It doesn’t it really matter where my organization’s ESI is kept…right?


Where companies store their electronically stored information (ESI) is of no concern to attorneys… right? Say what?

There’s an on-going debate over the question of where the “best” place is to store a company’s ESI for legal reasons; in the company’s own facility (on-premise) or in a third party’s  facility (hosted; also known as “storage as a service”, SaaS). The answer to this question really depends on several factors. There are three main questions to ask yourself when considering this question from a legal perspective; where’s the best place to store the organization’s ESI? The first question to ask is; is my ESI secure and can I prove it has not been altered in any way; in other words is it defensible? The second question to ask yourself is; can I access my ESI quickly enough to place legal holds and perform searches based on discovery requests? And the third question is; do I have access to the full ESI data set for ECA purposes and to insure I can fully respond?

Let’s review these topics you need to keep in mind when dealing with ESI in litigation. First, when litigation is reasonably obvious, you have a responsibility to immediately protect all ESI which could be responsive in the approaching civil case. This responsibility is an absolute requirement in U.S. Federal courts and most state courts. There are few if any excuses a Judge will swallow for a responder inadvertently deleting potentially responsive ESI after your legal hold responsibility has been triggered.

Second, the time frame you’ll have to fully respond to an eDiscovery request is generally much shorter now than in the past (pre 12/2006). Quick and complete access to all potentially responsive data is extremely important when responding to an eDiscovery request.

And third, good intentions can mean something to the court. A company that actually plans and documents their processes etc. for litigation hold and eDiscovery will mean something to the Judge (possibly) if you have an inadvertent ESI deletion.

Are Custodial Self-Discovery and Preserving ESI in Place Good for You?


A majority of organizations still follow the traditional practice of instructing custodians—that is, employees–to search for and protect potentially responsive electronically stored information (ESI) locally or what’s known colloquially as “preserving it in place”. In fact, the international law firm Fulbright & Jaworski found in its 7th Annual Litigation Trends Survey that more than half (55%) of companies still rely on custodians as their primary method to identify and preserve their own information for litigation or an investigation.

By following this practice, these companies, particularly those with larger numbers of custodians,  have a higher risk of incomplete collection, inadvertent deletion/spoliation, and metadata corruption. What’s more, it’s difficult for legal to supervise  the collection process,  leading to inadequate defensibility of the litigation hold and eDiscovery process.

In a 2008 Kahn Consulting survey on employee understanding of eDiscovery responsibilities, only 22% of respondents said they had a good understanding of their responsibilities for retaining ESI for discovery. Only 16% said they had a good understanding of their responsibilities when responding to a litigation hold. These statistics, while a few years old, blatantly highlight the risk of custodial self discovery and preservation in place.

Still not convinced? The courts are now holding litigants to a higher standard. In a recent case, Roffe v. Eagle Rock Energy GP, et al., C.A. No. 5258-VCL (Del. Ch. Apr. 8, 2010), the Judge expressed surprise overt the custodial self discovery practice used by one attorney:

The Judge asked:

Am I correct that you have been relying on what they [the defendants] self-selected to put in their transaction files in terms of what you obtained and produced?

The defense attorney answered:

That’s correct, your Honor. I was told that they uniformly would put all of their Eagle Rock e-mails into that folder. I have not checked, and I don’t know whether that is true or whether that is accurate. I believe they are telling the truth, but I don’t know if that is accurate.

The Judge immediately responded:

Then here is my ruling. This is not satisfactory. From what you have described to me, you are not doing what you should be doing. First of all, you do not rely on a defendant to search their own e-mail system. Okay? There needs to be a lawyer who goes and makes sure the collection is done properly. So both as to the two directors who already have produced — we don’t rely on people who are defendants to decide what documents are responsive, at least not in this Court. And you certainly need to put somebody on a plane to go out and see Mr. Smith.

In this exchange, the Judge clearly states: We don’t rely on people who are defendants to decide what documents are responsive. Custodial self-discovery is like the fox guarding the chicken coop.

Relying on litigants to find, protect and eventually turn over potentially responsive ESI can be problematic. Most of them will attempt to do what’s right to the best of their understanding. But as we’ve seen from the 7th Annual Litigation Trends Survey, fewer  than1 in 4 (23%) have a good understanding. Those few that could have something to hide may find ways to do a sub-par job in the discovery process. If I am the opposing counsel, I  want to know if self discovery was relied on.

So what is a defensible answer for the risks posed by custodial self discovery and preservation in place? Well in my opinion—and I’m about to sound like a corporate schill–you need an ESI archive, which captures the majority of potentially responsive ESI from the in-house infrastructure along with a solution for the remote collection of custodian ESI from their locally controlled equipment.

First, a central ESI archive that captures, indexes, stores, protects, manages and disposes of ESI allows for central discovery of ESI for silos like email systems, share drives and SharePoint systems.

So what can be done for the discovery of locally controlled custodian locations?

Some organizations centrally backup custodian workstations on a regular basis. But relying on restoring backups and searching for responsive ESI has never been considered a good idea. It’s also expensive.

What if you could schedule forensically sound backups of all custodian workstations and use those backups of custodians’ workstations to discover against, even when those custodians are traveling and not synced to the organization’s infrastructure?

A consolidated metadata repository provides enterprises with an accessible catalog of the types of data and content stored on PCs. Using flexible metadata selections, administrators can quickly identify information that is relevant to litigation or compliance matters and, if necessary, retrieve that relevant data from the solution for further review.

Are Custodial Self-Discovery and Preserving ESI in place a good idea?


A majority of organizations still rely of the practice of instructing custodians to search for and protect potentially responsive ESI locally or “preserve it in place”. In its 7th Annual Litigation Trends Survey, Fulbright & Jaworski reported that 55% of responding companies still rely on custodians to identify and preserve their own information as the method used most frequently to preserve potentially relevant information in litigation or an investigation.

Custodial self-discovery and “preservation in place” is a potentially risky in that, especially with larger numbers of custodians, the risk of incomplete collection, inadvertent deletion/spoliation, and meta data corruption is greatly increased, legal supervision of the collection process is impossible leading to inadequate defensibility of the litigation hold and eDiscovery process.

In a 2008 Kahn Consulting survey on employee understanding of eDiscovery responsibilities, only 22% of respondents said they had a good understanding of their responsibilities for retaining ESI for discovery. Only 16% said they had a good understanding of their responsibilities when responding to a litigation hold. These statistics blatantly highlight the risk of custodial self discovery and preservation in place.

The courts are now holding litigants to a higher standard. In a recent case, Roffe v. Eagle Rock Energy GP, et al., C.A. No. 5258-VCL (Del. Ch. Apr. 8, 2010), the Judge was surprised at the custodial self discovery practice one attorney was relying on:

The Judge asks;

Am I correct that you have been relying on what they [the defendants]  self-selected to put in their transaction files, in terms of what you obtained and produced?

The defense attorney answers;

That’s correct, your Honor. I was told that they uniformly would put all of their Eagle Rock e-mails into that folder. I have not checked, and I don’t know whether that is true or whether that is accurate. I believe they are telling the truth, but I don’t know if that is accurate.

The Judge immediately responds to the defense attorney;

Then here is my ruling. This is not satisfactory. From what you have described to me, you are not doing what you should be doing. First of all, you do not rely on a defendant to search their own e-mail system. Okay? There needs to be a lawyer who goes and makes sure the collection is done properly. So both as to the two directors who already have produced — we don’t rely on people who are defendants to decide what documents are responsive, at least not in this Court. And you certainly need to put somebody on a plane to go out and see Mr. Smith.

In this exchange, the Judge clearly states; we don’t rely on people who are defendants to decide what documents are responsive. Custodial self-discovery is like the wolf guarding the chicken coop.

Relying on litigants to find, protect and eventually turn over potentially responsive ESI can be problematic. Most of them will attempt to do what’s right; to the best of their understanding (less than 23% have a good understanding). Those few that could have something to hide may find ways to do a subpar job in the discovery process. If I am the opposing counsel, I am going to want to know if self discovery was relied on.

Effective Records Management Greatly Benefits the Legal Dept for eDiscovery


Many (but not all) corporate legal types consider ESI retention management as the legal hold process. Not a bad thought but really falls short of a true corporate definition of the term. To records managers ESI retention management refers to the systematic retention and disposition of the organizations electronic business records; either for the day to day running of the business, regulatory compliance or litigation support. And in this case I believe the records managers are right.

ESI retention management, also known as records management, needs to be better understood by corporate legal because the proper management and deletion of electronic business records have a direct relationship to the corporate legal department for both legal holds and eDiscovery.

A properly managed ESI records management system allows legal to quickly find and place on legal hold, all archived potentially responsive electronically stored information thereby reducing the risk of spoliation; destruction of evidence. A centralized ESI management system will also act as a on-going collection point so that when eDiscovery starts, the collection phase is already taken care of for that ESI already under management. Because the archive acts as an on-going collection point, the legal department can quickly search the ESI archive for responsive ESI and begin their culling and review responsibilities almost immediately; without the need to spend days or weeks trying to find/collect potentially responsive ESI.

A Proper Legal Hold Requires More Than Just an Email to a Few Employees


In the recent case; Jones v. Bremen High School Dist. 228, 2010 WL 2106640 (N.D. Ill. May 25, 2010), one of the discovery points made in the decision was what is the appropriate legal hold process to meet an organization’s legal hold responsibilities.

The court determined that the defendant breached its duty to preserve by failing to immediately issue a litigation hold to “all employees who had dealings with plaintiff” and by relying on only a few individual employees to identify and preserve responsive email. The Judge stated:

It is unreasonable to allow a party’s interested employees to make the decision about the relevance of such documents, especially when those same employees have the ability to permanently delete unfavorable email from a party’s system.  As one court has noted, “simply accept [ing] whatever documents or information might be produced by [its] employees,” without preventing defendants from clearing the hard drives of former employees, was improper.  Most non-lawyer employees, whether marketing consultants or high school deans do not have enough knowledge of the applicable law to correctly recognize which documents are relevant to a lawsuit and which are not.  Furthermore, employees are often reluctant to reveal their mistakes or misdeeds.

The court also rejected defendant’s argument that placing a proper litigation hold would have resulted in burden to the defendant and noted the troublesome nature of defendant’s failure to produce the document retention policy posted on the district’s website.   The court then determined that plaintiff had been harmed by the delayed production of documents as well as the possibility that emails had been permanently deleted.

This case again highlights the need to comprehensive and tested litigation hold policies. A comprehensive Information Management solution should include central control of all ESI and the ability to search for the responsive ESI and place a secure litigation hold on it immediately.

The full case review can be viewed at eDiscoverylaw.com

Backups are an effective eDiscovery resource, if it’s the right backup


I have always been told relying on backups for eDiscovery purposes is a costly and time consuming mistake.

Searching through backup tapes or even a disk-based backup for eDiscovery is difficult. Imagine restoring 22 200 GB backup tapes of your employee workstations and

Consider an eDiscovery request which asks for any files on 73 custodian workstations which contain the terms “Mimosa” and “Iron Mountain” that were created or accessed between Feb 19 2008 and June 3 2010, all the while meeting a 30 day deadline from the court to produce. How would you quickly determine what if any responsive content exists on those 73 custodians laptops/desktops?

The scenario I laid out above is not a corner-case, made-up situation. I have seen this many times. Many of you will recognize a situation very close to this.

Now consider one additional requirement to the above scenario… you must insure any responsive ESI on those workstations are secure and not deleted (litigation hold) by the custodian starting right now.

Active content on custodian workstations and laptops is the single biggest risk when facing litigation hold and eDiscovery responsibilities for most organizations. The usual processes most organizations follow for custodian resource collection is either:

  1. Custodian led collection: the organizations legal department sends out a detailed email to all custodians’ involved asking them to search for specific content on their system (including any PSTs) and forward any results to the legal department. Many opposing counsel’s have a problem with this process

or

  1. The legal department creates collection teams which consist of a legal department employee and an IT employee to visit each custodian’s workspace to look for responsive ESI, usually including the imaging of the custodian’s hard disks. This imaging of the custodian’s hard disk takes hours and then has to be filtered somewhere else to look for responsive content.

What if you could utilize your centrally managed custodian workstation/laptop backup process for eDiscovery purposes?

Iron Mountain has addressed this major eDiscovery risk and cost with its newly announced Connected® Classify & Collect, a solution which simplifies the collection process for distributed PC ESI to comply with a legal hold request as well as discovery. The Connected Classify & Collect offering helps businesses to quickly find relevant data on laptop and desktop computers to meet litigation and compliance requirements.

The Connected® Classify & Collect offering makes laptop and desktop data easily visible, searchable and usable. It also protects data and prevents accidental deletion to support eDiscovery or internal investigations. Its enterprise-class data-classification capabilities give administrators visibility into vast amounts of data stored on enterprise PCs and allow them to lower eDiscovery costs by quickly collecting relevant information to be used for early-case assessments and first-pass reviews.

An interesting twist to this capability is the fact that even if the custodian is disconnected from the network, Classify & Collect can discover against the existing centrally managed backup of each custodian’s workstation or laptop. The next time the custodian connects to the network, additional searching will be accomplished automatically in the background on the custodian laptop.

Additionally, the Connected Classify & Collect offering helps businesses establish a thorough and defensible collection process with its ability to track all activities, including the search terms and documents returned to support internal reviews.

Litigation Hold, Adverse Inference and Additional eDiscovery Costs


In Melendres v. Arpaio, CV-07-2513-PHX (D. Ariz. February 11, 2010) (UNPUBLISHED),  U.S. District Court Judge G. Murray Snow granted plaintiffs’ motion for sanctions and ruled that the Maricopa County Sheriff’s Office (“MCSO”) failed to issue a timely litigation hold resulting in the destruction of relevant documents, including e-mails.

In discovery, plaintiffs learned the MCSO shredded relevant documents (i.e., stat sheets) and deleted e-mails.  In addition, not a single deponent was aware of their obligation to preserve evidence.

The court found the MCSO was at least negligent in failing to preserve the stat sheets and permitted plaintiffs to file suggested possible adverse inferences concerning the destroyed stat sheets.  With respect to e-mails, the defendants admitted that they had purged all email communications related to the immigration sweeps.

However, certain e-mails that were separately saved by a user may still be recoverable.  The court deferred the issue of sanctions until defendants provided to plaintiffs:  (1) a description of the steps taken to recover all responsive e-mails from active and back-up systems; (2) a complete list of the new documents that have been recovered and the dates of recovery; (3) the sources from which the additional documents were recovered; (4) the inherent limitations on defendants search for documents that were imposed by defendants’ document retention systems; and (5) the components of that system.

The above content is taken from the Ryley Carlock & Applewhite website and can be read in its entirerty here.

This case highlights the need for a timely litigation hold notice for all potentially responsive ESI including email. It also points out the additional costs which can be incurred if the litigation hold requirement is not followed. Point one in the paragraph above calls out the additional requirement for MCSO to now check all backup systems for potentially responsive emails that were deleted. This process can be extremely expensive and time consuming.

Ideally, a properly administered litigation hold process would negate the need to restore backup tapes which can run between $2900 to $4500 per tape restored.

Anatomy of an Adverse Inference


In the investor related action, Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Secs, No. CIV. 05-9016, 2010 U.S. Dist. LEXIS 1839 (S.D.N.Y. Jan. 11, 2010) the defendants, who were connected to a hedge fund that lost money, sought sanctions against the plaintiffs for failing to preserve and produce documents, including ESI, and for submitting false declarations regarding their collection and production efforts. The Judge in this case was the Honorable Shira A. Scheindlin.

This case came down to two questions about litigation holds: when should a litigation hold be initiated, and what actions are required in the placement and tracking of the litigation hold.

In addressing the charges of spoliation, the court’s opinion included:

“[i]t is well established that the duty to preserve evidence arises when a party reasonably anticipates litigation. “‘[O]nce a party reasonably anticipates litigation; it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.’” A plaintiff’s duty is more often triggered before litigation commences, in large part because plaintiffs control the timing of litigation.

When the spoliating party’s conduct is sufficiently egregious to justify a court’s imposition of a presumption of relevance and prejudice, or when the spoliating party’s conduct warrants permitting the jury to make such a presumption, the burden then shifts to the spoliating party to rebut that presumption.

“[i]n short, the innocent party must prove the following three elements: that the spoliating party (1) had control over the evidence and an obligation to preserve it at the time of destruction or loss; (2) acted with a culpable state of mind upon destroying or losing the evidence; and that (3) the missing evidence is relevant to the innocent party’s claim or defense.”

The Court issued the following adverse inference instruction to the jury:

The Citco Defendants have demonstrated that most plaintiffs conducted discovery in an ignorant and indifferent fashion. With respect to the grossly negligent plaintiffs – 2M, Hunnicutt, Coronation, the Chagnon Plaintiffs, Bombardier Trusts, and the Bombardier Foundation – I will give the following jury charge:

The Citco Defendants have argued that 2M, Hunnicutt, Coronation, the Chagnon Plaintiffs, Bombardier Trusts, and the Bombardier Foundation destroyed relevant evidence, or failed to prevent the destruction of relevant evidence. This is known as the “spoliation of evidence.”

Spoliation is the destruction of evidence or the failure to preserve property [*104] for another’s use as evidence in pending or reasonably foreseeable litigation. To demonstrate that spoliation occurred, the Citco Defendants bear the burden of proving the following two elements by a preponderance of the evidence:

First, that relevant evidence was destroyed after the duty to preserve arose. Evidence is relevant if it would have clarified a fact at issue in the trial and otherwise would naturally have been introduced into evidence; and

Second, that 2M, Hunnicutt, Coronation, the Chagnon Plaintiffs, Bombardier Trusts, and the Bombardier Foundation were grossly negligent in their failure to preserve the evidence.

I instruct you, as a matter of law, that each of these plaintiffs failed to preserve evidence after its duty to preserve arose. 250 As a result, you may presume, if you so choose, that such lost evidence was relevant, and that it would have been favorable to the Citco Defendants. In deciding whether to adopt this presumption, you may take into account the egregiousness of the plaintiffs’ conduct in failing to preserve the evidence.

However, each of these plaintiffs has offered evidence that (1) no evidence was lost; (2) if evidence was lost, it was not relevant; and (3) if evidence was lost and it was relevant, it would not have been favorable to the Citco Defendants.

If you decline to presume that the lost evidence was relevant or would have been favorable to the Citco Defendants, then your consideration of the lost evidence is at an end, and you will not draw any inference arising from the lost evidence.

However, if you decide to presume that the lost evidence was relevant and would have been unfavorable to the Citco Defendants, you must next decide whether any of the following plaintiffs have rebutted that presumption: 2M, Hunnicutt, Coronation, the Chagnon Plaintiffs, Bombardier Trusts, or the Bombardier Foundation. If you determine that a plaintiff has rebutted the presumption that the lost evidence was either relevant or favorable to the Citco Defendants, you will not draw any inference arising from the lost evidence against that plaintiff. If, on the other hand, you determine that a plaintiff has not rebutted the presumption that the lost evidence was both relevant and favorable to the Citco Defendants, you may draw an inference against that plaintiff and in favor of the Citco Defendants – namely that the lost evidence would have been  favorable to the Citco Defendants.

Each plaintiff is entitled to your separate consideration. The question as to whether the Citco Defendants have proven spoliation is personal to each plaintiff and must be decided by you as to each plaintiff individually.

The Court also noted, “[w]hile litigants are not required to execute document productions with absolute precision, at a minimum they must act diligently and search thoroughly at the time they reasonably anticipate litigation. All of the plaintiffs in this motion failed to do so and have been sanctioned accordingly.”

The courts are moving towards being much less lenient in the question of when should ESI be protected from deletion due to potential civil litigation and also whats expected of the attorneys in protecting potentially responsive ESI.   Corporate Attorneys should always be conservative in their handling of the litigation hold question.

Place holds quickly, communicate the holds to custodians quickly, even those at the periphery of the case, track the custodians actions around the hold communication, and lastly, document everything.

Taking litigation holds seriously will lower your overall litigation cost and risk.

Eight Tenets for Building Effective Records Retention Policies


Corporate records retention policies for many companies are afterthoughts with little understanding of how the company truly uses its documents/records/ESI. In my experience, many companies leave the decision of whether to keep records and for how long to their employees. This strategy is dangerous and costly when litigation is potentially possible. Allowing your employees total control over records and ESI drives the cost of eDiscovery up because you greatly multiple the number of possible storage ares you must check for responsive records. It also increases the risk of spoliation when a litigation hold is required.

So to lower your cost and risk during eDiscovery, creating and enforcing effective records retention policies is a great first step to take.

Building effective records retention policies for eDiscovery preparedness, storage management, regulatory requirements etc. is not an exercise that should be done by a single individual or department. Put a cross departmental team together to fully understand how your organization uses and discards records.

The Eight Tenets:

  1. Understand any and all regulatory retention requirements you may have. Every organization will have federal or state retention requirements. The most obvious is the HR related regulations.
  2. Understand how and why your employees use data. You don’t want to create policies that make employees less productive or take away their ability to use and reference the data the need for their jobs.
  3. Create a common sense retention schedule. Don’t create an overly complex schedule that employees will quickly find ways to work around or ignore. Keep in mind the 5 second rule: If it take employees more than 5 seconds to decide how long to keep a record/document, they will almost always choose the longest retention period available.
  4. Build in a ESI litigation hold process…and test it.
  5. Train your employees on the new policies and insure they understand why the policies were created.
  6. Enforce the retention policies with audits and punishments if not followed. This step is important in litigation to be able to show the Judge of your “good faith intent” to insure ESI is not recklessly destroyed.
  7. Insure the language of the poplicy stands up to scutinity in the event of litigation by having your external counsel review the policies annually.
  8. And lastly, document everything you have done.

Depending on the size and complexity of your infrastructure, an ESI archive may be appropriate.

Litigation Holds and Lessons Learned


Bow Tie Law’s Blog recently had an interesting piece on litigation holds titled “The Holding Pattern: Lessons Learned on Litigation Holds” where insufficient notices or notices crated in bad faith can jeopardize a case because of the possibility of spoliation of ESI.

I have run across this same problem with past customers that didn’t take the litigation hold responsibility seriously. I worked with a customer whose litigation hold process was to send an email out to all 40,000 employees in 60 different countries telling them to stop deleting emails with specific content.

There was no consideration given to employees in other countries being able to read and understand English nor any follow up to make sure they had understood and acknowledge their responsibility. The GC’s opinion was: “I’ve let the employees know; now it’s their problem”. Obviously that doesn’t fly now.

So what is an easier, less risky way of applying litigation holds? The most straight forward way is to do it centrally and not rely on employees to understand and do it properly. A centrally managed ESI archive gives the legal department the ability to find the potentially responsive ESI and apply a litigation hold within minutes. This will also greatly reduce your risk of spoliation.

This also means all responsive ESI is available to be searched and placed on litigation hold. So you don’t have to hope employees understand and react properly to your litigation hold request…you simply do it centrally.