Regulatory-Litigation eDiscovery… Are You Ready?



Regulatory and investigation litigations have more than doubled in the last year. 46% of surveyed businesses have had an eDiscovery request in the last 12 months! Gartner estimates that 75% of global companies will have to produce electronic or mobile data messages as a part of eDiscovery by the end of this year. You may not have to deal with eDiscovery yet, but it is quite likely that you soon will!

It is time for your organization to invest in an archiving solution to archive and manage ALL your enterprise communications so you can be prepared for possible regulatory investigations and the inevitable eDiscovery process. Read on to learn more.

Regulatory Investigations – Increasing Litigation Concern

The 10th Annual Litigation Trends Survey, commissioned by Norton Rose Fulbright in 2013 gives some interesting insight to the types of litigation you may face. This survey, spanning small to large organizations, included 3,800 lawyers based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East, and Central Asia. 75% of the respondents were either General Counsel or Heads of Litigation. Most were headquartered in the United States. Respondents chose the most numerous, or most common types types of litigation they had seen during the past twelve months.

According to the results, regulatory and investigation matters have increased significantly in the last year, and were by far the largest increase of concern found in the survey. Regulatory litigation had more than doubled from 9% in 2012 to 19%. This trend was found across all company sizes and industries but was most obvious among tech (26%) and healthcare industry organizations (24%), up from 10% in 2012. As a result of this litigation increase, the concern over regulatory / investigations litigation had also nearly doubled from 23% in 2012, to 41% in 2013.

The entities involved in the investigations and litigations are varied, but the top three were the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Environmental Protection Agency (EPA). Healthcare, technology/communications, and energy companies were the prime target of the DOJ. Surprisingly, energy companies were two times more likely than financial services to be the primary target of the SEC. Energy companies were also the target of the EPA, with manufacturing also having been a heavy target. Rounding out the top ten list of agencies targeting businesses in regulatory investigations was the State Attorney General, Occupational Safety and Health Administration (OSHA), Financial Industry Regulatory Authority (FINRA), the Internal Revenue Service (IRS), the US Attorney’s Office, the Food and Drug Administration (FDA), and the State District or County Attorney.

Based on these results, even if your industry is not within one of the most common to be targeted by a regulatory agency, it is only a matter of time before your company faces a regulatory investigation. In fact, the possibility that your company will face a regulatory investigation is increasing.

Litigation Time and Costs

These days, industries and organizations are clearly concerned about regulatory litigation, not only because it is a scary thing to endure, but also because of the time and costs involved.

Most Litigation Trends Survey respondents (52%) spent more time over the last three years on regulatory requests or enforcement proceedings. And what does time in litigation mean? It means more costs spent on litigation. Legal defense isn’t cheap!

33% of respondents have more than 5 in-house lawyers managing litigation. 16% anticipate adding additional in-house lawyers in the next year. 59% had to obtain the services of outside legal counsel to deal with a government or regulatory investigation in the last year.

71% of all companies surveyed spent more than $1 million just on the costs of litigation—almost a 20% increase. 32% of smaller companies spent more than $1 million or more on litigation legal fees (not including the cost of settlement or judgments), more than double the previous year. 42% of medium sized companies spent between $1 million – $5 million last year. And a whopping 43% of large companies spent over $10 million on litigation expenditures. That is a lot of time, lawyers and money being used to defend regulatory investigations.

Now, what is one of the first steps legal teams will need to deal with as part of an investigation? Discovery! And, more often than not in this modern age, organizations and their legal teams are having to deal with electronic discovery (eDiscovery), and most specifically, eDiscovery of the organizations communications.

Communications eDiscovery

There are many regulations when it comes to file retention and archiving your organization’s electronic communication. Here are some examples of the regulations that may apply to you:

Financial Industries Archiving Regulations

  • FINRA, SEC, MiFID and FSA government rules
  • Dodd-Frank Act (which requires that you produce communications within 72 hours of an auditor request)

Governmental Entities Archiving Regulations

  • The Freedom of Information Act, “Sunshine Laws” (vary from state to state)

Education Institution Archiving Regulations

  • Family Education Rights and Privacy Act (FERPA)

Healthcare Facility Archiving Regulations


All Other Industries Archiving Regulations

  • Federal Rules of Civil Procedure (FRCP)

Failure to comply with these regulations can lead to possible litigation, fines, and sanctions.

When you think of eDiscovery, you most likely think of email, which is by far the most commonly used means of business communication. For decades, lawsuits and other legal actions have made it imperative for companies to have email retention policies in place and to be able to retrieve email for discovery. Archiving email has dramatically evolved over the past few years, and is now a ‘must have.’ But now eDiscovery has expanded beyond email. HIPAA regulations, Sarbanes-Oxley requirements, FINRA, HITECH and many other protocols demand that ALL communication data be archived and immediately accessible. This includes archiving mobile device messages, as well as archiving your employee’s social media messages.

This demand is clear from the Litigation Trends Survey. 41% of survey respondents were required to preserve and/or collect data from an employee’s mobile device for litigation or investigation. In larger companies, more than half confirmed preserving mobile device communication data for eDiscovery.

With regard to social media eDiscovery, just 20% stated that they were required to preserve or collect an employee’s social networking messages for a legal dispute or investigation.

The problem is that most companies are not archiving social media messages and mobile device communication. An Osterman Research study found that most organizations (96%) are archiving email, but only 6% are archiving SMS & MMS. Just 17% of companies are archiving instant messages, and even less are archiving Facebook (7%) and Twitter (2%) content.

We have moved from a time where it was only email communications that had to be archived as part of your retention policy. Today, all electronic communication—emails, social media messages, and mobile data communication like SMS and MMS—must be retained, archived, and must be discoverable for a possible regulation review or litigation defense.

So with all of the stats and with the information about regulations, investigations and litigation, and the possible costs involved, you may be wondering what you can do.

There is one thing you can do to ensure you are prepared: Archive all of your electronic data. By deploying an archiving solution, the costs for litigation and your chances of regulatory investigation become greatly reduced. If you are involved in litigation, a regulatory action, or a records request, an archiving solution can make it faster and easier to produce the needed communications. Your investment in an archiving solution will pay off, and you will be protected.

So which email archiving solution should you use?

We suggest Retain Unified Archiving. Retain helps ensure that you are ready for litigation, regulatory investigations, and the other risks associated with electronic communication. Retain archives multiple email platforms in addition to social media and mobile communication data into one central archive. This archive can be easily accessed and searched, through the use of the application’s powerful built-in eDiscovery tools. When it comes to regulatory litigation discovery, do it right. Find peace of mind and security and be ready with Retain.

You can download your Free 30-day trial of Retain below, or for more information about Retain and the need for archiving, visit our website!

Download your Free 30-day trial of Retain today!

Photo Credit: Man of concern by Lisa Brewster is licensed under CC BY 2.0 (added text)

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