Everywhere you look right now, financial services organisations seem to be stepping on litigation landmines—and they are ill-prepared to cope with it. Whether it is the LIBOR rate fixing scandal, rogue traders working wild, or the mis-selling of financial products to unsuspecting people in the street, the financial services industry is being brought to task by the Financial Services Authority (FSA) and other bodies for their misdemeanours.
With the economy in a state of crunch, crash, or conundrum depending on your point of view, money is tight in the market right now. However the legal departments in these organisations are regularly paying out multi-million pound sums—in some cases tens of millions—for litigation-related work whenever they are investigated.
So why are they having to pay so much in legal and review fees—and what can they do about it? You don’t need to look far to find answers to both questions. Whenever an investigation begins, one of the very first tasks of the investigative body is to ask for electronic data records. They will demand all of the electronically-stored data relating to the subject in hand—whether it is email, images, spreadsheets, audio files, or video—in support of their enquiry. And they will give the financial institution a period of grace to search out that data and supply it. If that deadline is exceeded, fiscal penalties may result.
The financial institution’s legal team have two courses of action here. They can choose either to collect the electronic data themselves, and then pass to outside counsel, or they can call their law firm or advisory consultants and ask them to conduct the collection and host the review. Either way, the largely manual process is inordinately slow, with lawyers, litigation support professionals, and IT security teams immobilised in a mountain of electronic data. It is expensive, with significant costs either in internal resources or third-party legal/advisory fees. And it involves risk: imagine the financial penalty and damage to the company’s brand if that smoking-gun email was overlooked.
The costs don’t end there. What if the institution is investigated a second time as part of an entirely separate enquiry? A financial institution might not be near the LIBOR landmine, but may step on the rogue trader scenario, or some other wrongdoing. Then, the entire process begins all over again, with the equivalent search and investigative costs being incurred again.
There is light on the horizon. As the macroeconomic climate went from explosive growth to recession, forcing organisations to cut costs as quick as possible, electronic discovery spending came under significant scrutiny. Once flush with seemingly endless budgets, legal departments are now analysing just how much the eDiscovery process is costing. IT departments are also starting to feel the burden as they dedicate resources to help their legal counterparts respond to discovery requests or carry out internal investigations.
The simple answer is an eDiscovery solution, also known as e-discovery or electronic discovery. As an increasing number of organisations are now finding—not just in financial services but also in telecommunications, the media, and other sectors—taking an eDiscovery solution in-house ensures greater efficiency in the review process of eDiscovery and hugely drives down the cost.. The solution manages legal, regulatory, and investigative matters with one single technology application. The Clearwell Platform from Symantec, for example, was purpose-built for eDiscovery, making it easy for organisations to defensibly solve real-world challenges across the entire eDiscovery lifecycle—from legal hold and collections through analysis, review and production.