30 Dec Consequences of Not Preserving Electronically-Stored Information

In our last two blogs, we completed a two-part podcast discussing the ins and outs of processing electronically-stored information or ESI.  What happens however if you decide to avoid electronically-stored information altogether, and do not discuss your company’s decision with opposing counsel?  You will not go to jail like the picture suggests, but the consequences will seem just as severe to your company.

CONSEQUENCES OF NOT PRESERVING ELECTRONICALLY-STORED INFORMATION

It may initially appear to you and your company that ignoring or even deleting electronically-stored information is inconsequential because it is easy to delete and forget about ESI.  However, the threat of sanctions is real, as it is easy to prove destruction of electronically-stored information.  ESI typically still exists elsewhere on your company’s network, such as on another employee’s e-mail account.  Also, electronically-stored information that you thought you destroyed may continue to reside in its original medium and may be recoverable by a computer forensics expert.

The consequences of not preserving electronically-stored information are just as severe for a party that destroys relevant paper documents.  If the duty to preserve has been triggered, you and your company have a duty to preserve electronically-stored information, regardless of whether you decide to use ESI in your case.  The penalties for destruction of ESI or “spoliation” include monetary sanctions, contempt citations, adverse inference jury instructions and dismissal of your claims and/or defenses.

The type of penalty imposed by the court will depend on the state of mind of the spoiliating party.  For example, if you and your company intentionally or recklessly destroy relevant electronically-stored information after the duty to preserve has been triggered, you and your company will likely suffer a harsher penalty than if you and your company accidentally or negligently destroyed the ESI.

The penalties will be equally harsh if one of your company’s employees commits spoliation, even if your company implemented and maintained a proper litigation hold and maintained a proper records management program.  However, if you and your company lost ESI as a result of a routine, “good-faith” operation of an electronic information system, a court may not impose sanctions.

BEST PRACTICES TO COMPLY WITH THE DUTY TO PRESERVE AND PRODUCE ESI

Generally, best practices require you and your company to cast a wide net to ensure that all potentially-relevant ESI is preserved and produced.  However your attorney can work to narrow the scope of electronically-stored information by working with opposing counsel to strike a balance early in the lawsuit.  For example, both parties can agree at the initial discovery or pre-trial conferences to produce only electronically-stored information that is “relevant” to the parties’ claims and defenses.  ESI can be limited by author, a certain time frame and/or a particular subject matter.

If an agreement cannot be reached with opposing counsel, you and your attorney must work with diligent detail in preserving and producing ESI.  This means having a discovery plan ready to implement at the first signs of litigation; implementing a document retention policy and procedures for preserving back-up tapes; immediately stopping any document and ESI destruction practices; identifying key locations of electronically-stored information and key file types; and implementing a procedure for preserving metadata.  It is also important to recognize early on whether your IT department has the capacity to handle the burden of e-discovery, in addition to its everyday tasks.  Using an online repository tool and outside vendors for paper and electronic discovery could lessen that burden and assist your attorney with facilitating the e-discovery process.

If you and your company find yourselves in litigation and need the assistance of an attorney to navigate the e-discovery process and avoid sanctions, call  Edwards Law today for a free one-hour consultation.