Transcending The Cloud: E-Discovery and the Cloud: Best Practices in the New Frontier



During the past five years or so, lawyers and their clients have struggled to reconcile their discovery obligations under federal and state discovery rules with the ever-expanding digital universe. Indeed, as technology continues to evolve, the digital sea of electronically stored information (“ESI”) produced by companies continues to rise. Consequently, the costs associated with creating new information technology (or “IT”) infrastructure, and with maintaining and preserving (or hosting) ESI, also continue to rise. In many cases, the duality of rising costs and increased technological complexity have led companies to look to third-party providers for some or all of their infrastructure and hosting needs. In fact, third-party hosts and IT service providers of varying sizes and offerings are essentially a ubiquitous reality in our digital economy today. Consequently, it should not be a surprise that cloud computing represents a natural, albeit somewhat different, model in the evolution of the use of IT.

Cloud computing is the term ascribed to the industry shift and transformation from companies either hosting and managing their own applications and data on local servers, or entering into micro-hosting arrangements with third-party providers to a grid computing model in which users access a shared computing environment typically being provided by large and well-entrenched technology companies such as Google, Microsoft, IBM and Amazon. For many companies that have embraced cloud computing for all or some of the IT and hosting needs, gone are the days of purchasing departments ordering server after server and rack after rack, or negotiating co-location agreements in which their servers sit within some third-party’s server farm in downtown Toronto, Miami or Seattle. Rather, the cloud is an entirely virtual environment with digital tributaries that span the globe, moving data from one server to another to achieve optimal data storage and retrieval capabilities, bandwidth optimization, and overall IT cost-effectiveness, providing all of a company’s data storage, data processing and distribution needs on an as-needed basis (think “utility”). This has already begun to transform the traditional IT model for multinationals, and continuing the trend that began with hosting and outsourcing, will effectively relieve companies of the burden and expense of maintaining their own electronic data and monitoring their own IT infrastructure.1 While there were good reasons, pre-dating the commercial use of the Internet, that the old timesharing models of the 1960s fell by the wayside and gave way to corporate IT infrastructure development, the environment has changed and cloud computing is an idea whose time may have now arrived.

So, what is it about the new age of discovery and terms like “cloud computing” that leave lawyers (and perhaps some clients) with a great degree of caution? Put simply, it is the existence of a tremendous amount of electronic data, the potential for lack of control over its location and attendant uncertainty about the ability to find and process relevant information in connection with a lawsuit. This fear lies in the fact that for purposes of meeting discovery obligations, a company’s data is likely considered to be in the company’s legal “control,” though a third party actually has the data. Also uncertain is what is considered “reasonable” with respect to efforts to identify, preserve and collect relevant information “in the cloud” under the discovery rules.

This paper will briefly discuss discovery obligations under the Federal Rules, specifically with respect to e-discovery2; the “reasonableness” standard as it relates to identification, preservation and collection of ESI; and particularly electronic information stored in the cloud. In that regard, this paper will highlight issues to address with your cloud provider that may help you minimize cost and burden, and help establish “reasonableness” for purposes of meeting your discovery obligations.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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