This is the third in a series of articles exploring how e-discovery costs can be contained by limiting discovery with mutually agreed-upon terms in commercial contracts (Part 1 and Part 2). In this installment, we show you how to use contract terms to specify when the parties’ duty to initiate preservation of documents is triggered.
The Federal Rules and the law of spoliation provide that parties have a duty to preserve potentially relevant evidence whenever it can be reasonably anticipated that a lawsuit will be filed. Exactly when litigation is reasonably anticipated, however, is oftentimes more gray than black and white. And while a smattering of courts have addressed when this standard is satisfied, there are many subtle variations as to when the duty to preserve attaches, which can vary by jurisdiction and venue. Since decisions with respect to the timing and scope of preservation are frequently required to be made prior to filing of a case, a party is required to determine its preservation obligations without benefit of knowing the specific rule that will be applied. The practical effect of this is a least common denominator approach; parties end up adopting the most conservative features of each jurisdiction’s rule resulting in requirements that are more onerous than any one single jurisdiction. This type of over-preservation costs money, and lots of it.
Here is an example of what such a clause would look like. (For the full model, see “Using Contract Terms to Get Ahead of Prospective e-discovery Costs and Burdens in Commercial Litigation”.)
I. Preservation of Information.