An important fact to remember is that if a company acquires excessive historical litigation costs from improper management, it may be more difficult for the company to obtain adequate Director’s and Officer’s (D&O) Insurance coverage or, at a minimum, may drive up coverage premiums. Additionally, the companies and their insurance agents must be sufficiently facile with e-discovery so that they can effectively address any underwriting issues the carriers may raise.
Prudent corporations will implement procedures (e.g. document retention policies) and technologies that will control costs. Additionally, corporations should be proactive by collaborating with their IT employees to address e-discovery requirements and select outside professionals to assist the corporations during the e-discovery process (e.g. computer forensics experts).
By putting the best policies, protocols and tools in place, corporations can most effectively assess the terms of D&O coverage and the policy limits which are likely to be appropriate. Additionally, corporations and their insurance agents who are proactive in addressing e-discovery risks and obligations will be better equipped to go to the marketplace for D&O insurance.
The challenges of e-discovery are increasing because of the various new technologies that are being introduced into the business environment (e.g. instant messaging) and the proliferation of ESI resulting from more users of these technologies. As a result, in-house counsel and insurance agents must stay ahead of the curve so that risk is appropriately assessed and managed. The more proactive corporate entities are in finding legal representation that approach e-discovery as a direct expense to the corporation rather than a premium on legal services, the more D&O Insurance coverage may become available under a given policy because the consequences of failing to obtain adequate D&O insurance can be dire.
** This is the last part in a two-part series which comprise an abridged version of the article “E-Discovery for Corporate Litigants,” written by Daniel Garrie and published in the Los Angeles Daily Journal. To request a PDF of the complete article, please contact Law & Forensics.