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    Associated Press: Electronic evidence firm grilled over absent memos

    The Associated Press reports on a case that shows how difficult it is to conduct searches for electronic evidence. Guidance Software, which provides technology to conduct searches of electronic data, is facing problems because of questions concerning its own electronic evidence search in response to a lawsuit.

    Whether Guidance intentionally hid documents or just couldn’t find them is a matter of dispute. The company said it did all that was required. But its inability to cough up certain e-mails, even over several months, led an arbitrator to accuse it of gross negligence and proceeding in bad faith. […]

    The mountains of digital information piling up on hard drives and backup tapes have made discovery — the exchange of information between parties at the start of a lawsuit — increasingly complex. “E-discovery” software and services boomed from a $40 million business in 1999 to nearly $2.8 billion in 2007, according to George Socha and Tom Gelbmann, directors of the industry group Electronic Discovery Resource Model.

    Pasadena, Calif.-based Guidance Software is one of the largest software specialists, with sales of $89 million over the last four quarters. The company began in 1997 making tools to help criminal investigators search computer hard drives. In recent years Guidance added new programs for scouring corporate networks for digital evidence. […]

    [The arbitrator, William McDonald] stopped short of saying Guidance was sitting on a smoking gun. But he was disturbed that [the former employee suing the company, Cassondra Todd,] kept identifying documents the company hadn’t unearthed. When he learned the corrupted backup tape had purportedly gone unnoticed for nearly a year, he had harsh words for the company.

    “These are routine things in this business. And it wasn’t done until pulling and screaming and kicking and facing the ultimate sanction,” McDonald said, referring to his option to end the case in Todd’s favor. “We’re looking at people who should be very sophisticated in this area, given Guidance’s business.”

    As punishment, McDonald ordered the company to pay for Todd’s expert witnesses and her travel costs, plus the cost of rescheduling the trial. He also forced Guidance to search the backups, despite its arguments that it would take weeks, amounting to a task Guidance would charge customers $100,000 to perform.

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