United States: Cloud Computing And Data Privacy (Electronic Discovery & Records Management)

Keywords: cloud computing, data privacy, data storage, e-discovery


A multinational company is negotiating an agreement with a cloud computing provider to maintain and hold all of the company's electronically stored information and data. The general counsel of the multinational company is concerned about data privacy and data protection both in the United States and worldwide.

What is Cloud Computing?

Cloud computing is the use of computing resources, including both hardware and software, that are made available over the Internet by a subscription-based service provider. Because cloud computing is Internet-based, it offers several advantages over more traditional access to a company's data and software. Cloud-based software and files can be accessed "on demand" from virtually any computer with an Internet connection. For example, when email is stored "in the cloud," the contents of a user's email folders may actually be stored in one or more easily accessed Internet-connected servers located around the world. Moreover, because a company that receives cloud computing services does not rely on its own servers, the amount of data that can be stored is unlimited. Finally, because cloud computing services typically are managed by a third-party provider, they have the potential to reduce a company's IT costs by eliminating the need to acquire and maintain expensive hardware and software. For all of the above reasons, many businesses are seeking to take advantage of this still-evolving technology.

Potential Risks: Data Privacy, Data Storage, and E-Discovery

Data privacy is an issue of concern for companies, their IT professionals and legal departments, whether files stay on-site or are stored electronically with a cloud computing provider. For companies considering cloud computing options, it is particularly important to carefully evaluate the provider's policies and procedures to ensure that they provide sufficient safeguards to protect confidential data. The company's lawyers and IT professionals should develop an understanding of the technology so that they can make informed decisions about whether cloud computing provides the level of protection they require.

One specific risk is that electronically stored information (ESI) may be co-mingled with the ESI of another company or of a separate but related corporate entity. Such situations can make it difficult to determine what entity has "possession, custody, or control" of the data and is under an obligation to preserve or produce the data. Moreover, if a cloud computing provider stores data in multiple servers around the world, ESI may be split up among jurisdictions with different data protection and transfer laws, making it difficult to keep track of how to access and retrieve data, and how to keep data private and secure. 

ESI stored with a cloud computing provider can also present challenges to the discovery process in litigation. For example, the U.S. Federal Rules of Civil Procedure allow a party to request discovery of ESI in the responding party's "possession, custody, or control." If a company has contracted with a cloud computing provider to maintain and hold its ESI, the company does not have direct control over, or possession of, the ESI. For purposes of discovery, however, the company still has a duty to preserve and produce that data, as long as it has the practical ability to do so.

Tips for Managing Risks

The use of cloud computing should not fundamentally change the way a company handles ESI. No matter where the ESI resides, a company is responsible for being aware of the information that it creates and for governing that information in accordance with applicable business and legal requirements. It is important that the company be familiar with and closely monitor how its information is stored, retrieved, retained and disposed of by its cloud provider. A company should also develop effective procedures for auditing such activities by its cloud provider. At a minimum, the company should make sure it is capturing sufficient data when information is created (including what the information is, who created it, and for what purpose) to properly govern it.

Before signing a service contract with a cloud computing provider, a company should be sure that the contract contains provisions protecting the company's interests and its need to comply with data privacy requirements. Consider the following items when negotiating a service contract:

  • Access: The company should have the right to access all ESI "on demand" and in a specified format that is easy to use.
  • Control: The company should have the ability to reasonably direct actions of the provider to preserve and produce ESI.
  • Cooperation: The provider should be willing to comply with the company's directions regarding its ESI and to comply with any and all legal holds.
  • Speed: The provider should agree to cease any data destruction in a timely manner and to produce data with sufficient speed to meet the company's obligations.
  • Metadata: The company should inquire as to the form or format in which data will be stored and returned for production during litigation, including whether metadata will be intact.
  • Costs: Beyond the subscription price for the service, the contract should address the costs of potential production, as well as potential indemnification policies and attorneys' fees should the cloud provider's failure to comply with the contract terms result in liability for the company.
  • Transparency: The contract should address confidentiality, data integrity and availability issues, including whether data will be commingled with the data of other cloud customers.
  • Jurisdiction: The company should discuss with the provider where the data will be maintained and should consider whether production of the data might require compliance with data transfer laws or international privacy laws.
  • Ownership: The contract should clearly state that the company owns the data.
  • Security: The company should inquire about the security measures that the provider has in place to protect data privacy and attorney-client privilege and whether the company will be informed in the event of a security breach.
  • Policies: The company should determine whether the provider's policies and procedures could impede the company's obligations to preserve, collect and produce ESI during litigation.
  • Disaster Recovery: The company should have contingency plans in the event the provider was to suffer a server crash or other data loss or go bankrupt or out of business. The contract should stipulate that its provisions will remain in force if the provider is acquired by another company.

The best way to manage the data privacy and security risks associated with cloud computing is to gain a comprehensive understanding of how the company plans to use cloud computing and to establish procedures and contract terms with the cloud computing provider that meet the company's data security and privacy needs.

Originally published December 2012.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2012. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Ostrow Reisin Berk & Abrams
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Ostrow Reisin Berk & Abrams
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions