Over the past few years, businesses increasingly have moved away from paper record-keeping to electronic information management systems. Despite that, the legal system has been slow to account for this electronic revolution. A committee advising federal courts whether to update their rules recently issued a report after five years of study, and judges around the country have only now begun to redefine the obligations of businesses in litigation to retain and produce electronic records.

National standards on retaining and producing electronic records finally are starting to develop. A federal judge in New York recently warned litigants that they must understand and meet these new standards or suffer dire consequences, including possible fines, unfavorable jury instructions or worse.

Here are six steps, drawn heavily on standards articulated by the judge in that New York case, that businesses should consider to preserve and produce electronic records when they become embroiled in federal court litigation.

Implement A “Litigation Hold.”

Once a company reasonably anticipates that it either is going to file a federal lawsuit or that one will be filed against it, it must suspend routine document destruction and implement a “litigation hold” to preserve relevant documents and information.

Phrased differently, the duty to retain documents arises when the company has notice that evidence is relevant to litigation, or when it should have known that evidence may be relevant to a future litigation. The litigation hold extends both to the company’s hard-copy and electronic records, and includes the records of any employee likely to have discoverable information that the company may use to support its claims or defenses in the case.

Recent court decisions make clear that it is not enough to issue the litigation hold once to employees and hope they remember their obligations as time passes. Rather, there is a duty periodically to reissue the hold so that new employees are advised of their duties and existing employees are reminded of them. A failure to carry out this simple task could itself lead to the imposition of sanctions on the company if documents or information later are inadvertently destroyed or deleted.

Identify Key Employees.

Federal courts have recognized that a business cannot be required to preserve every piece of paper and all information in its possession simply because it has brought a lawsuit or been sued. Rather, the company has an obligation to identify “key employees” whose documents and data are likely to be relevant to the dispute at issue and to communicate, either directly or through counsel, with those employees to ensure that they preserve and produce documents and data relevant to the matter.

These discussions must focus on the employees’ personal document creation and retention practices to assure that all responsive materials are obtained.

Identify Active Files Through Company-Wide Searches.

Courts recognize that the size of a company or the scope of the allegations made in a lawsuit may make it impossible to talk directly to every key employee about his or her personal document creation and retention practices. In those situations, at least one court has suggested that the company consider running system-wide keyword searches of its computer system to identify relevant active electronic files, and to ensure that they are preserved.

This does not mean that the company or its lawyers must review all of the documents identified by the keyword search at such an early stage of the litigation. Rather, these keyword searches will yield an over-inclusive pool of potentially responsive electronic records that will be available for later, more targeted searches, should the need arise. These electronic keyword searches are akin to the older practice of collecting boxes of paper files at the beginning of a lawsuit and setting them aside in a secure room for later and more targeted review.

Perhaps the most difficult part of conducting these keyword searches is deciding at an often preliminary stage of a lawsuit what keywords to use. The same court has suggested that, to avoid later accusations that the wrong keywords were used, counsel for the company should consider consulting with opposing counsel to develop appropriate search terms. While that approach may be unnecessarily generous, it nevertheless is desirable for the company to use broad search terms that can later be narrowed if and when more targeted searches of the resulting database are conducted.

Preserve Backup Tapes.

The duty to implement a litigation hold may include a duty to preserve some portion of the company’s computer backup tapes. The extent to which backup tapes must be preserved depends on the nature of the company’s computer system and the manner in which information is written to the tapes. The threshold question is whether the tapes are maintained only for disaster recovery purposes with data for any particular user essentially impossible to identify, or whether the tapes actively are used for data retrieval with data for particular users capable of identification and segregation.

If the company’s backup system does not allow it to identify where data for particular users resides, then the company may continue to recycle tapes on its normal schedule notwithstanding the litigation hold. If data for particular users can be identified on the tapes, the company has a duty to preserve tapes containing data for those users who are likely to have information that is discoverable in the lawsuit.

Once the universe of relevant backup tapes has been identified, it also is necessary for the company to physically put them in a place that will eliminate the possibility that they will be lost or accidentally re-used. This means that the tapes should be taken out of their normal storage facility and put in a secure location or, if absolutely necessary, put in a separate portion of the normal facility and clearly labeled. The latter option is less desirable because as long as the tapes remain in their normal location there always is a risk that they accidentally will be re-used.

Segregate Documents.

To ensure that key employees don’t inadvertently delete active electronic records that may be relevant to the dispute, they should be instructed to preserve active electronic records in a separate or “segregated” electronic file. This means, for example, that emails on subjects that potentially are relevant to the dispute at issue should be saved in a separate electronic folder, and that word processing or other non-email electronic documents should be saved in some type of electronic subject matter folder that reduces or eliminates the likelihood that they accidentally will be deleted.

Mirror The Computer System.

In addition to preserving existing backup tapes as discussed above, a company would be well-advised—when litigation reasonably becomes anticipated—to mirror its computer system to create and preserve an image of data on the system at that particular point in time. This requirement reflects the fact that data may have been added to, or altered on, the computer system since the last backup tape was taken out of service by the company and that, in order to preserve the universe of potentially relevant electronic materials, it is necessary to have a snapshot of the system at the time that litigation reasonably becomes anticipated.

Without question, the federal court system has been slow to consider how breakthroughs in electronic records retention have affected discovery in civil cases. But courts are now coming to grips with the technology revolution and are holding companies to national standards—like those described above—that are developing and that, from this point on, are likely to govern a company’s duty to preserve and produce electronic records.

The column solely reflects the views of its author, and should not be regarded as legal advice. It is for general information and discussion only, and is not a full analysis of the matters presented.

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