The major amendment to the Federal Rules of Civil Procedure in 2005 included specific rules for the first time governing electronically stored information (ESI). The growing prevalence of ESI requires that inside counsel today understand the potential forms of corporate data that are discoverable in litigation. The explosion of ESI and the relatively new focus on its preservation and production have dramatically driven discovery costs higher.
All ESI shares one trait: storage in a form that is electronically accessible, as opposed to paper, microfilm, microfiche, etc. Electronically accessible media include hard drives in laptops, desktops and servers; DVDs and CDs; backup storage in the form of optical discloses, backup tapes and archived servers; and other computers. ESI encompasses electronic messaging systems such as Microsoft Exchange and Lotus Notes. Typically these forms of ESI are managed and controlled by a company’s IT department, and data preserved (and destroyed) according to a written data retention policy. But what about all the sources of ESI “managed” by your employees?
The easy portability of ESI is both its primary advantage over traditional paper records and its chief drawback when identifying it in litigation. Today, USB hard drives the size of a paperback book, costing less than $200, can store 2 terabytes, or 2,000,000,000,000 bytes. To illustrate just how much data this is, the entire print collection of the Library of Congress is estimated at 10 terabytes in uncompressed text form. Now consider dozens, perhaps hundreds, of your employees (especially engineers) carrying these drives to and from work, each containing discoverable data, largely unknown and uncontrolled by their employer. Their existence will usually become known at inopportune moments, such as during deposition.
Employees frequently create and store discoverable information on media furnished by their employer, such as recordable DVDs. Once recorded, these largely uncontrolled and unknown sources of ESI would likely be considered within the “possession, custody or control” of the employer, even if taken home by the employee. The scope and breadth of the problem is staggering when one also considers personal storage media used by employees, such as thumb drives and USB hard drives.
Another popular and usually uncontrolled source of ESI resides in popular file sharing sites used by employees to exchange information with external entities, and sometimes each other. The present shift to cloud-based computing further complicates the ESI landscape. Although IT can restrict access to some of these sharing services, it is difficult or impossible to prevent storage of company data externally.
Yet another source of at least potentially relevant discovery value exists in instant messaging systems and Short Message Service (SMS) texts. This data is typically not managed by the corporation, but by the employee, and stored by the wireless carrier. Multiply this by the number of wireless devices per person today and the challenges are readily apparent.
So what steps can be taken by inside counsel to tame this growing, expensive and potentially perilous trend? First and foremost is a well thought-out company policy on employee-owned or created ESI, which must be enforced if it is to be of any value. Restrictions on employee-maintained media are universally unpopular, but are a critical part in meeting the company’s discovery obligations in litigation and avoiding sanctions for spoliation or untimely production of ESI. The next column will contain practical advice on writing such a policy.