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Information Management is Key to Litigation Preparedness


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Brett Burney, Burney Consultants, and Marta Farensbach, Sherpa Software, describe how small and medium size companies can effectively manage their electronic data so they are better prepared for litigation. This white paper will detail some best practices in handling e-Discovery inquiries and how to work with IT professionals and outside legal counsel.

Litigation is inevitable in today's business climate, regardless of the size of your company. It is also expensive, primarily due to the massive amount of electronic information (e.g. email, documents, etc.) that must be collected and reviewed in e-Discovery litigation. Larger companies that have had to endure multiple lawsuits have developed policies and procedures to keep the litigation costs under control. But small and mid-sized businesses find it difficult to justify the time and cost required to plan for litigation.

The ultimate goal of any company should be to reliably manage electronic data and have a litigation preparedness plan in place to keep costs low and reduce unwanted exposure and risk to the business. View this white paper to learn how to accomplish these goals.

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Information Management is Key to Litigation Preparedness

  1. 1. Information Management isKey to Litigation PreparednessBy: Brett Burney, Burney Consultantsand Marta Farensbach, Sherpa Software 456 Washington Avenue, Suite 2 ● Bridgeville, PA 15017 p (412) 206-0005 ● f (412) 206-0018 ●
  2. 2. Information Management is Key to Litigation PreparednessUnder the copyright laws, neither the documentation nor the software can be copied, photocopied,reproduced, translated, or reduced to any electronic medium of machine-readable form, in whole or inpart, without the written consent of Sherpa Software Partners, except in the manner described in thesoftware agreement.© Copyright 2013 Everest Software, L.P., d.b.a. Sherpa Software Partners, L.P.All rights reserved. Printed in the United States. Page 2 of 9
  3. 3. Information Management is Key to Litigation PreparednessLitigation is inevitable in business, which is why there are only two types of companies: those that havebeen sued, and those that will be sued.The key to litigation preparedness is proactive management of electronic data. Organizations can reducelitigation costs and corporate exposure by implementing effective policies and routine audits around theircontinuosly increasing volume of electronic data.Larger companies that have endured multiple lawsuits have well developed policies and procedures tomanage their electronic data which helps to lower litigation expenditures. Mid-size and smallercompanies, however, find it difficult to justify the time and costs required to plan for litigation. But it is clearthat effective information management can take much of the cost and guesswork out of preparing forlitigation.Effective Information ManagementInformation Management (also called Information Governance) is a catch-all term for processes andprocedures that a company employs regarding the creation, storage and deletion of its electronicallystored information (ESI). The primary objective of effective information management is to support theoverarching goals of an organization.The Information Governance Reference Model clearly outlines how different stakeholders should worktogether:In a basic information management framework, an organization should be able to: • Understand how ESI is created, stored and used • Identify where ESI resides • Establish effective policies to control ESI • Selectively be able to retain, access or search ESIWith these steps in place, litigation preparedness becomes so much easier. Page 3 of 9
  4. 4. Information Management is Key to Litigation Preparedness Putting the "E" in DiscoveryThorough When a thief breaks a window with a hammer, that hammer becomes an importantLitigation piece of evidence in the criminal prosecution. But in civil litigation, the evidence isPreparedness comprised of information in the form of emails, documents, spreadsheets, presentations, pictures, video, etc., all of which happen to be electronic in nature.No one wants to gothrough litigation – In litigation, all of the electronic information that is relevant to the matter must beits unpleasant and identified, collected and produced to the opposing party so they can judiciouslyexpensive. It is, build their case. This is traditionally known as the "discovery" phase of litigation.however, a reality When electronic information is involved, it becomes known as "electronic discovery"of doing business (e-discovery).today. For anorganization to Keep in mind that e-discovery is not only limited to the legal sphere. The ability toeffectively answer find and process key electronic data stores is highly relevant for Freedom oflitigation they Information requests, government subpoenas, and respondents to regulatory orshould be able to compliance inquiries as well as internal investigations on audits.utilize efficienciesin their informationmanagementprocesses to A Companys Duties and Responsibilities in E-Discoveryaccomplish basic In December 2006, e-discovery guidelines were formally adopted into the Federal 1steps of litigation Rules of Civil Procedure . Many States today have adopted similar amendments to 2including the their own rules which means e-discovery will be a factor whether a lawsuit is increation of the Federal or State court.following: A major theme of the amendments is that parties to a lawsuit must understand- Litigation where and how their electronic data is stored so that they can intelligently describeResponse Team their information systems to the opposing party. For example, its not enough to- Litigation Profile simply state that your company has an email server; you must be able to answer- Detailed Data specific questions on how the server is set up and how long the company keepsMap messages. Based on this information, the opposing party can dictate how the- Policy Creation relevant email will be produced.- ElectronicDiscovery Process These responsibilities persist whether or not the company believes the lawsuit has- Legal Hold merit. In other words, even if the company believes the lawsuit is unfounded or willProcess settle quickly, the company is still required to be prepared to discuss their information systems with the opposing party. Furthermore, the company must take precautions to prevent relevant data from being deleted or modified as soon as they have knowledge about the lawsuit. 1 The Federal Rules of Civil Procedure (FRCP) govern the process and related procedures of a civil lawsuit in federal courts. Part of the procedures that the FRCP governs is how the parties to the civil lawsuit exchange evidence. The FRCP were amended on December 1, 2006 to include references to "electronically stored information" (ESI) and equate the exchange of ESI with the exchange of paper documents. See generally "E-Discovery Amendments to the Federal Rules of Civil Process Go Into Effect Today," Electronic Discovery Law blog, December 1, 2006 civil-procedure-go-into-effect-today/ 2 See "Current List of States That Have Enacted E-Discovery Rules," Electronic Discovery Law blog; and "State Rules of Civil Procedure for e- Discovery," Fios Knowledge Center procedure.aspx Page 4 of 9
  5. 5. Information Management is Key to Litigation PreparednessThese critical steps are impossible if there is no method for managing the extensive (and constantlygrowing) storehouse of electronic data.Avoiding the Downsides of LitigationThe chief motivation for effective information management is to ensure the smooth running of dailybusiness activity while mitigating risk and exposure for the company. This includes keeping the costs oflitigation low, ensuring compliance with applicable regulations, and protecting the company (andexecutives) from negative publicity and liability.E-discovery is often costly. A survey of the Chief Legal Officers from Fortune 1000 companies found that45%-50% of respondents civil litigation costs were related to discovery activities due in large part to 3having to deal with increasing mountains of electronic information .The processing and review phases account for the lions share of e-discovery expenses because there isa direct correlation between the amount of data collected and the amount of data that must be processedand reviewed. An effective information management process allows a company to pragmatically cull thecollected data so that only the relevant, responsive information is passed on for processing and review.These costs, however, dont take into account the potential for monetary and disciplinary sanctions thatcan be applied to a faulting party. For example, if a court finds a party failed in their e-discoveryresponsibilities, they can order the party to pay the expenses of the opposing party, or simply find in favorof the other party. 4These responsibilities recently came to the forefront in the much-publicized Apple v. Samsung litigationmatter. Both parties were admonished by the judge for not properly preserving email that was relevant tothe matter. In Samsungs case, the company failed to suspend an automatic policy that deleted emailsafter two weeks. In Apples case, there was a policy in place that limited the amount of email employeeswere able to retain. 5In another case , a court found a defendant was "negligent in discharging its discovery obligations"because it failed to "prevent emails from being deleted, to prevent data from being overwritten, or toidentify and preserve backup tapes which might contain the only electronic evidence." As a result, thecourt ordered the defendant to spend more time and money on searching for relevant information, as wellas pay the lawyers fees for the plaintiff.3 "The State of Discovery Abuse in Civil Litigation: A Survey of Chief Legal Officers, Interim Findings – ReleasedOctober 29, 2008," U.S. Chamber Institute for Legal Reform, see generally the Microsoft PowerPoint presentationby Navigant Consulting located at page from Northwestern University Judicial Education Program Symposia at Initial opinion at Apple, Inc. v. Samsung Elecs. Co. Ltd., No. C 11-1846 LHK (PSG) (N.D. Cal. July 25, 2012)5 Naaco Materials Handling Group, Inc. v. Lilly Co., 278 F.R.D. 395 (W.D. Tenn. 2011) Page 5 of 9
  6. 6. Information Management is Key to Litigation Preparedness 6 In yet another case , an individual sued a company alleging sexual and racial discrimination and the court determined that the company was "grossly negligent in its attempts to secure relevant documents" for the litigation matter. TheForming a company was ordered to spend more time and money on collecting relevantLitigation information, pay the lawyers fees for the other side and have the jury instructedResponse Team that the company failed in their duty to preserve all relevant electronically stored information.For essentiallitigationpreparedness, anorganization needs a Planning to Work and Working the Planform a team that will A company enjoys many positive advantages when it decides to proactivelyhandle the setup and manage their electronic information. The bottom line is that the company canresponse to litigationor information save money on multiple levels.requests. This team,which may consist of First, from a pure numbers perspective, managing large stores of unstructureda single person, data is expensive in terms of both physical storage space and excessiveneeds to buy-in from processing by enterprise software. When considered in terms of litigation, the lesskey stakeholders data a company has to collect for a litigation matter means that there will be lessincluding Legal, IT, data to review and produce to the other party. When a company consistentlyand Business. It follows an information management plan that includes the prudent destruction ofshould have the unnecessary documents and information, there will simply be less data to collectpower to set policy,enforce it and have a when litigation ensues.very good idea howthe key steps in the Second, lawsuits and compliance requests are un-welcome interruptions toprocess will be business. The disruption can be lessened when the company has a plan in placeaccomplished. The to collect and preserve relevant data. This may include setting up a "litigationresponsibilities of the response team" internally at the company, creating policies to support the teamLitigation Response and employing technology platforms that can automatically collect the requiredteam can include: data. A "litigation readiness plan" gives a company much more control over the entire litigation process.- Acting as the keycontact point forlitigation Why dont all companies implement a litigation readiness plan if it willpreparedness unquestionably save the company money and reduce risk? Many small and mid-- Creating litigation size businesses believe that the project would be too expensive, whichand risk profiles completely ignores the cost-savings that such a plan would provide not just during- Establishing and litigation, but in day to day operations.auditing policy andprocess The reality is that most companies just dont know where to start. The thought of- Coordination of trying to understand complex electronic data stores and information systemsresponse forlitigation, compliance seems overwhelming, not to mention that theres a business to run. Preparing foretc. the "what if" litigation scenario takes a low priority in the multitude of daily- Issuing and auditing business activities.Litigation Holds- Identifying keypersonnel, software,consultants and Where to Start?vendors The first step in developing a litigation readiness plan is to understand the companys "litigation profile." Manufacturing companies need to be prepared for product liability issues while financial institutions may be more worried about SEC lawsuits or compliance obligations. The relevant electronic data will be different in 6 Northington v. H&M Int., No. 08-CV-6297, 2011 U.S. Dist. LEXIS 14366, 2011 WL 663055 (N.D. Ill. Jan. 12, 2011); Northington v. H&M Int., No. 08 C 6297, 2011 WL 662727 (N.D. Ill. Feb. 14, 2011) Page 6 of 9
  7. 7. Information Management is Key to Litigation Preparednesseach scenario as will the areas of risk. Ascertaining these details will provide a good starting point forlitigation readiness.For example, if the pricing of a product could be an issue, then spreadsheets and databases may beimportant to collect. In patent disputes, diagrams and design conversations are key factors. If anemployee brings suit against the company for discrimination, then emails from supervisors and/ormanagers will be important in the ensuing litigation.One of the universal low-hanging fruits of the e-discovery world is email since its chock-full of juicyconversations and noteworthy attachments. Email is one of the first items requested in any litigation.Companies can curb their litigation costs by simply implementing a destruction policy that deletes non-essential email older than 30 or 60 days. If theres no qualified business reason to keep an email 7message, then the company is fully justified in deleting it . Many companies implement a strict deletionpolicy on the main Inbox of employees, but allow employees to move important messages into sub-folders that have longer retention periods.A company should also consider utilizing an email archiving system that can assist in implementing anemail retention and destruction policy. Such a system effectively takes the work of identifying andpreserving relevant messages out of the hands of individual employees and places the task into thehands of legal counsel and company executives. Products such as Sherpa Softwares Archive Attenderallow companies to access archived email messages so they can quickly identify relevant conversationsand properly preserve the data.After email, a company must prioritize what electronic information should be managed next according totheir litigation profile. Data backup procedures, for example, should be examined from a practicalperspective on the rotation periods and the amount of data that is retained. Backup tapes are not ideal fore-discovery purposes, but they can become important to a litigation matter and the company must beprepared to answer questions about the data that is (and is not) being backed up. Records managementsystems, cloud based information tools and the all important social media should all come under scrutiny.Taking the Next Steps to Prepare for Litigation…Regardless of the size of an organization, it is imperative that the company set up a "litigation responseteam" or identify someone that can take charge of the activities required during litigation. A typicallitigation response team is composed of representatives from IT, records management (if applicable) andthe legal department.When the company becomes involved in litigation, the team takes responsibility for initiating the process,identifying the custodians and outlining the locations and accessibility of relevant data. This task can bemade easier through the creation of a "data map" that can be shared with legal counsel and the opposingparty. A data-map is less complex than a full-scale network diagram, but it generally outlines the locationsand purposes of a companys data.The litigation response team can also be responsible for overseeing the delivery and follow-up of the"legal hold" notifications at the company. The "legal hold is issued when litigation is anticipated. Itrequires that all data that might be relevant to the case or associated with certain custodians be securedand preserved from deletion or modification that occurs as part of standard business processes. For7 See Arthur Anderson v. U.S., 125 S.Ct. 2129, 2135 (U.S. May 31, 2005): "Document retention policies, which are created in part to keep certain information from getting into the hands of others, including the Government, are common in business. …It is, of course, not wrongful for a manager to instruct his employees to comply with a valid document retention policy under ordinary circumstances." Page 7 of 9
  8. 8. Information Management is Key to Litigation Preparednessexample, if a supervisor at a company is accused of discrimination, then a "hold" is typically placed onthat supervisors email and electronic records. Automated deletions of the data as part of retention policymust be suspended so relevant information is not lost. Legal holds can be issued as a communication to employees describing the relevant data that might bein their possession and direct them as to what items they are required to preserve. Alternately, manydata management systems have the ability to automate the legal hold process. However a legal hold isinstituted, it is imperative that the litigation response team conduct routine follow-ups with individuals andsystems to ensure that the relevant data is being collected and preserved (i.e. not allowed to bemodified).Lastly, the litigation response team could also lead the charge in revising the companys policiesregarding the retention and destruction of electronic data. In developing a legally defensible policy, acompany must balance their need for archival information against the expense of storing and maintainingthat information.Dont get overwhelmed with the thought of crafting a full retention policy from the beginning. Start bydeciding a default corporate policy, and then investigate the exceptions. Common exceptions often arelegally mandated by regulatory limitations. For example, in some cases, financial records must be storedfor 7 years, while HR records are stored permanently.Once the time period is established, move on to set retention periods for email, and follow up with otherelectronic information. The companys policy will develop in due time, and then the task turns to educatingemployees and the company on how to properly follow the policy.Keep in mind that retention is not the only policy concern for many organizations. Social media, back upand internet policy should all be discussed as part of a thorough planning process.Just remember, a policy that is not uniformly enforced tends not to be much of a policy at all. Withoutproper auditing, your policies may have the unintentional consequences of increasing a companys riskrather than reducing it.ConclusionCompanies do not have to tackle any of these steps on their own. Help is available from a variety ofsources. Online resources, consultants, vendors and the companys own legal counsel can provide criticalinsight into the best solution for effective information management and litigation preparedness for yourorganization.By effectively managing electronic information, a small or mid-size company will realize cost savings andreduced exposure in litigation. It may seem like a difficult project to push through, but all the work will payoff once the inevitable happens. Page 8 of 9
  9. 9. Information Management is Key to Litigation PreparednessAbout the AuthorsBrett Burney, Burney ConsultantsPrior to establishing Burney Consultants, Brett Burney spent five years at the law firm of Thompson HineLLP in Cleveland, Ohio, where he worked extensively with litigation teams in building electronic documentdatabases, counseling on electronic discovery issues, and managing the technical responsibilities ofpresenting electronic evidence at trial.Brett was responsible for several other projects at the law firm including document automation and thewireless e-mail system.Brett Burney is a featured speaker at numerous legal technology conferences including the ABATECHSHOW, LegalTech and ILTA.Brett is also a well-respected author on legal technology topics. You can find an extensive library ofarticles and columns written by Brett in, Law Technology News magazine, Legal AssistantToday magazine, and Farensbach, Sherpa SoftwareMarta oversees the development and growth of Sherpa Softwares electronic discovery products for theMicrosoft environment and is responsible for ensuring customer satisfaction with Discovery Attender andsupporting utilities. Since joining Sherpa in 2003, she has done extensive research on ElectronicDiscovery while expanding her expertise in Compliance and Content Searching.Prior to joining Sherpa Software, Marta oversaw the development and management of the informationtechnology department for a leading logistics firm. During her tenure, Marta was instrumental inincreasing profitability and efficiency of real-time data inventory products and subscription based datatransfer services, while guiding the deployment of new web-based offerings. Page 9 of 9