Companies can expect closer regulation and greater demands for data disclosure

(24/02/2009)

Kroll Ontrack looks at the likely impact the financial crisis will have on data disclosure trends over the next 12 months.

Martin Carey, Managing Director, Kroll Ontrack, said: “The next 12 months will inevitably be shaped by the global economic downturn. Beyond the immediate financial impact, however, will be a shift in working practices that will have a knock on effect to the implementation of electronic discovery. Alongside an increased demand will be the continued development of new technologies, making it easier for lawyers to focus on the important documents faster and more efficiently.”

1. Redundancies and litigation

The Centre for Business and Economic Research predicted 62,000 job losses in the financial sector alone by the end of 2009, and reports from the CBI already suggest an increase in employment tribunal claims: Statistics from the CBI showed the number of employment tribunal claims climbed sharply from 132,600 in 2006-07 to 189,300 in 2007-08. This area of litigation will prompt greater reference to electronic disclosure, as companies look to protect against liability in employee disputes.

2. Mobile working and its implications

With workforce and budgetary cuts increasing across all sectors, remote working is likely to be a practice relied upon more in 2009. The compliance and disclosure issues of this practice are multiple, with remotely stored data an obvious liability for industries that are highly regulated. As a result, there will likely be an increase in internal regulation and compliance in 2009.

This trend comes at the same time as a boom in the number of devices suitable for working remotely. The last three months alone have seen the introduction of 85 new products from the telecom industry. Tools will need to be developed to allow the extraction and analysis of data from these devices and expert forensics will play a key role.

3. Blurring of the public / private boundary

The proliferation of social networking sites over the last five years, combined with an ever-expanding blogosphere, has blurred the lines between the public and private realms. With the financial crisis heightening companies’ sensitivities to both compliance and brand image, 2009 will see a greater reference to e-discovery in what was previously considered the private realm.

4. Redundant computers

As redundancies continue to be made in 2009, companies will increasingly be faced with the necessary disposal of computers and other related hardware. In the financial sector alone, job loss numbers by the close of 2009 could require almost a quarter of a million man hours to back up data in order to mitigate data loss, intellectual property theft, and failure to disclose relevant information in a litigation process.

5. Heightened regulation

Companies across all sectors can expect closer regulation and consequently greater demands for data disclosure. The Competition Commission significantly increased its data disclosure demands in 2008 and this is unlikely to be reversed in 2009. Companies will need to have sufficient policies in place to manage their data and cope with any demands for its disclosure. Failure to do so can have serious legal and financial implications.

Related topics:  Data management and data security   Legislation 

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