Technology: Using contract terms to specify the timing and scope of the duty to preserve
A provision that identifies exactly when preservation is triggered removes the gray area the uncertainties associated with this confusing and oftentimes contentious area of the law.
February 14, 2014 at 03:00 AM
17 minute read
The original version of this story was published on Law.com
This is the third in a series of articles exploring how e-discovery costs can be contained by limiting discovery with mutually agreed-upon terms in commercial contracts (Part 1 and Part 2). In this installment, we show you how to use contract terms to specify when the parties' duty to initiate preservation of documents is triggered.
The Federal Rules and the law of spoliation provide that parties have a duty to preserve potentially relevant evidence whenever it can be reasonably anticipated that a lawsuit will be filed. Exactly when litigation is reasonably anticipated, however, is oftentimes more gray than black and white. And while a smattering of courts have addressed when this standard is satisfied, there are many subtle variations as to when the duty to preserve attaches, which can vary by jurisdiction and venue. Since decisions with respect to the timing and scope of preservation are frequently required to be made prior to filing of a case, a party is required to determine its preservation obligations without benefit of knowing the specific rule that will be applied. The practical effect of this is a least common denominator approach; parties end up adopting the most conservative features of each jurisdiction's rule resulting in requirements that are more onerous than any one single jurisdiction. This type of over-preservation costs money, and lots of it.
Moreover, much of the case law is quite fact-dependent, leaving a prospective party to interpret application of the standard in one's own litigation context. For these reasons, inside counsel will often find themselves playing a guessing game, where the penalty for guessing wrong can be an adverse inference instruction and loss of the case. Because of this, the conservative approach has been useless over-preservation, with all of its attendant monetary and operational costs.
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