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Regulatory

Surfing the .WAVs Can Sometimes Cause a Wipeout

We’ve been involved in a couple of projects recently where there is confusion about file formats and compatibility with Windows Media Player (WMP).  Specifically, one of the most common types of digital audio file extensions is the “.wav” extension, which is GENERALLY playable in all the standard media players like WMP, iTunes, RealPlayer, etc.  The .wav extension has become more or less a “standard” if such a thing exists in digital audio.

But the truth of the matter is quite a bit more complex, and can make your projects more challenging if you are not aware of it.  In reality, the “.wav” extension merely defines a “wrapper” for an audio file, and tells whatever media player you are trying to use certain information about that file. This information can vary considerably, but the most important thing it tells is what codec was used to create the actual digital audio track.

What’s a codec, you ask?  Well, that is an industry abbreviation for the “coder-decoder” that was used to capture the analog audio and convert it to a digital signal.  Every digital sound file has gone through a transformation, from the original analog sound waves to a series of bits and bytes that are generated to capture that sound wave and then recreate it through the computer.  The original capture and digitization of that sound is the coding part, and the subsequent processing of that code to play it back out of a computer (or CD player, DVD player, etc.) is the decoding part.  And there are many different codecs that can be used to accomplish this task.

One of the oldest and most common codecs is PCM (pulse code modulation), which is the standard for capturing and playing back audio from computers, CDs, etc.  But while PCM can produce a nicely accurate rendition of the original sound, it tends to be very “uncompressed” which means the digital files it creates are quite large.  In order to solve for the problem of file size, and still retain fidelity in different regions of sound, different codecs have sprung up to handle different types of audio.  For example, MP3 was developed specifically to retain a higher fidelity of sound for music, but at the sacrifice of keeping fidelity in the sound ranges represented by normal speech. Similarly, the telephony industry has developed certain codecs to maintain adequate representation of normal spoken content but to reduce the fidelity of other parts of the sound range to save file space. (The more educated reader will recognize that I am glossing over the issue of sampling and its effect on file size. For those that are interested, go to this this Wikipedia page.)

But here is the crux of the matter, and the trouble you may run into with an audio discovery project.  The “.wav” envelope can contain audio files in any number of different codecs, and these codecs are not all playable in WMP…or any other standard player.  The reason for this is that not all codecs are freely licensed.  Some codec developers have put restrictions on their creations, requiring that anyone wanting to play files in this format have a license to do so. And since Microsoft (and Apple, and Real) don’t feel like paying millions of dollars to these developers for each copy of WMP (iTunes, RealPlayer, etc.) they distribute, then these codecs are not recognized by those media players.  And thus, you have a .wav file that you may not be able to play.

Since audio discovery is most commonly about reviewing telephone calls, you are likely to run into two of the codecs that have become popular in telephony, due to their file compression and voice fidelity characteristics: TrueSpeech and G.729.  And while these files will commonly come with a .wav extension, you will get a nice little error message from WMP when  you try to play them.  Two things to keep in mind when you are dealing with files of this nature:

  1. You must make sure your audio discovery vendor has the ability to deal with them natively so that you can accomplish your review; and,
  2. You must also make sure that your vendor can convert any of these files that you need to produce to regulators or opposing counsel. Otherwise, you are likely to get a pretty nasty response (or worse!) back from them if you’ve delivered files they can’t play.

If you would like to know more about file formats, or learn about Nexidia’s ability to handle these (and just about any other) formats then please visit our website or reach out to me directly.  We can make sure you can surf the .wavs without wiping out.

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Audio Discovery: The Real Costs of Human Review

Two excellent reports have come out in the last year or so that address a pair of related issues: the growing costs of e-discovery, and the use of technology assisted review to help curtail those costs. While neither one addresses audio discovery specifically, the general thesis still applies; technology really can help you do things better, and cheaper. Who doesn’t like better and cheaper?

Well, there is actually an answer to that question which I’ll get back to in a minute. But first, a bit more detail on the two reports I mentioned.

The first is an article from the Richmond Journal of Law and Technology by Maura Grossman and Gordon Cormack.  The link will download the entire article for you so I’ll spare you the legal citations, and in a short blog entry I have nowhere near the time to cover all the points. But I quote the first two sentences in the Conclusion of the report:

Overall, the myth that exhaustive manual review is the most effective – and therefore, the most defensible – approach to document review is strongly refuted. Technology-assisted review can (and does) yield more accurate results than exhaustive manual review, with much lower effort.

Why does manual review fare so poorly in this competition? Lots of reasons, but a big piece of it is reviewer fatigue, and also that reviewers make mistakes and often don’t agree on the significance of what they’ve read. Shocking! Not everyone thinks alike.  Go figure.

The second report from the Rand Institute for Civil Justice, titled “Where the Money Goes”, looks at the cost elements involved in discovery. Again, the link is there for you to download a summary or the whole report, so I want to key on just one element. When looking at the costs of producing electronic documents, their finding was that 73% of the cost came during the Review component of the EDRM. What does that really mean?

It means that no matter how much people gripe about charges from the e-discovery vendors, it’s still all those in-house and outside attorneys, paralegals and other folks who are eyeballing the documents that drive the total cost in the process. And as with the Grossman article, the Rand report provides evidence that technology can help make the whole process better, and cheaper.

How does this apply to audio discovery? For years, if any party presented or requested large bodies of audio evidence for discovery, the expected process for managing this discovery was human review. And it generally takes about  4 hours of human time to review each 1 hour of audio. So if even a bargain-basement contract attorney makes $75/hour, that’s $300/hour of audio in review costs. Even a fairly small 1000 hour project would create a $300,000 cost, and most of the time the parties would just cry “unduly burdensome” and whisk it under a rug.

Fast forward to today, and effective audio discovery technology exists that has been proven effective in federal regulatory investigations, criminal cases and other litigation matters. It can lower costs by as much as 80%, in much the same way that technology assisted review lowers other e-discovery costs.  And yet, we see an interesting phenomenon, which is that many law firms still espouse the use of manual review to run these audio projects. Who wouldn’t want something better and cheaper?

People often ask me who my competition is in the audio discovery arena. And while there are a few other technology providers in this space, my answer to this question is actually different. My biggest competition is…wait for it…the billable hour.  Law firms make profit on billable hours. They don’t make profit on e-discovery costs (generally speaking).

I realize this is a bold and harsh statement, and I wouldn’t make it so blatantly except 1) I have heard from actual law firms who confirmed it for me, and 2) I’m not sure how many people are reading this blog yet, so I could use some publicity!

But seriously, if you have an opinion on this, weigh in here. Comments are welcome!

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The Regulators are Already Tuned In…Why Aren’t You?

In the June/July issue of Executive Counsel magazine, Michael Arkfeld spells out the various reasons why companies, corporate counsel and law firms can no longer ignore the myriad forms of evidence that are now presented in audio (and video) recordings.  But he doesn’t mention one very important fact, especially critical if you or your clients routinely record any type of energy or financial services trading activity.

The Regulators are AHEAD OF THE GAME and are asking for this content, and they are already using sophisticated tools to help quickly process and review these files in their investigations.

Just last week, Nexidia announced that the US DOJ Criminal Division has licensed its audio discovery software to help with investigations managed by that division.  It joins the SEC, the CFTC, the FTC and FERC as leading government agencies that have deployed Nexidia solutions to support the growing body of audio content under investigation.

And these investigations can have very meaningful (and financially painful!) consequences.  In a 2007 review of trading practices from Energy Transfer Partners, the FERC used trading floor recordings to uncover evidence of fraudulent practices that led to $97M in penalties and a $67M disgorgement of unjust profits. Pulling from a report of the incident:

“The investigation uncovered voice recordings that show senior managers at ETP were aware of the situation and directed the company’s manipulative strategy …

In one such recording …the company officer in charge of trading at the hub, told at least one trader that ‘as long as we sell as much as we can sell, it ought to push Ship down.’  The phrase ‘push Ship down’ means to suppress the price at the Houston Ship Channel… thereby increasing the value of its financial derivative positions.”

Why should you care about any of this?

As the saying goes, when in Rome…!

Now is the time for any firm engaged in trading floor activity – frankly, any firm that routinely records conversations that could be subject to regulatory review or electronic discovery – to enact a program for compliance with these types of activities.  As the Regulators have discovered, solutions do exist that let you quickly and accurately find content in even the largest collections of audio recordings, so the old “overly burdensome” argument will no longer let you off the hook.

And since the Regulators are using these tools to find what your people are saying, wouldn’t you like to know IN ADVANCE what that is so you can be prepared?

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Welcome to the Audio Discovery Blog!

Rest assured, we realize the last thing anybody needs right now is yet another boring blogspot to monitor, with esoteric topics that would make watching grass grow seem like a night at the Cineplex. (But hey, watching grass grow is at least a real 3-D activity!)

But the fact remains that audio is a burgeoning source of evidence for both regulatory and litigation investigations, and from all the evidence we’ve compiled in the industry, it is evident that this is one type of evidence that is evidently being ignored WAY TOO OFTEN.

We might argue that this fact is self-evident, but then we’d be taking our puns just entirely too far.

So the purpose of this blog is to help enlighten and educate our audience on the ins and outs of dealing with audio evidence, because one thing is very true: audio is not like email, word documents, TIFF images or any of the other kinds of electronically stored information (ESI) that make up the rest of content we deal with in the e-discovery world. Which is why we coined the term…

Audio Discovery.

So, let’s kick this off near the top of the Electronic Discovery Reference Model and talk about how to Identify audio evidence and the likely places it can come from. We have seen projects from many different walks of life: hundreds of hours of body-mic recordings from a personal defamation case; thousands of hours of phone wire-taps in criminal gang activity; even archived radio and TV advertisements (including video) that were searched for false advertising.

But the PRIMARY source of content we see regularly–the content that has literally grown to hundreds of thousands of hours–comes from trading floor activities in both energy and financial services. These tend to be the Big Kahuna matters in the audio discovery world, which if you think about it makes sense. These trading activities are routinely recorded and kept for long periods of time, as in many cases they are the only record of a transaction request. And let’s face it: the last decade has shown that, well, not EVERYONE who engages in this activity has the most stellar reputation. So these recordings have the potential to contain lots of ripe, juicy content that both regulators and litigators would just love to wrap their ears around.

So in upcoming posts, we’ll use these types of matters as the foundation to discuss the elements of audio discovery that will be important for you. Here’s a look at just some of the topics that we’ll cover:

  • Audio is a time-based medium and best measured that way. Measuring projects by the gigabyte could be a big rip-off!
  • Who’s listening? The Federal Regulators, that’s who. And you should be, too!
  • How accurate is “accuracy” in audio discovery, or the trade-off between precision and recall.
  • Audio vs. Text Search: All is Not Created Equal

Throughout this blog, our goal will be to educate and make you think about how audio discovery applies in your world, whatever that world is. Whether you are a compliance manager in a financial services firm, an auditor with a government regulator, or an attorney with clients facing litigation or regulatory oversight, you are now–or soon will be–faced with handling audio evidence in one fashion or the other.

So we want you to be prepared to do it with aplomb. And that means quickly, accurately AND cost effectively.

Audio no longer has to be the “dirty little secret” that gets swept under the rug during a Rule 26 Meet and Confer. With tools and techniques we’ll cover, your Audio evidence can rise up and be Discovered!

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About

Can you HEAR me now?

When it comes to audio evidence, the answer is oftentimes “NO!”

And this is unfortunate, because audio evidence (or “sound recordings” as the FRCP likes to say) are becoming a critical source of discovery content in both regulatory and litigation matters. So the purpose of this blog is to help you learn what Audio Discovery is all about and how to do it in the most efficient and cost-effective ways.

As your Bloggist, I bring 20+ years of experience in audio technologies to the table, first in the old Ma Bell system and then later with companies like Cingular Wireless and now Nexidia. So I’ve witnessed first-hand many of the revolutions in digital audio that are now dramatically changing how you manage this important discovery component. In this blog, I will help you navigate these .WAVs so you can be an audio expert too. And if you didn’t get that pun, even more reason to come back often!

Jeff Schlueter
VP/GM, Legal Markets
Nexidia