Most information managers are not prepared to comply with federal rules requiring them to produce electronic documents relevant to litigation, says a Forrester Research study based on interviews with 25 billion-dollar companies.

“Amendments to the FRCP [Federal Rules of Civil Procedure] took effect late last year, forcing information managers to take a hard look in the mirror and ask, ‘Can all electronically stored information potentially relevant to a given litigation matter be found and produced in less than 100 days?’ The answer for most is a resounding ‘No,’” Forrester says in a report to be released today with the title “Abysmal: the State of Retention Management.”

Companies that don’t have adequate procedures for managing information that might someday be needed for a lawsuit are opening themselves up to potential court fines and huge legal and discovery costs, says analyst and lead author Barry Murphy.

Yet legal and IT departments within businesses often fail to coordinate information retention efforts, which tend to be scattered across different departments and technologies, Forrester says. The analyst firm interviewed information management and IT professionals at 25 companies with revenue of at least $1 billion.

IT and legal departments communicate so poorly it’s like they often are speaking different languages, Murphy says. Lawyers often expect IT executives to handle information retention, even though IT “can’t know where all potential relevant information exists and does not have the legal expertise to make all the decisions involved,” he writes.

At other times, legal counsel thinks technology isn’t necessary to comply with rules requiring proper management of legally sensitive documents, he says in a phone interview.

Many lawyers “are averse to change and think they’re going to be able to argue their way out of this from a legal perspective, and not realize there’s a technology solution,” he says.

There are several components to a technology solution, with the first step typically being an e-mail archive, Murphy says.

“There’s so much [information] in e-mail. It’s a high-volume communication method. It’s where all the smoking guns tend to live,” he says.

Only 15% of information professionals interviewed by Forrester report using an e-mail archive as part of information-retention initiatives, and even fewer use e-discovery tools, records management or ECM.

Products such as Symantec’s Enterprise Vault Discovery Accelerator help companies review e-mail archives for information potentially relevant in litigation, before lawsuits occur, Murphy notes. If e-mail isn’t properly categorized into messages that might be useful in lawsuits and those that are not, companies may be forced to pay lawyers to review their entire archives. “At $200 an hour, that saves a lot of money,” he says.

Other technologies companies should use are file-system archiving and classification, and enterprise search, which plays into every area of discovery, he says.

Many businesses also need to change organizational structures to make compliance easier, Murphy argues. Businesses should have an information-management group that addresses the needs of legal, business and IT, and is able to translate to IT what instructions from legal mean, and vice versa.

Sixty percent of information professionals Forrester interviewed report having such formalized cross-functional teams, yet many of them are not operational.

Retention management should be treated as a cost of doing business, Forrester says, rather than being placed in one area, such as IT, legal or business. Enterprises that are good at information retention raise it to the executive level and give the task its own budget, the firm states.

Some executives remain obstinate, saying information stored on a user’s computer belongs to the employee rather than the company. But information stored on a company-owned computer or network is a company asset and must be treated as such, Murphy notes.

On the plus side, most companies are recognizing the importance of managing the retention of information even if they haven't perfected it yet. “The Federal Rules of Civil Procedure have forced companies to say ‘everything is a record and needs to be managed as such,’” Murphy says.