Electronic Data Checklists for General Counsel

A. Before Litigation Hits, Create and Maintain an Electronic Information Inventory

  • Identify relevant electronic systems, including the nature, scope, character, organization, and formats employed.
  • Inventory on-site and off-site records.
  • Decide what format in which to keep electronic documents.
  • Be prepared to describe the systems used by employees outside the corporate network.
  • Be prepared to describe how computers are networked, both internally, and remote access.
  • Be prepared to describe backup processes and schedules.
  • Be prepared to identify the person or persons who are most knowledgeable about the company"s electronic information systems, backup, and retention policies.
  • Be prepared to make representations to the adverse party and court about systems, retention policies and practices. To do this accurately, you should be involved in establishing policies and procedures, and you must audit the process periodically (or pay independent auditor) to make sure that your representations will be accurate.

B. Adopt an E-Document Retention Policy

  • Under new federal court rules, it is important for all companies to consider adopting a formal document retention/destruction policy.
  • One size does not fit all.
    • Each business unit/department should determine operational value of records it has been keeping.
    • Consider what is really necessary for business units: ask what was the oldest record you ever had occasion to consult?
  • Legal and regulatory constraints define the minimum requirements for document preservation
    • E.g., Sarbanes-Oxley, 18 USC 1519; HIPAA, 42 USC 1320(d)(2).
  • Business considerations may suggest retaining some documents longer than regulatory minimums.
    • Consider relevant statutes of limitation. (Massachusetts limitations period for breach of contract is 6 years).
    • While preserving everything might seem to be useful in event of data loss, it can result in having huge amounts of potentially discoverable information in the event of litigation.
  • When adopting document retention policy consider:
    • In any prior litigation, how far back did you have to go to search for and produce records? This should be seen as a minimum requirement.
    • In the event of litigation, it is critical to stop the destruction of electronic data or documents immediately.
    • To be meaningful, the policy must be regularly reviewed and enforced.
    • A policy should apply to hard copies and electronic records.

C. When litigation is reasonably foreseeable, immediately institute "litigation hold."

  • Most courts: "duty to preserve material evidence arises not only during litigation but extends to period before litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation."
  • Another articulation: when the party "knew or should have known" that evidence "was relevant to pending, imminent, or reasonably foreseeable litigation."

D. Litigation Hold Checklist

  • Gold standard: a system wide mirror image backup and preservation of all backup tapes.
  • Backup tapes present special problems.
    • One approach: Backup tapes must be preserved where they are actively used for information retrieval or can readily be identified as storing information of key players in litigation. In the event of litigation they should be turned over to counsel for safekeeping or, at a minimum, segregated.
    • If one anticipates problems, one should discuss the issue with opposing counsel and/or get guidance from the court as early as possible.
  • Communication with employees: the litigation hold letter.
    • The purpose of the litigation hold letter is to fulfill a party"s obligation to preserve potentially discoverable information. It suspends the normal document retention/destruction policies and alerts employees of the need to preserve and begin collecting responsive material.
    • Early on, confer with IT personnel to get a handle on a company"s backup procedures and tape recycling policies to pull backup tapes out of re-writing rotation.
    • Identify key players and speak with them about how they store information and what their email practices are.
    • Consider former employees and their computers.
    • The litigation hold should remain in place throughout the litigation.
    • Merely informing all employees of litigation hold is insufficient; counsel must monitor ongoing compliance, and the litigation hold instructions should be reissued from time to time.
    • If the litigation hold causes disruption, counsel should quantify the effects and be prepared to bring it to the court"s attention.
  • To comply with safe harbor, a party must intervene to modify or suspend routine operation to prevent loss of information that is subject to a preservation obligation.

E. Avoid Spoliation Charge

  • Federal Rules Sanctions - "Unless a party violated an order in the action requiring it to preserve electronically stored information, a court may not impose sanctions under these rules on the party for failing to provide such information if: (1) the party took reasonable steps to preserve the information after it knew or should have known the information was discoverable in the action; and (2) the failure resulted from loss of the information because of the routine operation of the party"s electronic information system."
  • You must take reasonable steps to preserve, and be prepared to justify what steps you took. Who will testify about these efforts? Think about this in advance.
  • Rule does not require that a document request be served before duty to preserve applies.
  • Rule does not establish penalties for non-compliance with electronic discovery requirements, but court can award sanctions including:
    • order that certain facts taken as established;
    • refusing to allow the disobedient party to support or oppose designated claims or defenses;
    • prohibit party from introducing certain matters in evidence;
    • striking claims/defenses;
    • monetary penalties (costs, attorneys fees);
    • shifting burden of proof on liability (i.e., defendant ordered to prove that it lacked knowledge of alleged fraud as opposed to plaintiff having burden to prove that defendant had knowledge);
    • excluding witnesses;
    • dismissing claim or entering default judgment;
    • liability in tort for spoliation; and
    • finding attorney-client privilege waived on matters relating to the spoliation

About Birnbaum & Godkin, LLP
Founded by trial lawyers who were formerly partners of Testa, Hurwitz & Thibeault, LLP, we have extensive trial and litigation experience and a winning track record. We handle sophisticated and complex business litigation and intellectual property litigation matters in Massachusetts and across the country. Our clients include emerging and established technology companies, financial services companies, private equity firms, and individuals. We pursue creative and innovative strategies to achieve excellent results at a reasonable cost. For more information, contact David S. Godkin (godkin @ birnbaumgodkin.com) or Scott A. Birnbaum (birnbaum @ birnbaumgodkin.com). The foregoing may be considered advertising for legal services under the laws and rules of professional conduct of the jurisdictions in which we practice.

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