by

Thomas E. Scarr
Catherine Johnston, Legal Assistant

According to several business surveys across the country, many companies are not in a position to comply with the Federal Court’s electronic discovery requirements of the Federal Rules of Civil Procedure (FRCP) that went into effect December 1, 2006.  The financial exposure to your business and your attorneys as a result of being unprepared could be devastating.  A New York federal judge levied a 1.25 million dollar sanction against an insurance company and two law firms relating to electronic information that was deleted and hard copy material that was not produced in compliance with the FRCP in the In Re September 11th Liability Insurance Coverage cases.

Recently, the FRCP regarding electronic discovery were amended significantly to address the ever-evolving technology in today’s business world.  The FRCP dictate the way that information must be managed during litigation; this makes the cooperation of information technology departments, corporate executives and managers, and legal counsel necessary to both minimize risk and prepare for litigation.  

The task of evaluating and preparing for production of all of this information to ensure compliance with the FRCP and the time constraints imposed by the Court demands a proactive approach.  Imagine, if you will, that each of your employees exchanged an average of 75 e-mails per day with customers and co-workers.  If your company had 75 employees, there would be approximately 2 million e-mails per year that are subject to discovery!  Additionally, e-discovery would include any other electronically stored information that each of those 75 people produced every day. 

What Are The FRCP Regarding E-Discovery?

The FRCP is the set of guidelines that are used by the Federal Court system to govern its procedures in civil cases.  Many states, including West Virginia, Ohio and Kentucky, have modeled their own rules of civil procedure after the FRCP.  Not long ago, the FRCP’s definition of electronic items which may be subject to discovery was broadened and now includes items such as e-mail, voicemail, instant messages, databases, and other forms of electronically stored information.  Ten or fifteen years ago, most of this type of information was in paper form – from message notes taken by your secretary to paper invoices kept in file cabinets – and was easily accessible.  Therefore, it could be easily identified and/or produced to opposing counsel when necessary.  That is no longer the case. 

Court rules now are long and complex regarding e-discovery.  In a nutshell, the FRCP state that within only a few months of the start of the lawsuit, the parties must meet and discuss a discovery plan and evaluate the protection and production of electronic data.  Soon after that conference, all parties must identify all sources of electronic information that may be relevant.  Any source(s) of information that a party chooses to exclude due to burden or cost must be identified for the opposing party.  Then, the parties must meet again to discuss the form the electronic data will be produced and means by which information will be preserved. 

Taking A Proactive Approach To E-Discovery

What can your company do to prepare for a lawsuit involving electronically stored information?  A team consisting of IT operations, human resources, record managers, corporate executives and legal counsel should be assembled to create or update a document/record retention policy and schedule.  Your company’s litigation readiness strategies and operational business needs should be reflected in up-to-date policies and procedures for document/record retention and destruction that govern both hard copy and electronically stored documents and information.

Once the team has updated or created the retention policy and schedule, the next step is to create or update the litigation hold policy and procedures.  The litigation hold policy ensures that your organization has the proper policies and procedures in place to quickly and reliably implement holds of electronic data ensuring that the data will not be destroyed due to a routine or automated retention/deletion process.  The violation behind the 1.25 million dollar sanction referred to at the beginning of this article involved litigation hold policies and procedures. 

Your company also should implement appropriate technology solutions for e-mail and file system archiving.  Effective archiving can reduce the need to search for e-mail messages on backup tapes and eliminate duplicate documents.  Archiving solutions also may reduce storage costs for unstructured data, such as audio files, by keeping only the files that are necessary.  In addition, archiving solutions can provide automatic capture of e-mail messages and attachments which may reduce your company’s dependence on human behavior to maintain a complete business record. 

Finally, the team must put into action an employee training and audit program on all new policies and procedures.  Because the FRCP are unclear on exactly what is considered reasonably accessible data, a company’s ability to demonstrate its document/record retention policy, as well as consistent, repetitive and verifiable enforcement of it, will assist your company in preparing its case and avoiding discovery sanctions.   

The Benefits Of Being Prepared

Becoming proactive in anticipation of e-discovery requests is like buying an insurance policy; you are preparing and protecting your company for any adversity.  If you are prepared, answering the request is easier, cost-effective and repeatable.  By taking control of the information, instead of merely reacting to each discovery request individually, you become more aware of your company’s information landscape, of processes that it can streamline and of information that can be preserved and repeated from one discovery request to the next. 

If yours is a company that does not have its house of electronic data storage and retention policies and procedures in order regarding e-discovery demands, now is the time to work with counsel who are skilled in this area.