E-Discovery in the Cloud Presents Promise and Problems

Lora Bentley

Lora Bentley spoke with Proskauer Rose associate Nolan Goldberg about compliance concerns that are unique to e-discovery in the cloud, as well as some of the advantages to computing in the cloud that companies may need to exploit more often. "I'm not down on cloud computing," he says. However, there are issues those using the cloud need to address.


Bentley: Cloud computing is a hot topic. What does that phrase mean? What does it encompass?

Goldberg: I think there are a lot of services that fall under that umbrella. I look at it like a marketing term more than anything. It's software as a service. It's IT outsourcing. They have this now, the so-called "internal cloud," where it's implemented entirely within your organization.


But I'm going to generally talk about cloud computing when you use a service, and by using that service, you're putting your data in the hands of a third party. For example, there's Gmail, or GDocs, or Amazon's EC3 service There are things as simple as online Web repositories where there's a hard drive on the Internet cloud and you can save your data somewhere. Or there are things that are more complicated, like software as a service. Rather than having something installed on your desktop, you can download or use online a copy of a Microsoft Word-like program.


Bentley: Can you give us an example of a situation in which a large company might take advantage of such services?

Goldberg: The New York Times had a project awhile ago where they wanted to take all their archived articles and convert them to PDF format. Doing that involved an enormous amount of computing power. They had some options. They could build a fairly complicated internal network. But the problem with that is, first of all, it's time-consuming and slow, and then, once you've done that, you're stuck with this network. What are you going to do with it?


What they were able to do instead was use one of the Amazon services. They were allocated some power for the time period of the project, and I think 48 hours later they had archived every single article they had going back to the inception of the paper. Then they were done, and that computing power was then allocated to somebody else.


Bentley: So can you break down cloud computing into different segments?

Goldberg: There are really two parts. There's consumer-grade cloud computing and commercial-grade. What consumer-grade means to me is that the terms of the service agreement are sort of take them as they come. If you or I as individuals sign on to Google, for example, the terms of service are what they are. We don't really have any opportunity to negotiate them.


Bentley: What about commercial-grade?

Goldberg: If you're a large financial institution and you're about to embark on some large permanent or semi-permanent cloud computing project you can negotiate for specific conditions. And the reason I'm so concerned about that is once we get into more about e-discovery, you're going to see that the service agreement, the contract between you and the provider, is really going to shape a lot of what happens in terms of compliance.


Bentley: What are the big issues when it comes to e-discovery in the cloud, then?

Goldberg: Going over it at 50,000 feet, there are three. The first is managing discovery obligations. With that, I include preservation of information-when you're in litigation you have an obligation to preserve certain things-and I also include collection The question is, "Who does it? How do you get the information?" The second is maintaining the value and protection of information that is placed on the cloud.


Bentley: Can you explain that?

Goldberg: If you have a document that contains a trade secret, or a privileged communication with your lawyer and it's on your work network, generally the privilege is maintained, the trade secret is maintained. When I pull it off the network, it has the same value as it did when I put it on the network, generally. Obviously there are circumstances where that wouldn't be true. But, if we take that same trade secret or that privileged information, and put it in the custody of a third party, do we maintain that privilege and that trade secret?


Bentley: And the third one?

Goldberg: The third big picture issue is the e-discovery implications of national privacy rules. They become implicated by the virtual nature of the cloud. In other words, if you put your information in the cloud, where is that cloud physically located? And what national privacy rules and other obligations is it subject to? Because of that there are times where certain information shouldn't be on the cloud because it's subject to certain laws, and other times where information may not be subject to certain laws but it may inadvertently become subject to certain laws. That's a concern.


Bentley: So the cloud isn't all that safe?

Goldberg: Well, I don't want this to be negative. I'm not down on cloud computing. There are some advantages to cloud computing that I think more people should make an effort to exploit. For example, the tools used in e-discovery are very expensive. If you have a shared cloud computing service where a bunch of companies have their own information stored on the cloud, they can share the cost of e-discovery tools And if you're a company that's not in litigation much you may only need those tools two days a year, so why should you pay for them the rest of the year? There's also some advantage for recovery and backup purposes in having all your information in a single place.

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