The Modern Archivist

Taxpayer money wasted as a result of poor Energy Department record keeping

Record keeping activities by the Department of Energy  are, according to an audit by the Department, sub-par.   The Department implemented a Loan Guarantee Program in 2005 (a $71 billion program) to spur commercial investments in clean energy projects that use innovative technologies – at least some of the loans have gone to companies exploring clean energy technologies lacking a proven track-record of success that would qualify them for ordinary commercial financing.  In essence, higher risk loans.

In order to examine the viability and legitimacy of potential projects under the Program, the Department conducted an audit that commenced last summer.  However, the effectiveness of the Program was a difficult determination for the auditors to make.  Since the Program began, the Department has yet to develop and implement a records management system, which has resulted in shoddy record keeping.  Moreover, departmental policies appear to have not been enforced:  a policy stating that records are “pivotal pieces of information used to approve or disapprove loan guarantees” was not known by Senior Investment Officers.  These inadequacies prevented the auditors from determining the resolutions and mitigation taken by the Department to reduce risks for loan guarantees granted under the Program. 

To colloquialize the problem:  taxpayer money may have been put at risk because the Department doesn’t know how to archive and manage its records.  Nor does the Department have a good repository of records with a defensible chain of custody in the event they end up in a legal dispute over one of the loans.  Can we say spoliation?  And, does that mean that additional taxpayer money will be sucked up in legal disputes should the Department receive financial sanctions for spoliation, or an adverse inference that results in an unfavorable judgment. 

The Department of Energy is not alone in its inability to implement an appropriate archiving solution and to enforce its record keeping policies.  (However, the Department may be slightly more unique in its inability to implement appropriate solutions – It had been given recommendations regarding its records management on two different occasions, by the Office of Inspector General and the U.S. Government Accountability Office.)  This record keeping nightmare is a reality faced by many private businesses as data grows more prolific and technological systems become more complicated.  Fortunately, the audit has (once again) made the Department aware of the myriad problems, which its officials are now addressing.  Hopefully, the old adage the third time is a charm will ring true this time.

Hold on to your ESI…for 18 years?

 

In Takeda Pharmaceutical Company Ltd. V. Teva Pharmaceuticals USA, Inc., 2010 WL 2640492 (D. Del. June 21, 2010), a patent dispute between two pharmaceutical companies, the court ordered that the relevant time period for all discovery requests be expanded to include the past 18 years.  Because the plaintiff had conceived of the patent and reduced it to practice 18 years ago, the documents from the entire time period may contain relevant data. On the plus side, the court did order that the parties split the cost of obtaining the ESI from this period.

Specifically, the Court stated:

1. Defendants have shown “good cause” for the production of ESI for a period of 18 years, including that the patent-in-suit (U.S. Patent No. 6,034,239) claims priority to 1996 and ESI relating to the inventive activities, including research, that led to the patent likely well preceded this date. “ESI from this period is critical to many issues in this patent case, including, among others, the date of conception and reduction to practice, potential concealment of the best mode of the claimed invention, obviousness and the inventors’ understanding of the prior art, and the construction of the claim language.”
2. Because plaintiff Takeda has shown that the ESI sought by Defendants for the period predating the five years immediately preceding suit is not reasonably accessible, it is appropriate to require the parties to share in the financial costs of production of ESI. An outside e-discovery vendor stated that performing the necessary tasks (e.g., indexing, restoring, culling, searching, and hosting) would cost approximately $1 million to $1.5 million. These figures do not include the time it would also take for attorneys to review the retrieved materials for relevance and privilege.
3. Here, the ESI sought by Defendants is relevant at least to Defendants’ invalidity defense and may not be available from any other source, but the financial and other burdens on Takeda from producing the requested ESI would be very high. Still, in relation to the importance of the interests at stake in this litigation, including the likely very substantial financial stakes, these costs may be justified.

This case pushes the limits of what the courts consider to be a “relevant” time period for e-discovery requests. Granted pharmaceutical companies experience especially long product development cycles due to rigorous testing and regulation. Nevertheless, companies in other industries have some cause for concern. This decision can have an immediate impact on the length of document retention policies and the utilization of company-wide archiving tools. As storage costs continue to drop, it is possible that more organizations will be holding on to their ESI for ten years or more.

Tags: e-discovery, litigation discovery, Preservation

E-Discovery Challenges of Multinational Corporations

I recently came across an article on www.executivecounsel.com which discusses the challenges faced by multinational organizations when trying to implement a comprehensive approach to e-discovery. According to the article, the sheer size of multinational corporations often presents the biggest obstacles since these companies are prone to frequent acquisitions and are so geographically diverse.  I agree that these are big challenges, but I have seen a few others that were even more formidable.     

After the ability to ingest and search billions of records in seconds is conquered, any good e-discovery system must be able to handle the amazing number of languages used within a single organization and must be able to segregate the enterprises’ data by the organization, jurisdiction and personnel.  Only once those problems are solved can a multinational organization feel free to merge with any company world-wide and not have to worry about the integration of various technologies and privacy levels for each country/subsidiary. 

This is of interest to me since I am scheduled to attend the E-Discovery Seminar for Pharma & Biotech next week and many of the companies in attendance are going to be large multinational pharmaceutical companies who face similar issues.  The ability to scale to any size has been a claim that virtually every vendor in the e-discovery space. But, in reality, when faced with large scale multinational companies, most solutions are unable to handle the billions of documents that must be ingested, searched, reviewed and produced. 

Frankly, reactive e-discovery vendors (or mere point solutions) should be immediately dismissed since they are not up to the task.  First, these guys are outrageously expensive (especially with per gigabyte pricing models) and second, they are far too risky since it is nearly impossible to track down (and preserve) all of the ESI involved on a custodian basis.  Instead these multinationals should implement a truly scalable archive that can provide an audit trail showing what ESI is stored, where the data originated and when it was reviewed/produced to opposing counsel.  Coupled with a powerful search engine, the combination will immediately cut down on costs while eliminating the need for costly and inefficient ESI collections (not to mention enable true early case assessment).    

Handling e-discovery for a multinational is not easy, but the technology to achieve it in a cost efficient and defensible manner is out there. Don’t believe me?  Just ask UBS, Wells Fargo and others! 

Tags: e-discovery, e-discovery search, early case assessment, electronic records