| KPMG: Companies’ lawyers face significant data readiness challenges |
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24/11/2009 12:39 (76 Day 21:36 minutes ago) | |||||
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The FINANCIAL -- Research by KPMG Forensic involving more than 200 senior in-house lawyers in companies across the world finds that many legal departments have significant concerns about how to handle data when called upon to do so for litigation or regulatory response.
"Many in-house lawyers consider that their company policies and procedures in this area are unclear and unworkable, with less than one in five aware of the existence of policies for collecting and processing data. Sixty percent of respondents are concerned about costs, 56 percent are concerned about security issues, and a similar proportion are concerned about records management policies and data volumes. Half of respondents admit to being concerned about the legal department’s ability to find data and nearly two in five respondents admit it would be difficult to retrieve relevant data in the event of a regulatory investigation or major litigation," KPMG survey says.
The survey finds a discord between high perceived levels of general readiness (86 percent had high levels of confidence in their ability to respond quickly to a data request by a regulator) and the significant practical concerns identified. This highlights the conflicting views amongst many in-house lawyers on whether their companies are as ready as they could be. Competition and anti-trust investigations are seen as potentially the hardest investigations to deal with, while some companies feel best-equipped to respond to employment and HR matters.
An additional area of concern is the extent to which company legal and IT departments communicate with each other. Over a fifth (21 percent) of legal departments say they are not consulted by the IT department about changes in storage capabilities within their organisation, and a quarter are rarely or never consulted about the adoption of new technologies for dealing with electronic evidence (e-discovery).
Commenting on the results, Paul Tombleson, Head of Forensic Technology at KPMG Forensic in the UK, said: "Companies have to deal with a mind-bogglingly large amount of data being generated every day, which not only has to be stored but made searchable and retrievable in the future. When a regulatory investigation or litigation arises, it is imperative that companies can find and organise the right data very quickly. Our survey shows that many in-house lawyers have genuine concerns about their company’s ability to respond in practice.”
“Storing and searching large volumes of data, often across borders and across different legacy IT systems, continues to be a major challenges for many companies. Whilst this might seem like an IT issue, when an investigation arises, it can become an urgent reputational and financial one.”
KPMG’s research found that over a third (34 percent) of companies have gone through a formal litigation or regulatory response assessment by an external body, with half that number having carried it out in the past six months. There were some significant regional variations in this – two thirds of the companies that have undergone an assessment in the last six months are in the Asia Pacific region, while only 30 percent of them were in the Americas (mainly Brazil) and just 3 percent in Europe and Middle East/Africa respectively. In Europe, only eight percent of respondents said they had undergone such an assessment by a third party.
Half of companies have an identified litigation response team in place to deal with e-discovery/e-disclosure or related requests. North American companies are advanced in this regard, with over 80 percent having one, compared to 38 percent in Asia Pacific and 34 percent in European. The results also show that North American companies have a closer link between their legal and IT departments than in other parts of the world – but despite this, they are more likely to rely on outside counsel to manage electronic information in litigious and investigative disclosure situations.
Commenting on the findings, Alex Dunstan-Lee, Head of e-Disclosure at KPMG Forensic in the UK, said: “Many in-house counsels seem to be preoccupied with the difficulties involved in data management. Without doubt it is a difficult area, but electronic data can be manipulated to benefit legal teams in a way that was not possible in the paper world. Properly managed, it can help a business to respond more effectively to a regulatory investigation or to stay ahead in a litigation. Data is at the core of any modern business. Lawyers, like other professionals, should not ignore it.”
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