Recent amendments to federal court
rules will impact how businesses
handle electronically stored information, which includes e-mail and other documents that reside on corporate computers and servers. The new rules are
designed to put electronically stored information (ESI) on the same legal footing as
traditional paper documents.
“The rules apply to every company that
may become involved in litigation —
essentially, any company that transacts
business,” says Chris Griesmeyer, a partner
at Levenfeld Pearlstein LLC. “However,
mid-sized companies are likely to find compliance with the new rules particularly
troublesome and should take steps to manage their ESI before a lawsuit even begins.”
Smart Business asked Griesmeyer to discuss the new rules and how company officers should react to them.
What kind of burdens are imposed by a
request to produce electronically-stored
information during a lawsuit?
The problem is one of volume. A company with just 50 employees can generate
more than 300,000 e-mail messages a year.
Consequently, electronic information is
often measured in ‘terabytes,’ which is the
equivalent of 500 million typewritten
pages. A company asked to print or photocopy a single terabyte of information
would need more than 1,000 pick-up trucks
to haul it.
Moreover, because electronic information is extremely cheap to store, companies tend to stockpile mass quantities of
outdated information. Because of this volume and because highly trained forensic
experts are needed to manage the e-discovery process, it is not unreasonable for a
company to spend hundreds of thousands
of dollars simply navigating the pre-trial
discovery process.
Is there any way to mitigate the financial burdens imposed by e-discovery?
The new rules allow a party to object to
an e-discovery request because obtaining
the information would be unduly burdensome or cost-prohibitive. However, if you
object to an e-discovery request, be prepared to produce your chief technology
officer and IT consultants for their depositions. And if their deposition testimony
fails to prove that the burden or expense is
sufficiently ‘undue,’ then be prepared to
produce the information.
At the same time, a court has the power
to limit discovery if there is a way to obtain
the electronic information that is more
convenient, less burdensome or less
expensive. The new rules encourage parties and the court to discuss these issues
before a trial begins.
What do the new rules say about privileged
documents in the e-discovery context?
If a party produces a document that is
protected under the attorney-client privilege or the attorney-work product doctrine, then the protection is typically
waived and the document becomes fair
game. But if a privileged document is inadvertently produced, the new rules provide
an automatic ‘claw-back’ mechanism. If a
party accidentally produces a privileged
document and notifies the recipient, the
document must then be returned,
sequestered or destroyed until the court resolves the issue of privilege. The same
claw-back mechanism is also available to
nonlitigants responding to a subpoena.
The new rules also say courts may not
impose sanctions on a party for failing to
produce ESI that was lost as a result of the
‘routine, good-faith operation’ of a computer system. The catch is that you cannot
exploit the routine operation of a computer system in order to thwart your discovery
obligations.
In light of these new rules, what steps do you
recommend corporate officers to take?
First, companies should establish formal
policies to routinely purge and destroy ESI
that is no longer needed. Any retention and
destruction policy should be individually
tailored to balance operational requirements, IT infrastructure, regulatory and
compliance responsibilities, and litigation
requirements.
Second, make sure your employees
understand and adhere to the policy. There
is a famous case in which the company’s
policy was to recycle backup tapes every
45 days. If the company had simply followed its own policy, there never would
have been a discovery dispute. But, for
whatever reason, its employees failed to
recycle the tapes. As a result, the company
was asked to produce 93 backup tapes,
which would take six months to review
and produce at an estimated cost of $6.2
million. That’s an expensive lesson.
Finally, once you become involved in litigation, it’s really important to retain
experts to make sure you’re getting complete electronic information from the other
side, as well as managing your own ESI
production. Even the best lawyer is not as
good as a forensic expert when it comes to
obtaining, analyzing and reconstructing
electronically stored information. The
forensic consultant will know how to identify deleted documents, missing e-mail
messages and crucial metadata.
CHRIS GRIESMEYER is a partner and vice chair of the
Litigation Practice Group at Levenfeld Pearlstein LLC. Reach him
at (312) 476-7574 or [email protected].