E-Discovery Strategy, Search & Artificial Intelligence

E-mail Archive Policy - Lesson from Tyco Scandal

In a legal dispute, you want as much of two assets as you can get – evidence and brainpower. You want evidence to supply facts so you can understand and support your side of the case. And you want good analysis and judgment so you can assemble the best arguments and make the best decisions about how to manage your case.  

Since e-discovery affects both evidence and brainpower, it is revolutionizing litigation and, more generally, all manner of investigations (whether they be investigations of bribes, kickbacks, overcharges, misallocation of funds, abuse of power or any other misconduct). 

A lawsuit today is not your father’s lawsuit. . . .

The advent of electronic records like e-mail causes the quantity of records potentially relevant to a lawsuit/investigation to swell beyond imagination. In any dispute, this profusion of records opens vast opportunity to those able to exploit it. Smart litigants today (a) welcome oceans of records, and (b) seek advanced analytics and artificial intelligence to glean from those oceans the best case.

Observe the lesson from the Tyco International scandal (white collar crime). Chief Executive Officer Dennis Kozlowski and Chief Financial Officer Mark Swartz were convicted (under New York law, even though Tyco's headquarters was in New Hampshire) for taking money from the company. They said the money was authorized compensation, approved by the board of directors, but top decisions at the company were poorly documented. Company leaders did business the old-fashioned way, with voice conversations and handshakes. Hence the records to support CEO Kozlowski’s and CFO Swartz’s side of the case were thin. Dan Ackman, “Tyco Trial II: Verdict First, Law Second,” Forbes, June 17, 2005.  

But compare the case of Tyco’s General Counsel, Mark Belnick. Like his bosses Kozlowski and Swartz, Belnick went to trial for allegedly stealing money from the company (misappropriation of funds). Yet the jury acquitted him. The jurors could not find him guilty, even though they “felt he was morally guilty”. Why? The jury was persuaded "Everything that he got was documented through e-mails and memos . . ." Steve Fishman, “The Convert,” New York Magazine, August 2, 2004.

Wow. The difference between Kozlowski and Swartz, who are in jail, and Belnick, who is free, was records. The bosses didn’t have them, but Belnick did. The existence of those records, and the ability of Belnick’s defense team to assemble them into a credible story was crucial to his case.  Belnick's story is a lesson about the Information Age. In the age of abundant digital records, advantage goes to the party who can better marshal records.  

[Update:  In another heartening Information Age story, digital records come to the rescue of a falsely accused defendant.  Defendant proves he did not commit murder by drawing on (a) New York City transit authority records showing his whereabouts based on metrocard found in his wallet at time of arrest; (b) timestamped photo showing him cashing payroll check; and (c) records of when he clocked out at work.] 

I therefore argue enterprises are wise not to fear e-discovery, but rather to embrace it. They should relish systematic archival of massive records (including new things like Twitter tweets, voicemail-converted-to-text, cell phone text messages, iPhone calendar alarms, BlackBerry mail, smart phone SMS), and seek tools, including artificial intelligence, that enable brilliant searching and sifting through those archives. They thereby position themselves to capitalize on unexpected or nuanced discoveries within their records.I’ve published more big-picture observations about e-discovery.