The article misses an important aspect of the situation, which is that discovery can be one of the most time-consuming and expensive part of any lawsuit. Typically, both sides will review all the documents that are relevant to the claims of the suit, precisely because of the danger raised by Cuban of the opposing side taking statements out of context. Automation makes some of this work quicker, because computers are getting pretty good at sorting relevant from irrelevant documents, but it'll be quite awhile before a computer can puzzle through the communications pertaining to a sale and figure out whether any statements can be construed as showing an intent to trade on insider information.

So ditching the paper trail can have benefits even if you didn't do anything wrong, because having fewer records can lead to lower discovery costs.[1] On the other hand, it could easily backfire. In many ways, the best way to counter an accusation of wrongdoing, say a sale that had suspicious timing, is to paint a detailed narrative, using records, of how the sale came about in a totally valid way. When you ditch the paper trail, you also lose the ability to point to hard evidence that no wrongdoing occurred. This is particularly relevant in a civil suit, because the burden of proof is only "more likely than not." Without a detailed record, the circumstantial evidence can easily be enough to tip the balance in favor of the plaintiff/prosecution.

Moreover, in the absence of documentary evidence, I imagine plaintiffs and prosecutors will do more old-fashioned lawyering: putting witnesses on the stand to testify. This can be extremely expensive in and of itself (what's the monetary value of taking your CEO out of commission for a few 7-hour depositions?) Moreover, it can lead to replacing a relatively neutral documentary record with unpredictable individual testimony. One of the highlights of the Microsoft antitrust trial was Gates' deposition testimony, which, when presented in court, made the judge laugh out loud (not in a good way).[2]

It's interesting to note that the large banks, which get sued regularly, have taken the exact opposite tack. Absolutely everything is recorded, including internal instant messaging. It's expensive for the bank to hire lawyers to comb through all this information, but on the flip-side, they have a detailed paper trail showing that everything was done by the book.

[1] In a way, it returns us to the status quo of the 1960's and 1970's, before the rise of electronic discovery making lawsuits significantly more expensive.

[2] http://www.cnn.com/TECH/computing/9811/17/judgelaugh.ms.idg/