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While there has been a great deal of discussion in recent years about the volume of data businesses create on computers, in-house attorneys have found little guidance about the best way to prepare for electronic document requests. The concept of electronic discovery is still somewhat intimidating to many in-house attorneys, but those who have learned to manage it effectively are enjoying the advantages it provides, including greater control over document review and production processes as well as significant cost reductions. There are two parts to a successful electronic discovery response plan: managing data efficiently in the ordinary course of business, and reviewing data effectively in preparation for electronic document production. With the establishment of a collaborative relationship among in-house attorneys, outside counsel and the company’s information technology (IT) department, businesses can map out a straightforward two-part plan for electronic discovery preparedness. FORGING RELATIONSHIPS Successful electronic discovery response means more than just gathering information reactively; it means maintaining control over information creation and storage in the regular course of business. This mandates a new way of thinking for in-house attorneys, their outside counsel, and corporate IT personnel as electronic discovery preparedness becomes part of the company’s business strategy, rather than simply a case-by-case reaction to pending subpoenas or document requests. In this important three-way communication, each party has an important role to play. To prepare effectively, in-house attorneys must partner with their IT department long before receiving an electronic discovery request. Building this relationship in advance helps bridge the gap between the company’s IT needs and legal duties. Emerging case law instructs that in-house attorneys should understand the company’s information systems as they affect document retention, preservation and retrieval issues. In-house attorneys must likewise educate IT personnel about how their work is vital in protecting the company’s legal interests. Outside counsel must assist corporate clients with electronic discovery requests differently than with paper document requests. The days of delivering a document request with form letter instructions to gather the necessary data are long gone. Now, outside counsel must foster a role as a strategic partner in the company’s ongoing discovery response plan, with minimizing disruptions to the client’s business as the primary goal. Outside counsel also must be prepared to conduct a thorough inventory of the client’s electronic data in responding to discovery requests. Courts expect counsel to get this information firsthand from IT personnel; it is not enough to consult with the company’s law department or even members of senior management. See GTFM v. Wal-Mart Stores, Inc., 2000 U.S. Dist. LEXIS 3804, 2000 WL 1693615 (S.D.N.Y.). Knowledge of data storage systems benefits the company’s position offensively as well, allowing outside counsel to effectively negotiate discovery parameters and challenge unduly burdensome requests. Outside counsel can bring significant value to corporate clients by apprising them of the changing law concerning electronic discovery. By leveraging the collective experiences of their clients, outside counsel can offer insight into the practical aspects of electronic discovery, including types of documents frequently requested, efficient means of review and production and trends in various jurisdictions’ discovery rulings. Beyond the legal team, the activities of the IT department directly impact electronic discovery preparedness. With responsibility for corporate technology purchases, hardware and software integration and company-wide system maintenance, IT personnel must be educated about how their technology decisions affect the company’s legal interests. Tasks such as choosing an e-mail program, selecting new hardware or software, creating a protocol for storing electronic data on servers, or saving monthly backup tapes can have profound consequences when the company faces electronic document requests. EFFICIENT MANAGEMENT An established partnership among in-house attorneys, outside counsel and the IT department allows a company to focus on the preventive steps necessary to efficiently manage its electronic data. The keys to success here are educational outreach and a plan for storing necessary electronic data in a readily accessible format. All employees must be educated about their role in the company’s data management plan. Electronic data storage means that every employee is now a document custodian. At a minimum, every employee must understand that e-mail is not private, that “delete” does not really mean delete, and that any document may eventually become public. Rather than retrieving and sorting employees’ documents on a reactive basis, in-house attorneys should promote effective data management as part of employees’ daily work, and must emphasize each employee’s role in protecting the company’s interests. This educational process should begin with new employee orientation and be supplemented with regular reminders about the company’s electronic data management policies. Education of the IT department is particularly important. Absent legal perspective, IT personnel will define their objective as making sure that no data is ever lost. Incremental, duplicative backup tapes can accumulate for years, serving no business purpose, and then create a document review disaster. In one notable case, lawyers learned well into discovery that their client’s IT staff had more than 1,000 backup tapes containing potentially relevant information. Because the data was stored on backup tapes, instead of in a centralized, readily accessible location, restoration costs were estimated at over $1 million. See Linnen v. A.H. Robins Co., Inc., 1999 Mass. Super. LEXIS 240, 1999 WL 462015. Through advance education of the pitfalls of storing too much data for too long — and in an inaccessible format — the Linnen situation could have been avoided altogether. In-house attorneys should participate in decisions about data storage methods, and must make IT personnel aware of the need for an efficient means of retrieval. Courts have not favored claims that discovery requests are unduly burdensome if a party’s own choice of storage methods makes searching or retrieval of information problematic. See In re Brand Name Prescription Drugs Antitrust Litigation, 1995 U.S. Dist. LEXIS 8281, 1995 WL 376682 (N.D. Ill.) (unfair to impose upon plaintiffs the costs of defendant’s less than efficient storage media). When considering data storage protocol and systems, in-house attorneys must ensure that the company will not later be penalized for or disadvantaged by inefficient or outdated storage methods. Leveraging technology to control the volume and location of stored electronic data makes good business sense, and allows the company to benefit from a legally defensible electronic data management plan. A party may defeat a claim of spoliation by showing that it destroyed data pursuant to a valid and consistently enforced document management policy. See, e.g., Lewy v. Remington Arms Co., Inc., 836 F.2d 1104 (8th Cir. 1987); Carlucci v. Piper Aircraft Corp., 102 F.R.D. 472 (S.D. Fla. 1984). While some electronic documents may be routinely discarded or overwritten, legal or business purposes dictate retention of others. See, e.g., Trigon Ins. Co. v. USA, 204 F.R.D. 277 (E.D. Va. 2001) (deletion of draft reports prepared by testifying expert witness was not excused by reliance on document retention policy). The company serves its best interests by implementing a sensible plan for storing the electronic data it must retain as business records. Educating those responsible for the plan’s enforcement becomes critical in light of a company’s legal duty to preserve evidence. If a company knows or should know that certain records may eventually become relevant in litigation, it must preserve them. When litigation is pending or imminent, usual procedures for electronic data destruction or recycling may have to be suspended. In re Prudential Sales Practices Litigation, 169 F.R.D. 598 (D.N.J. 1997). A plan for halting destruction of electronic records — for example, disabling e-mail auto-delete features and suspending backup tape recycling — is essential. Even with a plan in place, effective and continuous communication to all employees is critical. In Prudential, for example, the court found no willful misconduct, but determined the company’s efforts to notify employees of the duty to preserve electronic information were “uncoordinated and haphazard.” Finding that senior management should have implemented a comprehensive electronic document preservation plan, the court levied a $1 million sanction. Id. As Prudential illustrates, a court need not conclude that intentional data destruction occurred to impose a penalty. A finding of intent, however, can increase the severity of spoliation sanctions from monetary fines to an adverse jury instruction or even a default judgment. See Linnen, supra (defendant’s continuing customary recycling of backup tapes during litigation was “inexcusable conduct”); Lewy, supra (defendant’s inability to produce customer complaints supported negative inference instruction); Carlucci, supra (default judgment entered for defendant’s intentional destruction of records pursuant to improper document retention policy). RETRIEVAL AND PRODUCTION Implementing an efficient means of electronic data storage is half of a successful electronic discovery response plan. Once a subpoena or other document request is received, the company needs a clearly defined procedure for retrieving, searching and producing necessary data in a controlled, cost-effective manner. In understanding the framework for an effective electronic discovery response, in-house attorneys should consider issues including: application of the discovery rules to electronic data; required form of production; and cost allocation. APPLYING DISCOVERY RULES The basic legal framework for electronic discovery is the same as that for paper documents, with the rules of discovery providing expansive access to an opposing party’s electronic data. FRCP 26 and New York CPLR � 3101 set forth the general scope of discovery. The federal rules also require that at the commencement of litigation, and before receiving any formal discovery request, a party must disclose to opposing parties certain basic information. This information includes a description, by category and location, of documents and data compilations it may use to support its claims and defenses. FRCP 26(a)(1)(B). While federal courts were originally given the choice to “opt out” of this mandatory disclosure provision, the 2000 amendments to Rule 26 mandated that every federal district court comply with the provision. This requirement means that a company must search available electronic systems for relevant information even prior to a discovery request. McPeek v. Ashcroft, 202 F.R.D. 31, 32 (D.D.C. 2001). The ability to retrieve and search electronic data in a speedy, cost-efficient manner allows the company to meet these obligations without interrupting regular business activities. FRCP 34 authorizes requests for production of documents, including “electronic data compilations.” FRCP 34(a). It is now black letter law that computerized data is discoverable if relevant. Anti Monopoly, Inc. v. Hasbro, Inc., 1996 U.S. Dist. LEXIS 16355, 1996 WL 22976 (S.D.N.Y.). Computer records, including those that have been “deleted,” are discoverable documents under Rule 34. Simon Property Group v. mySimon, Inc., 194 F.R.D. 639, 640 (S.D. Ind. 2000). New York CPLR � 3120 is patterned after federal Rule 34, and provides the same mechanism for discovery of electronic documents. FRCP 30(b)(6) also provides a widely used means of gathering information directly from the company’s IT department. Such a deposition can provide substantive information about systems and document management protocols, shaping further discovery. See, e.g., Carbon Dioxide Industry Antitrust Litigation, 155 F.R.D. 209, 214 (M.D. Fla. 1993) (depositions to acquire information about defendants’ computers were necessary to proceed with substantive discovery); Alexander v. FBI, 188 F.R.D. 111 (D.D.C. 1998)(deposition about e-mail systems facilitated substantive discovery). Partnership among in-house attorneys, outside counsel and IT personnel will assist the 30(b)(6) witness in responding to deposition questions appropriately. FORM OF PRODUCTION Businesses must be prepared to produce data in electronic form if requested to do so. Courts routinely grant requests for electronic production, even when the same information has been produced in hard copy. Anti-Monopoly, supra. Courts recognize the necessity and efficiency of production in electronic form, and have applied the federal rules’ mandate of just, efficient and inexpensive resolution of disputes to require electronic production. If a requesting party will otherwise incur unnecessary expense, paper will not substitute for computer-readable discovery. Storch v. IPCO Safety Products Co., 1997 U.S. Dist. LEXIS 10118, 1997 WL 401589 (E.D. Pa. 1997) (defendant required to produce electronically rather than impose upon plaintiff the cost of re-inputting data to allow computer analysis); In re Air Crash Disaster at Detroit Metropolitan Airport, 130 F.R.D. 634 (E.D. Mich. 1989) (party compelled to re-create computer-readable tape though it had already produced printouts). Courts generally order electronic production when it mitigates unnecessary cost to the requesting party. Accordingly, companies must anticipate the need to produce in electronic form, and accordingly will benefit from data storage in an organized, searchable electronic format. COST ALLOCATION Cost allocation issues tend to arise when a party claims extraordinary costs of data retrieval or production. Reported decisions offer no predictable outcome in cost allocation disputes, but a company is better poised to argue that costs of production should be shared with the requesting party when it has an organized, defensible electronic data management plan in place. One line of cases favors imposing costs on the responding party under the rationale that businesses enjoying the benefits of computer technology must assume the costs of data retrieval as a foreseeable risk of the choice to use computers. See, e.g., Bills v. Kennecott Corp., 108 F.R.D. 459 (D. Utah 1985); Brand Name Prescription Drugs, supra. As one federal court recently noted, however, this reasoning presumes that businesses have an alternative to electronic document storage. In McPeek, supra, the court recognized that all businesses use computers, and analyzed whether to order restoration of backup tapes in terms of the “marginal utility” of the proposed discovery. Most recently, the Southern District of New York set forth eight factors in cost allocation analysis, balancing the cost of production against the information’s evidentiary value. Rowe Entertainment, Inc. v. William Morris Agency, Inc., 2002 U.S. Dist. LEXIS 488 (S.D.N.Y.). Factors considered by the court included the likelihood of discovering critical information, availability from other sources and the specificity of the request. Id. McPeek and Rowe signal a retreat from the traditional rule that producing parties must always pay for electronic data production as a cost of doing business. Instead, these decisions encourage a balancing test of the burden or expense of production with the likely benefits of discovery. These recent electronic discovery decisions illustrate how companies with an organized, accessible system for storing electronic data place themselves in the best position to respond to electronic discovery requests. As with any discovery matter, a company that can proactively inform the court of its electronic discovery response plan will likely fare better than one that waits to respond to a motion to compel. CONCLUSION The prevalence of electronic discovery means that all businesses must have ready access to the evidence they need to produce, while guarding against accumulating overwhelming volumes of information. Effective planning requires a new working relationship among in-house attorneys, outside counsel, and corporate IT personnel to make proper electronic data management the foundation for effective and complete discovery responses. Electronic discovery technology can provide lawyers with tools to handle complex discovery in a speedy, cost-efficient manner without interrupting the work flow of familiar business and discovery practices. With the use of such technology, in-house attorneys can gain control over data retrieval and review processes and costs, while outside counsel enjoy a tremendous advantage in preparing their clients’ cases. Christopher P. Orlando is vice president, general counsel and secretary at O.F. Mossberg & Sons Inc., in North Haven, Conn., and Virginia Llewellyn is an attorney with the New York City office of Applied Discovery Inc., a provider of electronic discovery services.

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