What should you do with your email and computer systems if
you become involved in a lawsuit? How much access will the
other side get to your archives of electronic data, recorded voice
mails, instant messages, and other computer files? Previously, the
answers to these questions were not well defined. Often litigants
would face costly court battles before the trial even began to
determine each side’s obligations for production of electronically
stored information. In some cases, litigants were sanctioned with
fines and other forfeitures if they did not produce all the relevant
electronically stored information.
Now, the rules governing the discovery of electronically stored
information, commonly referred to as “electronic discovery” or
“e-discovery”, are increasingly becoming more formalized. New
amendments to the Federal Rules of Civil Procedure governing
electronic discovery went into effect on December 1, 2006. The
Commonwealth of Massachusetts has published a judicial report
advising judges how to interpret the Massachusetts Rules of Civil
Procedure for e-discovery.
The initial reaction to the new rules caused a wave of a fear
reports by many legal analysts. Many news accounts of the
e-discovery rules contained a quote from Alvin F. Lindsey
about companies committing “virtual shredding” if they wrote
new data over old data on a backup tape. While Mr. Lindsey’s
assertion may be technically true, the new rules should ease the
burden and uncertainty that existed prior to the formalization of
electronic discovery procedures. In fact, the new rules provide
information on how companies can exempt information that is
not reasonably accessible. Nevertheless, the new rules do make
clear that companies should have knowledge about where its data
is located, and that companies should have a mechanism to place
a “litigation hold” on the deletion of data relevant to current and
reasonably suspected lawsuits.
The federal e-discovery rules require early disclosure by
the parties of the location of relevant electronically stored
information. If a company suspects a lawsuit, it should have a
mechanism to quickly locate all relevant data, including data
that may be stored on phone systems, email systems, data cards,
backup tapes, and other information archives. Many software
vendors and information technology providers have introduced
new tools and services designed to help companies locate and
isolate this information. If a company does not have systems and
procedures in place to quickly locate data, it should be looking
at improving this capability in the near future. Under the new
e-discovery guidelines, the ability to craft a legal magic bullet
to gloss over a lack of knowledge on the location of data will be
greatly diminished. Moreover, locating the data will be the first
step necessary to institute a “litigation hold” on the deletion of
relevant electronic data.
Companies cannot, and most often should not, delete any relevant
data once a lawsuit has been suspected. This does not mean that
a company cannot perform routine purges of non-relevant data
consistent with an organizational data retention plan. The “virtual
shredding” of electronically stored information only becomes an
issue once a lawsuit has commenced or is reasonably suspected.
Reasonable suspicion would be warranted in any situation where
a company has received a formal demand or claim; has knowledge
of an accident or an anticipatory breach of contract; has
commenced an investigation of some impropriety; or any other
action that would normally put the company on notice about a
possible dispute between itself and another party.
Disputes are often suspected before the involvement of counsel.
A company should have in place its own set of processes and
procedures to ensure that relevant data is not deleted. These
processes should include both data retention guidelines for
Information Technology personnel as well as other key employees
that may have data available through offline sources. You do
not want an incriminating document to later appear that may
have been located on an employee’s data card, but not the main
computer system.
The Sedona Guidelines: Best Practice Guidelines & Commentary
for Managing Information & Records in the Electronic Age,
published by Pike & Fischer, are rapidly becoming the standards
for data retention and deletion. Adopting the Sedona Guidelines
helps ensure that relevant information can be isolated and
retained immediately after the imposition of a litigation hold.
More important, having established a set of prudent best practices
can often save costly sanctions or possible forfeiture of a lawsuit.
The new e-discovery rules do not require organizations to turn
over data that is not “reasonably accessible.” Data that has been
deleted pursuant to policies and procedures consistent with an
emerging industry standard would be less likely to draw sanctions
or other adverse actions by the court in the discovery stage of the
proceedings.
Once a company has located and preserved the data, it may
then work with legal counsel to make determinations on what
data must be submitted in the discovery process. Privileges and other discovery exceptions have not changed as a result of the
enactment of the new e-discovery rules. Sorting through the
data before final presentation to the adverse party will typically
be the last step in the e-discovery process. Although courts
often require that the data be presented in its native format,
determining what data you have to submit is still paramount.
A company should not send an adverse party a full backup of
all electronic systems. Full backups may contain valuable trade
secrets or other confidential information. In fact, the disclosure
of some confidential information could be actionable by other
parties. If a company has a legal or contractual duty to keep
certain information private, it still must take reasonable steps to
prevent an authorized disclosure.
Although you may wish to have an attorney determine what
data must be presented, having the data available prior to the
involvement of litigation counsel can save a company a great
deal of time and money. If you do not know where your data
is located, and do not have the ability to preserve relevant
information, your case may be lost before an opening argument.
