E-Discovery

When a legal hold arises and an organization has the duty to preserve information for pending or reasonably anticipated litigation, the risks it faces start with its legal hold and preservation plans and practices—a difficult set of activities to execute in most corporate environments. This is because documents and data, or electronically stored information (ESI), is ubiquitous. It crosses systems, people and borders with ease. It is continuously being created, altered, stored, moved and deleted. Furthermore, ESI mostly is created and stored in business silos that make perfect sense to business users, but cause complexity to corporate legal teams managing preservation and discovery efforts.

And, if your organization is like most, you may have multiple, if not dozens, of preservation orders (legal holds) to manage at any given time. When custodians number into the hundreds or thousands, companies that still rely on manual methods such as email or spreadsheets, in-person custodian interviews and on one-off, piecemeal approach to preserve ESI, may open up their preservation efforts to challenging scrutiny from opposing counsel or the court.

Outlined below are the key steps of a reasonable preservation process, risks of destroying relevant evidence (leading to possible spoliation), and how leading organizations are preserving data in ways to more efficiently and cost-effectively meet discovery obligations.

5 Key Steps to Preservation Compliance

The courts expect that all parties involved in litigation take reasonable steps to preserve potentially discoverable information, and that information shall remain in an unaltered, original, verifiable state. While many times the process begins with issuing legal hold notices to employees, there are several key interrelated tasks beyond issuing a hold that comprise a sound preservation program.

Below are key components of a compliant preservation strategy:

1. Instruct employees not to delete or alter data. Corporate legal teams should collaborate with IT and HR to ensure that employees related or potentially related to the matter are on legal hold, and issue, track and monitor legal hold notices and custodian responses.

2. Identify custodians, systems and data types. Legal departments need to work with IT and custodians to find potential data sources, collect specific files and supervise IT and custodian activities so that ESI is properly uploaded, encrypted and stored for later use.

3. Suspend automatic deletion and other routine IT processes. Legal must manage IT tasks appropriate for preservation needs. Legal holds often encompass business procedures that affect active data stored across many systems and applications, including corporate network systems, backup data systems, individual laptops, desktops and network user shares. Legal and IT groups should work together to suspend the normal disposition of records (included data for departed employees) to protect relevant evidence from auto-deletion. This can be accomplished via automation, manual methods or both.

4. Preserve ESI. There are numerous preservation methods an organization can take based on the needs of the matter, systems and data types. Typically, in civil and commercial matters, email and digital records should be preserved by taking a reasonable and targeted approach using data collection technologies and methods guided by forensic principles that preserve ESI in a manner that can be clearly and successfully defended. Preservation begins early in the lifecycle of a legal matter and is typically ongoing until final disposition of the case. Thus, securely storing preserved ESI is important to reducing overall legal risk and costs to the organization.

5. Create a defensible audit trail. Failing to document hold and preservation efforts, from issuing the hold to collecting and preserving relevant data, is the surest way to make a judge consider sanctions for neglecting to take reasonable efforts with respect to your hold and preservation efforts. Ensure all actions and changes are logged and can be validated, and that a clear path can be shown for all steps taken.

Failure to Preserve

The courts can exercise discretion when it comes to penalizing parties for spoliation of evidence. Under FRCP Rule 37(e), judges generally will focus on whether the spoliation was intentional of the result of negligence, and whether the party who brought the motion for sanctions was prejudiced by the spoliation.

If spoliation was the result of negligence, and the opposing party was nonetheless prejudiced from this loss of information, under Rule 37(e) the deprived party would be entitled to “measures no greater than necessary to cure the prejudice.” Courts could potentially require that your organization:

  • Reimburse the deprived party for attorney fees for motions and other work related to requesting the lost ESI;
  • Face limitations regarding what ESI it could submit into evidence and have considered; and/or,
  • Face a jury instruction that your organization has breached its duty to preserve relevant evidence.

If the court finds, however, that the party that lost the evidence did so with the intent to deprive other parties from using it, sanctions can be more extreme. In these instances, a court could:

  • Presume the lost information was unfavorable to the party;
  • Instruct the jury that it may or must presume the information was unfavorable to the party; and/or,
  • Dismiss the action or enter a default judgment.

Sanctions meted out by the court aren't the only possible consequence for offending parties. As noted in the 2015 committee notes for Rule 37, prejudiced parties can in some instances bring individual tort claims for evidence spoliation in cases where state law applies and authorizes the claim.

Using Technology to Reduce the Risk of Sanctions

Meeting discovery obligations related to preservation need not be an overwhelming task. Court-tested legal hold and preservation technology can automate the process of creating, sending and tracking legal holds, collecting and securing relevant ESI, and ensuring custodians have acknowledged the legal hold and are in compliance.

More advanced tools use direct connectors to access and collect data from corporate enterprise platforms and workspaces for performing targeted data collections, providing real-time monitoring of collections and detailed audit trail reporting that track chain-of-custody and show which files and folders a custodian identifies during the ESI collection process. Collected data can then be filtered, culled, analyzed and exported to review.

A sound preservation process based on automated legal hold and preservation technology does more than just help avoid sanctions. It can control data volumes by enabling you to collect and review only when necessary, eliminate repeat collection processing costs, and keep your discovery obligations proportional to the risks of a given case.

 

Alon Israely has over seventeen years of experience in a variety of advanced computing-related technologies. Alon is a co-founder of NYC based legal services company, Business Intelligence Associates, Inc., a highly respected and successful legal technology consulting and solutions firm. In 2015, the company's software and technology division, based in Seattle, WA was spun-out as its own company and Alon was tapped to lead it. Alon now leads TotalDiscovery, an early-stage enterprise SaaS company that provides a legal compliance platform to corporations, government and law firms.