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Legal Ease by Scott SinderElectronic Black Hole

What to do with old e-mails? Fail to properly maintain or account for electronic documents and data and you could face big legal hassles.

By Scott Sinder

I sent my first e-mail on the Monday after Thanksgiving, 1991. The law firm where I worked had moved, and one of the many perks of the new space was computer interconnectivity and e-mail. The e-mails could be sent only internally. Al Gore’s Internet had not yet made it to our office. Many of you probably wish it had never made it to yours.

Some of you view e-mail as a litigation plague to be avoided at all costs. The rest of us have come to rely on it as an essential business tool. There are three potential e-mail issues that could become litigation problems if your firm does not consciously address them: how long to keep your e-mail; where to keep it; and knowing what you’re really sending.

How long? The federal courts have now spoken. In December, the courts adopted amendments to the Federal Rules of Civil Procedure, which govern the discovery of electronic information. Like so much law, this directive is framed in the negative, directing that a federal court “may not impose sanctions…on a party for failing to provide electronically stored information lost as a result of routine, good-faith operation of an electronic information system.” This crystal clear rule applies to all electronically created data, including the four with which you are probably most familiar: e-mails, databases, word processing documents and spreadsheets.

The retention schedule for e-mail turns on what is included in your e-mails, whether e-mails are printed and retained in paper files, the nature of your specific business practices, etc.  E-mail is a tool, and every firm employs it in different ways. Some firms memorialize all of their contractual agreements through e-mail correspondence. Others bar that practice.

You should have a document retention schedule that includes a protocol regarding how long e-mails should be retained on your system. The new federal rules specifically endorse this practice provided that a few conditions are satisfied. First, the protocol must be memorialized in a written document that explains the business justifications for the schedule. Second, that protocol must be followed. Third, your firm must have someone available at all times who can explain your protocol, how it is effectuated, and how your computer systems are configured and maintained. In a well-publicized case, a Florida court entered a default judgment against Morgan Stanley due to the firm’s failure to locate and produce electronically stored information, which led, in part, to a $1.4 billion damages award for the suing party. Although that jury award was later overturned, the case poses a lesson worth heeding.

Where to keep it? Failure to segment and organize your firm’s electronically stored information could be an expensive non-decision as well. Simply creating a division between where your firm stores benefits-related information and property-casualty information might cut the costs associated with producing documents by half in a lawsuit that involves only one of those categories. The more segmented and more organized, the faster (read: fewer attorney billable hours) responsive documents can be located and the fewer you will ultimately need to release.

What are you actually e-mailing? This is really an e-mail attachment issue. Did you know that when you provide electronic word processing documents or spreadsheets, a savvy recipient can often uncover what was changed and by whom from previous versions? This information, called metadata, can tip your negotiation strategy or just be plain embarrassing. It also can be used against you in many state courts. Consider using available technology to cleanse the metadata or convert your documents to PDF format, which do not suffer this malady.

If you find yourself embroiled in litigation in federal court, the first thing the federal rules require your firm to do is put a litigation stop on your document retention/destruction protocols. Philip Morris was fined almost $3 million for its failure to discontinue its policy of destroying all e-mails older than 60 days after it had been sued by the government several years ago. Several of its witnesses, whose documents were included in the errant destruction, were barred from testifying in defense of Philip Morris.

Your lawyers need to inform the court almost immediately of the location of relevant, electronically stored information, how much there may be and how difficult it will be to produce. Employing a sound retention protocol and good organizational methodology obviously should make compliance with these mandates easier and the actual production much more efficient and economical. Even so, one reality of the digital age is that electronic document production and review demands can be enormous.

Sinder is CIAB general counsel.

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