by Michael J. Bauer, Associate

Discovery is arguably the most expensive period in any litigation.  In fact, some estimates place the expense as high as 50% to 90% of the total cost.  Concurrently, it is also the most time-intensive period for both clients and attorneys.  Today, the increasing amounts, and types, of electronically stored information (“ESI”) compound the expense of, and time involved in, traditional discovery.  Inevitably, the ability to quickly sort, review, and analyze ESI gives an advantage to the litigant best able to perform such tasks.

Developing and refining strategies for dealing with ESI before litigation is “reasonably anticipated,” is of profound importance, both from an economic and legally strategic vantage point.  A well-devised ESI discovery plan should not be drafted after litigation has commenced, nor should it be created as a reactionary measure when litigation is reasonably anticipated.  Planning for the need to respond to the discovery of your ESI should begin before litigation even appears on an organization’s radar.

The Data Source Map

The ability to respond fully and effectively to ediscovery requests requires an organization to determine where and how its ESI is created and stored.  The organization should consider all potential sources, including, but not limited to: computer hard drives, internet servers, recovery tapes, voicemail, PDAs, e-mail, cell phones, and its employees’ personal computers (if used for business purposes).  This list is non-exhaustive and an organization will need to devise a complete list based upon how it operates.  Additionally, the organization will want to determine who is responsible for, and able to access and retrieve information from, each data source (generally this will be an information technology (“IT”) employee).

All sources of ESI, once determined, should be compiled into a “data source map.” This document should be updated as necessary.  A “data source map” will be of immense benefit when preparing for, and responding to discovery requests.  For example, the data source map will allow an organization and its attorneys to comply with Rule 26(a)(1)(B), and provide “a copy of, or description by category and location of … all electronically stored information” to opposing counsel.  A little foresight, planning and effort in the beginning can avoid hours of frustration and backstepping later to correct inadvertent omissions in disclosing ESI.

The Document Retention Policy

Once a company understands where and how its ESI is stored, it can create a document retention policy.  A well-reasoned document retention policy can be the linchpin for ensuring compliance with the e-discovery amendments to the Federal Rules of Civil Procedure (“FRCP”).  A document retention policy formalizes an organization’s rules, based upon its business practices, for the saving and deleting of ESI.  The policy does not need to be lengthy, but it should be comprehensive and address all data sources as identified in the organization’s data source map.  Specifically, the policy should define how, where, and how long ESI will be retained.  For example, the policy could specify that e-mails will be retained for 30 days and then deleted unless they contain sensitive or unique information.  If the e-mails for a particular topic need to be retained longer than 30 days, the organization should notify individual employees to create separate folders to maintain such e-mails.

Exclusive of industry regulations and any litigation hold requirements, an organization should only keep ESI as long as necessary for business purposes, and no longer.  If the organization’s policy limits the retention time for ESI, the organization will have less information to search and review for relevant items if served with a document request.  As a result, attorneys will be able to expedite their privilege review of relevant documents and be able to give opposing counsel a realistic timeframe for the production of discoverable ESI.

An organization, after it has developed and adopted its document retention policy, should distribute it to employees who should read it and sign it.  The organization should strongly consider training employees regarding the importance of the policy and monitor compliance.  An organization may want to impose penalties for employees who do not comply with the retention policy.

Indeed, once a retention policy is adopted, an organization should ensure that it is consistently and conscientiously applied.  Courts are more likely to respect a retention policy that has a consistent track record, than one that is only followed when the threat of litigation appears.

Additionally, the policy must describe a procedure for stopping any deletion procedures the company has adopted if litigation is “reasonably anticipated” or has already commenced.  This part of the policy is critical and will help the organization defend against, and avoid, claims of spoliation (i.e., failure to preserve, loss of, or destruction of, evidence relevant to potential or current litigation).  Remember, Rule 37 forbids sanctions under the FRCP for failure to provide ESI “lost as a result of the routine, good-faith operation of an electronic information system.” It does not, however, preclude sanctions under other sources of authority or under rules of professional responsibility.  As a result, this may be one of the most important functions of the policy.  Indeed, judges have meted out some harsh sanctions for the failure to preserve and/or destruction of evidence, electronic or other types of evidence.

The Litigation Hold

Preservation obligations are said to commence as soon as litigation is “reasonably anticipated,” a phase which is arguably subjective.  This preservation obligation is termed a “litigation hold,” and it encompasses an organization’s responsibility to suspend its document retention practices in accordance with its preservation obligations.  An organization should consult with its attorney as to the responsibility to the issue and timing of the litigation hold, and the method of communication and compliance within the client organization.  It is the attorney’s (likely in-house counsel’s) responsibility to issue the litigation hold, in writing, to his client.  An attorney may consider drafting a litigation hold letter template, which could be readily edited for each individual client.

Once a litigation hold is instituted, an organization must “switch off” any auto-delete features, or manual deletion procedures, identified in the organization’s data retention policy that may delete pertinent, discoverable information.  Failure to do so may subject the organization to spoliation claims.

Counsel should not take a passive role once the hold is issued.  An attorney should take affirmative steps, in conjunction with the client’s management, to monitor compliance so that all sources of discoverable information are identified and searched.  To do so, counsel should be familiar with the client’s document retention policy and the data retention architecture.  In order to be effective in negotiations with opposing counsel regarding production timetables, an attorney should understand the accessibility of the organization’s ESI.  Attorneys should speak with a client’s IT personnel to gather such information.  Additionally, management and its attorney should identify the key players involved in the litigation and make sure they understand their obligations under the litigation hold.  Because these key players are the “employees likely to have relevant information,” it is particularly important that the preservation duty be communicated clearly to them.  Key players would be well advised to create separate folders or storage spaces for ESI related to the litigation.

The litigation hold should be periodically reissued so that new employees become aware of the retention requirement, and so that it remains fresh in the minds of all employees.  The key players should be periodically reminded that the preservation duty remains in place.  Management or its counsel should instruct all employees to produce electronic copies of their relevant active files.  All backup media that the party is required to retain should be identified and stored in a safe location.

As stated before, failure to ensure compliance with the litigation hold may subject parties to claims of spoliation of evidence or document destruction.  Ensuring compliance can be far less costly than attempting to mitigate damage after the judge gives an adverse inference in the jury instructions allowing the jury to infer that your client destroyed evidence that was likely helpful to the opposing party’s case.

This is not to say that a party cannot defeat a claim of spoliation by showing that evidence was destroyed pursuant to a valid and consistently enforced document management policy.  A client should not, however, let this be an excuse for inactive monitoring of ESI retention efforts.  While the parameters of an attorney’s responsibility for monitoring compliance are not completely clear and continue to evolve, it is evident that the client and its counsel should work together to understand the duties the Federal Rules of Civil Procedure now impose on the retention and production of ESI.

Discovery Requests

When the time for discovery arrives, just as an attorney should be well versed in the client’s data systems, that attorney should also take the time to get acquainted with the opposing party’s data systems.  An important way, initially, to uncover such information is through the use of interrogatories.

The initial interrogatories should request information regarding the opposing party’s information systems, types of software and hardware, type of information stored, and the identity of personnel who are most knowledgeable regarding such topics.  Due to the limit on the initial number of interrogatories, you may consider seeking a stipulation regarding an increased number of interrogatories related to ESI, or seek leave of the court to propound additional interrogatories, as necessary.

Armed with your newfound knowledge of the opposing party’s information system, you are in a better position to make document requests.  In accordance with FRCP 34, make sure to specify the form of production.  Also, it may be important to request the production with metadata included.

Metadata has been characterized as the Rosetta Stone of the e-discovery world.  It describes how, when, and by whom an electronic document was created, modified, and transmitted.  In the e-mail context, for example, it can show information regarding the author, creation date, attachments, and the recipients, including any blind copies.  With metadata, a person can tell what document was attached to an e-mail, and what version of that document.  With metadata, attorneys do not have to rely on witnesses’ memories; the document is its own best evidence.  In addition, metadata can expose holes in the opposition’s document production that might otherwise go unnoticed.

Not every case hinges on issues for which metadata has answers.  An attorney may simply desire an electronic equivalent of the original document in a format you search electronically.  In that case, ESI produced in a “read only” format may meet all needs.  In sum, consider carefully the form of production best suited to a particular case.

Discovery Responses

If your client has performed its due diligence by creating a data source map and document retention policy, discovery responses will be less arduous than they would be otherwise.  An attorney with a diligent client should be able to navigate the questions posed by opposing counsel, during the Rule 26(f) conference, with relative ease.  If the client has not been so diligent, the attorney will need to quickly become familiar with the client’s ESI sources. 

Once the attorney has a working knowledge of the client’s ESI, the attorney is ready for discovery.  When responding to document requests, make sure to specify what data sources are considered “not reasonably accessible” due to “undue burden or cost.” Additionally, if you have objections to the opposing party’s requested form of production, be sure to voice them in the response, and state in what form you will be producing responsive documents.

Conclusion

Preparation is the key to dealing effectively with the new federal discovery rules for discovery and production of ESI.  Having a useful tool like a client-created data source map, or aiding your client in creating one, will help when litigation ensues.  One cannot stress enough the importance of a well-thought out, consistently applied, document retention policy.  In short, electronic discovery favors he who now prepares best.


The information or opinion provided in this article is the author's own and not necessarily that of Watt, Tieder, Hoffar & Fitzgerald, LLP. The author is solely responsible for the information and opinion that he or she has provided. The information contained herein does not replace seeking specific legal counsel to directly address individual client needs.

Watt, Tieder, Hoffar & Fitzgerald is one of the largest construction law firms in the world, with a practice that encompasses all aspects of construction contracting, claims and disputes resolution, and transactional legal services. WTHF principally represents large general contractors, design firms, and sureties throughout the country and internationally.