Adam Bendell, senior managing director at FTI Consulting, which commissioned the study, says there is a big disconnect between perceived and actual litigation readiness.

IT executives' perceived ability to respond to e-discovery requests "doesn't jive with the reality that other people involved in the survey or delivering [e-discovery] services see," he says.

Firms mistakenly believe many of the software programs they have purchased will solve all their problems, adds Bendell. "But many don't provide all the features they need, or software may not be deployed to an organization's subsidiaries, as well as the main company."

"Another part of implementing a good strategy is having people knowing what they're doing and having a repeatable process," he says. Yet while firms may have the software in place, often the people and processes that need to be wrapped around the software may not exist, he relates.

"It's a very complex problem when a firm is hit with a large e-discovery case. And it's proven to be a very difficult undertaking for all those things to go right in a repeatable way," Bendell adds.

In fact, IDC, which surveyed 118 IT cross-industry executives, found that companies are still in the early stages of adopting best practices for scoping the relevant individuals, records owners and system custodians.

Around 59% of companies polled said they have created core response teams, while 31% said response teams are created on an ad hoc basis and almost 9% said they are using third-party service providers to facilitate the process.

Around 85% of companies said they have formalized litigation communications policies. But 55% said they are still in the early stages of automating the coummunications process. The survey found that 29% are primarily using voice communications and in-persona notices -- while 13% are still using paper-based surveys.

"The existence of ad hoc and manual business processes exposes a litigant firm to potential challenges to its litigation hold practices," IDC said.

Meanwhile, as data volumes continue to escalate, many people still are struggling with not being able to produce data in a timely fashion. "It's a lot easier to put data into systems than to get it out," explains Bendell, of Annapolis, MD-based FTI Consulting.

Bendell predicts that hedge funds could be particularly hard hit by e-discovery litigation in the near future. While hedge funds currently are unregulated, the credit turmoil could lead them to be increasingly subject to litigation. "Most aren't well prepared," says Bendell.

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