Poor Information Quality Will Get You Sued
Daragh O Brien
In the September 2007 issue of the IAIDQ Newsletter, I had written on the topic of non-statutory legal risks arising from poor quality information and broken information management processes. Specifically, I had explored the potential areas of legal liability that a company may be exposed to if, for example, it were to publish an incorrect credit report about an individual, which was then relied on by another party for making an investment decision.
Recent reports and anecdotal evidence suggest that in the current economic climate, the risk to companies of litigation is increasing. Simply put, the issues that might have been brushed aside or resolved amicably in the past are now life and death issues, at least in the commercial sense. As a result there is now a trend to “lawyer up” at the first sign of trouble. This trend is likely to accelerate in the context of issues involving information, and I suspect, particularly in financial services.
A recent article in the Commercial Litigation Journal (Frisby & Morrison, 2008) supports this supposition. In that article, the authors conclude:
“History has shown that during previous downturns in market conditions, litigation has been a source of increased activity in law firms as businesses fight to hold onto what they have or utilise it as a cashflow tool to avoid paying money out.”
Since I first presented and wrote on this issue back in 2007, conversations with lawyer friends and with attendees at the tutorials I’ve run have explored possible defences that might be offered in court if your organization were to accidentally release crappy quality information and cause loss or injury to another party.
Thankfully, a recent judgment has helped clarify the position of the Court of Appeal for England and Wales– a judgment that is likely to apply to the rest of the UK and elsewhere. While the specific issues of the case were settled between the parties, the ruling of the Court of Appeal is good guidance as to the likely attitudes of judges.