Seventy-seven percent of US companies are not confident in the repeatability and defensibility of their Electronically Stored Information (ESI) Strategy, according to the the Fourth Annual ESI Trends Report, an independent study commissioned by Kroll Ontrack.

The survey found this is attributable to the fact that more than half (56 percent) of companies do not have or do not know if their organisation has a data map or inventory of where all their data is stored, only one-third (38 percent) have tested their policies, and nearly half (45 percent) do not know if their policies have been tested.

Companies are creating policies, but are not taking the important next step of making sure all the necessary protocols have been followed and testing and modifying policies as needed.

This year's survey revealed more than half of companies (52 percent, an increase from 46 percent in 2009) in the United States now have an ESI Discovery Strategy - a pre-defined, systematic process for identifying, preserving, collecting, analysing, filtering, processing, reviewing and producing ESI in preparation for or in response to litigation, investigations or regulatory matters. However, corporations and their in-house counsel are falling short on the implementation and optimisation of effective processes and technology.

"Over the past decade, the number of discovery cases increased exponentially, and as such, the act of producing ESI for a suit or an investigation has prompted a cultural shift in the law, technology and the way organisations conduct business," said Kristin Nimsger, president of Kroll Ontrack.

"Furthermore, protecting an organisation's ESI while managing it for legal and regulatory demands has become increasingly complex and burdensome and often detracts focus from an organisation's core business priorities. While it is encouraging to see more organisations making ESI Discovery Policies a priority, they need to ensure their policies can be implemented effectively. Without testing their policies, organisations cannot be confident in the repeatability and defensibility of their ESI Discovery Strategy."

Also revealed in this year's survey was the fact that companies are taking little action to address subjects such as early case assessment (ECA) technology and social networking, despite the industry's attention to these topics. In fact, nearly three quarters are not taking advantage of ECA technology to get a better understanding of their data early on in litigation.

The survey results also showed a decline in the number of organisations that have updated their ESI Discovery Policies to address social networking sites and use. In addition, 55 percent of companies either did not update their policies or did not know if they were updated, marking a significant increase from last year when only 19 percent reported the same.

"The emergence of new technologies and user habits translates to an increase in ESI volume and variability and adds another layer of complexity when responding to ESI requests," said Jason Straight, vice president of business development, Kroll Ontrack.

"With the increasing prominence and usage of new technology and communication channels as well as the issues that arise in addressing ESI requests from these mediums, it is critical for companies to revisit their policies every six months to ensure they are up-to-date and thus effective. In addition, implementing key discovery management tools, such as an archiving platform, legal hold tool and ECA technology can better ensure compliance with legal and regulatory requirements, help organisations avoid discovery missteps that have significant financial impact, and reduce the cost of discovery - the ultimate goal."

While economic conditions may have hindered organisations from revisiting proactive plans or closing the loop on their strategies, findings indicate that discovery spend remained relatively constant from 2009 to 2010, despite tight budgets at many organisations.

The 2010 survey revealed US corporations are still spending upwards of $US1 million per organisation on average annually, with nearly half of companies (40 percent) budgeting for discovery as a component of their overall litigation spend. However, half of organisations (52 percent) are not deploying or do not know if they are deploying discovery cost-control measures such as data mapping, bringing aspects of discovery in-house and/or implementing a data archiving tool.

"Litigation is no longer an occasional, unpredictable event. Today, corporations must manage data in a way that contemplates the distinct possibility - even probability - that they will need to respond to a request for ESI from a government agency or an opposing party in a lawsuit," concluded Nimsger. "Corporations can minimise risk and costs by managing data in a manner that contemplates legal requests for ESI, making the right technological investments and making the most of those investments."

To see the results in entirety, visit www.krollontrack.com/esitrends.

This survey was conducted by Echo Research Inc. on behalf of Kroll Ontrack. A total of 203 online interviews were conducted among IT and in-house counsel at commercial businesses in the U.S. Interviews were completed in June 2010.