E-Discovery Requests Loom Large for Financial Services Firms
Wall Street and Technology, November 18, 2008
The financial crisis had to fall on somebody’s shoulders and regulators are left with trying to find out who’s to blame. Nobody would’ve ever paid attention to Freddie Mac, AIG and Lehman, if it weren’t for the coupling of two words: “bailout” and “taxpayer”. These three companies are just a few of the “countless” financial firms that under the FBI’s microscope. Each company is being asked to provide data in support of their investigation—and it’s only natural that a rise in litigation and e-discovery requests has been felt.
According to Rob Brunner, senior managing director in the technology practice at FTI Consulting, it’s the firms that will be folded into other companies or who are doing the acquiring that will be hit the hardest.
“When Bear Stearns and WaMu were acquired by J.P. Morgan, or Merrill Lynch by Bank of America, each transaction happened within two short weeks. Often that speed means assets have changed hands so rapidly that there may be some residual company that has to produce e-mail for discovery that doesn’t yet own the systems to do it,” Brunner says. “If I sold part of my operational arm to another entity and I’m facing an [e-discovery] request from an oversight committee, I might not yet own the systems to produce the e-mail.”
While some companies were featured as vendors monopolizing the e-discovery rush in the financial services sector—one technology solution not mentioned was entrusting digital timestamps to authenticate documents. As more and more companies move from a paperless environment to electronic records, there’s no question of the inherit risks associated with intellectual property ownership. Businesses must have the power to prove that their electronic records have never been manipulated, in order to protect trade secrets and other intellectual property—from the moment they were generated to the time they are challenged.
And just like Michael Mills, the director of professional services and systems at the law firm Davis Polk Wardwell said “If you’re using today the same software tools you used two or three years ago…you’re not keeping up.”