So much has been written about the duty to preserve electronic evidence that there is little room left for original scholarship. Simply stated, the duty arises when litigation is reasonably anticipated. Compliance can be shockingly expensive, yet counsel and litigants who fall short of the court’s expectations could pay a heavy price, including monetary sanctions, default judgments and adverse instructions to the jury, to name just a few.
The miasma of rules and rulings that have followed the now familiar series of opinions issued by Judge Shira Scheindlin in Zubulake v. UBS Warburg LLC have turned the early stages of litigation into a logistical and financial nightmare for inside counsel, who must balance their obligations to the court with the often inconsistent fiscal demands of their clients. In this article, we focus on three steps you can take before the duty to preserve arises to ensure that compliance will be as efficient, effective and painless as possible.
1. Know what you have.
Understanding your information assets before the duty to preserve arises is critical, or you may be left scrambling at the eleventh hour and asking your outside counsel to assist—an often effective, but always costly, request. To address this challenge, consider implementing an enterprisewide policy for how paper and electronic files will be managed and stored.
Managing information before a dispute arises is particularly important in the case of electronic data. Left unsupervised, employees often bypass corporate computing policies by, for example, storing information on local or personal computers, or by establishing department-specific computer networks that are “off the grid.” Such conduct can complicate your effort to quickly identify all information that must be preserved, and it can increase the cost of preserving evidence when you find it.
Enforcing a uniform policy for information management will make your life easier in three ways. First, when the duty to preserve does arise, you will not have to conduct a hasty internal investigation just to determine what you have. Second,
When you do have to issue a “litigation hold” memorandum, you will know exactly where to send it. Third,
You are less likely to be surprised in a deposition by a witness who refers to a source of information that was not preserved, and has since been lost or forgotten, because you didn’t know it was there in the first place.
2. Create and enforce a document retention/destruction policy.
Your document retention and destruction policy can have a tremendous effect on the relative ease and cost to comply with the duty to preserve. There is no one-size-fits-all solution, but certain principles are fundamental.
First, whatever your document destruction policy may be, ensure that it is enforced. If files are supposed to be purged on a regular basis, make sure that occurs, as that will enable you to define the outer bounds of your duty to preserve. There are few circumstances as costly—in both credibility and dollars—as finding a box full of back-up tapes, or a storage locker full of documents, at the end of discovery.
Second, don’t retain more than business necessity and regulatory regimes require. The more you have, the more you must preserve, and preservation of evidence can be both cumbersome and expensive.
3. Identify preferred vendors.
Many business disputes are decided based not on their merits, but on the anticipated cost of electronic discovery. A principal driver of this problem is the amount charged by third-party vendors to “mine” your electronically stored information for relevant evidence. One reason this occurs is that, too often, companies are presented little choice in deciding which vendors to use and no opportunity to compete the work because they are told court deadlines will not allow it.
To counteract this problem, compete the selection of e-discovery services as you would any other services you procure. You can accomplish this either by soliciting e-discovery vendors to compete to be among your “preferred” vendors, or by requiring that your outside litigation counsel do the same before a dispute arises. Either way, you will know that you took reasonable steps to ensure that you will get the best value from your e-discovery vendor without the pressure of a court-imposed deadline to constrain your judgment.
Compliance with the duty to preserve can be a daunting task for inside counsel, but it truly is one area in which an ounce of prevention is worth a pound of cure.