Storage on Trial

What is a good data-retrieval plan worth to a company caught up in litigation? For Morgan Stanley, $15 million. The average Fortune 500 company has over 150 lawsuits in active litigation at any given time. As document retrieval requests from the legal department start piling up, IT departments are just starting to realize how big and scary the eDiscovery monster really is, with retrieval eating up increasing amounts of IT time and budget.

In 2006, Morgan agreed to pay the hefty $15M fine to resolve an investigation by U.S. regulators into its failure to retain e-mail messages. E-mail played a central role in the (later overturned) $1.58 billion judgment in favor of Ronald Perelman in the case of MorganStanley v. Coleman. Perelman is a billionaire investor who said he was defrauded by the firm over the sale of a business. The judge, frustrated by Morgan Stanley’s inability to produce e-mails demanded by Perelman’s lawyers (the firm said backup tapes had been overwritten), took the unusual step of shifting the burden of proof to Morgan Stanley, so that the firm had to prove its innocence.