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As electronic discovery grows, so do the sanctions

Does your company organize and keep track of its electronically stored information (ESI)?

It’s definitely in your best interest to do so in civil litigation or face the increasing prospect of sanctions that can take the form of monetary penalties, adverse jury instructions, motions, case dismissal and even bar association complaints. Most civil litigation today either has or has the potential to include electronic discovery.

“I think there is a growing appreciation of the issue,” said Justin Cordello of Thomas & Solomon, a Rochester employment law firm. “You don’t want to lose credibility with the court or a jury.”

The Federal Rules of Civil Procedure were amended in 2006 to address electronic discovery issues. But recent data from a Duke University law journal indicates the sanctions for non-compliance have increased dramatically since then.

Cordello, who regularly receives defendants’ ESI, said companies that do not utilize proper ESI preservation procedures typically do not have a handle on their internal systems, or fail to appreciate the importance of the electronic information they possess.

“It can be overwhelming,” Cordello said. “You have to work with an IT person or a company like D4 to know where your information is. You can’t wrap your arms around it one and a half years into the litigation.”

That sentiment was echoed by others.

“The most important thing is up-front planning to deal with volumes of data,” said John Roman, Nixon Peabody’s director of Litigation Technology Services. “You have to know who owns the data and where the data is located.”

Roman said e-mail is still the number one source of e-discovery information but stored data sources are increasing all the time. Word documents, spreadsheets and PowerPoint presentations are obvious examples but don’t forget BlackBerries, voicemail, iPads and even Facebook.

Cordello said his firm customarily requests that defendants provide a data map or graphic illustration of potential ESI sources.

“Having a data map means we can have a more productive conversation of what we need to look at,” Cordello said.

Helping businesses find, organize, and preserve their ESI and to comply with e-discovery is the goal of D4 (formerly DocuLegal), a nationwide company with offices in Rochester.

An example of how staggering the volume of ESI can be is the fact that a two gigabyte file can produce as many as 100,000 papers to review. Once information is collected and identified, a company like D4 helps reduce the volume.

Peter Coons, senior vice president of D4, said his company puts e-discovery data into a hosted environment so people around the world can review it. 

“We eat, breathe and live this stuff 24/7,” Coons said. “We make sure we comply with Rule 26F [of the Federal Rules of Civil Procedure].” 

Not only does information identification and preservation reduce the chance of e-discovery sanctions, it reduces costs and “provides another tool in your arsenal,” Coons said.

For example, accessing computer data information may lead to a quick dismissal or resolution in a sexual harassment case. Coons said he has seen the number of e-discovery cases and sanctions increase exponentially in the past few years and D4 is working to educate attorneys and businesses to provide effective compliance.

“One of the biggest shifts I’ve seen [as a result of increasing e-discovery awareness] is that companies are taking control of their own data as opposed to letting outside counsel handle it and receiving a million dollar bill for it.”

Coons said D4 can also help small companies get an electronic records management plan in place in a cost effective manner.

The definitive case regarding e-discovery occurred in the Southern District of New York in the long running case of Zubulake v. UBS Warburg, 217 F.R.D 309 (S.D.N.Y. 2003) and its resulting progeny. The judge in that case, Judge Shira A. Scheindlin, set electronic discovery guidelines such as the need for identification and preservation of records. 

In a later ruling, Judge Scheindlin held that the discovery collection and preservation obligations identified in Zubulake had become so established that failure to comply with them warranted severe sanctions.

Fortunately, Cordello said that thanks to constructive legal opinions and e-discovery information disseminated by bar associations, he is optimistic that e-discovery is improving with time.