Since the addition of the e-discovery amendments to the Federal Rules of Civil Procedure in 2006, sanctions for spoliation have risen markedly. This trend seems unlikely to wane now that the 2015 amendments to Rule 37(e) are in place. One way counsel can help insulate their clients against the risks of untimely data deletion is to focus on shoring up their preservation practices. The key is to construct a consistent, yet flexible regime that ensures documents are destroyed on schedule, that data is preserved when required, and that legal holds are issued to the right people, at the right time, on the right data.
Adhering to the following eight commandments of preservation will improve the defensibility of any organization’s program.
1. Organizations shall establish and follow a records retention program.
It is not enough for organizations to establish a records retention schedule; rather, they must implement and follow it to the letter. Adherence to the policy can defeat claims of bad faith, while deviations can create inconsistencies and raise suspicion about whether documents were selectively — and intentionally — deleted with opposing parties and the court.
2. Organizations shall construct and maintain a reasonable data backup system.
When evaluating their data storage needs, organizations must take a holistic, long-term view. In addition to budgeting for the expense of storing data in the cloud or on servers, they must also determine whether their solution will meet their needs if they must produce their data in a regulatory investigation or litigation. In other words, they must consider the costs of processes including identification, preservation, collection, review, and production. A party that recently balked at producing data from backup tapes, claiming the cost of nearly $250,000 to do so would be an undue burden, was reprimanded by a court. The court faulted the company for choosing to store its data in an unindexed, unsearchable manner on backup tapes without giving “some thought to the risk of litigation and corresponding discovery obligations.” The cost of the restoration was the company’s fault, and it was an “infinitesimally small portion” of the company’s profits, so the court required the company to bear the cost of production.
3. Counsel shall ensure that clients implement a legal hold.
Counsel must explain the importance of preservation to their clients and follow up to confirm that their clients suspend the destruction of documents. A document retention policy, standing alone, will not suffice as evidence of a commitment to preservation. Accordingly, one of the most important actions clients must take is to issue a written legal hold—and to issue it as soon as they anticipate litigation. Moreover, the legal hold cannot be generic; although a template can save time and money, counsel must ensure that it is tailored to the lawsuit at hand.
4. Counsel shall supervise their client’s preservation process.
Even where parties impose a timely legal hold, the failure to administer it can doom a lawsuit. Counsel must follow up regularly to ensure that clients not only issue a legal hold but that custodians are continuing to comply with its terms. Simply relying upon reports from a party is not enough to comply with this responsibility, as one court recently held, especially because the CEO in that case claimed no documents were being destroyed while actually telling people to delete relevant documents and signed and certified discovery responses that contained falsehoods. His lawyers certified those responses without performing a reasonable inquiry into their accuracy.
5. Counsel must ensure legal holds are comprehensive.
Counsel must also ensure that the hold covers all potentially relevant evidence, regardless of where it is located: in the cloud, on mobile devices, or elsewhere. In a recent case, four key custodians deleted important text messages because the company failed to take adequate measures to preserve evidence on their mobile devices. As a result, the court imposed an adverse inference instruction.
6. Counsel shall promote consistency in the discovery process.
Although it can be tempting to delegate responsibility for document identification and collection to custodians, doing so is practically begging for sanctions. Without direction and supervision, custodians are likely to make idiosyncratic decisions about relevancy and may fail to search certain data repositories for information. In one recent case, a defendant claimed it “swept” e-mail of 10 to 20 custodians, but the custodians themselves had been told to search their hard drives using keywords of their own creation. Some custodians failed to search at all; others conducted partial, spotty searches. The plaintiffs found hundreds of documents from other sources that the defendant had failed to produce, casting suspicion on the defendant’s search process. Ultimately, the court required the defendant to offer a corporate representative for a deposition to describe its document retention practices and its efforts to search for responsive documents.
7. Counsel and clients shall remind custodians of ongoing preservation requirements.
Over the course of months or years, custodians can become lax about keeping their documents and e-mails. Therefore, to improve defensibility, custodians must be regularly reminded of their obligations to preserve. To determine an appropriate reminder schedule, counsel should review their clients’ records retention program and reissue the hold several weeks before the scheduled automatic deletion of older data. They should also advise custodians when the need to retain information expires so they can return to their normal business practices. Leaving holds open indefinitely could create ongoing preservation obligations where no legal duty to preserve exists.
8. Counsel shall encourage clients to use technology to manage their legal holds.
It can be cumbersome to track legal holds through spreadsheets, custodian acknowledgements, and e-mail receipts, especially when matters drag on for years. One court recently took issue with counsel who failed “to evaluate the efficacy” of a client’s system for implementing and monitoring legal holds. To avoid these issues, counsel should encourage clients to automate legal hold management with technology solutions, which can also create a defensible audit trail. The system must be able to document all activity regarding the hold, including any notifications, reissues, reminders, and custodian correspondence.