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Anyone with a closet knows that deciding what to keep and what to throw away is not easy. The process can be even more excruciating when it comes to choosing — with imperfect knowledge about the future — which documents might aid or harm your company down the road. The bad news is that despite innumerable articles spawned by the Microsoft litigation warning that e-mail evidence can be lethal, many companies still don’t have electronic document retention policies. Some are unwittingly holding on to everything; others have no rules to guard against spoliage of electronic data in the event of a suit; still others have policies — but have implemented them so imperfectly that they might have created new problems. In the days of paper documents, it was a somewhat self-expurgating process, says William Fenwick, one of the founding partners of Palo Alto-based Fenwick & West. “When the room got too full, you went in and threw out the old documents.” Alas, the miracle of magnetic tape has eliminated this impetus. A big part of the problem, says Larry Kanter, a computer forensics expert and partner at PricewaterhouseCoopers, is that lawyers tend not to understand what the information technology department does. IT staff typically have two mandates: Keep the network up and don’t lose anything. So if you’re assuming that the company’s electronic “closets” are being cleaned on a regular basis, you’re probably wrong. “We find backup tapes in people’s houses, people’s cars; in one case, a guy had ten-year-old tapes in his home,” says Kanter. “They’re keeping logs of all sorts of stuff.” To make matters worse, e-mail programs basically invert the traditional pattern of document retention. “Ordinarily documents are not retained unless they’re affirmatively put in a file,” says Ian Ballon, a partner at Finnegan, Henderson, Farabow, Garrett & Dunner in Palo Alto. But, he explains, the programs used by most businesses — Windows and Apple applications — typically retain everything unless an affirmative decision is made to delete them. And because so few companies have wrestled with these problems, says Eric Goldman, general counsel of Epinions, Inc., “basically, everything is kept.” When PricewaterhouseCoopers asked 216 litigators if their clients had an established protocol for handling electronic discovery requests, 83 percent said no. The survey, conducted at the annual meeting of the American Bar Association litigation section in May, also found that 70 percent of the lawyers expected electronic discovery to increase “dramatically.” “Unless a company has had firsthand experience with litigation and very fresh memories of it, [a document retention policy] is a very hard sell,” says Fenwick. But, he adds, “every company that has experienced a large, complex litigation gets on it immediately.” Although rules for managing electronic data should be consistent with policies for paper documents, they also must address the basic differences between the two media. Multiples, for instance, are a major problem. E-mail easily allows one to send thousands of copies of a document. Many recipients will then print it out, mark it up, and file it, thus creating new originals. E-mail also has created a transcript of the kinds of casual office conversations that used to occur by telephone. And despite its ephemeral quality, e-mails are surprisingly long-lived. “You cannot kill e-mail,” says Goldman. To tame it a bit, Ballon recommends that companies have “a policy that distinguishes between official and unofficial e-mail.” Policy guidelines should be issued so that employees can determine which of their messages are official and which are personal. Employees should be instructed to save the official communications. At regular, announced intervals, the system should automatically purge all other, presumably personal, e-mail. To ensure that the right documents and e-mails are being properly retained, Fenwick recommends regular spot audits. If information is saved inconsistently, it can expose the company to charges of spoliation. Conduct annual reviews of all stored information — and cull anything you are no longer required to keep. Difficult as hammering out a policy might be, the policy alone won’t do the trick. Implementation and auditing are vital. An incompletely or inconsistently implemented policy can be more harmful to a company engaged in litigation. Fenwick recommends wholesale imaging: making a digital snapshot of paper documents, making them easier and less expensive to store, sort, and retrieve. More and more states, he says, are adopting rules that permit digital images to be considered as originals. Burdensome electronic discovery requests are not typical in litigation between big companies, says Ballon. Instead such requests usually come from individuals, small entities, or government. “A single plaintiff, for a very small amount of money, can cost a company literally hundreds of thousands of dollars,” Ballon says. “There’s a fundamental unfairness in the federal rules that creates incentives for certain litigants to bring burdensome or harassing discovery requests. I wish I could say these issues have gotten simpler, but they haven’t.” Kanter suggests that in-house lawyers also follow these five steps for taking on digital document retention: • Find out what digital information is being captured and where it is. While your instinct may be to ask the chief information officer for this, go instead to the operational level. • Develop a strategy for preserving relevant electronic information in the event of a suit. • Get a handle on what trade secret information is kept digitally. Information can leak out with temporary employees and contractors. Make sure that their e-mail accounts and network access are shut down as soon as they depart. • Make it a matter of policy for all employees’ computers to be reviewed when they depart. Too often computers go straight to new employees, and valuable files are lost. • Meet regularly with IT staff. Learn what they’re doing. Teach them the potential legal ramifications of their actions.

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