United States: Five Document Management Strategies That Reduce Burdens Of E-Discovery In Construction Claims

Last Updated: October 3 2013
Article by Ralph A. Finizio, Robert A. Gallagher and Ryan P. Stewart

Litigants in all industries, including construction, have to deal with electronic documents. Collecting, processing, reviewing and producing these documents involves substantial expenditures of time, manpower and money, often before a single deposition can be taken, and before a meaningful claim evaluation can occur.

In the face of these expenditures, many litigants opt to either settle claims prematurely—and often without a complete understanding of the facts—or not litigate at all. But owners, contractors and professionals can implement proactive document management strategies to reduce their e-discovery burdens and gain an early advantage in disputes.

Without an organized document management system in place, the potential sources on a construction project for discoverable, electronically stored information (ESI) are virtually endless. This is because ESI (1) includes so many things—e-mails, documents, spreadsheets, databases, photos, text messages, calendar entries, instant message chats, audio and video files, Web sites and social media; (2) can be stored in so many places—desktops, laptops, tablets, servers, cell phones, and flash drives; and (3) is held by so many people—virtually any person who touches a construction project. With all of these available sources, it becomes clear that the broader a company allows the universe of potential ESI to be, the more burdensome all other steps along the discovery process—collection, processing, review, production—will be.

Fortunately, there are several simple document management strategies that, when employed effectively, can significantly reduce the discoverable ESI universe for a construction dispute. The critical component is to have these strategies in place throughout the project.

1) Organized Custodian Project Files

All personnel should organize their project files. This includes creating project-specific folders for their e-mails and other electronic documents. Project-specific folders are especially critical for those working on multiple projects at the same time. Project-specific files reduce the likelihood that companies will have to collect a custodian's entire mailbox or documents folder and sift through all of the data to isolate just those e-mails and documents that relate to the dispute.

2) Central Project Repository for All Project-Related Documents

Companies should set up a central electronic repository for all project-related files where custodians can save their information. Organization is a must in these repositories, as this document management system will house all project-related files. The system should be organized logically (such as by project), with sub-files or folders to compartmentalize project information (for example, correspondence, subcontracts, design, purchase orders, punch lists, etc.). Those working on the project must have a clear understanding of the repository's structure. Otherwise, when a dispute arises, a company may be forced to search the entire repository if the custodians are not storing the project data in the appropriate sub-file.

3) Discourage Work on Personal Computers and Limit Storage Options

Companies should also discourage work on personal computers and handheld devices, and should require employees to save their data only on company-controlled hardware, rather than locally. To that end, an effective document management strategy will ensure that employees' ESI resides only in company-controlled locations—desktop hard drives, laptop computers, network servers, flash drives and CD-ROMS. Companies should also limit the locations where data may be stored. Some companies may find it advisable, for instance, to disable storage capabilities on desktops and laptops so that all information must be saved on the company's network or on a company-controlled thumb drive. That way, when a dispute arises, the company will only have to collect data from a limited number of sources.

4) Document Retention and Litigation Hold Policy

An effective document retention policy is a key component to an effective document management system. The retention policy must be strictly enforced. Employees must be responsible for following the policy—neither destroying documents and ESI prematurely, nor retaining them beyond their useful life. It should also be accompanied by a "litigation hold" policy that applies once the possibility of litigation arises. A defensible document retention policy will limit the data that must ultimately be collected, reviewed and produced to that which is reasonably available to the company. This saves both time and money.

5) Information Mapping and Collection Plans

Finally, formulating a collection plan before disputes arise will also limit costs and promote efficiency. Companies should work with their in-house or outside counsel to determine the categories of ESI that will need to be collected. In order to facilitate the collection, the company should create a data map of its network systems. Understanding the organization's network, infrastructure and document retention policies is an integral part of identifying, preserving and collecting relevant ESI. Counsel should then create a list of custodians who may possess relevant documents and interview them to learn more about their document-storage practices and counsel them on any necessary changes.

By following these document management principles, companies and their lawyers can more cost-efficiently access relevant data. Rapid collection and early case analysis permits timely and accurate assessments of potential litigation outcomes. This allows both the company and its lawyer to gain confidence and should give them a leg-up on their adversary, who may be bogged down with collection and processing issues. A sound document management policy may also facilitate early alternative dispute resolution mechanisms like mediation, and permits companies and their lawyers to focus on winning cases, rather than on costly and distracting e-discovery issues.

While it is clear that e-discovery will always present challenges for litigants in terms of its scope and cost, the key to addressing e-discovery is to be proactive in the management of information and records.

This article was published in Construction Claims Monthly on September 18, 2013

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Ralph A. Finizio
Robert A. Gallagher
Ryan P. Stewart
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