Intel last week provided a window into just how screwed up even wealthy, forward looking companies are around document retention for pending litigation. In the law biz these policies go under the general term of “litigation hold”. Intel is in Federal court on an anti-trust suit filed by competitor AMD in June 2005.
The recent changes in the Federal Rules of Civil Procedure (FRCP) added explicit requirements for electronically stored information (ESI) on December 1st, but litigation hold policies have been around for ages (for more info see Sto’Mo’s 3 Minute Guide to Electronic Discovery and Today’s the Day: New FRCP Rules Now in Effect). Which makes Intel’s behavior even more peculiar.
Let 1,000 litigation hold policies bloom
Intel’s email system automatically purges emails after short time, said by Intel to be about three months. It was only in October of 2005 that they started a weekly backup of the emails of executives whose actions might be relevant to the case. Until then they asked that employees voluntarily retain any emails that might be germane. Even after the backups started, an employee could receive and delete an email immediately to avoid having it backed up.
In effect, Intel replaced a single corporate litigation hold policy with one for every employee. With potentially billions of dollars damages at stake may one be forgiven for thinking that one of the world’s most successful high-tech companies might have done better?
Dumb, yes; malicious, maybe not
There is no evidence now that Intel sought to hide incriminating emails, which could bring disastrous “adverse inferences” from the judge if the case goes to a jury. Yet AMD’s legal team will be looking for evidence that Intel is hiding something, and if they find any Intel will have no one but itself to blame.
Intel will now invest in software that automatically preserves the emails of designated employees. One has to wonder why they waited until now.
The StorageMojo take
The resolution of Intel’s email retention liability may add to the evolving case law of ESI and electronic discovery. It certainly should serve as a warning to large companies that audited litigation hold policies are a necessity.
A sheepish “oops!” and a good-faith effort to recover lost documents may protect a company if no evidence of a cover up is found today, but in a few years judges and corporate audit committees will not be so forgiving. Get your litigation hold policies in order now, or face real pain sooner rather than later.
Comments welcome, please. I’m spending much of the day on an airplane headed back to StorageMojo’s Fortress of Solitude in the Arizona mountains, so moderation will be a bit slow.
RE: “Dumb, yes; malicious, maybe not”
It’s neither.
It is self-preservation, or a survival game, against a government viewed as capricious. The long-term view of government is that they will adjust the regulations to get the results they want. It will take time so you need a Strategy so that can use that time to your advantage. In this case technical obsolescence is free.
The IRS and tax revenue is an excellent example.
The use of Tax Shelters to legally avoid paying taxes is well known in high income areas. When I first became familiar with Tax Shelters they lasted as long as 15-20 years before they became useless due to regulation changes. Now the typical life is one year. Definitely one year if it is a very popular Tax Shelter.
The Time Value of Information is an interesting picture. Not as good as the one I can’t find but close…
Some Information, such as emails, instead of becoming valueless, can become quite costly for legal reasons. Costly emails fall rapidly into the (-$$$) quadrant of the full graph in practically “zero” time, instead of nicely declining to “useless” or zero. The value can plunge frighteningly almost straight down the “Y axis” into “-$$$” territory. Email is one of those pesky problems where the TCO of Storage is less than the TCO of identifying and removing the email. So they are left laying around for years. Not any more!
The “government over your shoulder” is a powerful deterrent to good SOA, ITIL, IT Services and maybe SaaS. The Lower Metrics of Information Integrity, Disaster Recovery and Business Continuity are retarded as well. If you can recover and read it so can the government. This makes ECM (Enterprise Content Management) a real challenge. What records and documents do I need to Recover my business in case of Disaster? How do I identify them? What is the litigation risk for each?
Robert,
Thanks for the pointer to Bill Inmon’s work. Interesting stuff.
I believe that within ten years a variety of forces will require that companies keep virtually all of their information for at least ten years. While I am no fan of Big Brother, companies have another option: train employees on danger areas such as anti-trust, harassment, financial reporting and then audit for compliance.
Government regulation is a bigger concern in Great Britain than it is here. Lawsuits dig up much more dirt here. Yet the idea that if we get rid of information we get rid of culpability is at the very least morally flawed. If it appears a company has engaged in a concerted effort to destroy relevant information then trial judges will often tell juries to make an “adverse inference” that the destroyed data was damaging – nearly equivalent to a guilty verdict.
Corporations are a legal fiction: immortal “persons” capable of amassing huge power. Why shouldn’t they be held to a higher standard than us garden-variety mortals?
Robin