On December 1, 2006 amendments to Rule 26 and other sections of the Federal Rules of Civil Procedure (FRCP) became effective to address discovery issues that are unique to electronic discovery. The intent of these amendments is to reduce discovery disputes and costs, and improve discovery efficiency, with respect to electronically stored information.
Nearly every company is involved in litigation at one point or another, and when it is, its records management program will be severely tested to produce relevant e-mails, attachments, instant messages, transaction logs, video files, and other electronic records upon request. As a host of well-publicized cases have vividly illustrated, businesses that bungle eDiscovery are incurring multi-million dollar fines, spending more millions retrieving and analyzing enormous volumes of information, and damaging their reputations in the process.
The new amendments will increase the pressure on corporations to proactively manage the electronic discovery process to avoid sanctions, unfavorable rulings and a loss of public trust. Corporate IT departments must prepare now for changes required by these amendments. This article provides a brief overview of four key amendments that impact IT, followed by the specific steps for IT preparedness.
Electronically stored information requires special attention in litigation
The concept that computer-based data may be subject to discovery has been accepted for many years. The new amendments recognize that computer data is as important as any other embodiment of information and that "the discovery of electronically stored information raises markedly different issues from conventional discovery of paper records."
Amended Rule 26(a)(1)(b) explicitly identifies electronically stored information (ESI) as a specific category of information to be described by a disclosing party as in its possession and that the disclosing party may use to support its claims or defenses. There is no longer any ambiguity about whether digital data constitutes a "document." Businesses now have a clear responsibility to produce electronic records.
This places a premium on your records management team's ability to keep an up-to-date inventory and working knowledge of the company's data systems so that when litigation hits, employees don't need to spend limited time figuring out where relevant electronically stored information might reside, or the format in which it exists. Learning the ropes under fire is a dangerous way to operate.
In addition, for discovery requests, your company will have to expand the scope of its potentially relevant data sources to include all media and all formats, including backup media, portable media, remote or third-party locations, etc.
Be prepared for early discussions on electronic discovery
Among the most important of the newly amended FRCP for businesses is Rule 26(f), which requires parties to meet within 120 days of the filing of litigation, and at least twenty-one days prior to the scheduling conference, specifically to discuss eDiscovery issues. The purpose of this Rule is to avoid loss of ESI and ensure its usability and timely production by resolving concerns up-front.
The amendments will require companies to be prepared for discussions on electronic discovery prior to the scheduling conference. Topics to be discussed include the form of production of electronically stored information and the preservation of information. Obviously, in order for your counsel to discuss these matters intelligently, records management and IT must have made available all relevant ESI so that attorneys can review it at some level, even though they may not have reviewed it in depth.
In short, these amendments will require continuous, ready access to and control of all the ESI that may be relevant to a case. It will be difficult if not impossible to create ready access and control after litigation has started. It needs to be created and maintained as a way of life through close coordination of IT, Legal and other constituents of the records management team.
You will be responsible for identifying all potentially relevant sources of information
Amended Rule 26(b)(2) states that if your company is responding to a discovery request, it need not furnish electronically stored information that is not reasonably accessible due to burden or cost. However, you must identify all potentially relevant sources of information, and state when you are not providing information because of burden or cost. The other party in the law suit may then ask the court to compel your company to produce the material, and in that event, your company will have the burden of showing unreasonableness because of burden or cost. If your company is able to convince the court that the ESI is not reasonably accessible due to undue burden or cost, the court may nevertheless order production if the requesting party shows good cause. That means it will become more important than ever for your company to have a very good handle on its ESI. If your company fails to identify all of its "inaccessible" information and then can not produce it later because this information was not subject to the litigation hold, it could face severe sanctions.
A new safe harbor provision still requires proper litigation hold notices
Rule 37(f) is an entirely new "safe harbor" provision to the FRCP. In recognition of the fact that companies cannot preserve all the data they generate, its purpose is to provide limited protection against sanctions for parties that have disposed of potentially discoverable data in the normal course of "good faith" business operations that occur regularly in the operation of a data system
The Rule says that absent "exceptional circumstances" you will not be subject to sanctions for failing to produce email or electronic documents "as a result of the routine, good-faith operation of an electronic information system." However, the Rule makes it clear that "good faith" may involve a requirement that IT intervene to modify or suspend automatic overwriting or deletion functions to prevent the loss of information that is subject to a preservation obligation. That means you will still be required to halt automatic deletion programs or overwriting to preserve potentially relevant data in a reasonably anticipated litigation or investigation, so it is not clear what impact the "safe harbor" will have.
In short, these amendments will require continuous, ready access to and control of all the electronically stored information that may be relevant to a case. It will be difficult if not impossible to create ready access and control after litigation has started. Here are the specific steps IT should take to be prepared:
#1 - Map out all places where electronic information is stored
Not just email servers and backup tapes, but any data source including deleted data, data on systems no longer in use, data in remote or third-party locations, copies of production data used in demos, test systems or the like. Companies that don't have a complete map of potentially relevant data will put themselves at an early disadvantage.
#2 - Update your records retention policy to include all electronic information
Corporate retention policies should be applied to email and other electronic records. This step can significantly diminish your company's litigation risk and lower your email storage costs. Remember that your retention policy needs to specifically address how email backup tapes are handled. By establishing a consistent email retention policy across your organization you can ensure that the necessary emails are being retained and that the majority of emails, which are not official records or required to be preserved for litigation holds, are purged on a regular basis.
#3 - Ensure your litigation hold policy fully covers all electronic information including backup tapes
Make sure your litigation hold policy document includes rules for all relevant electronic records, such as email, electronic documents, scanned documents, and backup tapes. Ensure that all IT system administrators understand how to implement the hold policy for all IT systems and that the policy includes backup tapes to ensure they are not deleted or overwritten as part of the normal tape rotation process. To aid in turnaround time for the discovery process, select a vendor ahead of time to handle data restoration from tapes. Ideally, the restored data and files would then be transferred to a digital archive to enable search or assisted discovery.
#4 - Establish systems that simplify identification, retrieval and production of potentially relevant data
Evaluate how you can organize your data storage to proactively prepare for electronic discovery requests. For example, consider migrating identified records from backup tapes to a searchable, Web-based repository. Potential discovery records that were virtually inaccessible on backup tape would then be accessed anytime, anywhere. This would allow your response team to respond quicker and more efficiently. Your team could assess your legal exposure at the first sign of pending litigation.
Start now.
The electronic discovery amendments are on schedule to take affect on December 1, 2006. Executing these four proactive electronic discovery steps is crucial to avoid potential sanctions, big fines and risks to your corporation's brand.
Garry B. Watzke is senior vice president and general counsel of Boston-based Iron Mountain Incorporated, which helps organizations around the world reduce the costs and risks associated with information protection and storage. He is available at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .