Tales From the
Litigation War Room:
High Stakes in
Information Governance
John W. Bagby
Prof. Info. Sci. & Tech.
Pennsylvania State University
Overview
• Crisis Tests Practice
• Conformity with Well-Designed
Standards Reduces Litigation Risk
• Crisis Management Most Effective
if Well Prepared
Crisis/Catastrophe Litigation
“When looking for an effective
test of an organization’s
preparedness, there is really
nothing quite like a crisis that
triggers high stakes litigation.”
Stakes Attracts Investment
• Crisis often unexpected, potentially severe
– Crisis mismanagement raises risks of failure
• Scale of Catastrophe Implies Large Groups
– Share community of interest
• EX: affinity group members, shareholders, clients,
employees, alumni, geographic neighbors, supply
chain participants
• Consequences uncertain & unpredictable
• Prepared & Nimble Organizations/Verticals
– Pivot Quickly to Respond Effectively
– But if Caught Off Guard & Flat-footed
– response capabilities, contingency planning, backup
Litigation Surprise
Crisis Readiness:
Law & Economics
• Crisis Readiness Fails Traditional
Investment Criteria
• High Stakes Combine with Low Readiness
– Result: High Contingent Liability Risk
• Irregularity of Catastrophic Events
Engenders Ignorance
• Catastrophic Events Blindside the
Unprepared
Preparedness Investment Fails ROI
Readiness Market Disciplines Less Convincing
– Market Incentives often Insufficient to spur Readiness
– High, Near-Term Costs, Uncertain Delayed Benefits
– Avoidance of Unquantifiable & Unpredictable Future
Losses,
• Not Traditional Upbeat Positive Cash Flows (e.g., Sales)
• The NPV Compounding Problem
– Severe when Interest Rates are Higher than today
• Other Analytics Are Needed to Assess Litigation
Readiness in Catastrophic Cases
– So Need Familiarity with Litigation & Regulation
Some Litigation Preparedness
Investment Satisfies ROI Screen
• publicly-traded companies & financial firms –
securities litigation
• sellers of goods – product liability
• manufacturing, chemical, transportation,
mineral extraction/processing firms environmental
• service providers - malpractice
• all firms not-fors & govt agencies- employment
Preparation
• Prepare for Investigations
– Regulatory, Criminal, Self-regulatory
organization (SRO), Internal
– In-house counsel familiar with operations &
personnel;
– Ongoing experience & good relations with
external litigation counsel;
– Employee Training in Legal Process &
recurring regulatory enforcers
• Siege-Survival Skills: Avoiding Inadvertent
Disclosures, Press Relations; Evidence
Preservation; Defensible Records Management
Regime
Document Preservation
• Form of Readiness: “the” essential conundrum
– Records Destruction Risks Spoliation, Obstruction,
Regulatory Sanctions
– Records Retention Has Plausible Utility
– Smoking Gun Production Risks Liability
• Records Mgt Standardization - Some Defense
–
–
–
–
Generally Accepted Recordkeeping Principles
ISO 15,489
COBIT
EDRM
• Litigation Holds: Planning, Dry Runs, ESI Teams
– And there Will be Litigation War Rooms
Churchill’s Second World War Rooms
Modern War Room Origins
• Derived from actual war time hostilities
– Originally Centralized Physical Location
– Information Gathering
– Expertise Applied for “Sense-Making”
– Enables Strategic Planning
– Expert Analysts Findings
– Informs Decision-Makers
• Traditional Physical War Room Features
– Walls project images, maps, data
– Informs Analysis & Planning
Cold War Room
Modern Electronic War Room
• Invest in war room facilities, training & readiness
– Justified for high stakes campaign
– Concentration of information, hypotheses, testing
assertions, debate, command & control decision-making
– Transaction & communication costs reduced
• Public Policy Derivations
– Adapted to litigation, pre-trial discovery, political
campaigns & crisis management
– Crisis particularly useful organizing principles
• Document Repositories
• Provide easy access to: robust literature, primary/secondary docs
• Selective Availability to defined group(s)
– Strategic choice: publicly accessibility
Virtual War Rooms
• Various Locations: Security Defense & Cost
– Dispersed Actors
– Connected Electronically to Info Respositories
• Public Internet connections vs. secure lines
• Communications nerve center(s),
• eDiscovery “in the Cloud”
– What is the Cloud’s Street Address Again?
• That’s an “in rem” lawyer’s joke
• Closed systems preserve confidentiality
• Open systems trade-off confidentiality
– May Destroy Confidentiality & Privacy
Litigation WaRoom
• EXs in Instruction & Outside Litigation:
– Enron War Room – electronic repository of
litigation docs
– Political Campaign war room
– Deep Water Horizon War Room - repository of
BP Litigation documents Gulf Oil Spill
• Often Powerful
– Crowd Source Enabled
• leads, interpretation, documents, video, participant
recruiting, leadership
CrowdSource Investigations
• Online Collaboration Lowers Costs/Barriers
– Access many people, each performs subset of tasks
– Crowd Source Scholars May Argue:
• 1st Central authority organizes, sets narrow task, vets before
decision-making
• Here, grassroots impetus is eventually focused
– Independent Investigative Journalism
• Cite to D.Tapscott; A.D.Williams; P.Bradshaw
• Derived from social networks (SN) & wikis
– Website encourages crowdsource content mgt
• Ward Cunningham: "simplest online database”
• Design options:
– Confidentiality; group expertise, size & dedication; raw
data vs. deep analysis through Sense Making
SenseMaking in General
• Follow-on & interative with investigation
– HCI, Information & Organization Sciences
– Decidedly Interdisciplinary
• Simultaneous Data Gathering & Framing:
– Retrospection, Social Interaction, Ongoing,
Cues/Clues Discovery, Plausibility trumps
Accuracy
• Narrative(s) Hypothesize & Summarize
“Findings”
• Cite to: K.Weick; B.Dervin
SenseMaking in Crisis CrowdSource
Investigations
• Stakeholders both apparent, self-appointed
• Incentives derived from info. scarcity, complexity,
contradiction, uncertainty, equivocality, ambiguity,
confusion, disbelief, rumormongering
• Process:
–
–
–
–
Key nodes & relationships (links) ID’d
Cognitive mapping: network graphs, time-lines
Scandal clue detection engine(s) deployed
Informant (virtual) network emerges
• Driven by rumors, tips, news, knowledge, suspicion
– Central repository (WaRoom) deployed, managed
– Crowd analyzes, hypothesizes, investigates, reports
S. Clark’s SenseMaking Enterprise
Meaning guides
scanning behavior
- Belief–driven scanning
SCANNING
Conditional Viewing
• Unconditional Viewing
• Directed Viewing
• Undirected Viewing
•
Enact or create meaning
to justify actions
- Action drives intrusion
into environment
ACTION v
INTERPRETATION
Beliefs
• Assumptions
• Values
• Meaning
•
Gather information
to create meaning
- Satisfice
- Simplify
- Bracketing
Structure drives
and guides action
Defend
• Prospect
•
Translate meaning
into action
- Implementation
- Pursue objectives
STRUCTURE
Technology
• Policy/Standards
• Procedures/Processes
• Organization
• Formal Goals
•
Action becomes
patterned and routinized
Defining Standard Terms
• Self-Regulatory Organizations (SROs)
– Regulate their members, set standards
– May Reduce Govt's Intervention
• SDO-Standards Development Organization
– Presumes contributions from various players
• SDA-Standards Development Activity
– Presumes substantial design component & std
anticipates (precedes) compliant objects of std
– Develops Voluntary Consensus Std (VCS)
Standards ARE Important!
• Standards Impact Nearly All Fields
– SDA Participants,Affected Parties, Int’l Orgs, Gov’t
Agencies, SROs, NGOs, SDOs
– eCommerce & Internet largely dependant on Stds:
• EX: html, http, 802.11, x.25 packet switching …
• Standards May Embody Considerable Innovation
– SDA have Innovation Life Cycle Independent of
Products/Services Compliant w/ Std
– Stds Innovation Occurs in Various Venues
• Inside innovating firms, inherent in many products, Inside
technical domain groups (trade assoc. professional societies,
indus. consortia)
– Standards Increasingly Embody Patents
• EX: Apple v. Samsung - Standards Essential Patent(s)
Standard Impacts of Standards
• Standards May Have Economic Impact
– Open Markets, Create Professionalism (Guilds)
– Suppress Competitive Alternatives: Barriers to Entry
– Monopolize: Lock-in
• Increasingly perceived to favor particular nations, industries,
identifiable groups & individual firms
• Standards May Have Legal Impact
–
–
–
–
–
–
Set legal duties
Guide compliance
Mere minimum floor for activities
Exonerate
Obligate royalty payments
Monopolize (again)
Why are Standards Important?
• Stds Increasingly an Emerging Source of Policy
– L.Lessig’s Code cited for IT trend:
• Public policy imbedded in s/w. f/w. h/w & ICT stds
• Do SDA Approximate Traditional Policymaking?
– SDA’s impact on public’s consideration/deliberation?
– SDA transparency?
• Downstream impact so embodied w/in code or technical
compatibility details so obscured from public review?
• SDA Participants Use Non-Gov’t Venues
– Forum Shopping may be Widespread
• Classic “Race to the Bottom”
Standards Development
Activities (SDA)
• SDA are collaborative processes
– Infused with technical design
– Largely by self-selected groups of interested
constituents who assume standard roles
(avitars)
– Participants must have foresight & resources
to engage in protracted, frustrating political
processes
• General Disadvantages of Standardization
– Lock in old/obsolete technology
– Resists favorable evolution or adaptation
– Favors particular groups & disfavors particular
groups
Traditional Standards Taxonomy: Origins
• de Jure
– Emanate from authorized source (statute, regulation,
caselaw, accredited SDO)
– Best when de Facto or VCSB rigor unlikely
• Policy risks: inadequate, ineffectual, inefficient
• EX: determine acceptable risks, sete protection
level, balance risk-cost-tech feasibility @ FCC, EPA
• de Facto
– Generally Not directly endorsed by govt or SDO
– Achieve critical mass in market
• EX: OS (Windows), content interoperability (VHS)
– Less multi-participant coordination & delay,
natural result of competition, liberty, flexibility
Traditional Standards Taxonomy: Origins,
Accreditation & Certification
• Voluntary Consensus Standards Body (VCSB)
– NGO, consortia, private-sector venue
– Source of most crucial electrical, electronic,
Communications & Internet protocols, building/construction,
petroleum/fuels, testing methods
– Enhances Liberty
– Generally OK if Due Process remains strong
• Am.Nat.Stds.Inst. (ANSI)
– Participates in int’l coordination of standardization
– Certifies American National Standards produced by
independent SDOs
• Nat’l.Inst.Stds. & Tech. (NIST)
– Coordinates U.S. Govt.’s stds strategy from statutes,
funding, appropriations & by Dept. of Comm.
Cite to: J.W.Bagby, Ch.49 in Bidgoli’s Tech.Mgt. (Wiley ’09)
Taxonomy: Autonomy, Specificity,
Precision in Implementation
• Breadth of variance in compliance
– Rules-based standards (precise, most specific)
• Most ICT stds & HIPAA security rules
• EX: Results of FTC caselaw interpreting G/L/B privacy
– Principles-based standards (middle-ground)
• FTC privacy security rule
• EX: Expected result of SEC pressure on some acctg stds
– Principles-only standards (vague, interpretable)
• SEC’s G/L/B CyberSecurity stds Reg.SP
• IFRS (formerly IAS) issued by IASC
Various Due Process Constraints on
SDA Processes
• ANSI “Essential” Due Process Requirements
– (1) openness (2) lack of dominance (3) balance (4) notification (5)
consideration (6) consensus (7) appeals (8) written procedures
• OMB Circular No. A-119
– (i) openness, (ii) balance of interest, (iii) due process, (vi) an
appeals process, (v) consensus
• Standards Development Organization Advancement Act
(SDOAA)
– Requires Due Processes:
Notice of particular SDA to affected parties; Opportunity to
participate in SDA; Balancing interests to avoid SDA domination
by any single group; Ready access to proposals and final
standards; Consideration of all views and objections; Substantial
agreement on all material points before reaching final standards;
Right to express positions in SDA; Right to consideration of
positions by SDO; Right to appeal adverse SDO decisions
Applying the Standards Regime to
Records Management Standards
• S.Ct. AA case OK’d Routine Doc. Destruction Plan
• Spoliation
– Adverse Inference
– Severity
• Obstruction
– Criminal Intent
• Litigation Holds in Civil Pre-Trial Discovery
– Scope
– Timing Trigger
• Regulatory Retention, Submission, Disclosure
– Enforcement Penalties
Financial Crises
• LIBOR
• Chartered-MoneyLaundering
– Value transfer
• 2008 Financial Crisis
– Derivatives
– Capital Reserves
– Trading Mechanisms
• “On” the table rather than “under the counter”
• Some of the Primary Standards Applicable
– Accounting, Auditing, Creditworthiness, Financial Market
Operations, Ratings, Recordkeeping
• ex post:
– Regulation Intrudes on Private Decisionmaking
– Public Expose Builds Pressure to make the Recordkeeping
Regime More Stringent
Environmental Disasters
• Varied Types
– Agricultural, Health, Industrial, Resource
Extraction/Transportation, Nuclear, Natural
• Existing Governmental Regulation & SelfRegulatory Regimes Scrutinized
• ex post:
– Physical Controls, ex ante Studies
– Public Expose Builds Pressure to make the
Recordkeeping Regime More Stringent
– Remediation/Reactions are Culturally Biased
Abuse Scandals
• Targets:
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–
–
–
Catholic Church
Boy Scouts
Native American Tribes
Ivory Towers
• Venues:
– State vs. Federal, Criminal, Civil Liability, various
Regulatory Regimes, SROs, Internal
• ex post:
– Reputation, Goodwill Impacts
– Public Expose Builds Pressure to make the
Recordkeeping Regime More Stringent
Standards Embody IP
• Looming Patent Thicket
– Complex Web of Inter-Related IP
– Both Records Mgt & eDiscovery
– EXs Issued Patents:
• Predictive Coding
• Near De-Dupe
• Dozens Adaptable from Info Process, Search, etc
– Dozens More Pat. Applications @ PTO & EPO
• Large Concentration by a Few Notable Applicants