Last time we focused on a company which filed suit against its competitor for trade secret violations. Now let’s assume you are the competitor which has been sued. What are your company’s document retention/destruction policies? Do you know what documents, e-mails or even voicemails to which your company currently has access? Is this data being stored in your current system or was it previously stored on out-dated software or computers as a backup? If your company were sued for trade secret violations, how many years of old e-mails would you have access to? If so, would that even be desirable?
Document retention and destruction has changed, for better and worse, in the last two decades with the advances of the electronic age. While documents in the past have been destroyed with no further thought necessary, many companies now have electronic versions of paper files which have been destroyed—in essence an electronic trail of documents. Our legal system has slowly but surely caught up to today’s technology and in the event of litigation having these electronic files can be less than ideal depending on which side of the courtroom you are sitting. Extensive electronic files often lead to onerous discovery requests, as well as disputes, and at times may require production of tens of thousands of documents not to mention increased legal expenses as well as costs for computer forensic experts.
As a result, many larger companies have adapted by developing document retention and destruction policies. These policies typically dictate how long electronic documents or files are to be kept and should be treated as living documents as we all struggle to keep pace with the seemingly daily changes in technology. However, what companies don’t know about their document retention policies and their own practices of keeping outdated disks or back up tapes can be quite costly in the event of a lawsuit.
As the defendant in this lawsuit, your company is required to preserve all “electronically stored information” (ESI) for the pending litigation in the form in which it is ordinarily maintained and this duty may even begin from the date you became aware of the dispute, not just the date the lawsuit is filed. This ESI, which may include current and former computers, online repositories or portable devices, along with tangible things like documents and photographs, then becomes the information exchanged via the discovery process.
However, with the advent of ESI many companies have the equivalent of thousands of pages of discoverable information—at times stored as different types of files (i.e. .pdf, .jpg, .tif, or .gif). This is where things get expensive—let’s say you have two old laptops with information relating to the pending trade secrets lawsuit as well as several bankers’ boxes full of paper documents and over 1,000 e-mails saved on your server—does all of this information have to be produced to the plaintiff?
The short answer is that it must be provided to your attorney to review and determine whether it is responsive to discovery requests posed by the plaintiff and/or subject to being withheld as privileged.
Additionally, the laptops will need to be examined by a forensic computer expert, which will be as expensive as it sounds, and information on these laptops may also have to be produced. Oftentimes this information may ultimately prove to be unnecessary or may even be embarrassing to your company—(do you really need to save every e-mail that comes across your desk?) but it may still be discoverable through an e-mail chain or cookies automatically saved on a company laptop if this information is likely to lead to discoverable information.
What does all of this mean? It means that in our technologically dependent world, every company should have a formal written document retention/destruction policy in place which limits the ESI retained by the company. This policy should be reviewed at least annually to ensure that appropriate amounts of ESI are being stored (not too little and not too much).
Additionally, once a dispute arises, even before litigation is resorted to, your company should contact its attorney to discuss data preservation and, if possible, arrange a sit-down meeting with your IT folks. In the long run, these steps will help your company keep from running afoul of discovery rules as well as limit the costs of discovery in the event your company becomes a party to a lawsuit.
Bob Wishart is a founding partner and head of litigation of Wishart, Norris, Henninger & Pittman, P.A., a law firm which focuses on helping business owners define and achieve their business and personal objectives. Contact him at 704-364-0010 or visit www.wnhplaw.com.