E-Discovery: IT Execs Are Overconfident and Underprepared

A new study shows that there is a big disconnect between IT executives' perceived and actual litigation readiness.

Almost 98 percent of IT executives rate their ability to respond to litigation as above average or very well prepared, according to a new survey conducted by research and advisory firm IDC. But according to analysts, IT execs are vastly overrating themselves.

IT executives' perceived ability to respond to e-discovery requests "doesn't jibe with the reality that other people involved in the survey or delivering [e-discovery] services see," contends Adam Bendell, senior managing director at Annapolis, Md.-based FTI Consulting, which commissioned the study. According to Bendell, firms mistakenly believe that the software programs they have purchased will solve all of their e-discovery problems. "But many [applications] don't provide all the features they need, or software may not be deployed to an organization's subsidiaries as well as the main company," he explains.

In addition, even if firms have the software in place, often the people and processes that need to be wrapped around the software are insufficient, Bendell adds. "Another part of implementing a good strategy is having people who know what they're doing and having a repeatable process," he says. "It's a very complex problem when a firm is hit with a large e-discovery case. And it's proven to be a very difficult undertaking for all those things to go right in a repeatable way."

In fact, IDC, which surveyed 118 IT cross-industry executives, found that most companies are still in the early stages of identifying the relevant individuals, records owners and system custodians to handle e-discovery requests. Just 59 percent of respondents said their companies have created core response teams, while 31 percent said response teams are created on an ad hoc basis.

Further, while 85 percent of survey participants said their companies have formalized litigation communications policies, more than half (55 percent) are still in the early stages of automating the communications process. "The existence of ad hoc and manual business processes exposes a litigant firm to potential challenges to its litigation hold practices," IDC said in a release.

FTI's Bendell predicts that hedge funds could be particularly hard hit by e-discovery litigation in the near future. While hedge funds currently are unregulated, the credit turmoil could increase scrutiny, making hedge funds increasingly subject to litigation, he explains. "Most aren't well prepared," says Bendell.

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio