Are in-house legal departments ready to manage electronic data?

Increasing volumes of data have become a well-documented global challenge for businesses, including how to manage the storage, security and transfer of digital information and how to gain insight and value from such electronic information across the business, KPMG global survey showed.

Despite this often being regarded as an IT issue, it also falls to a large extent to the legal department to ensure that data is managed effectively when responding to litigation and regulatory requests (ensuring the protection of personal data and the security of database archives, keeping a record of contractual documents and of staff etc).

The fundamental question asked by this survey is “are legal departments ready?” In-house legal departments act as the catalyst for wider records management exercises, with an agenda of litigation and regulatory readiness.

“There is no easy place to begin improving the readiness of a legal department – it has to become an ongoing process of risk anticipation and diagnosing the legal issues that could impact a company. Even if the financial crisis restrains the companies’ capacity to allocate funds for the implementation of radical, major enterprise solutions in this area, we have identified a number of ‘quick wins’ which, from our own experience and involvement in complex projects for some of our clients – large corporations operating in Romania - have proven to be highly successful in an organization and advance the active role of the legal department,” said Daniela Nemoianu (photo), partner at Nemoianu Attorneys At Law, the correspondent law firm of KPMG.

KPMG survey aims to establish a high level view from some of the most senior lawyers in many of the world’s largest corporate organizations of how ready their organizations are to manage data for legal purposes, to what extent they coordinate their activities with the IT and Internal Audit departments and what they are doing to improve readiness in this area.

For many, ‘readiness’ is about the ability to respond as effectively as possible - in particular regarding the collection, review and disclosure of electronic material - when required to do so.
In that sense it is easy to see the value of legal departments being ‘ready’ as it allows businesses to handle litigation and regulatory matters as effectively as possible, putting them ahead of an opponent or a regulator, understanding their exposure or risk, and leaving them less open to further challenge (for example, through an inability to find documents).

Proactive readiness enables legal departments to assess their legal strategy early, deal with matters more efficiently, and achieve the best outcome in ensuring the security of the business.

KPMG’s survey has revealed in-house lawyers’ views on how ready their legal department is to cope with the electronic information management challenges involved in litigious and regulatory matters. Over 200 of the top global companies’ in-house lawyers were interviewed revealing that:

• There is a significant discord between high perceived levels of general readiness and considerable practical concerns, showing a lack of understanding of the concept of ‘readiness’, or a willingness to accept the concerns in the absence of obvious solutions.
• Many respondents believe that records management policies and processes are unclear and unworkable.
• Only 19 percent mentioned the existence of policies or procedures for collecting and processing the data.
• Perceived readiness levels appear stronger for some matters, such as employment/personnel matters (with 75% indicating a high level of readiness) but weaker for others, such as competition/anti-trust/personal data protection (with 62 percent indicating a high level of readiness).
• There are very mixed views on how easy it is to retrieve data for regulatory or litigious matters. 38% indicate some level of difficulty in documenting data. 10 percent think it is extremely easy to retrieve data while 10 percent think it is extremely difficult to generate or retrieve data.

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