United States: How Companies Can Plan Ahead and Minimize the Burdens of E-Discovery

It can be an enormous challenge for companies to institute a litigation hold and preserve or collect Electronically Stored Information in response to a discovery request in a legal matter.

From a business perspective, new technology can be a wonderful thing, offering flexibility, mobility and convenience. However, from a legal and IT (not to mention security) perspective, more devices, more software and apps, and more repositories for ESI can create headaches because it usually means that more data is being generated and spread out, and is often being mixed together with other types of information.  As such, advancements in technology that are allowed to go unchecked can greatly increase a company's burden, time and expense in gathering relevant information when litigation arises.

Many forward-looking companies who have repeatedly responded to the needs of eDiscovery recognize the importance of swiftly identifying what documents and ESI it has that may be subject to discovery, and quickly preserving and collecting that data. In this writer's experience, the companies who are best prepared to implement a litigation hold and respond to a request for electronic discovery are the ones who have:  (1) centralized their electronically stored information; (2) established a logical and easy-to-use system for structuring and organizing the company's data; and (3) developed clear internal policies and procedures relating to the retention or deletion of electronic data and the organization's response to a request for ESI.

  1. Centralization.

In today's business environment, relevant information might be created and stored in many different locations, such as on computers, servers, tablets, PDA's and cell phones, removable media (flash drives, DVD's, etc.), cloud-based email or document management systems, etc. Simply stated, the more sources there are of potentially relevant data, the more time consuming and expensive it will be to search for and collect it all.  Having data scattered around can also significantly increase the risks of security breaches and of losing important documents due to corruption of files, hardware malfunctions, theft, or intentional or inadvertent deletion or spoliation of files by employees.  Obviously, having more devices can also increase a company's costs to maintain those different systems.

On the other hand, having a centralized system for storing and maintaining important company records can have many benefits. It can significantly improve data security, the ability to create usable and efficient backups, and the ability to set and consistently follow a records retention policy where old, useless data is deleted after a defined period of time.  Having a centralized system can also drastically improve a company's ability to promptly identify – and preserve and collect – information and data sources that are relevant to a legal matter.  If the proper controls are in place, potentially relevant data can sometimes be identified, preserved and collected through a single point of contact with the company (usually someone in charge of the IT systems).

A centralized system ideal for responding to requests for electronic discovery will typically feature: (a) secure servers that house all of the emails and documents created and maintained by the company's employees; (b) controls enabling the company's IT specialists to easily and quickly back-up the data, set retention and litigation hold processes, and protections against the spoliation, corruption or loss of data; and (c) a single point of access enabling the company's IT specialists to quickly and easily identify and export all of the relevant ESI, in formats that are useful in litigation and preserve original metadata.

Sometimes email journaling systems can be useful in gathering emails relevant to litigation. Such systems often retain all of the company's sent, received, and deleted emails, even though users may be able to routinely delete messages from their email client (e.g., Microsoft Outlook) to create space.  When considering an email journaling system, however, care should be taken to ensure that the system provides effective searchability and exporting features, as described above, and that the system retains a complete record of all emails and attachments.  Some journaling systems create and retain incomplete ("stub") emails, making the task of collecting the complete email record difficult or impossible.

A non-ideal and decentralized system, which can drive up the costs and burdens of eDiscovery, will typically allow users –at their choice – to save documents locally to various devices (computers, tablets, cell phones, removable media, etc.), or third-party, cloud-based document management systems that they control, such as Dropbox or Google Drive. Similarly, non-centralized systems may allow users to create and/or use personal or other email accounts for communicating on matters related to the company.

  1. Structured and Organized Data.

Harken back to the "paper age" and imagine that you're a sales person who works on 20 different deals in a given day, creating purchase orders or invoices, jotting down notes, drafting correspondence, etc. Now imagine that instead of maintaining a separate file folder for each specific transaction, your practice is to place each document you create – along with your junk mail, paystubs, grocery list, etc. – into a canister, which you send through a pneumatic tube system that dumps out into a gymnasium-sized basement of the company.  Now imagine that all of the other 50 sales people at your company engage in the same practice, as does the CEO and the 300 other people across the company's various departments.... And everyone has been using the same system for 15 years.

In that situation, how difficult would it be for you (or your company's lawyers) to go back and find the important notes you jotted down on a specific transaction from 6 months ago?

Much like the gymnasium-sized basement, a server or network can serve as a centralized "dumping ground" for all of a company's ESI – where all things both relevant and irrelevant (including perhaps employees' personal information) is stored. When it comes time to locate and produce only the relevant evidence, someone must still deal with the entire mountain of information– most of which is likely irrelevant to the matter.

By contrast, having a centralized document management system for employees to save records under a clear taxonomy and foldering system enables a company to locate smaller "buckets" of potentially responsive documents much more quickly and accurately. It also enables a company to more consistently implement and comply with its records retention – or destruction – policies, so as to eliminate useless or outdated information that no longer serves any business purpose.

A structured system that is better suited for responding to the needs of eDiscovery would carve out well-defined network shares. Each individual might have their own share to which they can save the documents they create or maintain.  Depending on the daily business needs of the company, certain shares or folders might be established for specific departments, transactions or matters.  Having a structured and organized system may also allow for easy searchability, by providing means to identify certain important criteria about the documents, such as document types or applicable creation or editing dates.  As mentioned above, it would also allow the company or its IT professionals to export all of the selected ESI in formats that are useful in litigation and which preserve the documents' original metadata.

  1. Internal policies and procedures.

Finally, what good is having a centralized and structured system for maintaining emails and documents, if your employees don't know how to use the system, or if they can easily circumvent it?   In practice, the lack of clear policies and/or the lack of employee education concerning these policies, can expose a company to the risk that its record retention desires are not followed and its technology not used.  This can lead to the risk of noncompliance with the company's eDiscovery obligations, which in turn, may expose the company to the risk of sanctions, court costs and/or attorneys' fees.

The Federal Rules of Civil Procedure require parties to produce any relevant documentation in their possession, but they can also shield parties from any liability for failing to produce certain documents that are no longer available due to the routine, good faith operation of an electronic system (for example, when old emails are deleted prior to the litigation pursuant to an automatic deletion policy). However, parties are only shielded from liability if their retention policy is clearly written and if it is enforced consistently within the organization.

In order to comply with its eDiscovery obligations, a company might consider adopting and educating its employees on a clear, written document retention policy governing, for example: what constitutes an official "record"; how and where employees should or should not store those official records; and the schedules for retaining different kinds of official records as well as other unimportant emails, documents and other ESI.

Companies might also consider implementing a litigation hold policy and procedures that suspend any deletion of documents and emails if a reasonable anticipation of litigation arises. Such a policy would also outline: procedures for reporting litigation or threats of litigation against the company; the internal procedures for handling litigation holds; and the responsibilities of employees who implement or are subject to litigation holds.

Companies might also consider adopting policies and educating its employees about maintaining the confidentiality of sensitive company information, and the proper and/or improper use of the company's information systems (including the use of its computers, mobile devices and Internet access). For companies who allow employees to "Bring Your Own Device," a BYOD policy might address issues related to the retrieval of company-owned data on personal devices and govern employees' privacy issues.

Finally, when investing in a centralized, structured email and document management system, it is important to educate employees on how to use it, and any taxonomy and foldering system that you create.  Make sure to clearly document both the policies governing the retention of data and the technical procedures for executing the preservation and collection of ESI.  Your new IT personnel will thank you when tasked with preserving and collecting data that may predate their own employment by years.

While the above list is certainly not an exhaustive one, these kinds of controls can be a great help in limiting a company's data and the time and expense associated with complying with the needs of preserving, collecting, searching and producing a company's Electronically Stored Information in litigation.

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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