A new discovery

If you rely on computers to manage your business, you and your employees are becoming increasingly dependent upon electronic communication and other forms of electronic record keeping.

“Electronic data can be ‘deleted’ but never truly disposed of and may be easily recovered,” says Jeff Berman, Esq., an attorney with Katz Barron Squitero Faust.

As businesses depend more on computers for communication and record keeping, electronic records are more frequently becoming an issue in lawsuits. If your business gets involved in litigation, your company’s electronic records could be subject to disclosure through electronic discovery.

Even if you are not directly involved in litigation, your business may be required to produce its electronic records in response to a subpoena. Your electronic records should be managed to ensure not only effective use in lawsuits, but also full protection of your proprietary documents and communications.

Smart Business spoke with Berman about electronic discovery and managing electronic business records.

What is electronic discovery?

Electronic discovery is the requesting and production of electronic records in litigation. Traditionally, discovery involved the production of physical documents — written records that were simply pulled from a filing cabinet or storage and produced by duplicating them. Electronic discovery, in contrast, is often more complicated because it requires the diligent protection of proprietary information and can be more onerous than physical document production.

Unlike the production of physical records, which a business can easily screen to avoid the production of proprietary information, the production of electronic business records is fraught with concerns over the disclosure of confidential information. Many types of electronic files include metadata, the hidden data attached to files that may contain information you do not want produced. For example, e-mail metadata may include various different versions of an e-mail, including drafts of the e-mail before it was sent. Business e-mails are often revised to exclude information the business would otherwise not want disclosed. Given the complexity of electronic records, a business producing its computerized records may inadvertently disclose proprietary information or other information that was not sought, cannot be required or which the business would not have wanted to willingly produce.

Beyond confidentiality, business owners and managers should be concerned with the potential difficulties involved in responding to electronic discovery requests. The ease or difficulty of producing electronic records depends on how a business’s electronic records are organized, stored and maintained. Electronic discovery can involve a number of electronic devices and may include e-mails, text messages, digital pictures, electronically generated or stored documents, electronic calendar entries, and electronic financial and accounting records, among others. How the data generated by these devices is stored will impact the manner in and ease with which electronic business records can be produced.

Electronic discovery also presents opportunities to further business objectives. It can help businesses involved in litigation bolster their claims or shore up their defenses. Through electronic media, businesses can document their ongoing work before disputes arise. Electronic records can often strengthen a litigation position, resulting in more cost-effective dispute resolution.

What is required for electronic discovery?

State and federal courts in Florida apply different rules for electronic discovery. The requirements can be more burdensome in federal court, including, most notably, parties having to produce or at least identify all electronically stored information relating to the litigation before it is even formally requested. However, the federal rules on electronic discovery have a more specific framework for the production of electronic records, which, in some cases, will afford invaluable protections from electronic discovery requests.

While the state discovery rules do not yet specifically address electronic discovery, state courts interpreting the procedural rules governing discovery routinely require production of electronic business records. As in federal court, state courts have general discovery requirements and protections that can be applied to electronic discovery.

Just as with traditional paper discovery, electronic discovery can result in a variety of sanctions if not properly responded to. It is important to work with an attorney who can efficiently employ the requirements and protections of electronic discovery.

How should electronic business records be managed?

As with physical documents, electronic documents may be produced in the manner in which they are kept in the ordinary course of business or they may be categorized by the different types of discovery requests. Whether producing electronic records as a nonparty responding to a subpoena or as a party to a lawsuit, your attorney should review your records before they are produced to ensure a thorough and appropriate production. Business records that are well organized by type and sorted by client or project will be more cost-effective to produce in electronic discovery. Moreover, for a business that is a party to a lawsuit, well-organized electronic records that are easier to consume could help convince your adversary of the merits of your position and result in a more efficient resolution of the dispute.

A business-minded commercial litigation attorney will help his or her clients plan ahead before litigation and ensure that the best electronic document management practices are employed. As a result, participating in electronic discovery will be less costly and burdensome, and electronic evidence can be more efficiently marshaled to pursue claims or support defenses in litigation. <

Jeff Berman, Esq., is an attorney with Katz Barron Squitero Faust. Reach him at [email protected].