According to Webopedia, electronic discovery—or ediscovery for short—describes the process of compiling, storing, and securing of digital information, such as email, files, and other data for evidence in a legal proceeding. This article looks at why it's important for small business owners to understand ediscovery and what they need to do in the event of a lawsuit.
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Disagreements are an inevitable part of doing business, and fortunately you can often resolve disputes with customers, suppliers, or employees relatively easily (if not always amicably). But when you can't, your business might receive a demand letter notice of a claim or a lawsuit. Such notification often includes a demand for preservation of information, sometimes known as a "preservation letter," instructing you to take steps to ensure that no one in your company destroys potentially relevant information—including electronically stored information, or ESI.
Let's look at what you need to know about ediscovery in the event that you need to preserve ESI as the result of a lawsuit. Before we go any further, it's important to note that we're not conferring legal advice here; if you receive a preservation letter, your first order of business should be to obtain your own legal counsel.
Read the entire article, and use the links below to jump to that specific ediscovery category.
- Ediscovery and Preserving Digital Evidence
- Costs and Consequences
- What Information Should You Preserve?
- Preserving Email
- Tools for Preserving PC and Server Content
- Preserving Smartphone and Tablet Data
Keeping paper documents out of a dumpster or a shredder is straightforward enough, but preserving ESI in an environment where you constantly modify data (i.e. overwrite it) can be a considerably more daunting job. Given what's at stake (more on that later), preserving electronic data—which typically involves a series of ongoing tasks—should be performed by, or under the direct supervision of, an IT expert, depending on the amount of data you need to preserve and where it's located.
If you don't have in-house IT resources then bring in outside expertise, and keep in mind that regardless of whether you handle data preservation internally or you outsource it, the people involved must document their activities in detail—who did what, and when, and how. They must also maintain a chain of custody for any physical devices (computers, storage devices, etc.) that contain potentially relevant data. Another big reason to task data preservation chores to IT professionals: whoever does the job may be considered a witness and be called on to testify in hearings or at trial.
So what exactly data do you need to preserve? That, of course, depends on countless variables and the specifics of the particular case. And because the information that may be relevant isn't always clear at the outset of litigation, preservation letters often use very broad—sometimes vague or confusing—language to describe what information should be preserved.
When preservation letters take an "everything-but-the-kitchen-sink" approach, your attorney can contact the opposing counsel to advocate for narrowing the scope to specific types of data, individuals, and/or timeframes.
"It's always a good idea for the parties' attorneys to start a dialogue and attempt to formulate a discovery plan early on, even if there aren't any concerns about the scope or clarity of the preservation demand," says Sonia M. Diaz, Esq., partner with Coleman Hazzard & Taylor, a civil litigation and business law firm in Naples, FL.
Small businesses with limited resources may be justifiably concerned about how much effort and expense it takes to preserve the required electronic data. The costs in terms of hardware, software, and especially person-hours can be considerable. The data you need to preserve may go back long before the legal claim was filed, and finding it might be time and labor intensive. The upshot is that preservation expenses may be a major financial burden.
Unfortunately, no uniform standards govern preservation demands or outline how much effort or expense is appropriate to comply with them. In general you should always make best (i.e. good-faith) efforts to preserve any potentially relevant data. "When in doubt as to whether data is relevant, err on the side of preserving rather than discarding data or allowing it to be overwritten," recommends Diaz.
Courts typically have discretion to limit the scope of discovery and/or require the requestor to bear at least some of the recipient's costs. But exactly how and when courts exercise that discretion varies from jurisdiction to jurisdiction and there's no way to know in advance when, or even if, a court might make such a determination.
In some jurisdictions the court will limit discovery and/or shift cost to the requesting party only where it determines that the cost of preserving and producing the data is disproportionate to its likely benefit. If a preservation demand is especially burdensome, your attorney may be able to convince the other party to share some of the resultant expenses, provided you can show documentation or testimony to justify the expenses.
If the parties cannot agree on a resolution, your attorney may be able to obtain relief in court. While there are no hard-and-fast rules as to what types of preservation costs may be shifted to the other party, "if the expense was a direct result of compliance with a preservation demand, I would be comfortable asking for it," says Diaz. Just don't expect anyone to help pick up the tab for indirect costs, such as lost productivity or downtime associated with taking computing devices out of service.
The hassles and costs of compliance notwithstanding, it's important that you take evidence preservation demands seriously to avoid putting your business at risk of adverse legal consequences. Indeed, while the data you preserve may or may not ultimately be required depending on how the case unfolds, failing to preserve data that's later determined to be relevant or potentially relevant (what the legal profession refers to as spoliation), can result in significant penalties.
Specifics vary by jurisdiction (sometimes even within the same jurisdiction), but they can include "prejudicial jury instructions, monetary fines, and the striking of pleadings, which can result in the party responsible for destroying evidence losing the case," according to Diaz. And it may not matter whether the destruction was unintentional, because some states, such as Florida, consider destruction of evidence a sanctionable discovery violation even if the destruction wasn't deliberate.
The type of electronic information that might be relevant to a legal proceeding includes documents or spreadsheets, emails, a PC's browsing history, text (SMS) messages, and voice mails. It may also include metadata—data about data—such as when a piece of information was created or modified, and by whom. Preserving different types of data presents different challenges, but here are a few things to keep in mind.
First off, when it comes to data preservation, time is most certainly of the essence. Given the routine electronic data destruction (i.e. old information continually being overwritten with new) that takes place in a typical office environment, data preservation can't generally wait a week or even a day—the time to start is right away. If you can't begin immediately, at the very least you should power down devices, take them out of service, and secure them until they can be examined.
Also, technical measures to lock down data may not always be practical or even possible, so—and this is vital—don't neglect the human element. Formally notify employees about the existence of litigation and instruct them not to delete any potentially relevant data. Given that legal proceedings can go on for months or even years, issue reminders frequently, and don't forget to inform new employees as well.