Guidance Software Inc. bills itself as the leading provider of technology that helps companies dig up old e-mails and other electronic documents that might be evidence in a lawsuit. Yet when Guidance itself had to face a judge, it was accused of bumbling its internal digital search.

Whether Guidance intentionally hid documents or just couldn't find them is a matter of dispute. The company said it did all that was required. But its inability to cough up certain e-mails, even over several months, led an arbitrator to accuse it of gross negligence and proceeding in bad faith.

At the very least, the case shows how thorny electronic evidence searches can be, even for a specialist.

The mountains of digital information piling up on hard drives and backup tapes have made discovery - the exchange of information between parties at the start of a lawsuit - increasingly complex. "E-discovery" software and services boomed from a $40 million business in 1999 to nearly $2.8 billion in 2007, according to George Socha and Tom Gelbmann, directors of the industry group Electronic Discovery Resource Model.

Pasadena, Calif.-based Guidance Software is one of the largest software specialists, with sales of $89 million over the last four quarters. The company began in 1997 making tools to help criminal investigators search computer hard drives. In recent years Guidance added new programs for scouring corporate networks for digital evidence.

Guidance needed to turn that expertise on itself in a case involving its former marketing director, Cassondra Todd.

Todd believed Guidance's chairman pressured her manager to fire her, in part because she is a woman. After she got a scathing performance review in 2007, she asked for an investigation.

"I was quite confident that whatever information was produced would wipe clean what was going on," Todd said in an interview. "That's what we did for a living."

But Guidance told Todd it found no evidence of discrimination. It apologized for the harshness of the review but wouldn't delete it from her file.

Todd responded by hiring Arnold Peter, an attorney with Los Angeles-based Raskin Peter Rubin & Simon. A few weeks later, she was laid off.

Todd filed a wrongful-termination claim, and both sides were required to perform discovery, a hunt for documents that might matter to the case.

The results of Guidance's initial run of e-discovery seemed scant to Todd. She expected to see far more e-mails from her days in the company. But she couldn't argue Guidance was holding back - intentionally or not - until she got a break a few months later.