Increasing regulation of industry, together with businesses’ growing reliance upon digital devices which enable and record oral communication has combined to create data search and review requirements which cannot easily be satisfied by means of traditional technologies and techniques. Audio evidence, like documentary evidence, can be pivotal to a legal case and a failure to deal with this evidence effectively and efficiently can leave businesses open to judicial criticism, damaging publicity and searing fines from regulators.
JP Morgan, for example, was investigated by the Financial Conduct Authority (FCA) earlier this year following rumours the bank was sitting on large losses. Investigators uncovered internal documents and calls which showed that the Chief Investment Office (CIO) was “in crisis mode” as managers realised that multi-billion dollar hedges meant to protect the bank had lost almost all their worth. The ‘London Whale’ loss resulted in fines of $920 billion; the second largest fine ever imposed by the City regulator.
In the energy sector, the US Federal Energy Regulatory Commission (FERC) threatened oil giant BP with fines of nearly $29million for manipulating the market. BP responded by saying that the regulator misinterpreted a phone call between two of its traders and that the assertions are unfounded.
Audio evidence
During litigation and regulatory investigations such as these, those making or defending legal claims are often required to disclose audio evidence. The definition of “electronic document” in the Civil Procedure Rules includes electronic communications such as voice mail and communication recorded on mobile phones and other electronic devices and media. Litigants are required to identify, preserve and disclose the pertinent parts of their audio evidence, along with other forms of evidence, as soon as litigation proceedings are contemplated, with the threat of adverse inferences being drawn if such evidence is deliberately withheld.
The cases outlined above indicate that many regulatory authorities recognise the compelling nature of audio recordings. In the U.K., the Financial Services Authority (FSA) introduced rules in 2008 requiring that all firms regulated by the FSA record all telephone conversations and electronic communications relating to client orders and the conclusion of transactions in the equity, bond, and derivatives markets.
In November 2011 this requirement was extended to cover the recording of mobile phone conversations that relate to client orders and transactions by regulated firms. Similar rules have either been introduced or are under consideration by regulators across the globe. Whilst IT departments of regulated businesses have taken technical steps to comply with these obligations, their review systems have been designed around the need to provide a small scale sampling of a particular individual’s calls over a short period of time, rather than a comprehensive and defensible collection over an extended period, as typically required for litigation or a major regulatory investigation.
The future of audio review
Phonemic search technologies are a relatively new entrant to the world of e-Discovery but are gaining rapid acceptance. Using phonetic audio search engines, forensic data search can be conducted across multiple sound file types to find relevant material extremely quickly compared to traditional methods. Phonetic search technology transforms audio recordings into a phonetic representation, rather than written words. It includes a model for the way in which words are pronounced and is therefore not limited to only searching for words in a dictionary. Audio recordings are then indexed by identifiable units of sound – the building blocks of human speech known as ‘phonemes’. Once the recordings are processed in this way, the audio files are available for search and analysis by expert reviewers. This presents a new challenge to lawyers, since it involves a twist on the conventional key word approach.
Within text, a given keyword will render a 100 per cent success rate, so long as the word is spelt correctly within the document. However, with sounds, some sounds are simply too generic. As such there is a need to fine tune the process by identifying context. Once the lawyers are confident in a search / filtering strategy, the data can be filtered effectively and potentially relevant documents made available for conventional review via standard review platforms. The benefit of this solution is that it enables a responsive set of audio to be produced from a collection in a streamlined manner which can significantly reduce the burden of traditional linear review.
The technologies and techniques which are available to deal with audio evidence are evolving rapidly and it is important for lawyers to keep abreast of these developments. Dealing with audio evidence efficiently, such that the cost remains proportionate to the overall cost of the legal exercise, is a challenge. As ever, while the technologies are crucial to providing a solution, a considered and well thought through plan and consideration of the available options will stand those who are required to search, review and disclose audio evidence in good stead.
Deborah Blaxell is Legal Consultant and Martin Bonney is International Director of Epiq Systems.
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