The problem for most organizations is their unstructured data is not easily searchable; it tends to be stored not just on servers but in places such as hard drives, a multiplicity of shared drives, tape, and personal e-mail files (.PST files in Microsoft Exchange and .NSF files in Lotus Notes)–all of which makes it difficult and costly to retrieve. But once retrieved, the information must be analyzed for relevance, then compiled and produced in a format that's usable by opposing counsel. Consider, too, the real risk that some of the content should not have been retained in the first place or that large portions of the content may have been retained for periods that exceed the legal retention requirements.

And then there are the "rogue" repositories: removable storage devices such as USB or "thumb" drives, and content sources such as instant messaging, discussion boards, and blogs–channels for which many organizations have yet to develop effective policies and procedures. While the ESI from these sources might not result from standardized, documented business processes, it's unfortunately precisely the type of content that can get an organization in trouble if the content gets into the wrong hands.

Finally, don't forget about repositories maintained by remote agents (or other third-party contractors). Many organizations understand the need for effective management of the ESI in the repositories that are under their direct control but have little control over or visibility into the documents that may be held by captive and independent agents or by contractors and remote employees. Typically, these parties aren't required (or incented) to follow the home organization's internal document or records management policies; for instance, they may be using multifunction devices to scan in documents and then storing those documents in an ungoverned manner.

The result of poor management of ESI is the compromise of the integrity, confidentiality, and accessibility of business-critical information. From the litigation discovery standpoint, it means an arduous and costly process to retrieve and produce the specific ESI that's requested in the discovery phase of litigation.

What are the hard-dollar costs of responding to litigation discovery? Specific components include the costs associated with search and retrieval, information preparation, production and forensic costs, as well as the hardware and systems costs. Then there are the "miscellaneous" costs: the costs of hiring service firms to restore, search, and remove duplicate documents from backup tapes. Consider, too, the opportunity cost (the money that could be put to other uses), the cost of disruption to normal business processes during an ongoing search, or the business impact of unfavorable rulings. Companies that don't have a handle on their ESI can pay for it twice: first in the financial penalties, and then in the loss of public and shareholder confidence.

For midsize to large enterprises, industry estimates for e-discovery costs range from $100,000 to $600,000–per lawsuit.

What's particularly striking about these litigation costs is they are all repetitive, without leverage, on a per-litigation basis–which is to say the above-mentioned costs will continue to be incurred until such a time as the organization has repeatable processes and systems built, implemented, and enforced to address the steps of the litigation discovery process. The absence of a repeatable process increases the likelihood that, faced with litigation, an organization will find it difficult to determine the level of risk and to decide whether to settle or to contest the suit. If the litigation proceeds, that organization could be sanctioned for failure to produce evidence in a timely fashion. Even worse, a company could face sanction for destruction of evidence, or spoliation–whether willful or inadvertent, because of inadequate records retention policies and procedures. And spoliation can lead to a number of sanctions, ranging from fines or payment of the opposing attorney fees to refusal to allow testimony to dismissals and default judgments.

Effective management of ESI is essential to e-discovery. The document management capabilities of ECM, along with components for records management, are a cornerstone of any e-discovery program. ECM provides the capabilities to manage unstructured content, such that it can then be searched and analyzed for relevance, then compiled and produced in a format that will be usable to the other party.

Records management components are essential to ensure destruction of documents according to the disposition rules of your corporate records retention schedule as well as for legal hold and release of documents. This will ensure that the relevant information is preserved–and that it's preserved for only as long as you need it to respond to a specific litigation.

Search tools provide the ability to query an organization's various information sources and view the results. They can be used to search Web content, databases, local or federated content repositories, or the information and unstructured data residing in file systems. Common search tools include free-text search, concept-based search, and federated search/universal search. Other search technologies and techniques available today include agents, behavioral search, entity extraction, sentiment analysis (a form of semantic analysis), and controlled vocabularies.

Today, most large organizations rely on third-party service firms within the legal community to assist in discovery efforts. The process used is very manual–and very costly: Crude searches are performed, and the results are reviewed one by one (open a document, scan through the content, and determine its relevance).

E-discovery has discrete triggers that initiate the process. It also has specific tasks and time dependencies as well as defined roles for participants. Workflow or business process automation can help address these challenges by automating steps of the e-discovery process. Best-in-class firms have recognized this and are taking steps to leverage the capabilities of their existing systems to lower their e-discovery costs, perhaps with the same tools they've been using to automate transaction processing-type tasks.

For years, the argument was the ECM technologies provided greater efficiencies. Or they made it easier for users to share information across the enterprise, thereby enabling an organization to better leverage its information assets. All of this is quite true. But the changes to the FRCP upped the ante significantly, requiring an organization manage its ESI effectively in order to conduct discovery efforts efficiently and cost-effectively. Executive management took notice, and the result is CIOs now have a mandate to find a way to manage their organizations' unstructured content–across the enterprise and throughout the life cycle of that content.

An organization that does not have technologies to assist in searching and retrieving ESI to meet litigation discovery-related requests is at greater risk of sanctions, not to mention incurring hefty penalties–penalties that can be both hard dollar and soft dollar in nature. That's why many organizations now are taking steps to develop strategies that will enable them to fulfill their legal obligations–and to allow them to meet those obligations more easily, at far lower cost. But in the face of today's litigious environment, the component technologies of ECM should be the centerpiece of any risk management program.

The content of "Inside Track" is the responsibility of each column's author. The views and opinions are those of the author and do not necessarily represent those of Tech Decisions.