"Electronic discovery" does not refer to a simple, cheap means of responding to requests for information and documents in litigation. It involves searching your company's computer network to locate and produce potentially large volumes of electronically stored items, e.g. emails, attachments, spreadsheets and drawings, and may include producing metadata (data hidden in documents regarding authors and times of document creation) and drafts of documents that have been "deleted" from computers. Recent court decisions and proposed new federal rules of court procedures could wind up costing your business as much or more than the amounts of the claims made against ( or by ) your company. Planning and implementing a good "e-retention" policy now can help prevent such a dilemma.
First, a little background information on this topic. Until a few years ago, businesses had to make a conscious decision to keep documents. Once you determined that various records might be useful or needed in the future, they were saved, labeled and stored. With the advent and expansion of email and other computer functions, the opposite has occurred. E-documents are forever, unless you make a conscious decision to destroy them completely. ( As most of us now know, simply hitting Delete usually leaves emails, etc. on your hard-drive, where a good forensic IT professional can find and restore them). In addition, many IT workers pride themselves on doing things that allow them to find those seemingly unfindable documents the boss may want from 5 years ago. Moreover, many of us in business use emails as if they were both formal letters and very causal "e-phone calls," which has created a huge cyber trail of both useful correspondence and off-hand statements that should never see the light of day. People often mistakenly believe that company emails are somehow automatically confidential, and therefore they can write whatever they please in them and no harm will ever come of it. The volume of all e-documents is staggering. One reliable estimate is that U.S. businesses automatically store the equivalent of a billion pages of new data in their computers per day.
In the event of litigation on any subject, all the items in your computer system that may have anything to do with that subject become relevant and discoverable. Costs associated with producing them can be huge, including:
- IT professionals (yours, contractors or both) to locate and assemble all of them, sometimes including metadata;
- "screening" to find items that are legally privileged, e.g. discussions with your attorney, trade secrets and proprietary business information; and
- actually producing the relevant non-privileged documents, either on paper, on disc or in some direct method of electronic transfer.
Additional costs can result from court sanctions, in the form of monetary fines and/or the exclusion of your evidence for use at trial. In extreme cases, courts may order you to allow access to an outside IT person for a full-scale search. Recent court decisions have come down hard on companies where the judges concluded they either did an inadequate job of producing all relevant, non-privileged e-documents or intentionally destroyed some of them after the time when they should have "reasonably anticipated" litigation. A good example is a seemingly routine gender discrimination suit filed in New York in 2002. The federal judge presiding over that case issued five pre-trial opinions on e-discovery disputes. The basic lessons from that case, called Zubulake v. UBS, are:
- Companies and their legal counsel are responsible for preserving all relevant data as soon as litigation on a given subject is reasonably anticipated;
- They must communicate that duty to all employees likely to have that data/information; and
- They must produce all relevant e-copies. This case is proving to be influential, even in state court cases.
Another point on which to focus is the problem of accidentally producing confidential data, i.e., the legally privileged items noted above. The rush to get a big e-production done by the deadline can cause such accidents to happen. Proposed amendments to the federal rules of procedure governing e-discovery may allow companies to "take back" such confidential data under certain circumstances. However, this begs the question of how much damage has already been done by an accidental production of sensitive data. Moreover, other aspects of these proposed new rules could multiply expenses and risks of e-discovery if your counsel doesn't know how to handle things correctly. There are effective ways to deal with all these situations, but not all attorneys know how to do so.
Fortunately, courts are starting to recognize that companies do not have to, and cannot afford to, keep all their e-data forever, and both judges' opinions and proposed new rules are starting to provide "safe harbors" for companies who destroy old e-data pursuant to a properly constructed e-document retention policy. Taking steps now to put such a policy in place, with the help of competent legal counsel and IT professionals, and then making sure you implement it, can save you much expense and grief in the future. While the issues involved in doing so are complex, they are manageable with the right help. Conversely, the failure to address your e-retention practices now could prove to be disastrous in the near future.