With the recent Amendments to the Federal Rules of Civil Procedure regarding electronic documents, e-discovery is the issue de jour for many in-house counsel. This is particularly true for smaller to mid-sized companies. Before now, these companies may not have needed to be routinely concerned about their ability to conduct comprehensive searches of electronic information systems in order to respond to discovery requests. But all that has changed effective December 1, 2006 with the revisions to the Federal Rules of Civil Procedure. Now all parties in every federal case must discuss and plan for the discovery of electronically stored information at the inception of the litigation and many states are adopting similar rule changes concerning electronic discovery.
We no longer live in – or litigate in – the world of bankers boxes or file cabinets of largely paper documents. And even big companies’ legal departments are not immune to the anxiety involved in ensuring that their electronic discovery protocols are adequate while at the same time keeping some check on burgeoning litigation costs.
It is little wonder that e-discovery has spawned a cottage industry of vendors, consultants, and third-party contractors, who—for a fee—will eagerly assist corporate counsel and outside law firms in managing the electronic production process. Indeed, hardly a day goes by when you don’t receive yet another email invitation or announcement about an upcoming e discovery CLE seminar. The sheer volume of documents, data and other information that is stored electronically, coupled with the cost of searching, collecting, and reviewing this information under the pressure of discovery deadlines make it imperative that in-house counsel develop effective protocols for electronic discovery long before being served with the massive “any and all” request for production.
While many in-house legal departments will not have the resources to internally manage large, multi-terabyte productions, there are simple, important steps that any in-house counsel can take to help contain the cost and decrease the stress of your next e-discovery production – whether large or small.
The Solution: Know Where You’re Going or You’ll End up Where You’re Headed.
Tip No. 1 - Early Partnership Between Counsel & IT Staff is Key. The first step in getting a handle on electronically stored information within your company is to develop a partnership with the IT director and his or her staff. Get to know the techies; in ediscovery, they are your team. Before you have a discovery request pending, make time to meet with your IT director. Discuss what resources they have at their disposal to search for and collect information from company servers, hard drives, and other data sources. If you know ahead of time what internal capabilities are available to search and image hard drives, for example, or what volume of email backup tapes exists, you will be in that much better position to effectively manage your discovery budget when the document requests get served because you will know exactly how much outside help, if any, you will need to manage the e discovery process. At the very least, you will have a better idea of where you will need to allocate your discovery dollars.
Tip No. 2 – Know Your Company’s Information Architecture. Nothing is more stressful when responding to a large document request than not knowing where to look to find the responsive information. This is why you want to develop a strong working partnership with your IT team early on. In-house counsel must have an understanding of the company’s information systems, what is sometimes referred to as the company’s “information architecture.”
What operating systems are in use? What software and hardware is currently in use? Has it changed? When? What happened to the records stored on the legacy system(s)? What servers are used for which kinds of information or data? Financial institutions, for example, will often have different software (and dedicated servers) to track security transactions and brokerage confirms than what is used for basic company accounting.
Where and how is email stored, purged, back-up and/or archived? And don’t forget company laptops, PDAs, voicemail, home office networks, and instant messaging systems—is any of this information captured by company servers? What about the company website and intranet pages— are these stored? Where? For how long? How frequently is this information updated or revised? Are the historical pages cached or archived? Get the answers to all of these questions well before opposing counsel asks. Have your IT director walk you through what’s out there and, if possible, create a flow chart or schematic (similar to a corporate organizational chart) for you that lays out the information management systems that are currently in use and how various systems may interface with one another.
Tip No. 3 – Create an Inventory of Your Company’s Operating Systems. Once you have a basic understanding of what systems are in use, document this information so that you can refer to it later. Create an inventory or spreadsheet listing your company’s operating systems that are used to process, store, and manipulate various electronic data and information, including word processing, document management, email, accounting, and financial data systems.
Tip No. 4 – Know Your Company’s Document Retention Policies. Typically different types of documents are kept for varying lengths of time depending on their nature, relative importance, and whether they are subject to statutory or regulatory retention requirements. In-house counsel should have copies of the most current versions of company retention policies readily available and must monitor for consistent compliance with these policies. You can bet that you will be asked to produce these policies, or relevant portions thereof, in any litigation involving significant electronic production.
Tip No. 5 – Include IT Staff in “Litigation Hold” Announcements. Once litigation is impending, in-house counsel must preserve all potentially relevant documents and communications. Generally, this is accomplished through the use of a “litigation hold” directive sent to the particular operating units or personnel that are likely to have information pertinent to the litigation. But just sending the memo or email to operating personnel is not enough. If you do not also include the IT team in such announcements (and in regular reminders of the preservation requirements), important documents may be inadvertently lost for failure to disable automatic purge or back up tape write-over functions that operate behind the scenes in your information systems.
Tip No. 6 – Use Spreadsheets to Organizing Electronic Searches and Results. Once you have identified the relevant repositories of information, Excel spreadsheets are valuable tools to track: (a) which personnel may have relevant documents and information; (b) whether their hard drives and email have been searched and/or imaged for preservation; (c) any special issues your IT team has identified in retrieving or searching for particular data; and (d) what quantity of data was collected and when.
Tip No. 7 – Use Chain of Custody Affidavits for Each Electronic Search Project. Electronic discovery is often expensive and time consuming. It can also be disruptive to your company’s operating units. The only thing worse than having to do an electronic search once, is having to re-do some or all of the search because no one can remember whose files were searched, when, and by whom, or there are inadequate records to demonstrate that the data was properly handled and preserved after its initial collection.
Avoid this costly headache by consistently using chain of custody affidavits. The chain of custody affidavit should include a sworn statement by the appropriate custodian outlining whose files were searched, when, by whom, the search terms used, date range for the search, search methodology, along with what software was used to collect or process the data, and what medium it was stored in. Such affidavits are essential whenever you transfer files to outside counsel for review or send data to third party vendors for processing.
Furthermore, outside vendors who receive your electronic data for purposes of OCRing, imaging, or conducting word searches should likewise provide a chain of custody affidavit to you when the results are returned so that you can be assured that the integrity of the original files was maintained throughout processing. Chain of custody affidavits can be extremely important when you are faced with defending the integrity of your electronic search and production procedures either in the meet and confer process or when opposing a motion to compel further production.
Tip 8 – Take Advantage of Industry Knowledge. Finally, consider participating in an e-discovery roundtable within your industry or local bar association. This may be an inexpensive way to gain from others’ experiences and build a shared body of knowledge that will enable you to respond confidently and cost-effectively to even the most extensive discovery request.
Love it or hate it, e-discovery is here to stay. But you can master this important component of litigation and make your litigation budget go farther by planning for electronic discovery well before your organization is under the gun.
Karen L. Stevenson is Senior Counsel at Buchalter Nemer in Los Angeles with expertise in complex commercial litigation and business torts. She can be reached at 213.891.5574 or .
