LexisNexis® Legal Newsroom

August 2012

Home – Every Cloud Has a Lining. Whether It's Silver or Not Depends on You

Every Cloud Has a Lining. Whether It's Silver or Not Depends on You

OK, we realize that our headline sounds like something we pulled from a fortune cookie, but that doesn't change the fact that when it comes to technology we are dealing with a couple of irritating realities.  

 

One is that technological innovation means we have to buy something new and feel stupid while we learn how to use it.  Then, we wait for the unexpected yet inevitable glitches to kick us in the shins. Another is that technology "allows" us to generate data like a fire hose.  In 2010 alone, we created data comparable to what is stored in the Library of Congress-times 10 million.  

 

The sheer volume of electronic information has driven up discovery and storage costs.  This is why so many firms are turning to the cloud, even though most attorneys are hard pressed to even say what it is. Thanks to the National Institute of Standards & Technology, we have a definition.  A cloud is "a computing model for enabling convenient, on-demand network access to a shared pool of computing resources (e.g., networks, servers, storage, applications and services)."  Also, it should enable resources to be consumed with "minimal management effort or service provider intervention," the NIST says.  

 

With the allure of cost savings and efficiency comes the fear of losing control.

Stephen J. Lief, practice support counsel with Epstein Becker Green, says cloud computing presents storage savings for IT in the corporate world and has already been in regular use for several years; however, it also presents a "whole host of issues related to litigation in general, and e-discovery in particular." 

 

Also a board member for the Organization of Legal Professionals (OLP), a fast-growing e-discovery association, Lief says there are a number of important questions you will want to have answered when moving to a cloud.  "Where is your data? Can you access your metadata? Can you export your data for review under real-time pressure?  "Imagine," Lief says, "that a court orders production of 100GB of data next week, and the service level agreement with your vendor assures you a two-week turnaround. What is the surcharge for expedited work?  What if you need to download 1 terabyte?" 

 

"Be aware of the issues, unexpected costs and potential challenges," Lief told The Examiner. "Go into this with your eyes open, and with the advice of an advisor law firm or consultant with experience in this area."    

 

Paul D. McGrady, Jr. of Greenberg Traurig said that for the corporate client the cloud adds an extra layer of complexity in guarding trade secrets.  For the in-house counsel, there are concerns that attorney-client privilege could be waived.  These are matters that should be addressed in contracts with any cloud provider, he said.

 

Fernando M. Pinguelo, chair of the cyber security team at Norris McLaughlin & Marcus and OLP board member, told The Examiner that two ethical obligations are generally implicated when using cloud services:  the duty of confidentiality owed to clients and the duty to serve them competently.  "These duties may include making sure that a third-party cloud services provider is aware of the lawyer's obligations and is itself obligated to assist the lawyer in meeting these duties," explained Pinguelo.

 

How can firms recoup their investments in data? Michael Arkfeld, founder of Arkfeld & Associates, who, along with McGrady, spoke on a recent LexisNexis® Webinar on the subject, said most firms don't charge clients for storing and handling data, leaving firms with a tough decision. "They can either increase their billable hours  . . .  do a consent agreement [if they want to charge clients] and keep it in-house, or move to a cloud computing system. If you keep it in-house," Arkfeld said, "I think you're moving away from your core competency of practicing law." 

 

With an onsite solution there may be more control, but you increase overhead and have other challenges.  Firms have to determine which solution gives them more flexibility in adding capacity when, for example, a large case comes along that involves huge volumes of data.  

 

Compared to paper, data seems to be about as manageable as balloons in a wind tunnel-so some companies are struggling with orders to destroy information arising out of various lawsuits, and how they are going to get to all the backup copies of data. At the same time, law firms are grappling with how to handle client retention policies and litigation holds-critical issues that require control.

 

Different Cloud Formations

 

Robert J. Ambrogi, attorney and writer behind the Legal Line blog, recently gave a presentation where he summarized three types of clouds: 1) software as a service, where the user provides applications via a network; 2) platform as a service, where the customer deploys its own applications using the cloud provider's operating system and computing platform; and 3) infrastructure as a service, where the customer rents processing power, space and networking capacity.

 

Ambrogi reiterated the benefits of security-quick deployment, team access from anywhere and scalability.  He called out the disadvantages that come from being dependent on network access-the difficulty in not being able to carry your data around, and the risk that comes with browser vulnerability, that is, if your browser is compromised, so is your data.

 

When considering a cloud for e-discovery you will want to be in tune with the five requirements for regulatory compliance.  As outlined in the magazine American Agent and Broker, you will need:  1. Centrally-controlled access to document management; 2. Document classification policy management, 3.  Retention policy management that specifies retention schedules to help keep records for the required amount of time, and deletes them when the retention policy requires it; 4. Destruction and disposition policies management that helps track all stages of destruction to show a history of approvals (if required) and adherence to policies; 5. Legal hold management to prevent destruction of documents under a litigation hold.

 

"If companies have a series of litigations, it may be that the hold from one matter to the next results in a larger-growing backlog of data that can't be eliminated, regardless of what the client retention policies might be," according to L. Kevin Hayworth of Morgan Lewis & Bockius LLP, also a speaker on a recent LexisNexis Webinar. An issue that Hayworth has observed among clients is that the ESI one saves at a law firm is discoverable by other litigants in other lawsuits, if it's still available. "I'm seeing a number of firms retain their client data after the case is closed and it's a fruitful source of discovery," he warned.

 

And then there is regulation. More than 15 states have imposed e-discovery rules in addition to the federal rules, Arkfeld said. He noted hundreds of cases in which courts have imposed sanctions for failing preserve, disclose or properly process ESI.

 

Arkfeld advocates putting data into an environment where you, as an attorney, do not have to be concerned about whether you have the proper security protocols in place. Law firms should avoid putting time and resources into this complex arena.  

 

Hayworth agreed. Law firms should be focused on the strategic decisions being made in those early stages of early case assessment (and understanding what it all means as quickly as possible in some intelligent way), instead of worrying about how they're going to get it on a platform where they can review it.

 

Ambrogi said essential steps you must take include: 1) Work only with a reputable cloud provider; 2) Execute an express Non-Disclosure Agreement (NDA) with the provider; 3) Understand what physical and electronic security procedures they follow; 4) Understand their practices for backing up and recovering data; and 5) Make sure you know where the data is housed and who can get to it.

 

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