The following article was prepared by Mike Taylor, C.P.M., for distribution to ISM affiliate newsletters


Electronic Records & E-discovery

November 2013

Does your organization use electronic processes in managing your supply chain business? Do you email contract documents, use email to communicate with management and technical folks, share electronic files with users, store electronic records, post information on the web, keep in touch via smart phones use texting, etc.? I know many organizations that use electronic processes a lot.

The good news is that the electronic files are much easier to search for information than the old paper files. The bad news is that the electronic files are subject to legal discovery proceedings. That is, all the files, in all locations.

What we don’t know about the legal discovery process and issues associated with electronic records (generally referred to as e-discovery) is a liability and a risk. Supply chain managers should be taking the lead to educate themselves and their users on the issues and ways to mitigate the impact of e-discovery.

Here are a few facts and references that might get your attention:

  • E-discovery software is a hot growth market for leading edge software suppliers, marketing to attorneys and auditing firms.
  • In June 2013 Gartner distributed a Magic Quandrant report of e-discovery software in which they rated the top 25 firms. One of the leaders was reported to have increased its workforce by 20 in 2013 to over 500 people and receiving an infusion of capital of $25Mil. Report ID G00252032. You can download a copy of the report by signing up through this web site (and I’m sure many others) http://www.zylab.com/.
  • “….Gartner forecasts that revenue in the enterprise e-discovery software market will grow from $1.7 billion in 2013 to $2.9 billion in 2017… Double-digit revenue growth of approximately 15% is expected because of increasing volumes of litigation and regulatory investigation, and the ever-expanding amount of content and data that must be searched in support of these activities….”
  • Federal officials arrested a former BP engineer on charges of obstruction of justice on Tuesday, in the first criminal charges filed in connection with the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. For erasing hundreds of text messages sent to his supervisor during the event.
    http://www.huffingtonpost.com/2012/04/24/kurt-mix-bp-engineer-oil-spill_n_1449316.html 
  • Office of Federal Housing Enterprise Oversight (OFHEO) learned a $ 6 Mil lesson in trying to respond to an electronic discovery order in a case where they were not even one of the litigants. http://www.williamsmullen.com/sites/default/files/wm-url-files/PLIT1001_McCarroll.pdf 
  •  In this often cited [and now very old case from 2005 ] Zubulake v. UBS Warburg http://en.wikipedia.org/wiki/Zubulake_v._UBS_Warburg  the defendant lost primarily for failure adequately to preserve and provide electronic records.

Imagine what it would be like if the next time you are in a dispute with a contractor, the lawyers show up with a discovery order for all electronic records. How would you comply? Could you prove the search located all relevant records, on all computers, network share drives, backup servers, email databases and cloud storage locations? Would personnel understand the meaning of the litigation hold order or would records get “accidentally” (or even criminally) erased?

Here is a link to a general overview presentation on e-discovery and the accompanying reference list with more links like the ones above:

If you don’t recognize the terminology and issues mentioned in the references above, then it’s time to start getting up to speed. Supply Chain managers don’t need a legal degree to know the value of understanding the basic tenets of the law.

In this case we should also recognize that our day-to-day processes are creating a huge electronic target. What we don’t know leaves our organization vulnerable.

Related articles:

Hope it help you prepare,
Mike Taylor

 

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