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Globalization Speeding Up eDiscovery Adoption, But a Long Road Lies Ahead in China

Blog Posted in: eDiscovery |
Sep 20, 2017

By Adam Feinberg 

In the United States, the eDiscovery market has grown quickly over the past decade – both because of the ever-growing amount of litigation and the fast transition of most businesses to digital-only work. But outside of the U.S., and specifically in Asian countries, eDiscovery is not nearly as common.

Will these nations see the same eDiscovery boom in the near future?

Rhys Dipshan recently published a Legaltech News article covering some interesting highlights on adoption in Far East markets. Overall, the consensus seems to confirm that eDiscovery will continue to grow.

However, when it comes to China specifically, while the eDiscovery market may continue to grow, there will still be difficulties with stored data – specifically how it will be used in U.S.-based cases. Here are a few things to consider when working a U.S. case involving a company in China:

Data Privacy Networks 

China has very heavy restrictions on the internet, including where you go, what you can see and how much (or little) privacy users have on the internet. Chinese officials are even requiring telecom companies to eliminate individual user access to VPN software except back to company servers. These issues with data privacy make it incredibly difficult to do things like collect data remotely or host a document review site that attorneys in both the U.S. and China could access, often forcing costly relocation of discovery teams to China. We have developed solutions for many of these issues, but even with those solutions in place, we always caution clients that collecting data from China can be unpredictable at times and to plan for and expect the unexpected.

Encrypted Data Transportation

If data can’t be collected remotely, it needs to be forensically collected to a hard drive and encrypted. The hard drive then needs to be shipped or carried out of the country. However, there has historically been great difficulty in getting encrypted data in and out of the China. More than 40 countries, including the U.S., agreed to the Wassenaar Arrangement, which allows for encrypted device transport across national boundaries, under a “personal use exemption.” China is not a part of this arrangement.

In fact, our firm has had its own troubles with this technology barrier. In a recent case, a forensic collection resource was stopped at an airport on the way back from China to Singapore and had his collection hard drives confiscated for a short time, which contained encrypted data storage related to a legal matter. When he arrived back at his office he found that Chinese officials had erased the content of both drives.

Culture Differences

Japan is also a focus of Dipshan’s article. It has a long history of delivering goods and services to the West and, as such, has extensive experience dealing with the American and European legal systems and understands and can better accommodate our forensic and discovery needs. Japan also happens to be a participant in the Wassenaar Arrangement. The same could be said for South Korea.

In China, this long history of adoption is not present, and as time has progressed, China has become more locked down in terms of technological access. More difficult than the obvious language barrier, Asian culture is also firmly rooted in the concept of honor. Since the eDiscovery can unearth questionable or dishonorable actions, potential custodians can see the collection of data for litigation as a personal attack on one’s individual honor.

Regardless of these obstacles, Legaltech News makes the point – with which I agree – that as more and more U.S. companies do business in China, the more litigation there will be, which should spur faster eDiscovery adoption. Globalization already contributes to changing regulations in foreign countries, and as the world becomes more connected, so will the need for electronic discovery. That said, you should always consult local counsel who should be well versed and schooled in local privacy, data transfer regulations and law as well cultural differences.

A fuller version of the article appears on Relativity’s blog: part one and part two.