Data Hosting and Cloud Computing

Data Hosting and Cloud Computing

A LexisNexis® Webinar Report

Dylan McGuire

Cloud computing—or the replication of a law firm’s information technology (IT) server platform as well as its applications and other services on a remote computer platform—is a new buzzword in the legal field and carries immense ramifications for law firms and their clients, said Michael Arkfeld of Arkfeld & Associates speaking at a recent LexisNexis® CLE-accredited Webinar titled "Ethical Cost Recovery, Data Hosting and Cloud Computing".

L. Keven Hayworth of Morgan, Lewis & Bockius LLP, who also spoke at the seminar, said that cloud computing came about due to the need for storage caused by a “massive increase” in data in recent years. “University studies have shown that since about 1999 over 90 percent of the data that corporations are creating has been created in an electronic form,” he said. He compared the amount of data in the corporate world against the information in the Library of Congress. He said that the Library of Congress, which contains about 17 million volumes, would be equal about 136 terabytes of information. The amount of data created in 2010 would equal almost 10 million Libraries of Congress.

“This is definitely a trend that’s not changing. We don’t see it going anywhere and we’re going to have to get a handle on it,” he said.

Law firms are grappling with ways to manage all this data which has various requirements under client retention policies and litigation hold overlaps.

“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,” Hayworth said.

Hayworth said that some larger law firms have spent a lot of time and money looking at their client retention policies in order to find ways to get rid of information that is taking up space. However, some of the other firms whose practice doesn’t involve as much litigation haven’t dealt with the issues because they have had other business matters occupying their attention.

Hayworth also said that although it has not come up at his firm, he has observed his clients struggling with orders to destroy information arising out of various lawsuits and how they are going to get to all the backup copies of that information existing on various servers to destroy it.

“The other issue here and one I see with the clients I talk to, is that the ESI [Electronically Stored Information] that you save in a law firm is discoverable by other litigants in other lawsuits if it’s still available,” said Arkfeld.

“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 said.

Responsibility to Monitor ESI Systems

“We’ve seen 15 plus states impose e-discovery rules as well as the federal rules and we’ve also seen the regulatory agencies imposing rules like the SEC and what form or forms they wish to receive data in,” said Arkfeld. “We have a lot of pressure from the procedural rules as well as case law from a lot of courts discussing ESI issues.”

As an example, Arkfeld said that in federal law, there have been hundreds of cases in which the courts have imposed sanctions as a result of failure to preserve, disclose or properly process ESI.

“And one of the reasons I’m raising these issues is not only do the costs go up but I think the understanding of ESI for practitioners has reached new levels,” he said.

An obligation that is not well understood, however, is court-imposed responsibility to monitor the client’s ESI systems as sanctions for failure to disclose. He said that courts that have imposed these sanctions have essentially said that “they want attorneys to get involved in their client’s ESI.”

“The reason I’m raising this is because the amount of activity and interaction you have to have with your client’s ESI population is increasing and the courts are imposing those obligations on most parties and outside counsel throughout the country,” said Arkfeld.

“The more in-depth or the more complex some of these ESI issues are becoming with more and more court decisions, I see the necessity of taking the ESI and putting it into some kind of an environment where you’re not concerned about whether or not you have the proper security protocol under DoD, but whether or not you have the proper search protocol that you have to enter into with opposing counsel,” Arkfeld warned.

He said he feels that due to the complexity of these issues firms should avoid putting time and resources into handling them. “They’re lawyers, they’re not IT people,” he said.

Hayworth agreed. “They should be focused more 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 just worrying about how they’re going to get it on to a platform from which they can review it,” he said.