When the e-discovery amendments to the Federal Rules of Civil Procedure took effect on December 1, there was a widespread feeling of panic among corporate counsel and, indeed, many members of the bar, as well. Some articles in the popular press reported that the amendments require corporations to retain virtually every electronic document ever created.
Fortunately, the situation is not nearly as dire as rumored.·
While no one course of action is appropriate for all corporations, there are some basic steps to prepare for that first e-discovery challenge, none of which guarantee success. On the other hand, failure to recognize the challenges of complying with the e-discovery rules is more likely to lead to disaster.
Here are a few thoughts on recommended survival tactics to maneuver through the e-discovery minefield.
1. Update and enforce your records management policy.1
Prudence and good corporate management dictate that every business should have a records management policy. Such a policy informs employees about the documents they are required to keep as a matter of law or regulation or business necessity. It establishes procedures for the maintenance of records, and equally important, it outlines when records may permissibly be destroyed either because the legal retention period has expired or the business necessity no longer exists.
Having a sound records management policy and system in place are the first steps towards meeting the e-discovery challenge. One of the grave risks of e-discovery – indeed all discovery in litigation or governmental inquiries – is the loss of critical evidence without a justifiable explanation. A records management policy provides the framework for outlining to the opposing party and the court the types and categories of records that are likely to exist, and if not, why. It also increases the efficiency with which relevant documents are likely to be located and produced. If properly practiced, the recycling or destruction of records at the termination of the retention period will reduce the need to wade through documents that should have been disposed of years earlier.
In the context of electronic discovery, it is important to ensure that records management policies recognize the many different types of electronic documents that may be created in a corporate environment and provide adequate instructions to employees regarding their duty to preserve and the manner, method and location of preservation. For example, a policy may mandate that work-related documents or information created on a lap top or a remote PC must be downloaded to the corporate network for preservation. A policy may also mandate that employees save all work product to a designated server rather than their individual hard drives, thumb drives or other removable media, and designate the naming convention for such documents.
2. Adopt Litigation Early Warnings Strategies.
Long before the e-discovery rules were put into place, courts imposed a duty to preserve all "relevant documents" once litigation is "reasonably foreseeable." What documents are "relevant" and when litigation becomes "reasonably foreseeable" are questions of fact for each case. Unfortunately, these fact issues all too often create opportunities to second guess decisions made prior to the filing of the lawsuit. To minimize the risks, both house counsel and records managers should be attuned to the need to watch for and anticipate potential litigation and be prepared to implement a litigation hold when that contingency arises. Among other things, the client’s records management policy should recognize the possibility that a legal hold may be imposed on certain documents or categories of documents for anticipated or pending litigation.
While the requirement to preserve documents in a litigation hold is not new, the focus on electronic documents has greatly increased since the adoption of the e-discovery rules. This means that systems must be in place to ensure the preservation and accessibility of relevant electronic documents.
A good early warning system trains managers and officers of the need to advise corporate counsel of the risk or threat of litigation, or of incidents that customarily give rise to litigation. The preservation duty may be triggered by an event that is reasonably likely to lead to the filing of a lawsuit, e.g., a motor vehicle accident, although the event may not ordinarily come to the attention of house counsel. An early warning system would ensure that the information is communicated through the proper channels to determine if and when litigation is "reasonably foreseeable" for purposes of a litigation hold.
3. Correct implementation of the litigation hold is essential.
It is no longer adequate simply to send out a memo stating: "We’ve been sued; please hold all relevant documents." Proper implementation of a litigation hold requires:
Providing detailed and adequate instructions to employees about what must be held by subject matter and document type.
Personal follow up with the key employees to ensure that the memo has been received, acknowledged and implemented.
Periodic compliance checks to promote ongoing adherence.
There are likely to be multiple personnel changes during the course of protracted litigation. Personnel need to be advised of their duty to preserve existing documents and, where appropriate, documents created in the course of ongoing business, as they rotate in and out of the company or change positions. If anything, the loss of a relevant document during the pendency of a litigation hold is even a greater risk of sanctions than a failure to hold the document in the first place. The latter may be excused on the basis of a record management policy or lack of notice, while the former may be deemed spoliation or gross mismanagement.
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By: Arthur L. Smith