Are you licensed to collect ESI?

As the cost of eDiscovery continues to grow, more corporations will buy software and appliances specifically designed to collect and preserve data or Electronically Stored Information (ESI in the new techno-legal jargon). Since the earliest interrogatories and discovery requests began to specify email, Office files and other ESI in the late nineties, corporate IT has manually carried out legal's requests. Early high-profile spoliation sanctions gave eDiscovery vendors an excuse to charge outrageous volume based fees, but the days of unlimited case budgets and firm favoritism are coming to an end.

As corporate counsel becomes more savvy and comfortable with the 'reasonable' standards of due diligence, they have begun to take control of the spend. The first question that many a General Counsel asks is "Why don't we just do this ourselves?" Your vendors will have a polished set of answers sprinkled with names like Morgan Stanley, Qualcomm and Merrill Lynch, all designed to use the Sanction Scarecrow to keep their golden goose producing. The smoke and mirrors have lost their effectiveness in the face of new guidance from the Sedona Conference, EDRM, conference panels and waves of webinars.    

But there is something new lurking in the discovery backwaters. State regulated private investigators have increasing lost revenue to the fancy new collection tools from vendors like  Autonomy, Clearwell Systems, Kazeon,and the unregulated eDiscovery service providers who already speak legalese and understand the litigation that follows corporate investigations. Given the money at stake, it is not surprising to see that the state private security boards are pushing back. They have expanded the definition of a private investigator to include anyone who collects ESI for potential use as evidence as a paid service. This forces litigation service providers who perform collection or analysis services to either hire a licensed private investigator who can directly supervise such activities or try to become registered as an investigative agency themselves. You can see the squeeze play in effect here.  The Texas Private Security Board has finally issued an opinion exempting imaging and ESI processing that does not include investigative analysis.

But what about all those email administrators who routinely export user mailboxes, search archives and ghost hard drives to support HR and legal requests? They are definitely being paid and the ESI may very well end up as evidence. So are they risking running afoul of the new rules and could they be charged with unlicensed investigation services? Worse, could vital evidence be excluded from trial just because your litigation support professional used a specific application or device to collect it?

The answer seems to be a tenuous 'yes', but the boards so far have only gone after actual vendors. Because corporate IT is usually acting under the direct supervision of counsel, it usually is exempted from the requirements. After all, I would bet that the American Bar Association has more lobbying clout than the state boards.  However, many routine HR or audit investigations do fall under the new definition and evidence from these early collections could be at risk in the aftermath litigation. In most states with these requirements, there is a mechanism to get corporate data security or litigation support personnel covered under a Business Letter of Authority. It will require training, fingerprints, background checks and a yearly fee, but that is a small price to pay for admissibility.

Note: This blog entry was modified at 6:39 pm CST on 5/1/08 in order to clarify a specific statement. You may contact jerome.wendt@dciginc.com or greg.buckles@dciginc.com for an explanation of what was changed and why.