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Project: Corporate Counsel - Legal Service Providers
Evidence Exchange To The Rescue: Offering Corporate Counsel New Tools For Electronic Discovery And Production
By Michael Prounis
Over the last few months, much has been said about the electronic data
discovery and production problems faced by corporate counsel and the impact
of the Corporate Fraud Accountability Act of 2002, also known as the Sarbanes-Oxley
Act of 2002. The Act increases the penalties for sloppy "e-lawyering"
- a term that can be used to describe such tasks as identifying relevant information
sources and determining which data are responsive to an information request.
Up until now, the penalties for sloppy e-lawyering or partial information
disclosure have been exceptionally mild. Now regulators and plaintiffs can
reference a federal statute under which fines and jail time can be imposed
for obstruction of justice, alteration of evidence and incomplete information
disclosure.
Today, responding to a subpoena or a document request has become challenging
because we must deal with a proliferation of electronic records lodged in
a multitude of different places. In many cases, the records can be automatically
deleted or overwritten on a regular basis. Systems need to be put in place
that will quickly ferret out requested material before those deletions occur
and result in an obstruction-of-justice charge.
Not surprisingly, most effective solutions to the electronic data discovery
& production problem involve a combination of people, process and technology.
Here are some ways to avoid information losses that can result in legal troubles
under the Sarbanes-Oxley Act.
People
Adopt formal training programs for your professionals on e-lawyering
and safe record-keeping practices, so that you can assure your executives
and/or corporate clients that best practices are consistently being applied
to all of your client matters and materials. There is a surprising lack of
consistency among companies, law firms and lawyers when it comes to information
disclosure. Don't let these inconsistencies result in a government investigation
into the record-preservation and deletion practices of your company or client.
Process
Develop standardized information disclosure practices (i.e., electronic
discovery and production plan) so that when the request for information comes
in, the in-house lawyers know where to look, how to look for it and what actions
to take to protect the company and prevent mistakes from creeping into your
preservation, discovery or production process. Likewise, law firms need to
adopt formal electronic discovery and production practices that can withstand
scrutiny from outside parties.
Technology
Fortunately, new software tools are now available that can easily and
reliably freeze the content of electronic records, and mark those records
with nonrepudiatable digital time/date stamps. The Secure Digital Photocopier
(SDP) software of my company, Evidence Exchange, bundles this capability seamlessly
with a robust set of extraction, filtering and production solutions to the
thorny problems of electronic data discovery. The SDP provides a simple, secure
means of notarizing the time and content of digital documents, managing and
tracking a large database of such documents, parsing and searching, and ensuring
the integrity of documents through the chain of custody.
Reliance on the content of electronic records in a number of legal contexts
can be established by answering three basic questions: When, What, and Who.
Here, the time/date of receipt must first be unambiguously established to
fix exactly when the record entered the discovery process. Second, integrity
must be verified so that it is clear that the content (what was in the record)
has not been altered since the time it was received. Lastly, one needs to
authenticate who prepared the record to ensure that there is a proper foundation
regarding the source of the electronic file. These issues are paramount in
the discovery context because a foundation of authenticity must be laid as
a precondition to evidence admissibility.
These questions can now be authoritatively answered by the SDP, which
provides a painless but powerful way to freeze the content of electronic records
at a given point in time. The SDP makes sure that both receipt time and content
are reliably authenticated and cannot be later denied or repudiated. Further,
it does it in a way that can be easily used by non-technical attorneys in
firms of any size, without requiring the overhead of a complicated technical
or network infrastructure. The SDP accepts electronic files of any format
and fingerprints, brands and digitally notarizes them. A wide range of such
files may then be culled and converted to readable/searchable/printable PDF
files before being released to regulators or opposing counsel. Once this process
is applied, the files are secure from the time of receipt during discovery
through the trial conclusion, no matter how many hands they may pass through.
How Does The SDP Work?
To meet the needs of the trial process, the SDP must perform three basic
tasks. It must 1) inventory, preprocess and notarize received documents; 2)
filter, manage and track the collection of source documents; and 3) allow
viewing and validation of the documents throughout the trial or investigative
process.
To accomplish the crucial first task, the SDP includes a powerful preprocessor
tool. The electronic files received by a client may be in many forms including
simple text files, WordPerfect or MS Word documents, spreadsheets, databases,
compressed (i.e., "zipped") archive files, digital image or audio
files, and e-mail messages coupled with attachments of any file type. As a
threshold matter, these raw original submissions are identified and entered
into a Microsoft® Access database repository so that an inventory of exactly
what was received from the client can be kept on record. The preprocessor
also breaks apart "compound" files such as zipped files or e-mails
with attachments and divides these files into their constituent document parts
while maintaining the critical linking of those parts. The new constituent
document parts are stored in subdirectories with the original submissions
and are separately entered into the repository.
At the same time that the original and constituent documents are inventoried
and preprocessed, they are also notarized to unassailably freeze their content
at the time of receipt. To accomplish this vital step, SDP leverages a licensed
technology patented by Surety, Inc. called the Digital Notary™ Service.
Using this service, the content of an electronic document is frozen in time
by a process whereby the SDP software generates a digital fingerprint (technically
called a hash) that uniquely represents the data in the record. This hash
is transmitted to a central server computer, which notes the time of receipt
and then stores the hash. The server then sends a special digital certificate
to the SDP software for storage with the original document. At a later time
when the time and content of the document must be authenticated, the certificate
and the currently stored document are used to regenerate the hash fingerprint.
This regenerated hash is then compared to the original hash stored by the
central server. If they match, then both the time of creation (when) and the
content (what) of the record at the time of creation are unassailably verified.
SDP seamlessly manages this process and maintains the association between
the document and its certificate within the repository to facilitate easy
proof of content at any future date.
Upon the completion of preprocessing and notarization, the integrity
of all client source documents is locked down tight. SDP then provides capabilities
to help make sense of the collection of potentially diverse documents. The
attorneys, client and support experts can easily search, catalog, analyze
and review the collection of original documents that are stored in the SDP
Repository database. Using the SDP Repository Tool, the documents in the database
are supplemented with metadata such as confidential attorney's notes, original
file name, and tracking information of the treatment/disposition of a document
to facilitate monitoring of the "chain of custody." Because management
of such a heterogeneous hodge-podge is difficult, the SDP has the ability
to accept any of 300 different file types and convert those files to a common
Adobe® Portable Document Format (PDF) format. From the original documents,
PDF versions of the individual documents are created so that the documents
can be easily viewed in a camera-ready, searchable form.
Having the documents organized in a logical database structure also simplifies
the task of examining, culling, and redacting the documents before any files
are turned over to the other side. To assist in this task, the attorney uses
the SDP to create a number of individual "sequences" of related
documents. For example, the attorney may use the SDP Data Review Tool to quickly
review the entire original document set, and then select particular responsive
documents for analysis and membership in a "culling set" of documents
that are converted to PDF form. This subset of documents can be subjected
to further review to generate further subsets in preparation for submission
as either discovery or exhibit releases. The derived PDF documents are themselves
securely locked against alteration and are notarized using the Surety service
prior to submission in a discovery or exhibit release.
Once the attorney has decided exactly which documents are responsive and not
privileged, a "discovery" or "exhibit" release sequence
of documents is generated. Each page of a document slated for release is automatically
stamped with a Bates number and may also be marked with footer information
that includes the sequence number of the document, the file name and other
information such as markings for "Attorney Eyes Only" or "Judge
Eyes Only." The PDF document itself has the Surety Notary Record embedded
in the file as proof of notarization. The notarized original client documents
may also be included with the release if desired.
Finally, any original or corresponding PDF file may be validated by the SDP
at any time before or after release. The SDP File Viewer/Validator works in
conjunction with Adobe® Acrobat 5.0 to support the searching and viewing
of rendered files and their web-based validation to prove that a given file
has not been modified, i.e., a cryptographic demonstration of a file's authenticity.
At the conclusion of the process, the relevant, sanitized and security-locked
electronic documents are ready to be turned over without any fear of later
alteration.
The SDP is available to Corporate Counsel on an individualized license
basis or through the Evidence Exchange service bureau. Used in conjunction
with effective employee training and a consistently applied information disclosure
process, it can take the sting out of electronic data discovery and production.
Summary
Under Sarbanes-Oxley, a failure to properly collect, preserve and filter the
information to be disclosed to regulators constitutes a federal crime. Individuals
can face up to 20 years in prison if they "corruptly" alter, destroy,
mutilate or conceal records or documents with the intent to impair their integrity
or availability in an official proceeding; or to otherwise obstruct, influence
or impede a proceeding (or attempt to do so).
New investments will be required to protect companies and their executives
from charges of untrustworthy information disclosure. It is time to insist
that your law firm or legal department either create or enforce a standard
corporate practice for trustworthy information disclosure, especially when
it comes to handing over electronic records. This will require new process,
extensive employee training and the acquisition of state-of-the-art electronic
data discovery and production tools, such as the SDP.
Michael Prounis is the CEO and Co-Founder of Evidence Exchange, a three year old Electronic Discovery software & service company. He has worked in Legal Information Systems since 1977, having founded Arthur Andersen & Co. S.C.'s initial offering in the area (1982-1989) as well as co-founding Prounis Consulting Group, Inc. (1989-1996), which in 1996 was sold in part to Alco Standard Corporation (1996-1999). His specific experience with Electronic Discovery & Production goes back to 1987. Evidence Exchange is located at 21 Penn Plaza, NY, NY 10001. The phone number is (212) 594-2500 or michael.prounis@evidenceexchange.com.
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