Technology: Reduce your risk of e-discovery sanctions by 80 percent

Properly collecting and preserving ESI is just the beginning.

As deputy general counsel, an adjunct professor and distinguished lecturer who teaches Electronic Discovery, Digital Evidence, & Computer Forensics, one of the most common questions I get from in-house counsel and law students alike is, “How do I reduce the risk of e-discovery sanctions?” My answer is simple: It’s best to begin by collecting and preserving all potentially relevant electronically stored information (ESI) because that is how you eliminate 80 percent of the sanction risks.

The key aspect to the 2006 amendments to the Federal Rules of Civil Procedure (the Rules) is the duty to preserve ESI. The Rules instruct parties to preserve, discuss and plan for ESI, in many cases before litigation actually begins. A party’s failure to meet its duty of preservation often will result in sanctions, including payment of costs, adverse inference instructions, default judgments or dismissals.

To determine whether such sanctions are warranted, courts have used the following test:

1. Whether the party had an obligation to preserve the evidence at the time it was destroyed

2.  Whether the evidence was destroyed with a “culpable state of mind”

3.  Whether the destroyed evidence was “relevant” to the party’s claim or defense  (Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 430 (S.D.N.Y. 2004))

Therefore, if a party has a defensible, repeatable process to collect and preserve potentially relevant information from getting destroyed once the duty to preserve arises, it will substantially reduce or eliminate its potential risk for sanctions. The most prevalent sanctionable conduct related to e-discovery is the failure to preserve ESI.  See Sanctions for E-Discovery Violations: by the Numbers..

There are three key factors that are essential to building such a defensible and repeatable process. First, you need to bring the process in-house. By making it part of your corporate fabric, everyone in your legal and IT departments will know the process used to search, collect and preserve relevant ESI.

This will give you several benefits. Having dedicated people searching and collecting your ESI will promote the use of the same process for each data collection. In addition, your employees will already have some expertise in searching and collecting data because they are part of the corporate culture, and understand your unique corporate language and data environment. Owning this process also will allow you to take control of the spiraling costs of an outsourced e-discovery process, enabling you to save millions of dollars annually.

It’s important to keep in mind that whoever does your ESI searches and collections will need to testify, so ensure that they have the necessary training and certifications (some well-established certifications include the EnCE and EnCEP).  Second, you need an in-house process with early case assessment (ECA) capabilities.

Specifically, these ECA capabilities should allow you to test, search and sample keywords, file types, dates, times and other criteria before you collect data. A true pre-collection ECA capability also will allow your lawyers to collaborate with IT professionals to determine what data they truly need to collect. Doing so will allow you to test and sample your environment, and it will better arm your lawyers for their meet-and-confer conference with opposing counsel.

Third, your in-house process needs to search, collect and preserve ESI without altering any metadata. Metadata includes things like blind copies on email, formulas on Excel spreadsheets, track changes in documents and timestamps on files. Keep in mind that the creation dates, times, and last-accessed dates and times are highly volatile. In fact, simply opening a file can alter them.

Therefore, if your process depends on employees dragging and dropping relevant documents for custodian self-collection, it will alter potentially relevant metadata. The best process is a solution that can search for potentially relevant ESI and make a copy of that data while preserving all relevant metadata that’s admissible in court. Once you properly preserve all potentially relevant ESI, you can use virtually any type of culling, review and production processes with little or no risk of spoliation. Also, a proper initial collection will let you retrieve any needed ESI or metadata from the originally collected data.

It also is critical that you issue a litigation hold or communication to potential data custodians informing them of the reason for the legal hold, and explaining what they need to preserve. Recent cases emphasize the need for a written hold notice to ensure you preserve relevant ESI.

“When the duty to preserve is triggered, it cannot be a defense to a spoliation claim that the party inadvertently failed to place a ‘litigation hold’ or ‘off switch’ on its document retention policy to stop the destruction of that evidence.”  MOSAID Techs. Inc. v. Samsung Elecs. Co., 348 F. Supp. 2d 332, 339 (D.N.J. 2004).  In fact, courts have found the failure to instigate a litigation hold to be grossly negligent.  Green v. McClendon, No. 08 Civ. 8496, 2009 U.S. Dist. LEXIS 71860, at *18 (S.D.N.Y. 2009).  Issuing a legal hold is a crucial first step because it will help prevent your employees from inadvertently deleting potentially relevant ESI.

Quickly issuing a legal hold combined with a defensible and repeatable in-house process to search, collect and preserve potentially relevant ESI, as I have outlined above, should allow you to eliminate 80 percent of your e-discovery sanction risks.

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