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Ancient Greeks told the legend of Hercules, a warrior-hero, ordered by his cousin, King Eurystheus, to perform 12 impossible labors to atone for killing his family to avoid suffering consequences. Hercules’ labors included slaying, or capturing live, dangerous and mythical creatures such as the Nemean Lion, the multiheaded Hydra, the Cerynitian Hind and the Cretan Bull, as well as other impossible tasks such as cleaning the Augean Stables. For mere mortals, such labors were impossible. Today, litigants view the labors of meeting e-discovery obligations as just as daunting and dangerous as Hercules’ labors. Litigants who have tried, but failed, to conquer e-discovery labors have faced criminal prosecution, default judgments, spoliation claims, adverse inferences in jury instructions and orders prohibiting them from introducing evidence on crucial issues. For example, the investment-banking firm Morgan Stanley did not conquer its e-discovery labors in defending the fraud claims of investor Ronald Perelman. In granting Perelman a default judgment, the court found a Morgan Stanley executive had represented to the court falsely that all backup tapes had been searched when 1,600 such tapes had not. The jury then awarded total damages of $1.4 billion. This was after Morgan Stanley had rejected a $20 million settlement offer. Susanne Craig, “How Morgan Stanley Botched A Big Case by Fumbling Emails,” Wall St. J., May 16, 2005. In another well-publicized e-discovery case, a jury awarded Laura Zubulake over $29 million in her discrimination trial in which she received the benefit of an adverse inference because USB Warburg’s employees deleted e-mails after the company had a duty to preserve electronically stored information. Zubulake v. UBS Warburg, No. 02 Civ. 1243 (S.D.N.Y). E-discovery failures can give rise to criminal prosecution as well. Frank Quattrone, a former Credit Suisse First Boston banker, was convicted of obstruction of justice for sending an e-mail reminding employees of the bank’s document retention/destruction policy on the eve of government and grand jury investigations into his activities. The jury concluded that his e-mail obstructed justice. In June, the Civil Rules Standing Committee on Rules of Practice and Procedure approved proposed amendments to the Federal Rules of Civil Procedure to address e-discovery issues. The proposed rules are expected to be published for comment in August. The comment period would close in February 2006. The amendments recognize discovery of electronically stored information, raise unique issues in civil discovery and provide a path for litigants to travel to manage discovery and avoid discovery sanctions. They build on existing case law and practice and will provide a flexible framework that will allow courts and litigants to tailor e-discovery to the circumstances and needs for that case and to map a course for litigants to sail into the “safe harbor” from Rule 37 sanctions. This article offers a few practical steps a litigant can take to avoid the pitfalls that produce sanctions and even conquer the Herculean labor of e-discovery. Lesson One: Know a client’s electronic storage systems, past and present. At least two amendments to Rule 26 will encourage litigants to create e-discovery teams with representatives from the client’s information technology (IT) department as well as counsel. Companies should not wait, but should create these teams before becoming a party to a suit. Revised Rule 26(b)(2) would excuse from discovery “electronically stored information that the responding party identifies as not readily accessible.” The term “not readily accessible” is not defined in the revised rule. The comments indicate that the term should apply to legacy data, information stored on obsolete systems and other information where the search and retrieval efforts would be too expensive and time consuming. The reason for not offering a definition is the recognition of the variety among the electronic storage systems now in use and the great pace at which technology can cause previously inaccessible data to become accessible. While not offering a definition, the comments recommend that the court should consider the following: the volume of information; the variety of locations in which it might be found; and the difficulty and cost involved in locating, retrieving and producing the information. ‘Not readily accessible’ defense Withholding electronically stored information on the ground that it was not readily accessible is comparable to withholding documents on grounds of privilege. The responding party will bear the burden of proof to show the information is “not readily accessible” and must provide the requesting party with information sufficient to allow it to challenge whether the “not readily accessible” assertion is valid. One way to go about it is to provide a general description of the types of data that are not being produced or that have not been searched. The responding party should provide an explanation as to why the information is not readily accessible. Such reasons could include that the information was stored on an obsolete system or on a tape that has since been overwritten as part of the routine operation of the storage system. Thus, a “not readily accessible” log will need to be prepared. The litigant’s IT department should participate actively in the determination of whether certain information is “not readily accessible.” The IT department representative is likely to be the witness who has to defend the decision not to produce if the requesting party challenges the determination. The information must not be accessible. This point seems obvious. Often it is not. The information cannot be of the kind that is routinely used by the client to conduct its business; cannot be of the kind required by law to be maintained by the litigant (e.g., under Sarbanes-Oxley); or cannot be of the kind that is accessed to support the responding party’s litigation claims. These categories of documents are “readily accessible.” A litigant who misrepresents whether information is “not readily available” can expect a court to impose the full arsenal of Rule 37, Rule 11 and common law sanctions as the Zubulake court did. Rule 26(f) would also be amended to oblige counsel to discuss e-discovery at their initial Rule 26(f) planning conference and to reach agreements with respect to the scope of e-discovery, a schedule for the productions, and formatting issues. This provides counsel additional incentive to be familiar with the client’s electronic storage systems and to work with the client’s IT department to plan for discovery efficiently. Counsel should work with IT not only to prepare for responding to requests for electronically stored information, but also for guidance on the preferred storage systems to receive such information to facilitate storing, searching and retrieving information produced during discovery. Counsel should conduct an early assessment of the client’s electronic storage systems to ascertain all potential locations where potentially relevant information might be stored and in what format. This assessment ought to be crucial in the Rule 26 planning conference. As with the “readily accessible/not readily accessible” determination, counsel should work closely with the client’s IT department to steer the planning discussions toward a reasonable, or more reasonable, outcome. A prepared e-discovery team will have an advantage during the Rule 26(f) conference in narrowing the search and retrieval obligations and in producing electronically stored information in an existing format, while obtaining a commitment to receive electronically stored information in a format compatible with the client or counsel’s current electronic storage systems. Lesson Two: Sail into the “safe harbor.” Rule 37(f) would be amended to afford a responding party a map to sail into a “safe harbor” that spares a party from Rule 37 sanctions for failing to produce electronically stored information. The safe harbor precludes discovery sanctions against a party for a failure to produce electronically stored information if the party took “reasonable” steps to preserve the information after it knew (or should have known) the information was discoverable; and if the failure to produce resulted from losing the information through the routine operation of the party’s electronic information system. Two safe-harbor showings The safe harbor requires two distinct showings by the party seeking refuge. First, the party must show it took steps to preserve potentially relevant electronic data that it knew or should have known might be relevant to a litigable dispute. Preservation policies and a demonstration of compliance with them become critical. Counsel should send employees a “preservation” notice specifying the information that should be preserved. Counsel also should coordinate with the client’s IT department to take steps to preserve potentially responsive information and to document the actions undertaken. Second, the loss of the information must result from “routine” operation of the party’s electronic system. To the extent e-mail is stored only for a few days or systems are replaced, the loss of information should not warrant any sanctions. However, to the extent the information was deleted through irregular activities, sanctions might be imposed. Lesson Three: Adopt, implement and enforce a document-retention policy. The route to the safe harbor is navigated through a reasonable document-retention policy, which the client routinely implements and enforces. As the Quattrone case illustrates, it is too late to enforce a retention policy when the threat of litigation looms over the horizon. While the elements of a comprehensive document retention/document destruction policy are beyond the scope of this article, the development of such policy requires input from counsel and the client’s IT department, among others and must have the support of senior management. The policy should take into account current and past electronic storage systems, and determine storage capacity, cost, formatting, search and retrieval efforts, volume and other legal obligations. In addition, any policy must address preserving information when counsel knows (or reasonably should know) litigation is imminent. The policy should include notice to affected employees and the IT department to preserve potentially responsive information until the litigation is resolved and further steps that actively prevent the destruction of electronically stored information. The Quattrone prosecution illustrates the risks of failing to implement and enforce the document-retention policy. A litigant cannot be lax in implementing and enforcing its document-retention policies, which would allow information to be removed from electronic storage only when a litigation storm is looming on the horizon. Moreover, the litigant has the affirmative responsibility to preserve information. A failure to act to prevent employees from destroying potentially responsive information will lead to the imposition of sanctions. Lesson Four: Take control of the discovery response. In the seven pre-trial opinions in Zubulake v. UBS Warburg, Judge Shira Scheindlin addressed production of e-discovery, cost-shifting for production and sanctions. The backup tapes proved to be the insurmountable task for UBS. Although in-house and outside counsel ordered UBS employees to preserve their electronically stored information before the filing of the lawsuit, Zubulake’s request for certain backup tapes revealed the deficiencies in UBS’s strategy for collecting and maintaining potentially relevant electronically stored information, in particular e-mails. UBS failed to request information from one employee, failed to request one employee to preserve relevant information, failed to understand how one employee maintained her electronic information and failed to secure and preserve the backup tapes. As a result of these failures, certain potentially relevant e-mails, including at least one prepared by the alleged harasser, were deleted and could not be recovered. Those that were recovered were produced two years after they were requested. Because UBS deleted e-mails, Scheindlin ordered that an adverse inference instruction be given during the trial. In addition, because of the late production of certain e-mails, UBS was ordered to pay the cost of any depositions or re-depositions made necessary by the newly produced information. Zubulake v. UBS Warburg, No. 02 Civ. 1243, 2004 U.S. Dist. Lexis 13574 (S.D.N.Y. July 20, 2004). The “labors” experienced in Zubulake confirm the importance of developing a comprehensive plan for managing e-discovery. Litigants should know that e-discovery will be requested, and as such, there is no reason to wait for the request to begin preparing. Moreover, a comprehensive plan will allow the litigant to discuss e-discovery issues at the Rule 26(f) conference, and more importantly, provide protection under the proposed amendments to Rule 37. For a plan to be successful, counsel should consider the following: Record hold orders should be issued, and more importantly, enforced. Outside counsel should monitor compliance with the orders regularly, through communications with the IT department, key supervisors and employees. When it becomes apparent that litigation is imminent, counsel should begin working with the IT department or an IT consultant to identify the location of potentially responsive information and its volume. This information should be preserved and separated. Also, reasonable search terms designed to winnow the volume can be tested at this time. Counsel should also review e-documents for privilege. Lawyers should assemble the IT and document-review resources necessary to complete the review of e-documents for privilege and responsiveness in a timely and accurate manner. They should also be prepared to produce the privilege log. Counsel should speak candidly and keep opposing counsel and the court informed of efforts to comply with the schedule. They should be prepared to offer production on a rolling basis. Counsel should not overstate what has been done or what needs to be done. For example, they should not say that all backup tapes have been reviewed, but rather explain where searches have been made, what has been found and what has been reviewed, and explain what else needs to be done. Finally, no one should destroy or alter documents. Lesson Five: E-mail-the new smoking gun. E-mail has taken the place of the unrecorded water cooler commentary. Such recorded glib commentary can be devastating to the company. Idle e-mail chatter of analyst Jack Grubman played a prominent role in actions against Citibank, and Bill Gates’ e-mail chatter was played over and over again during the Microsoft antitrust trial, much to his chagrin. A litigant should adopt measures to contain idle chatter. Ultimate responsibility for management of discovery will fall on litigation counsel, who are obliged to ensure that a thorough review is completed of potential witnesses, potential locations of information and all other issues relevant to the case. Counsel cannot rely on employees to confirm that all e-mails have been produced, especially when those employees have the greatest motivation to delete e-mails. Initial interviews are crucial to determining who the critical witnesses are, what electronic information is available and how it is stored and accessed. If the initial interviews direct the lawyers in the wrong direction or if they overlook a key segment of information or employees, the damage is done. Counsel should work with the client’s IT department and management to take the necessary steps to identify, preserve, search and retrieve responsive information. An e-discovery team that includes counsel, the IT department, corporate management and others should facilitate completing the e-discovery labors. Ron Raider is a partner in the litigation department of Atlanta’s Kilpatrick Stockton. His practice concentrates on complex commercial litigation and arbitrations. Danielle Williams is a partner in the firm’s Winston-Salem, N.C., office, also in the litigation department. Her practice focuses on patent and business litigation. Roger Gural, a summer associate in the Atlanta office and a student at the University of North Carolina School of Law, also contributed to the article.

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