Digital Data Changing Legal Landscape

A survey of trial lawyers and judges by PricewaterhouseCoopers shows that few companies are prepared to comply with a subpoena demanding production of their digital files for use in litigation, even though most companies store up to 70 percent of their records in electronic form.

Additionally, the survey indicates that even though companies are storing proprietary information on computers, few companies have developed a protocol to protect their digitally stored trade secrets.

Digital Discovery

According to the report, "The PricewaterhouseCoopers/Section of Litigation of the American Bar Association Pulse Survey," 98 percent of the 216 respondents expect technology to play an increasing role in the discovery phase of litigation.

According to Scott Charney, PricewaterhouseCoopers principal and former head of the United States Department of Justice (DOJ) Computer Crimes Section, "E-commerce generally, and a high level of trade secret vulnerability in particular, increases the likelihood that a company will become involved in a complex business dispute involving electronically stored documents."

Charney added, "Such disputes will involve substantive electronic discovery requests that many organizations are not prepared to handle. Without a comprehensive and proactive system in place, finding and managing information critical to prevailing in the dispute becomes like finding a needle in a haystack -- and the costs will be astronomical."

Even though many lawyers are convinced that digital information is important, 83 percent said that their corporate clients have not established policies and procedures for handling electronic discovery requests. For instance, 68 percent of respondents said that their clients rarely or never took steps to stop the automatic overwriting process for relevant electronic data, even after they had been notified that a lawsuit had been filed.

E-Mail Evidence

Examining the electronic discovery trend further, the survey found that 60 percent of respondents said that their clients were not even aware that electronic information -- such as e-mail -- could later become evidence.

In fact, e-mail , at 49 percent, was the most requested type of electronic information. Electronic discovery, according to 69 percent of respondents, was most common in the high-tech industry.

Recent high-profile cases indicate that electronic discovery is an increasingly important tool for litigators. Yahoo! is currently the target of a privacy lawsuit by an individual whose real name and address were revealed when the company answered a subpoena. In another case, producing copies of internal e-mails bolstered the antitrust case against software giant Microsoft (Nasdaq: MSFT).

Trade Secrets

The survey also revealed that many companies are storing trade secrets on unprotected computers. According to Charney, "The documented loss of proprietary information exceeds $45 billion (US$) and 60 percent of network sites have been breached by intruders. These facts reveal a chilling level of vulnerability in the corporate community."

In spite of the vulnerability, according to the survey, 53 percent of respondents corporate clients have no established protocol for identifying and protecting their trade secrets.

A survey released earlier this year by Computer Security Institute and the Federal Bureau of Investigation (FBI) Computer Intrusion Squad, revealed that 70 percent of the respondents, as opposed to 62 percent last year, reported incurring such serious computer security breaches as theft of proprietary information, financial fraud, denial-of-service (DoS) attacks, and sabotage of data or networks.