Electronically Stored Information in Litigation
Patricia A. M. Vinci
During the past two decades, privacy professionals have witnessed technological changes in the way business records are created, maintained and regulated, requiring adaptations to their privacy management practices. During that time, parties to litigation and the courts have wrestled with the issues surrounding electronic documents. On December 1, 2006, the Federal Rules of Civil Procedure were revised to address specifically, for the first time, the area known as electronic discovery. This article provides an overview of the prominent role electronic data now plays in litigation and the implications for all data types.
Generally speaking, "discovery" refers to that part of a legal proceeding during which the parties are required by law to produce relevant information in their custody and control. Production of information takes place in many different legal situations, including civil cases among companies and individuals; criminal prosecutions; and government agency investigations. Production also may be required in other circumstances. Internal company investigations, and merger or acquisition due diligence, are two examples. The "electronic" part of electronic discovery refers to information stored electronically, as opposed to hard copy (paper). Studies show that more than 90 percent of new information is now stored on computers and computer storage media, and in huge volumes. The term now used in the U.S. to refer to this data is "Electronically Stored Information" or ESI, as a result of the amendments to the Federal Rules of Civil Procedure. Although this article focuses on ESI, the principals outlined here can apply to all forms of information.
The Fulbright & Jaworski 2005 Annual Trends in Litigation Survey found that nearly 90 percent of U.S. corporations were engaged in lawsuits with electronic discovery — the number one concern of corporate counsel. One of the reasons that ESI causes such alarm is its volume. Massive volume is a result of a number of factors, such as numerous and proliferating sources of ESI; multiple reproduction of the same item; ease of creation and retention; and the relative low cost of storage compared to the paper volume equivalent. Electronic discovery is a deceptively simple term for a complex undertaking that can frustrate lawyers and their clients unprepared to meet the legal obligations of any ESI production scenario.
By combining their knowledge of the changing privacy landscape with an understanding of electronic discovery, privacy professionals can contribute to their companies' electronic discovery preparedness. One way to understand the importance of the electronic discovery process and its impact on any participating organization is to start at the end of the ESI story, when ESI is offered as evidence. All relevant information involved in the situations described previously is potential evidence. However, it will not be useful as evidence unless its origins can be reliably confirmed, that is, legally authenticated. Electronic evidence, such as email messages, memos and spreadsheets, must be authenticated to be useful evidence. But ESI is intangible, despite the fact that we see portions of it on our computer monitors. Therefore, knowing the possible end of the story (ESI as evidence), this article reviews the process from the perspective of a company's counsel charged with the task of conducting electronic discovery on behalf of a producing corporate client.
Preservation of ESI
Clients' and counsels' discovery responsibilities may begin even before a formal notice of legal action. Some jurisdictions require the preservation of potential evidence when the possibility of litigation becomes known or can reasonably be anticipated. In the discovery context, preservation of information is the company's first and fundamental duty.
The competent fulfillment of that duty must begin with the company's record retention and destruction procedures. Privacy experts within a company often possess detailed insight into the Records Retention Policy and Procedure, especially if they have participated in its creation, revision, maintenance and/or oversight. That expertise can prove crucial to the company when lawyers communicate the requirement of a "litigation hold," which is the suspension of routine document retention and destruction policies for the purpose of saving all potential evidence from destruction or alteration. "Spoliation" of evidence (its alteration or destruction) can result in serious consequences to both the company and its counsel, such as monetary sanctions and presumptions of law against the company (such as the inference of deliberate destruction). It is neither enough as a legal matter, nor as a practical matter, to tell certain individuals within an organization to "place a hold" on its destruction schedule. Detailed instructions must be promptly articulated to everyone in the company who may have access to relevant information. The definition of relevant will vary from case to case and must be delineated in several ways.
All possible sources of relevant ESI must be identified. ESI resides in many locations, such as: desktop personal computers' hard drives; laptop computers; handheld devices (any personal digital assistant "PDA"; mobile phones); email systems; servers; backup and archival tapes and other such media; CDs; DVDs; disks (e.g. floppies, Jaz, zip); voice mail files and their back-ups; and instant messaging records. This step also requires that key individuals (custodians) in the particular matter are identified and their information is given special preservation attention. The scope of the preservation duty is broad. It encompasses information not only known to be relevant to pending claims and defenses, but also that which is reasonably calculated to lead to the discovery of admissible evidence, and is reasonably likely to be requested. The Federal Rules of Civil Procedure require counsel to "meet and confer" about their lawsuit's electronic discovery and to make detailed disclosures. These mandatory meetings and disclosures occur very early in the life of the case. Including an e-discovery consultant sooner rather than later can keep the focus on the merits of the case and save the company time and money in the long run.
Collection of the discoverable information is next. The process of acquiring needed information must be done in a forensically sound manner, usually accomplished by experts, so that no ESI is inadvertently altered, destroyed, or missed, and so that the chain of custody is documented and preserved. Again, think ahead to the end of the story, when the company's attorney needs to use a particular email message as evidence in the company's defense. Success at that point may turn on proper collection techniques that took place early in the discovery process. Winning pre-trial discovery disputes may depend upon the effectiveness of the litigation hold and upon the historic, consistent implementation of the records retention policy. That policy must have demonstrated both the detailed, systematic control of information plus defensible compliance with the retention and destruction schedule prior to the start of the litigation hold.
Culling, Processing, and Reviewing
These steps are best accomplished by using the consulting, processing services, and tools offered by electronic discovery experts who have the know-how to manage large volumes of ESI as potential evidence and can deliver many types of ESI in a format that counsel can review before producing to a requesting party.
A Starting Point
Privacy professionals can enhance the company's readiness strategy with their specialized knowledge in areas such as information security, privacy, and data transfer. The benefits of anticipating and preparing for ESI discovery are many and include: future cost savings; process efficiency; minimal business interruption; litigation control; avoidance of sanctions and the resulting publicity; and risk management and assessment. Unprepared organizations may indeed look back upon the experience as overwhelming, when the company and its people were drowning in massive, disorganized amounts of data, searching for information with possible relevance. However, armed with the knowledge of what to expect, any company can both do business and be litigation-ready at the same time.
This article should not be construed as providing legal advice or legal opinions. You should consult an attorney for any specific legal questions.