Mishandled electronic information could land businesses in litigation
By Marie Price
August 1, 2008
OKLAHOMA CITY – Businesses today find themselves deluged with electronic files, documents and records that require special handling, protection and preservation, a lack of which can come back to bite a company, particularly in court.
Tulsa attorney Gerald Jackson said that electronically stored information (ESI) brings with it a whole raft of issues, which can be exacerbated by the growing number of employees who work in nontraditional settings, such as at home on their own computers.
“It’s going to be a bigger and bigger issue,” he said.
Jackson, with Crowe & Dunlevy, said law firms may be at less risk to a degree, because e-mails and documents created internally are generally privileged.
Jackson said he counsels clients to have an electronic discovery readiness plan for handling computerized information. That involves establishing policies and procedures for addressing such files, as well as determining how much and what kinds of data a company keeps.
“You can’t manage the risk associated with ESI if you don’t know what you have and where it is,” he said.
Use of home computers can get overlooked, he said.
However, Jackson said attorneys are more conscious these days that some employees work at home, and sometimes go after data on home computers in lawsuits.
“It’s a constant issue now that’s coming up,” he said.
One danger is that home computers are generally outside the control of the company’s information technology department.
Jackson said that raises concerns of whether data is properly backed up or retained as company policy requires.
“We always encourage them to have a retention policy that routinely eliminates this backlog of data out there,” Jackson said. “Once you’re sued, it’s too late to start doing that.”
Home computer-stored company data that has not been deleted as policy requires can be “a ticking time bomb,” he said.
Jackson said federal discovery rules are particularly explicit about what must be done with electronically stored information.
“Once you’re sued, your company is sued or you have good reason to believe you’re going to be sued, you have to stop destroying documents, stop overriding these files,” he said.
An employee working from home who is still routinely deleting files could cause problems for a business, he said.
“You could be subject to sanctions, or even worse, in a lawsuit, even though the documents may not have had any damaging things, or any relevant things,” Jackson said.
What businesses should do to make sure they handle electronic data correctly varies according to what types of systems they have in place and other factors, he added.
“The first thing you have to do, and we always talk about with clients, is doing a data inventory,” Jackson.
An inventory must take into account new sources of data, such as home computers, he said.
Jackson said a company’s electronic information policy should also set out clearly how and when data is to be retained and deleted.
He said key issues are “knowledge of what’s there and how you can account for it and how you manage it.”
Jackson said a company’s electronic discovery readiness plan helps it react to a lawsuit under the quick deadlines outlined in the federal rules.
“If you don’t have a readiness plan in place, you’re really under the gun to do what you need to do,” he said. “If you end up missing some of those deadlines, it can be very damaging to your position in the case.”
Jackson said a readiness plan should involve a data inventory, an understanding of the hardware creating information within a company, knowledge of where data is stored, and a retention policy.
He said businesses without retention policies can find themselves facing mountains of accumulated data that must be reviewed to meet discovery requirements.
Having such policies in place also gives companies more credibility with the court when retention issues crop up, Jackson said.
It’s important that a company follow the retention policy it establishes, because deletion of files after the discovery process takes hold is a major red flag in a lawsuit, he said.
“I think a great example of that was Arthur Andersen in the Enron case,” Jackson said. “They had a retention policy that they were ignoring. Suddenly, when everything started going south, they started implementing the policy. That’s really what got them in trouble, because any selective enforcement is going to look very, very bad.”
Posted on Sat, July 18, 2009