your enterprise information system eDiscovery compliant the most effective way.

Why eDiscovery compliance is important? The main threats to a non compliant enterprise come from litigation costs, company downtime, and brand damage.

Litigation costs and legal fees associated with improper ESI management result from spoliation of evidence, adverse inference, summary judgment, and sanctions (see Qualcomm v. Broadcom). In gender discrimination lawsuit (Zubulake v. UBS Warburg), the court ordered defendant to produce all electronic evidence at its own expense - a huge amount of data stored on optical disks, active servers, and backup tapes. Some tapes appeared to be non-functional or tampered with - the defendant was facing monetary charges for its failure to preserve the missing tapes and e-mails. It is important to point out that while judicial procedures did not reveal any documents supporting the plaintiff, the defendant lost the case because of the improper storage and management of company documents.

Cost of company downtime due to on-site or off-site discovery process are best illustrated with the following real-life example. The United States Secret Service executed a search warrant at SJ Games Inc. office computers looking for evidence of data piracy (SJ Games, Inc. v. United States Secret Service). Due to huge amount of data, officers decided to remove company hardware to a dedicated site for an off-site search. The hardware was not recovered until four months later. The company had to lay-off half of its employees and was ready to close its doors. Some of the SJ Games expenses were recovered in court only three years later.

Brand damage and losses associated with bad PR, loss of clients' trust leading to loss of clients, stocks plunges, etc. can mount up after the general public finds out that the search warrant was issued against an enterprise. It is in the company's interest to complete the unpleasant procedures and clean its name as soon as possible.

Good data organization, ease of retrieval, protection from spoliation and tempering are the key elements of eDiscovery preparedness. I will consider two potential situations: when the data storage infrastructure is already in place and when the system is at the planning stage.

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