Robinson Brog Leinwand Greene Genovese & Gluck, P.C. - New York City Business Litigation Attorneys

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Requiem for a Bankers Box

by Ronald B. Goodman

Once upon a time, companies used computers mainly to produce paper documents more efficiently. If a lawsuit arose, "document discovery" generally meant sorting through a few hefty banker's boxes.

Today, banker's boxes are a virtual antique.

In 2006, over 90 percent of business documents are created electronically, and almost half of those never become hard copy.

The banker's box is out, replaced by massive servers capable of holding millions of data and frustrating litigators in related discovery.

The digital age has exponentially increased companies' document storage capacity. The volume of data can be outrageous. And, yet, the courts generally are not willing to stipulate that an eDiscovery request is "unreasonable," in spite of the massive data, time, and expense involved.

Because most companies do not have effective, comprehensive records retention programs in place, eDiscovery can be tedious and complex. Most companies know they do not have to and often should not keep everything, but their expertise on records retention generally ends there. As dependence on electronic communication has grown, lawyers and their clients have faced new and significant issues relating to the preservation of electronic information. Electronically stored information is often recycled pursuant to the company's ordinary course of business. For example, through a computer system that automatically deletes e-mail older than 60 days and is archived or through a document retrieval system that overwrites metadata. Once a duty to preserve evidence arises, companies must act to halt the deletion for lost of potentially relevant electronic data. Deletion of electronic data is a significant risk for companies and may lead to spoliation claims. It is often unclear when the duty to preserve arises – it can be difficult for a company to determine when litigation becomes reasonably foreseeable. And, in practice, suspending document retention policies or ordinary course of business deletion policies for electronic data can raise significant headaches for a company from halting its automatic process, to purchasing additional backup tapes, to storing backup tapes that are no longer being recycled.

These concerns and the consequence that can follow, such as, sanctions if the wrong choice is made, makes life difficult for clients and lawyers struggling to balance the business needs and realities with their duties to preserve evidence.

The sanctions referred to above can range from sizable fines (such as a recent penalty in excess of $10,000,000 levied on banks for failure to produce e-mails, sought in connection with pending investigations), adverse inferences (such as an adverse jury instruction in the recent Zubulake case) and in most extreme cases, outright default or dismissal.

It is important for companies to have a document retention policy and to work with their attorneys in the event litigation is contemplated to preserve all such documents and not face the consequences as set forth above.

Recent legislation like Sarbanes-Oxley and HIPAA as well as industry – specific regulations, such as, those from the SEC or the NASD makes compliant records retention even more complex. For example, the SEC requires that certain companies keep all business related e-mails for a specific number of years. It has already imposed multi million dollar fines on violators. Staying up to speed on the latest eDiscovery methods, strategies, legislation and case law is essential to prevailing in Court.

We at Robinson Brog Leinwand Greene Genovese & Gluck P.C. have formed an Electronic Discovery Committee just for this purpose – to advise clients as to record retention policies, to assist clients in connection with office discovery needs in the recent of anticipated litigation and to act with clients when faced with litigation in both preserving and producing necessary records and also seeking such records from adversaries.

Our Electronic Discovery Committee is available to assist in all such matters and to help clients form a comprehensive basis for record retention so that dire sanctions will not be imposed at a future date. The eDiscovery attorney is simply an attorney who understands eDiscovery. It is that attorney's function to assist clients uncomfortable about sending confidential and proprietary data to unknown offshore locations. The role of the eDiscovery attorney can vary, but there are certain essential tasks. For instance, he or she can provide internal legal teams with guidance on how best to handle electronic date – both internally and when working with data from other organizations – if involved with litigation or mergers and acquisitions. That person could also manage outside eDiscovery vendors, computer forensics vendors and outside counsel both in terms of cost to best process internal electronic data and coordinate collection efforts with the IT Department of External Resources, if needed. Finally, this person will be able to testify on eDiscovery issues and could help keep members of the firm abreast of current eDiscovery trends and case law. 

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