Discovering electronic discovery Featured

8:00pm EDT October 26, 2007

Today, more than 90 percent of all business-related documents are electronic in nature. Records such as word processing files, spreadsheets, e-mails, calendars, voice mails and photographs are digitally created and stored on computer hard drives, servers, backup tapes, hand-held devices and even cell phones.

Electronic discovery, also called e-discovery, is the process in which these types of electronic records are located, preserved and examined during the discovery stage of litigation. New federal court rules governing the discovery of electronically stored information went into effect last December, but many businesses remain unprepared. Now more than ever, companies must develop and implement detailed policies for the retention, preservation and destruction of their electronic records. Failure to do so needlessly exposes these companies to greater risk in litigation.

“Long gone are the days that a party to a lawsuit can just print electronic records and produce the hard copies to the other side,” says Matt Rechner, an associate in the litigation department of McDonald Hopkins LLC and the chair of the firm’s Electronic Discovery Practice Group and Response Team. “The reason for this is that not all electronic data is visible to the computer user. Electronic discovery captures that invisible data that does not appear by simply clicking the ‘print’ key.”

Smart Business spoke with Rechner about e-discovery and why it’s so important to the present and future of business.

What makes e-discovery unique?

‘Metadata’ is an example of one of those e-discovery buzzwords that is getting more and more attention these days. Metadata is essentially ‘the data behind the data.’ It is the information that describes how, when and by whom a particular electronic document was created, accessed, deleted, revised, modified and/or formatted. Some metadata is viewable by a computer user, while other metadata is hidden or embedded. However, whether visible or invisible, courts are now requiring parties to preserve — and, in some cases, produce this metadata in the course of e-discovery. Companies, as well as their attorneys, must be cognizant of the existence and content of any underlying metadata when engaging in e-discovery.

What’s important to consider in e-discovery?

Effective Dec. 1, 2006, the Federal Rules of Civil Procedure were amended to govern how parties conduct e-discovery in federal litigation. Among other things, these amended rules now direct parties to discuss and establish procedures for e-discovery early on in every lawsuit. Moreover, the rules outline a party’s data preservation and production obligations and provide for possible sanctions if relevant data is improperly deleted or destroyed. While some businesses have prepared for these rules, many still have not. Organizations unprepared for these amended rules expose themselves to greater risks in litigation but can avoid future costly mistakes with relatively simple steps.

What problems are businesses facing?

In light of the amended federal rules and with more and more state courts enacting their own e-discovery rules, companies must rethink how they approach litigation. If electronic data is potentially relevant to an ongoing or anticipated lawsuit, proper steps must be taken as soon as possible to prevent the destruction of this data or the company could be exposed to spoliation of evidence claims.

Unfortunately, electronic data is particularly susceptible to spoliation due to the inherent and necessary characteristics of a computer’s operating system. For instance, when data is tagged by a computer user for deletion, the operating system does not permanently erase the data. It simply ignores the data. The data is moved and rendered ‘invisible’ to the operating system, but it remains resident on the computer’s hard drive. When the computer user later needs to save new data in order to perform a function, the operating system will randomly overwrite this ‘invisible’ data that had been designated for deletion. If this ‘deleted’ data turns out to be potentially relevant to a lawsuit, a company must take proper care to prevent the overwriting of that data.

How can companies prepare themselves?

Because of the unique nature of e-discovery, companies must establish, implement and enforce formal data retention and destruction policies for their electronic data. These policies will reduce the volume of retained data by clearly defining what should be kept and what should be destroyed. An organization’s data retention and destruction policies must also include protocols for the initiation of ‘litigation holds.’ When a lawsuit is reasonably anticipated, companies are obligated to suspend their routine retention and destruction policies in order to prevent the destruction of potentially relevant data. Lastly, companies should designate a point person or response team to coordinate their internal electronic discovery procedures.

MATT RECHNER is an associate in the litigation department of McDonald Hopkins LLC and the chair of the firm’s Electronic Discovery Practice Group and Response Team. Reach him at (216) 348-5826 or mrechner@mcdonaldhopkins.com.