Legal Insights: Discovery of Electronically Stored Information
Winter 2007

Recent decades have witnessed an electronic revolution that has substantially changed the ways in which information is generated, communicated and stored. Like many other aspects of society, this revolution has had a profound effect on judicial proceedings.

One of the prime features of civil litigation is discovery—the process by which parties disclose information to the opposing party about the factual basis of their case. Much discovery consists of producing documents. Depending on the size and complexity of the lawsuit, document production can involve anything from a small file to entire warehouses.

For years, courts have struggled with how to fit “electronically stored information” (ESI) into the discovery process. On December 1, 2006 amendments to the Federal Rules of Civil Procedure specifically addressing ESI became effective. These amendments apply to all civil litigation that takes place in the federal courts. While the changes do not yet apply to state courts, it is likely that similar amendments will soon be adopted by these courts as well.

Not only lawyers need to know about these amendments. Anyone who works for a company that is or could become involved in litigation (which is to say, every company) should be aware of these changes too. The amendments detail several aspects of what is now called “e-discovery” including the following:

Recognition of ESI: When a lawsuit is filed, the parties must give early attention to ESI. This means they must report to the court and the opposing party what information is stored electronically, how it is stored and how the information will be preserved and produced during the lawsuit. In going through this process, it is important to understand that not all ESI can be reproduced in paper formats. Even if the volume of ESI is sufficiently limited to make this a practical production strategy, printed documents do not include metadata. Metadata is electronic information that shows who prepared the document, when it was prepared, when it was printed, when it was last modified, dates of access and other such information. Depending on the nature of the issues in a particular case, production of metadata may be required.

ESI Not Reasonably Accessible: Due to the potentially enormous volume of ESI relating to a particular case, a party does not necessarily have to provide discovery of such information from sources the party identifies as not reasonably accessible because of undue burden or cost. The opposing party may challenge this assertion in court or ask the judge to require the information be produced anyway.

ESI and Privilege: Also in recognition of the volume of ESI, if a party inadvertently produces information that should not have been produced because it is privileged, the producing party may so notify the receiving party. After being notified, the receiving party must either return or destroy the information or sequester it until the claim of privilege can be resolved by the court. Before the new amendments were adopted, the general rule was that the production of a privileged document, even if by mistake, waived the privilege not only as to that document, but also as to any other privileged documents concerning the same subject matter. The amendments also recognize and encourage “clawback” agreements. These are voluntary agreements permitting parties to produce information first and then assert privilege later without risking a waiver of the privilege.

Preservation of ESI: Courts will not impose sanctions on a party under the federal rules for failing to produce ESI that is lost as a result of the routine, good-faith operation of an electronic information system. This does not mean a party can dodge its discovery obligations by allowing a routine operation to continue to destroy information that should be saved. A party is under an obligation to preserve information when litigation is pending or reasonably anticipated. Under these circumstances, the party should implement a “litigation hold” that, among other things, includes intervening in the routine operation of an information system to preserve ESI that would otherwise routinely be destroyed.

What do these changes mean to your company? Those people who are responsible for overseeing the company’s litigation must become very familiar with your computer systems and must educate your lawyers about them. In particular, they must understand how electronic information gets created, disseminated and stored or destroyed. At a minimum this requires a working knowledge of the company’s networking systems, data storage systems, server backup cycles and all possible data storage locations.

Even companies fortunate enough not to be currently engaged in litigation and who do not anticipate becoming involved in a lawsuit must ensure that they are familiar with their computer systems. Once a lawsuit commences, there may not be enough time for a company to assess its ESI. Parties must understand the impact of a lawsuit on their ESI as soon as the case is filed.

This article is intended for general information and should not be construed as legal advice or opinion. Any questions concerning your legal rights or obligations in any particular circumstance should be directed to your lawyer.

View the entire article in PDF format here.

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