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Rise in Regulatory Investigations Makes E-Discovery Preparedness Imperative

Created on November 15, 2011

E-discovery trends are usually discussed in the context of civil litigation. But for many companies, the reality is that regulatory investigations now make up a growing share of e-discovery demands.  According to Fulbright's recently published Litigation Trends Survey, over the past three years:

  • 37% of all companies surveyed reported an increase in external regulatory inquiries
  • More than one-third of respondents reported spending more time addressing regulatory investigative requests or regulatory enforcement proceedings
  • Highly regulated industries, such as healthcare, energy, and finance are especially vulnerable to these regulatory demands.

Mark Surguy, partner at global law firm Eversheds, echoed these trends in a recent article, stating “there are more organizations out there with the power to demand that companies produce evidence of their business dealings….It's now widely recognized by these authorities that, in such cases, the bulk of evidence is likely to be found in digital formats."

Similar to traditional e-discovery related to litigation, a typical regulatory investigation involves a company being compelled to turn over material concerning specific business units, employees, keywords or covering a particular date range.  However, regulatory investigations are not governed by the Federal Rules of Civil Procedure, which means there is no “meet and confer" where both sides negotiate discovery parameters to limit scope and costs.

And the stakes in regulatory investigations are incredibly high (see our post on the California Public Utilities Commission's investigation following the tragic PG&E gas line explosion in 2010 in San Bruno, California, which killed nine people).

With increased scrutiny on businesses after the economic collapse and the enforcement of Sarbanes Oxley, organizations are now more incentivized to take a proactive, repeatable approach to document productions associated with regulatory investigations. This involves:

  • Establishing a company-wide preservation program that includes employee compliance monitoring
  • Constructing a data map that provides a comprehensive inventory of  all employee data sources, storage locations, file types. and data volumes
  • Deploying e-discovery technology to quickly build the data map, enforce preservation obligations and provide both IT and legal teams visibility into the entire discovery process.

For more information on effective data mapping and e-discovery preservation, download a copy of the Exterro white paper, Effective Data Mapping: A Holistic Approach to Integrating Legal, Records Management and IT Needs, here.