Technology and Legal Panel Addresses the Risks and Benefits of Cloud Computing at Gibbons Fourth Annual E-Discovery Conference

Cloud computing is revolutionizing the IT marketplace. With the economy still suffering aftershocks from the Great Recession, companies of all sizes are being pressured to consider cost-cutting strategies. One such strategy is migration to cloud computing services. The “cloud” provides a reasonable solution to reduce cost while at the same time, increasing efficiency and innovation in IT operations. On Thursday, October 28, 2010, Gibbons P.C. held its Fourth Annual E-Discovery Conference, assembling a panel of experts for a roundtable discussion concerning (i) what constitutes “cloud computing,” (ii) how cloud migration can be achieved, and (iii) what risks are posed by “cloud computing” and how to mitigate those risks.

The panel included Michael Aginsky, Chief Technology Officer for Gibbons P.C., Jonathan M. Remshak, Senior Corporate Counsel at Konica Minolta Business Solutions USA, Inc. (“KMBS”); and Galina Datskovsky, Senior Vice President of Information Governance at Autonomy and President-Elect of ARMA International. Luis Diaz, a Director at Gibbons and Senior member of its E-Discovery Task Force, moderated the discussion.

The discussion first focused on the definition of cloud computing, which was described as internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand. The panel explained the software as a service model now being pursued by cloud providers that seek to sell these services as utilities like electricity and gas using a “pay as you go” approach. They next compared and contrasted cloud architecture with traditional client-server architectures, highlighting important differences. Lastly, the panelists discussed the ever-expanding list of cloud-based services like Gmail, and and what this implies for the future.

The panel then turned to an actual case study in cloud migration. They discussed the migration path of one major multinational corporation to cloud-based email services provided by Google. The panel explained that, while email remains a critical business tool in today’s fast-paced global environment, the provision of enterprise-grade email and collaboration tools to everyone at the corporation was a costly affair. The corporation wanted to improve the sharing of information in a scalable platform that allowed multiple business units to share a single web-based platform and that permitted a tight implementation timeframe. It was noted that the corporation has reported that the migration to Gmail has (i) provided cost savings, (ii) provided scalability and elasticity, (iii) allowed rapid application development, and (iv) allowed for low-cost experimentation.

Lastly, the panel examined the myriad of legal, business, retention and E-discovery issues associated with migration to “cloud computing.” It explained the risks associated with accessibility, data security, data location, data segregation, data integrity, and data ownership. The panel also reviewed significant legal risks relating to privacy, trade secret protection, E-discovery and a host of other issues unique to cloud computing. In closing, the panel recommended that companies migrating to the cloud carefully negotiate protections into the provider service agreements. At a minimum, they noted, these agreements should address the following:

  • Clear rules for use of systems, that includes social networking sites;
  • Limiting or prohibiting subcontracting by the cloud provider;
  • Limiting data storage locations;
  • Legal hold methodology;
  • Segregation/commingling of data;
  • Access rights;
  • Allocation of liability for loss or wrongful disclosure; and
  • Data disposition protocols.

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