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Big data doesn't mean big litigation

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Articles - June 2013
Tuesday, May 28, 2013

BY DARIN M. SANDS AND KRISTEN TRANETZKI

The term “big data” commonly refers to all the digital information we now create, disseminate and store. It largely consists of unstructured data such as web pages, tweets, Internet search histories, digital images, sensor signals, purchase history transactions, and GPS signals from cell phones and cars. According to the research firm IDC, 2.8 “zettabytes” (2.8 billion terabytes) of data were created in 2012 alone, an almost 50% increase from 2011. It is expected that this number will grow to 40 zettabytes by 2020.

Businesses have sought to curate and process this data using complex software and algorithms to provide useful analytics and to derive business insights. Big data can tell us customer preferences based on prior purchases and search histories. It has been used for everything from estimating the number of shoppers on Black Friday using cell phone locator data to detecting potential side effects of prescription medicines by tracking patients’ medical data. The potential for these insights is nearly unlimited.

And the benefits are not just for Amazon, Google and the major companies in the Silicon Forest, either. Smaller businesses are investing in big-data technology and are teaming up with vendors to harness this data. Perhaps your business is one of them.

But businesses that want to use big data should be mindful of not just the opportunities it provides but also the potential pitfalls, especially where there is latent litigation risk. Here are three tips for mitigating that risk, and though all require an investment of time and money up front, the cost savings in the long run can be significant.

1. Have a Written Data-Retention Policy (and stick to it):

With the exponential increase in data being stored comes the threat that all that data will have to be searched, and potentially produced, if your company becomes involved in litigation or receives a third-party subpoena. The costs of such efforts can be staggering. To reduce these costs and associated risks, businesses should carefully assess how and what kinds of big data is being collected and stored (including data provided by and to outside vendors). And based on this assessment, tailor a written retention policy that goes beyond just paper documents and email, and defines whether and when all types of data should be destroyed. The policy should both provide for the length of time the data is kept and how it is destroyed. Employees should receive training on the policy, and regular monitoring should be conducted to ensure compliance.

2. Have a Plan for E-Discovery.

Businesses should also proactively prepare a plan for dealing with big data after the obligation to preserve and produce data if litigation arises. Failing to do so properly can significantly impair a company’s litigation position and add substantially to underlying litigation costs. Businesses should work with knowledgeable counsel in advance of any litigation to create a plan of how to tackle electronic discovery in a cost-effective, efficient and defensible way. Being prepared to navigate discovery burdens before the onset of litigation will help reduce litigation expenses and may even provide a strategic litigation advantage.

3. Understand Privacy Regulations.

Advancements in big data have also raised new concerns about complying with evermore complex privacy regulations. A breach in data security (such as from an outside hacker or a careless employee) can create substantial litigation exposure. Businesses should work with counsel proactively to remain apprised on evolving regulations governing big data’s collection and use, to ensure that they are doing everything they can to properly secure sensitive and protected information. Such steps can mitigate exposure even if the unthinkable happens and secure data is lost.

0613 BOB Information 010613 BOB Information 02Darin M. Sands is co-chair of Lane Powell’s Electronic Discovery, Technology and Strategy Practice group.

Kristen Tranetzki is an attorney at Lane Powell, where she focuses on securities litigation, banking and lender liability, and white-collar criminal defense.

 

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