• Everything You Ever Wanted to Know About Electronic Records Discovery But Were Afraid to Ask
  • August 9, 2004 | Author: Daniel I. Prywes
  • Law Firm: Pepper Hamilton LLP - Washington Office
  • The information revolution is spawning a litigation revolution. As information migrates from paper to bytes, the litigation process increasingly focuses on discovery of electronic data. Many companies are still planning how to prepare their information and electronic-records systems for the eventuality of litigation.

    Once litigation is commenced, it is too late for planning. Companies must slog through the discovery process and live with the consequences of haphazard prior actions (or inaction) involving electronic records. Even worse, a poorly conceived or implemented document "retention" program can easily boomerang. A court or jury may conclude that it was undertaken to "cover up" rather than "clean up" the company's electronic records.

    Companies are generally under a duty to preserve records that are likely to be relevant to pending or threatened litigation, and some courts extend this to litigation that is reasonably foreseeable. If companies fail to satisfy this duty, and evidence useful to a later lawsuit is destroyed, courts may impose sanctions for spoliation of evidence.

    Companies should ensure that they can efficiently access information they have chosen to preserve. Hardware and software changes occur now in short cycles, so that data recorded one way two or three years ago may be difficult to retrieve now, with the difficulty level increasing with time.

    These problems can be reduced if steps are taken to ensure that databases potentially needed for litigation are converted or updated as a company transitions its hardware or software systems. Never assume that this will be done by itself, or that the information systems department will appreciate the significance that counsel places on a category of documents.

    Companies also must keep an organized record of the electronic records they have preserved. In one recent case, a major pharmaceutical firm faced a sanctions motion because it did not produce records in a product liability case that it had produced in another piece of litigation.

    Ensure that privileged communications -- including e-mails to or from lawyers -- also can be easily identified. This can dramatically reduce the screening process necessary in responding to document requests in litigation.

    E-mail poses the greatest threat to companies in litigation (but see the related article about Uniform Messaging systems and voice mail discovery). Employees often treat e-mail as an informal mode of communication and assume that -- like most telephone calls -- e-mail is not recorded. E-mail messages are often crude, painfully blunt and poorly conceived. They have proven critical in many lawsuits, most famously in the Microsoft litigation where Bill Gates was publicly stumped and impeached by his own e-mail messages.

    E-mail is the cat with nine lives. When a user presses the "delete" key, the e-mail message can then be overwritten, but it may take several overwrites to actually erase the message on a single computer and other copies may exist elsewhere. Among other things, companies should carefully consider their policies about retaining backup tapes of electronic records.

    Courts have offered very little guidance on discovery of electronic records. Some of the most important rulings to date have come in Zubulake v. UBS Warburg, No. 02- Civ. 1243 (S.D.N.Y.). In July 2003, the Zubulake court, applying a new formula for cost-shifting in discovery disputes involving electronic data, ordered UBS Warburg to pay most of the cost of restoring backup tapes that the plaintiff claimed were relevant to her case. On July 20, 2004, the court imposed sanctions on UBS Warburg for destroying e-mail records after its counsel had directed it to save e-mail. In addition to requiring it to pay the plaintiff's attorneys fees incurred in seeking the e-mail records and other missing data, the court announced that it would give the jury an adverse inference instruction regarding the destroyed e-mail records.

    Today, discovery of electronic records comes up in nearly every commercial litigation case. For a company defending litigation, discovery of electronic records usually presents only risks and no benefits. The moral of this story is that, when it comes to information and electronic record keeping systems, don't wait until the lawsuit is filed. Follow the Boy Scout motto and "be prepared."