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San Francisco—When a New York jury awarded securities broker Laura Zubulake $29 million in a sex discrimination suit last month, in-house lawyers around the country uttered a collective gasp. The federal court verdict provided a painful lesson on what can happen when a company fails to turn over electronic data in discovery. Zubulake claimed that her employer, UBS Warburg, hadn’t retained incriminating e-mail. The judge ultimately agreed and told the jury that it could infer that the lost e-mail was unfavorable to UBS. The case shone a spotlight on an increasingly worrisome quandary: How long must companies hold onto data stored on their computer systems, and what are they obligated to retrieve in discovery? Many lawyers, judges and corporations say the lack of national standards has created a maze of confusion. “There’s tremendous uncertainty, and it creates huge problems for lawyers in their relations with clients and the courts,” said Daralyn Durie, a partner at San Francisco’s Keker & Van Nest. “Clients are . . . saying, ‘Do you expect me to pay $1 million to turn over e-mail?’ “ Clarification coming? Such questions aren’t likely to be answered anytime soon. But the federal court system is trying to make the rules of the game clearer. An advisory committee of the Judicial Conference of the United States has proposed amendments to the Federal Rules of Civil Procedure to clarify what information must be provided in e-discovery. Under the new rules, parties would have to outline expected e-discovery requests at the outset of a case. Companies would be exempt from turning over data that were inaccessible or lost during the normal course of their computer operations. While some believe that the rules could help clarify the parameters of e-discovery, others worry that companies may try to use them to avoid turning over electronic material. Lawyers agree that many of the questions will have to be answered case by case. And companies will still have to invest large sums in collecting, retrieving and organizing that data. “I think the proposed changes are a good start, but they still leave open the possibility that people will try to use the threat of costly electronic discovery to extract unfair settlements in meritless cases,” said Mia Mazza, a securities litigation partner at Morrison & Foerster. Electronically stored data are not new, but it’s only in the past five years that they have comprised the bulk of discovery. And only in the past two years have courts begun to issue guidance as to what electronic information should be preserved and produced in litigation.

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