A Five-Step Plan
By John J. Coughlin
December 5, 2006
The following is an overview of a series of Alerts that will expand on each of the topics below.
The long wait is over, and the new Federal Rules of Civil Procedure are now a daily reality for litigants and their counsel, who can and should do much more than wait for the filing of their first case under the new rules. For those who do not frequent the federal courtroom, be aware that many states are adopting similarly worded, if not more onerous rules, while courts in jurisdictions with no explicit guidance are left to their own resources, often with harsh results for unwary litigants.
At the very least, any business with even the most basic Information System (i.e., word processing, e-mail and/or any type of enterprise network) should take the following five steps, as the changes in the law make fair game the discovery of any and all "electronically stored information," a catch phrase inserted across the new rules to eliminate the distinctions between paper documents and the exponentially larger volumes of data that must now be accounted for.
1. Identify IT contact or technical liaison to assist with legal needs.
This is a new one, having counsel go directly to IT personnel to inquire of and even challenge their knowledge of the corporate systems. One of the most frequently quoted passages from the series of cases that have defined electronic discovery obligations requires that "Counsel must become fully familiar with her client's document retention policies as well as the client's data retention architecture," which "will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures and the actual (as opposed to theoretical) implementation of the firm's recycling policy."1
Some jurisdictions, including the U.S. District Court for the District of New Jersey (L. Civ. R. 26.1(d)(1)), expressly require counsel to "identify a person or persons with knowledge about the client's information management systems ... with the ability to facilitate, through counsel, reasonably anticipated discovery." (Emphasis added.) In addition to satisfying what many jurisdictions consider to be an express obligation, the IT contact will also be the person to best assist with the remaining four steps below.
2. Understand the "document" retention policies, as they apply to "electronically stored information."
Revised Fed. R. Civ. P. 37 contains a "safe harbor provision" that allows litigants to avoid sanctions for the loss, alteration or destruction of evidence as the result of the "routine, good faith operation of an electronic information system." The best way to demonstrate good faith routine operation is by demonstrating the existence of a well-thought-out document retention policy, one that embodies the realization that the storage of data is expensive and spells out the instances in which it is not justified. In short, the policy on retention will necessarily encompass deletion or destruction of data, and will withstand the scrutiny of hindsight much better when it is shown that the policy was created and enforced in good faith toward the goal of efficient business operations. In applying such policies, however, parties have a duty to suspend automatic deletion through the enactment of "litigation hold" exceptions for information that is relevant to present or anticipated litigation. In other words, a company cannot "routinely discard" information that it reasonably could have preserved and had actual or constructive notice of the duty to do so.
3. Identify important IT systems and hardware that will be at issue.
"Electronically stored information," the term of art used in the Federal Rules, takes many forms and resides in many places. E-mail usually resides on servers rather than individual computers, and those servers may be located in numerous physical plants, which could expand with the geography of your clients' operations. Depending on a particular company's IT history, one user's e-mails may have resided on several servers over a period of time. Word processing documents, PowerPoints and standard spreadsheets may or may not be indexed and/or stored in a central database. Banks and other financial institutions often maintain databases and programs created exclusively to manage certain records that are later at the heart of litigation, and those systems may be proprietary or require specialized configuration or training to operate or enable production and preservation.
4. Distinguish "accessible" from "inaccessible" data and ensure that the distinction is appropriate in the litigation context.
An understanding of the issues raised in steps 2 and 3 should illustrate the categories of documents that are "accessible" and those that are "inaccessible." The concept of accessibility is not cast by a single definition, but, generally, "accessible" data are those which reside on the active information systems network or which can be viewed on the active network or through optical portable media (discs, CDs, Zip drives, etc.). "Inaccessible" is a term that typically describes data residing on backup tapes or other emergency storage media, which, while ultimately recoverable, are much more involved and costly than simply loading a CD or a tape and opening files. The distinction is important to the court's analysis of whether information is discoverable in the face of such burdens, and perhaps whether significant costs of restoration and production should be shifted to the party requesting the discovery.
As an extension of step 2 above, a thorough document/data retention policy should contemplate the storage or destruction and overwriting of backup media. Herein lies the dilemma of saving too much (justifying demands for larger volumes to be produced) versus destroying too quickly (justifying cost-shifting or worse sanctions). While there is no perfect answer to the ongoing, case-specific inquiry, the process itself leads to quality management of all media, which, without such management, can sometimes "appear" under circumstances and time frames in litigation that are difficult to explain in hindsight. Such circumstances will be prevented or minimized by the process, even if some difficult questions are raised along the way.
5. Assess internal resources and determine whether additional staff or vendors are needed.
Even before the electronic age, businesses were taxed by sudden unpredictable attacks on resources occasioned by the discovery process. The location, review and production of electronically stored information presents multiple challenges, from understanding and projecting workloads, to allocating necessary business operations resources, to properly handling important evidence. The export and "hosting" of e-mails alone has become a cottage industry of vendors to store and manage discoverable data and assist with production. Unfortunately, the consumer of the service often has little understanding of the service or product being offered and the vendor itself may have little experience or depth of personnel. Litigants who are traditionally inclined to "do-it-yourself" need to consider not just the impact of electronic discovery on their resources, but perhaps more importantly, the ability of internal resources to accurately collect and preserve intact the important electronic evidence. The transition from paper records to digital data means that the evidence is easily accidentally altered, modified or lost through processes that are almost always traceable. Companies should weigh the short-term feasibility of engaging experts to handle their discovery, as well as the long-term savings offered by employing or training in-house resources for this task. In either instance, the technical expertise and legal sensibilities of those involved in the implementation of processes will be critical to the success of the endeavor.
Given the cost and complexity of electronic discovery, litigants are more likely now to customize discovery based on the needs and aspects of a particular case. Nonetheless, the steps outlined above will form a common foundation that is resource and cost-effective as well as inevitably necessary regardless of when your next lawsuit will be prosecuted or defended.