Corporate enterprises and other businesses need to ensure proper integrated data management policies, a US-based consultancy firm said, warning that poorly managed data could cost the firms a lot during electronic discovery (eDiscovery) processes in case of lawsuits.
Companies, especially large and multinational entities, must proactively and reactively seek methods to deal with large volumes of data more efficiently during eDiscovery, according to AlixPartners, a consultancy that has made a name for itself in business turnaround advisory services.
The work is not easy as different regulatory rules and laws in different countries have added to the complexity in data management tasks for companies, said Michael Faraci, an expert in litigation discovery and a managing director at Alixpartners, which is based in Southfield, Michigan.
eDiscovery refers to identifying, collecting and producing electronically stored information (ESI) by a company in response to a request for information in a lawsuit or investigation.
With almost every task in companies getting digitalized in the modern era, large amounts of data are being created and stored in computer servers every day. The storage of huge data involves a lot of costs, but poor organization of the information could prove even more expensive — and could even land a company in serious trouble — if the firm is slapped with an eDiscovery request through a legal action or an investigation.
A 2011 study by the Minnesota Journal of Law, Science and Technology has noted that file processing fees for eDiscovery range anywhere from US$5,000 to US$30,000 per gigabyte.
Email and exchange servers could possibly be the repositories of the bulk of data, but they aren’t the only ones that can come under eDiscovery.
Alixpartners’ Faraci told EJ Insight in an interview recently that companies, particularly the big entities and multinational corporations, are faced with the challenge of organizing their vast troves of data in a way that makes it easy to retrieve any information when the need arises.
As Chinese companies are becoming more active on the international stage they will also be subject to regulations in foreign countries, such as detailed information disclosure rules.
However, many firms are yet to get a good grasp and awareness of eDiscovery issues, said Stephen Yu, vice president of AlixPartners’ Information Management Services group and head of its Shanghai data center.
Countries such as Australia and the United Kingdom, as well as a city-state like Singapore, have published clear rules and regulations governing companies’ data management procedures.
But authorities in other places, including mainland China and Hong Kong, are yet to have clear rules on matters such as how long a company should keep sensitive trading data, whether firms need to delete consumers’ personal information within a certain period of time, and how companies should present relevant data to the court.
“Presently in Hong Kong, it really depends on a judge’s orders how to perform these duties,” Yu said.
He noted that judicial authorities in Hong Kong have almost completed drafting a series of pilot eDiscovery guidelines for companies and law firms, but it is not clear when the guidelines would be unveiled.
China’s draft Personal Information Protection Law was proposed in 2003, but the pilot rules may not be unified across the provinces or among different authorities.
In January 2011, the Ministry of Industry and Information Technology issued draft rules on data protection that restrict the ability of organizations to transfer personal data without specific prior informed consent. They also appear to forbid the export of personal information even from one division of a company to another.
In late April, AlixPartners launched a new data center in Shanghai, responding to regulatory requirements on personal information protection in China.
Faraci believes the Shanghai data center will provide his firm a huge competitive advantage in businesses related to China because, at present, not many foreign companies have data centers in China. Clients will no longer need to transfer locally-sourced data to locations outside the country.
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