Back in April I wrote an article for the IAIDQ’s Quarterly Member Newsletter picking up on my niche theme, Common Law liability for poor quality information – in other words, the likelihood that poor quality information and poor quality information management practices will result in your organisation (or you personally) being sued.
I’ve written and presented on this theme many times over the past few years and it always struck me how people started off being in the “that’s too theoretical” camp but by the time I (and occasionally my speaking/writing partner on this stuff, Mr Fergal Crehan) had finished people were all but phoning their company lawyers to have a chat.
To an extent, I have to admit that in the early days much of this was theoretical, taking precedents from other areas of law and trying to figure out how they fit together in an Information Quality context. However, in January 2009 a case was heard in the Court of Appeal in England and Wales which has significant implications for the Information Quality profession and which has had almost no coverage (other than coverage via the IAIDQ and myself). My legal colleagues describe it as “ground breaking” for the profession because of the simple legal principle it creates regarding complex and silo’d computing environments and the impact of disparate and plain crummy data. I see it as a clear rallying cry that makes it crystal clear that poor information quality will get you sued.
Recent reports (here and here)Â 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 â€œlawyer upâ€ 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:
â€œHistory 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.â€
The Case that (should have) shook the Information Quality world
The case ofÂ Ferguson v British Gas was started by Ms. Ferguson, a former customer of British Gas who had transferred to a new supplier but to whom British Gas continued to send invoices and letters with threats to cut off her supply, start legal proceedings, and report her to credit rating agencies.
Ms Ferguson complained and received assurances that this would stop but the correspondence continued. Ms Ferguson then sued British Gas for harassment.
Among the defences put forward by British Gas were the arguments that:
(a) correspondence generated by automated systems did not amount to harassment, and (b) for the conduct to amount to harassment, Ms Ferguson would have to show that the company had â€œactual knowledgeâ€ that its behaviour was harassment.
The Court of Appeal dismissed both these arguments. Lord Justice Breen, one of the judges on the panel for this appeal, ruled that:
“It is clear from this case that a corporation, large or small, can be responsible for harassment and can’t rely on the argument that there is no ‘controlling mind’ in the company and that the left hand didn’t know what the right hand was doing,” he said.
Lord Justice Jacob, in delivering the ruling of the Court, dismissed the automated systems argument by saying:
“[British Gas] also made the point that the correspondence was computer generated and so, for some reason which I do not really follow, Ms. Ferguson should not have taken it as seriously as if it had come from an individual. But real people are responsible for programming and entering material into the computer. It is British Gas’s system which, at the very least, allowed the impugned conduct to happen.â€
So what does this mean?
In this ruling, the Court of Appeal for England and Wales has effectively indicated a judicial dismissal of a â€˜siloâ€™ view of the organization when a company is being sued. The courts attribute to the company the full knowledge it ought to have had if the left hand knew what the right hand was doing. Any future defence argument grounded on the silo nature of organizations will likely fail. If the company will not break down barriers to ensure that its conduct meets the reasonable expectations of its customers, the courts will do it for them.
Secondly, the Court clearly had little time or patience for the argument that correspondence generated by a computer was any less weighty or worrisome than a letter written by a human being. Lord Justice Jacobâ€™s statement places the emphasis on theÂ people who program the computer and theÂ people who enter the information. The faulty â€˜systemâ€™ he refers to includes more than just the computer system; arguably, it also encompasses the human factors in the systemic management of the core processes of British Gas.
Thirdly, the Court noted that perfectly good and inexpensive avenues to remedy in this type of case exist through the UKâ€™s Trading Standards regulations. Thus from a risk management perspective, the probability of a company being prosecuted for this type of error will increase.
British Gas settled with Ms Ferguson for an undisclosed amount and was ordered to pay her costs.
What does it mean from an Information Quality perspective?
From an Information Quality perspective, this case clearly shows the legal risks that arise from (a) disconnected and siloed systems, and (b) inconsistencies between the facts about real world entities that are contained in these systems.
It would appear that the debt recovery systems in British Gas were not updated with correct customer account balances (amongst other potential issues).
Ms. Ferguson was told repeatedly by one part of British Gas that the situation was resolved, while another part of British Gas rolled forward with threats of litigation. The root cause here would appear to be an incomplete or inaccurate record or a failure of British Gasâ€™ systems.Â The Courtâ€™s judgment implies that that poor quality data isnâ€™t a defence against litigation.
The rulingâ€™s emphasis on the importance ofÂ people in the management of information, in terms of programming computers (which can be interpreted to include the IT tasks involved in designing and developing systems) and inputting data (which can be interpreted as defining the data that the business uses, and managing the processes that create, maintain, and apply that data) is likewise significant.
Clearly, an effective information quality strategy and culture, implemented through people and systems, could have avoided the customer service disaster and litigation that this case represents.Â The court held the company accountable for not breaking down barriers between departments and systems so that the left-hand of the organization knows what the right-hand is doing.
Furthermore, it is now more important than ever that companies ensure the accuracy of information about customers, their accounts, and their relationship with the company, as well as ensuring the consistency of that information between systems. The severity of impact of the risk is relatively high (reputational loss, cost of investigations, cost of refunds) and the likelihood of occurrence is also higher in todayâ€™s economic climate.
Given the importance of information in modern businesses, and the likelihood of increased litigation during a recession, it is inevitable: poor quality informationÂ will get you sued.