consolidate masses of data across legal cases and assess up to billions of prior document classifications made by attorneys to identify which documents are relevant for new cases, eliminate repeat reviews, automate the classification of document and identify data that could be a legal liability in the future.
Rachel Teisch’s point was that the use of data analytics can help anticipate a regulatory investigation, mitigate risk and, almost incidentally, improve productivity.
Karl Sobylak of Xerox Business Services has written an article called The SEC has data fever, and the only prescription is more data (analytics) on the (very good) Xerox Discovery Talk blog. The article’s theme is that the SEC and other regulators are increasingly using data analytics to back their investigations into corporate conduct, giving rise to a record year for enforcement actions. The SEC alone “obtained judgments and orders totalling more than $4 billion in disgorgement and penalties”.
There proved to be a link between these penalties and weak internal controls at the organisations which were the subject of the investigations. As Karl Sobylak puts it:
During the course of its investigations, the agency learned that many organizations lacked the requisite internal controls to detect or prevent illegal behavior. The agency repeatedly found that the sanctioned companies and individuals ignored red flags denoting suspicious transactions and other indicia of bribery, corruption, and fraud. In some of these cases, the SEC acknowledged that it discovered the misconduct while studying other transactions and discerned patterns from the data it collected.
Being on the wrong end of a regulatory investigation has implications beyond the purely financial ones of fines and repayments. The damage to reputation matters also, and that damage can be personal as well as corporate when the finger of blame moves to the individuals deemed responsible for the problem. These are not just the bad actors themselves but those who, through greater diligence and better controls, might have uncovered the wrongdoing earlier or headed it off completely.
The answer, Karl Sobylak says, is to “fight data with more data”. Companies can “put themselves on equal footing with government agencies” by making use of the same data analytics tools as are increasingly used by those agencies.
eDiscovery has given us powerful analytical tools such as predictive coding, relationship analysis, anomaly detection, concept analysis. Xerox’s Analytics Hub enables organisations to go further and to apply big data analytics across an organisation’s entire stock of data, not just in reaction to an investigation or litigation but as a continuing assessment of enterprise governance, risk, and compliance.
Xerox Analytics-As-A-Service allows organisations to “proactively identify risky communications or actions in real time”, that is, to spot wrongdoing or breach of policy as it occurs instead of waiting for a government investigator to get there first.