July 03, 2007

Federal courts have been working with electronically stored information for years. Due to recent changes to the Federal Rules of Civil Procedure, however, e-discovery requirements have been intensified for businesses and key personnel, indicating the importance of early, proactive collaboration between information technology specialists, counsel and executive management. The amendments, which took effect in December 2006, bring renewed clarity and consistency to the discovery process, allowing parties to plan ahead, save time and mitigate the costs associated with producing electronic information. Working with these new federal rules will require the collaboration of IT personnel and in-house and outside counsel to develop an effective process to preserve and produce information, and document compliance efforts, in order to avoid stiff penalties associated with negligence.

In federal court, it is now allowable to request that ESI—available in a variety of file formats from Microsoft Word documents to e-mails, databases or Blackberry data—be produced during litigation. Because IT personnel understand the “what” and “where” of a company’s data management system, when a claim or lawsuit arises, it is crucial that clients notify legal counsel so that both can immediately consult IT personnel, who can easily locate and preserve valuable ESI. All relevant ESI should be identified and preserved in hard copy format and also “native format,” the format in which the data was originally created. Anticipating discovery needs and early preservation will maintain ESI in a searchable and accessible format, saving time and money when the information must be produced during a lawsuit.

Communication is Critical to Preservation
After identifying what ESI must be preserved, the next step is to communicate with the people involved in handling the relevant ESI. Information to be communicated should include: names of key personnel, relevant subjects or topics, the types of files to save, location of information and the relevant time period. The scope of preservation will depend on the circumstances in each case, but developing a plan before a lawsuit is filed is ideal. Moreover, every person involved in the preservation process should document all preservation activities—such information is invaluable when the opposing party raises concerns with the court. Preservation may begin by temporarily suspending document retention procedures. All company personnel should be advised early and often to keep relevant information, whether it was created before or after a lawsuit started. In-house and outside counsel are under a continuing duty to ensure that all personnel—from CEOs to receptionists—understand and comply with preservation requirements. Assistance from IT personnel is necessary to ensure that people are meeting the duty to preserve evidence. Simply writing a letter asking employees to refrain from deleting documents is not enough. Preservation and collection of relevant information is an ongoing process, requiring counsel to communicate with IT personnel on a regular basis.

Collecting and Producing ESI
There are a number of ways to collect information identified as relevant to a lawsuit. Care should be taken to ensure that data collection does not interrupt the day-to-day operations. After information is collected, the party must produce information responsive to the opposing party’s discovery requests. Production will depend on the specific discovery requests and nature of each case, so counsel and IT personnel should determine if the existing format is sufficient to meet all obligations under the new Federal Rules of Civil Procedure.

Failure to follow these rules may result in severe sanctions imposed by the court. A frequently referenced New York case, Zubulake v. UBS Warburg, shows that thousands of dollars in sanctions are at stake for failing to preserve backup tapes. Here too, documentation of the process used to collect and produce ESI is also critical. Should counsel, a client, the court or opposing counsel need to review what procedures were implemented, there will be no need to recreate the past.

Conclusion
Preserving electronic information is a collaborative process, requiring the input and experience of IT professionals, and in-house and outside counsel. Early action, including the establishment of sound e-discovery practices, may ultimately make the difference between a litigation win or loss. In addition, an effective preservation and documentation process can provide a company and its counsel added advantage in prevailing over the opposing side. The consequences of noncompliance under the new rules should not be taken lightly. Courts are empowered to shift the costs of production or impose sanctions on parties that ignore their obligations. The earlier counsel and IT personnel confer and establish protocol, the easier it will be to comply with the new federal rules for the discovery of electronic information.

For additional information, please direct questions to your Briggs and Morgan attorney or one of the following:

John Degnan 612.977.8660 [email protected]

Robin Caneff Gipson 612.977.8699 [email protected]

John Lunseth 612.977.8484 [email protected]

Dan Moak 612.977.8721 [email protected]

Daniel Supalla 612.977.8870 [email protected]

Ellen Brinkman 612.977.8868 [email protected]