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Prepare Now to Avoid the Pitfalls of E-Discovery Later

A corporate executive sued his ex-employer seeking damages for wrongful dismissal. He settled the claim promptly when he learned that his employer had retrieved internet usage logs from his workplace computer that proved his dubious on-line activities on company time.
A large company involved in litigation had been instructed by the court and its lawyers to preserve relevant email. Certain employees deleted email messages despite these instructions. Over $20 million in damages was awarded against the company at trial after the jury was instructed that it could infer that the destroyed emails would have been damaging to the company’s case.

The explosive growth in the use of computers and related digital technology in modern commercial life has required lawyers and their clients to re-think the scope of discovery of records in litigation. As stories spread about lawsuits in which “smoking gun” emails have brought down Goliath, litigation lawyers are increasingly demanding electronic or “e-discovery” from their opponents and clients are expecting it from their litigation lawyers. 

My focus in this article is on an organisational setting where e-discovery is more likely to be fraught with pitfalls because of the complexity of computer networks and the number of employees creating and deleting electronic data on a daily basis. However, an individual involved in a lawsuit has the same obligations to produce relevant records for his or her PC, laptop, Blackberry, iPod, digital camera and other sources of stored electronic data.

Electronic discovery creates unique challenges for organizations that find themselves embroiled in or contemplating litigation. Unlike conventional discovery, which may require a litigant to do little more than a search through one or more filing cabinets to locate relevant records, e-discovery may require technical expertise to locate and preserve electronic records. Once located, electronic records cannot simply be printed, or copied to a disk and sent to the lawyer’s office for further handling. Each computer file (for example, a letter in MS Word saved on a hard drive) consists of the textual data we see on the screen or on paper and “metadata” that we do not see. The metadata reveals such things as who first created and who has since accessed the document, what changes have been made and on what dates, who received a bcc copy, etc. In some litigation this metadata may be critically important. Printing a hard copy does not disclose the e-record’s metadata and the act of copying a file to another source such as a disc actually alters the metadata so that it no longer accurately reflects the original record. Metadata is subject to discovery just as the textual data is and may need to be preserved intact. The most common method for accomplishing this is for a technical specialist to create a “mirror” version of the hard drive or other data source. This process ensures that each e-record, including its metadata, is reproduced exactly.

Electronic records also differ from conventional paper records in other ways Most significantly, they can be deleted with far less effort than it takes to destroy paper records. But deleting an electronic record does not actually destroy it, it merely frees up the storage space for reuse. The deleted data remains in place until the computer overwrites it with new data.

Consequently, deleted data can often be recovered (at some expense) and is subject to discovery. When an opposing litigant discovers that relevant documents have been destroyed it may ask the court to infer that the responsible party intentionally or negligently destroyed the evidence at a time when it had an obligation to preserve it, and that the destroyed evidence was damaging to its case. In the United States, some high profile and expensive lawsuits have been lost (or settled at a considerable disadvantage) because of such adverse inferences arising from the destruction of electronic records. 

This risk of accidentally destroying electronic records can be managed when an organization has a formal document retention and destruction policy and follows it. The process of creating a document retention and destruction policy (“document policy”) is beyond the scope of this article. It involves analyzing the types of records the organization creates and receives, the sources and types of obligations (business, legal and other) which oblige the organization to retain its records of various types, and creating rules about the manner and duration that documents of different types will be retained before being destroyed. It also addresses which employees have responsibility for retaining and destroying which records. Having in place an effective document policy may give an organization an advantage in complying with its electronic discovery obligations when litigation arises. Understanding where to look for relevant documents becomes easier, as does knowing how far back relevant archival records are likely to exist. In addition, following a document policy may help avoid an adverse inference when it can be shown that deleted documents were routinely destroyed in the normal course of business according to the policy at a time when litigation was not reasonably contemplated. Once litigation arises or is threatened, however, the organization must suspend routine document destruction until such time as it and its legal counsel have determined what records must be preserved as potentially relevant in the lawsuit. This step too should be easier with a document policy in place. Suspending the destruction of documents is simpler when employees already understand that they are doing it and why. A thorough document policy will consider conventional documents and computer records stored on the organization’s network and workstations, but also records on digital voice mail systems, shared use laptops, PDAs, disaster recovery tapes and over a dozen other sources where digital information may be stored.

The potential burden of e-discovery can seem overwhelming. The good news is that the test for discovery of records is still whether they are “relevant and material.” In some cases the collection and preservation of electronic records will be straight forward, particularly if the parties can agree that the preservation of metadata is not a concern. In others, a court may impose limits on the scope of e-discovery because the burden (including the cost) of locating and producing all such records outweighs their value in the litigation. The common-sense approach is to immediately discuss with counsel the potential importance of electronic records in any existing or anticipated litigation to determine how best to address the extent of e-discovery required.