Tips on Technology

More on Electronic Discovery

by Richard K. Herrmann, Esquire

It is interesting how our legal culture is driven by forms. We have form contracts of sale, form wills and, of course, form pleadings. Finally, during the last two years, the forms relating to discovery have now caught up with the use of technology in business. I am talking about electronic discovery.

It took a while before many lawyers focused on the issue of electronic documents and the wealth of information they contain. This is particularly true now that email has become the number one means of communication in the business world. Now litigants know what to request and the impact of the discovery they are seeking. And the impact is dynamic, it is awesome and it is expensive.

A number of fascinating issues arise when considering electronic discovery. What is the impact on document retention policies? How do companies control computer backup in light of electronic discovery? How does all of this relate to the issue of spoliation of evidence? And who should bare the cost of electronic discovery?

What is the impact of discovery on document retention policies?
It is common for companies to have written policies on document retention. How long should the records be saved and when can they be safely destroyed? Years ago, we did not have to deal with whether the documents were in paper format or electronically kept. Microfilm generally involved the types of records which were not scheduled for destruction. When electronic documents evolved, most lawyers counseled their clients that the media may have changed but the subject matter of document drove the issue of document retention. A letter was a letter and a memo was a memo. There was no need to treat document retention differently. Of course things have changed. Now, the media becomes extremely important and is often the most important factor in drafting document retention policies. The underlying reason for this is the burden and cost of electronic discovery. In 1999, U.S. World Report indicated that 1.1 billion business email messages were sent daily. According to experts today, more than 90 percent of the documents created by business are electronic and more than 31 billion emails are sent daily.

One would think that, since almost all of the documents are electronic, control and access would be a snap. Of course, this is not the case. Electronic records are kept in many different locations, on site and remotely. Employees are accessing and storing records electronically at home and on handheld computers. Document retention policies are difficult to create and even more difficult to enforce. To avoid subjecting the company to the burden and expense of searching every computer, backup tape, home and PDA for electronic documents, the trend appears to be to shorten the life of a document. This can be unfortunate. Generally speaking, the corporate knowledge of any organization is in its documents. When the documents are destroyed, the history of the company may go with it.

How do companies control computer backup in light of electronic discovery?
Once a document retention policy has been implemented, it needs to be followed. Let’s suppose that a company has a policy of backing up its email on a rotational basis, daily, weekly, monthly and yearly. Let’s further assume that as the tapes are rotated, they are over written. Two issues arise with regard to litigation. Once a lawsuit is filed, what happens to the rotation? Can a company overwrite backup tapes which may contain relevant information? Does it have to stop the procedure during the litigation, and in the process, destroy its document retention plan? How does the IT department know to stop destroying electronic documents? While a number of opinions have been written dealing with the issues, they offer no business solutions. Of course, this leads to the next very serious matter.

How does all of this relate to the issue of spoliation of evidence?
Spoliation involves the destruction of evidence relevant to issues before a court or tribunal. Each week, the number of spoliation cases relating to technology are increasing. The courts are becoming more informed on the practical and legal issues as are the attorneys. Much of the destruction is innocent, and much involves an intent to destroy relevant evidence. Sanctions are issued with more frequency. Orders are issued preventing further destruction even if the party was following document retention policies.

Who should bear the cost of electronic discovery?
This is a subject on which courts are opining and opining. It is an expensive process to sift through millions of electronic documents for relevant documents. It is easy to request the information. Of course the broader the request, the more burdensome and costly the process becomes. It is obvious that electronic discovery can be used as a sword to drive the cost of litigation to settle. In some cases, is it appropriate to shift the cost to the requesting party. A definite trend seems to be evolving from the case of Rowe Entertainment, Inc. v. The William Morris Agency, Inc, 205 F.R.D. 421 (S.D.N.Y. 2002). The Rowe court developed an eight-factor balancing test to determine cost shifting.

What’s to Come?
There are only a few things that are clear when it comes to electronic discovery. One is that it will keep us occupied as a profession for the next few years. The other is that many fundamental principals we have not discussed are in jeopardy. The right to privacy is one of them. Those employees working at home may very well find their entire computers subject to subpoena, as a party reviews hard drives for relevant information. How are we to protect the attorney/client privilege when a limited number of privileged documents are among millions? Does the fiction of returning inadvertently produced documents protect the sanctuary of the privilege? The answers are evolving. Should we be satisfied with waiting for them, or should we proactively design the structure of electronic discovery in the Delaware courts? Is it time for a Rule?

Return to July/August 2003 Table of Contents.