Megabits, gigabits, back-up tapes, metadata—these words, although generally foreign to most lawyers, are beginning to appear in legal opinions and even in the Federal Rules of Evidence. The only computer training offered when I was in law school, so long ago, was using Lexis and/or Westlaw for research. As times have changed and technology invades the courtroom, law schools today might be smart to offer programming degrees along with the J.D.

Today, computers in the workplace are the norm, not the exception. Employees share documents, pass along hundreds of thousands of e-mails, save voice mail messages and utilize instant messaging to communicate. In order to preserve corporate records, documents and the various forms of communication, corporations are forced to store all of this information electronically. Attempting to store it using paper copies would be a financial and logistical nightmare.

In response to the massive amounts of electronic data, an area of law that has been developing along with the use of computers is electronic discovery. Most practicing lawyers or their clients have received discovery requests for paper documents, but today these requests include electronic data, files, communications and documents. Decisions on how to respond to a request need to be made early on to determine the most effective response strategy.

Choose a Format

You can resort to the old-fashioned method of document production—providing a hard copy—but keep in mind that in the long run it may end up costing more. You have to consider the printing, photocopying, transcription of voice mail, shipping and labor costs involved for every document or file. Strategically though, you may not want to make life easy for your opponent. However, making life difficult for the other side may also make life difficult for you.

Some electronic formats may have higher up-front costs, but in the end those costs could save everyone a lot of time—including you! Electronic production can be as simple as providing non-searchable image files such as tiff or pdf files (there are some pdf files that are searchable). On the other end of the cost spectrum, production can be as extensive as employing an outside vendor to create an online file room. The latter can be shared by both the plaintiff and defendant and can include searchable image files, voice mail recordings and corresponding metadata.

Metadata?

In simple terms, metadata is the embedded data that is stored electronically about a document. For example, you can print a hard copy of an e-mail, but all you know about the document is what is printed on that page. Metadata can tell you exactly who sent the e-mail, what time it was sent, who received the e-mail (including who received blind copies), who forwarded the e-mail (when and to whom), who made changes to the e-mail and what those changes were—you get the point. The metadata may be more informative than the actual e-mail itself. A recent court decision has found that the production of the metadata in electronic format was necessary because the hard copies didn't contain that information. (See Zenith Electronics Corp. v. WH-TV Broadcasting Corp., 01 C 4266, 2004 WL 1631676 (ND Ill. July 19, 2004)).

Just imagine that you have advised your client to provide everything in hard copy and they spent weeks copying and printing documents. Opposing counsel files a motion to compel requesting production in electronic format, which will likely be approved by the judge in your case. The entire process must begin again, taking time, money and resources. Now you can see why hard-copy production might be more expensive in the long run.

Retention Policies

In order to have the ability to produce documents in either electronic format or hard copy, the information must still exist. Every company has, or should have, a retention policy in place. The length of that policy will of course depend on the nature of the business, size of the business, amount of data, etc. As bankruptcy professionals, you most likely aren't going to be involved in establishing a company's retention policy. However, case law is extremely clear that where there is pending or reasonably foreseeable litigation, there is a duty to preserve evidence. West v. Goodyear Tire and Rubber Co., 167 F.3rd 776 (2d Cir. 1999). In the bankruptcy context, if you are working with a client in preparation for a chapter 11 filing, it can easily be argued that there is reasonably foreseeable litigation. The best thing you can do for yourself and your client is to advise, in writing (you'll be glad to have a copy of this later), that your client not destroy or delete any information, documents or files, including back-up tapes, that relate to the case, or in the bankruptcy context, to the company and its financial situation. Any destruction is called "spoliation," which was defined in West v. Goodyear as the "destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." Id. at 779. Examples include the shredding of documents, deletion of e-mails and even revisions of e-mails. Remember, the metadata, which is discoverable, will show those revisions!

The penalties for spoliation can range from a simple fine to the most severe: default or summary judgment. These severe penalties are usually reserved for cases where a party has intentionally destroyed or altered evidence, but judges have wide latitude in determining the appropriate sanctions for spoliation.

Even if you have advised your client not to destroy anything, you can't just walk away and assume they will listen. A recent case in the Southern District of New York has made it clear that attorneys must take affirmative steps to assure that their clients preserve evidence. Zubulake v. UBS Warburg, 2004 WL 1620866 (S.D.N.Y. July 30, 2004), deals with an employment discrimination suit where the employer intentionally destroyed e-mails relevant to the plaintiff's suit. Both in-house and outside counsel advised the defendant not to destroy or delete any files that were relevant to the former employee's claims; however, against this advice, USB employees deleted the relevant e-mails. The Zubulake court repeated its finding from an earlier decision in the same case that "once a party reasonably anticipates litigation, it must suspend its routine document retention/ destruction policy and put in place a 'litigation hold' to ensure the preservation of relevant documents." Id. at 9. The court went further by adding that "a party's discovery obligations do not end with the implementation of a 'litigation hold'; to the contrary, that's only the beginning. Counsel must oversee compliance with the litigation hold, monitoring the party's efforts to retain and produce the relevant documents." Id. Although the court found that counsel should have been more diligent, there were no penalties assessed against the attorneys in the case. There were, however, numerous penalties assessed against the defendant, including adverse jury instructions with respect to the missing e-mails and all costs associated with the motion before the court, including expenses and attorneys' fees. In a postscript to the opinion, the Zubulake court stated:

The subject of the discovery of electronically stored information is rapidly evolving. When this case began more than two years ago, there was little guidance from the judiciary, bar associations or the academy as to the governing standards. Much has changed in that time. There have been a flood of recent opinions—including a number from appellate courts—and there are now several treatises on the subject. In addition, professional groups such as the American Bar Association and the Sedona Conference have provided very useful guidance on thorny issues relating to the discovery of electronically stored information. Many courts have adopted, or are considering adopting, local rules addressing the subject. Most recently, the standing Committee on Rules and Procedures has approved for publication and public comment a proposal for revisions to the Federal Rules of Civil Procedure designed to address many of the issues raised by the discovery of electronically stored information. Id. at 18.

The public comment period with respect to these proposed amendments to the Federal Rules of Evidence has just recently ended, and the earliest these changes could take effect would be late in 2006. However, these rules are just codifying practices being utilized in a number of courts today.

Electronic discovery is rapidly becoming a way of life in the legal world. As the courts become more comfortable with the procedures, and the standards are developed and defined, electronic discovery will become as natural as sending an e-mail request. To prepare, be sure you understand your options and develop strategies to best respond to discovery requests in this modern technology era.