BUSINESS RECORDS IN THE DIGITAL AGE

Date: November 10th, 2010

Hopefully, all of us have learned a good lesson from Tiger Woods and Brett Favre. Text messages, voicemails, and other types of electronically stored information can be kept for a long time and produced when we least expect it.

It is no secret that the majority of business records are now created and stored electronically. New ways of communicating and electronically stored information (“ESI”) have changed the landscape of lawsuits. E-mails, text messages, electronic flashdrives, documents, databases, instant messages, voice mails, hard drives, photographs, and social media sites such as Facebook, LinkedIn, and Twitter can be requested and often times must be produced in lawsuits.

Despite privacy issues, several courts have compelled parties to produce copies of Facebook and MySpace profiles, text messages, and other “documents.” Such discovery can include having to provide usernames and passwords for social media accounts. Access to this type of information can be extremely powerful in lawsuits. One ill-advised text message, Facebook comment, or unprofessional voice mail can allow an opposing party to make a mountain out of a mole hill and paint a company in a very bad light.

In most circumstances, all parties to a lawsuit will have the opportunity to request from other parties all relevant information relating to the dispute. In general, a document is “relevant” if it relates in any way to the claims at issue in the lawsuit. In today’s litigation context, parties request information from numerous sources in search of that one smoking gun.

Here is an example of how a party may define the term “document” when requesting the production of all relevant documents:

“Document or documents” means writings of every kind and character pertaining to the designated subject matter, including, without limitation, the original and any copy, regardless of origin or location, of any book, pamphlet, periodical, letter, memorandum, diary, file, note, calendar, newspaper, magazine, statement, bill, invoice, order, policy, telegram, correspondence, summary, receipt, opinion, investigation statement or report, schedule, manual, financial statement, audit, tax return, articles of incorporation, bylaws, stock books, minute book, agreement, contract, deed, security agreement, mortgage, deed of trust, title or other insurance policy, report, record, study, handwritten note, map, drawing, working paper, chart, paper, draft, index, tape, microfilm, data sheet, data processing card, computer printout, computer program, check bank statement, passbook, e-mail, voicemail, text message, electronically-stored information, or any other written, typed, printed, photocopied, dittoed, mimeographed, multilithed, recorded, transcribed, punched, taped, filmed, photographic or graphic matter, however produced, to which you have nor have not had access.

Parties not only have the obligation to produce a wide range of documents after a lawsuit is started…parties also have a duty to take affirmative steps to ensure relevant documents are preserved prior to a lawsuit being filed. Once a company anticipates litigation, it should take steps to stop its routine document retention/destruction policies and put in place a “litigation hold” to ensure preservation of relevant documents. Reasonable “anticipation” arises when a company is put on notice of a credible threat that it will be involved in litigation or anticipates initiating a lawsuit. At that point, the company should work with its legal counsel and IT Administrators to issue a litigation hold, which is essentially a process to ensure the company secures and preserves all relevant information. Taking affirmative steps to preserve relevant ESI is the first step in making sure a company is not sanctioned by a court down the road for failing to produce all relevant documents.

Courts expect companies and their lawyers to have a clear understanding of their electronic information systems and know the scope of the ESI, where it is located, the formats in which it is stored, and whether it is reasonably accessible. A company’s ability to manage information that is generated or stored electronically significantly affects its ability to successfully manage litigation. Policies and practices for the retention, disposition and availability of electronic information are now more critical than ever.

What does all this mean?

• Companies should have clear policies for employees relating to emails, text messages, instant messages, voice mails, social media profiles, etc.
• Companies must work with their IT Administrators and lawyers to ensure they have the ability to quickly implement a litigation hold once a lawsuit is anticipated.
• Companies should work with their IT Administrators and lawyers to review and recommend appropriate changes to the organization’s electronic records management systems.
• Companies should work with their IT Administrators and lawyers to ensure everyone knows who has what information as well as where and how such information is retained and stored.
• Companies must have complete control over all information, documents, and data, i.e. employees should not decide what to keep and what to delete or how information should be preserved or stored.
• Companies should periodically review and test their ability to access, search and retrieve electronic records and information in the event of a lawsuit.

A “document” is very different than what it used to be. The days of simply producing contract documents, project files, and important correspondence in lawsuits are long gone. Often times, the document discovery process is the most time consuming and costly aspect of a lawsuit. Failing to identify, preserve, collect and produce all relevant documents can completely change the playing filed and expose a party to severe sanctions issued by the court, including money, dismissal of claims and defenses, and default judgment. The good news is that companies who follow the steps above, understand their ESI, and have policies and procedures in place can reduce their legal expenses when responding to discovery requests. Perhaps more importantly, they will also be more familiar with the full range of electronic information they should be requesting from opposing parties in litigation.