Litigation Readiness

Developing a Proactive Strategy

An explosion of electronically stored information (ESI) and changes to discovery rules on the federal, state and local level pose new challenges to organizations across the globe. Amendments to the Federal Rules of Civil Procedure that expand the scope of discovery to include ESI were enacted two years ago. However, many organizations today are ill-equipped to preserve, locate, collect and produce ESI in response to anticipated or threatened litigation.

The best way to tackle growing e-discovery challenges is through a proactive approach. By establishing a comprehensive litigation readiness plan, organizations can significantly reduce e-discovery costs, mitigate risk, reduce the likelihood of sanctions and better prepare for e-discovery challenges.

“My favorite clients want me involved early and often,” says Alysia Solow, a partner with Constantine Cannon and head of the firm’s e-discovery practice group. “Pre-planning is the key to a timely execution of a company’s preservation and discovery obligations.”

Jay Rana, former Director of Legal Technologies and Litigation Support for Constantine Cannon, LLP and founder of Arnov Global Business Solutions Inc. in Bangalore, India, agrees. “A litigation readiness plan reduces expenses drastically, aids the legal team in determining relevant custodians, and ensures that the collection/acquisition of data is done in a defensible manner. It also provides an opportunity to utilize modern tools to cull data size since you already have a sense of the data volume and its location.”

Federal Rules

Amendments to the Federal Rules of Civil Procedure (FRCP) enacted in late 2006 obligate the parties to produce information stored in electronic form. Electronically stored information subject to discovery include e-mails, voicemails, instant messages, graphics, spreadsheets, tape backups, web pages, optical and CD/DVD storage, phone system logs, e-calendars, PDAs, cell phones, USB drives, memory cards and any other information that exists in electronic form. State and local courts are adopting similar rules with regard to the discovery of electronic evidence.

In any large organization, this new obligation has a substantial time, cost and risk impact.

“Gone are the days where companies treated the discovery process like an onion, peeling layers away tactically, identifying and producing only as much data as necessary, awaiting subsequent rounds of discovery requests,” says Solow. “Today companies are compelled to identify and preserve all possible sources of electronically stored data and to disclose any such ESI to one’s adversary.”

Although the FRCP amendments were enacted two years ago, organizations are just beginning to grapple with their ramifications. “I think we are just now seeing the impact of the 2006 FRCP amendments,” says Duane Lites, Director of Litigation Support for Jackson Walker LLP. “The impact has settled in and we are starting to see the application of these amendments based upon almost two year’s worth of cases.”

The litigation support professional (LSP) can play a significant role in implementing new e-discovery protocols in organizations large and small. Although no one standard or model can fully meet the needs of every organization, below are a few best practices for establishing a litigation readiness plan.

Create a Litigation Readiness Team

An interdisciplinary litigation readiness team is an important element in mitigating the risks and costs of e-discovery. Depending on the size and complexity of the organization, a litigation readiness team may consist of attorneys, paralegals, litigation support personnel, business managers, IT representatives, compliance officers, records managers and e-discovery vendors. Human resource managers may also comprise an important part of the team. “HR managers provide a historical perspective as to who is there and not there,” says Mary Pat Poteet, Director of Litigation Support for DLA Piper US LLP. HR can help track personnel changes and provide a timeline of data custodians.

The litigation readiness team can collaborate to formulate and implement a litigation readiness plan that best suits the needs of the organization. Solow recommends that organizations “develop a transparent, repeatable and auditable workflow with specifically defined responsibilities for each team member.” For example, HR might be responsible for notifying the appropriate parties before a custodian of data leaves the company so that an exit interview is held and data is preserved, she explains.

The litigation support professional can help assemble the litigation readiness team and identify the best parties to serve on the team. The LSP can also play a key role on these teams by recommending, designing and implementing technology systems that can help protect the company and its information. LSPs can also keep IT, legal, human resources and records management personnel and other parties informed of ESI rules.

Develop Data Retention Protocols

Implementing a data retention policy is a key element in litigation readiness. In the absence of an established policy, evidence may be inadvertently lost, overwritten, altered or destroyed.

A defensible data retention policy does not require organizations to retain all information. What should an organization retain and for how long? In creating a sound records policy, companies must first determine whether the record serves a business purpose within the organization. If so, the organization should retain that information only for as long as it remains of value. Second, organizations must determine whether the information’s retention is governed by law or regulation. For example, personnel files, tax records, pension materials and environmental records must be retained according to statutorily-mandated periods of time. Certain legislation, such as the Sarbanes-Oxley Act, the USA Patriot Act and the Health Insurance Portability and Accountability Act, prescribes retention guidelines for various types of records.

A records destruction policy is a necessary part of any data retention program. Many organizations save information that has no continuing business or legal value.

When faced with litigation, companies may be forced to search archives, warehouses and other places for responsive information, a time-consuming and costly process. “Without a functioning records retention policy, a company is exposed to the dramatically increased discovery costs and significant legal risk associated with having maintained vast amounts of data with no legal or regulatory retention requirements or ongoing business utility,” Solow explains. It is important to remember that the systematic deletion of ESI is permitted and does not constitute spoliation.

A key feature of any records retention procedure is the ability to suspend the destruction of information should that information be deemed potentially relevant in litigation. A well-articulated strategy for preserving backup tapes, archiving e-mails and suspending data retention programs will help to preserve evidence in the event of litigation.

Once a data retention policy is established, it should be actively monitored and enforced, states Rana. “This includes backup policies, e-mail data size limitations and shared drive policies,” he states. The data retention policy may need to be periodically updated to accommodate organizational changes, legal developments and technological advancements.

Partnering with attorneys, clients and records management personnel, litigation support professionals play an important role in developing records retention protocols. The LSP’s specialized knowledge of technology makes him particularly vital in selecting data archival and preservation technologies to preserve, manage and destroy ESI in accordance with the organization’s document retention policies, legal compliance requirements and litigation hold orders. LSPs can also “educate system administrators so that they understand, document and enforce litigation preservation and destruction policies,” Solow states.

For more information on records retention best practices, the Sedona Conference has developed comprehensive guidelines practices for managing electronic information and records at http://www.thesedonaconference.org/content/miscFiles/TSG9_05.pdf.

Inventory ESI

In order to properly preserve, collect and produce information, it is important to identify all locations of electronically stored information. ESI may be globally dispersed throughout various business units of an organization and may reside on servers, desktops, hard drives, thumb drives, flash drives and internal and external operating systems. The practice of telecommuting has also increased the amount of ESI on employee’s home computers, PDA’s and laptops.

Inventorying ESI can help organizations navigate the vast landscape of electronic information that might one day become relevant in litigation. Taking a proactive approach in identifying the locations and custodians of ESI can help save time and costs down the road.

“The key is developing a change management process that includes the corporate legal department to insure that legacy data is properly handled and that new systems under consideration fit neatly into the company’s records management and legal hold processes and that IT tracks and documents any such changes,” says Solow.

Litigation support personnel play an important role in the inventory process. “Litigation support folks talk the talk, they understand the technology,” says Poteet. Moreover, since many similarities may exist from client to client, the litigation support person’s experience and knowledge can help streamline the process. LSPs can also develop questionnaires that help assess the types, amounts, locations, custodians and accessibility of an organization’s ESI.

Map Existing IT Architecture

A data map that outlines, through text and graphics, the location of ESI throughout an organization is another excellent litigation readiness tool. This visual diagram helps identify the location of ESI as well as active and inactive data, file types and the custodians of the data. Data maps can facilitate the implementation of litigation holds as well as the collection, review and production of ESI and the identification of key witnesses in the event of litigation. A map of the current ESI landscape can help organizations locate responsive documents more efficiently and expediently.

“It is crucial to have at least a top-line understanding of the key components of a company’s IT infrastructure,” says Solow. “If one waits for litigation to commence before considering the inventory of ESI stores you will be attempting to catch up before you have even started. At worst, you may from the very start be at risk of spoliation. Not understanding the IT environment in advance is akin to designing the set of a theatrical performance after the curtain has risen.”

Lites agrees. “I believe it’s good practice to meet with an organization’s IT manager and create a map of how the company’s data is stored,” he says. “Litigation support can assist in the process by using checklists to inquire where ESI is located and what type of information is stored, working with attorneys on how to obtain the information and determining what methods to use to ensure ESI is properly collected.”

Data maps are helpful for all organizations, not just large, global enterprises. “I am a huge proponent of creation of data map prior to any EDD for all organizations regardless of the size and number of employees,” Rana states. “A data map, if created correctly, not only assists the client and the legal team to determine the source/location of all data within their organization, but gives the client an opportunity to affirmatively sign off on the ESI locations and locate relevant custodians for any action or investigation,” he says.

The existence of a data map and litigation readiness plan can help mitigate a company’s liability and permits organizations to easily locate, identify, access, collect and product relevant data. “An accurate ESI data map allows an organization to negotiate a more favorable scope of discovery because it shows the organization has its own house in order,” Lites observes.

Once a data map is prepared, it must be updated on a regular basis. Poteet recommends updates on a quarterly or bi-annual basis; however, the frequency of the updates depends upon the nature of the client’s business and how frequently the organization upgrades its systems. It also helps if the IT manager in charge of major upgrades notifies the law firms or parties responsible for updating the organization’s data maps, she notes.

Software providers are beginning to offer tools that assist in the data mapping process. These products help organizations automate the change manage process and mitigate the risk of application and infrastructure changes from negatively impacting business outcomes.

Technology tools such as these are best suited to large corporations with significant budgets. “Smaller companies can develop their own data map and update it on a regular basis or their consultant or law firm can update it for them,” Poteet says.

Implement Litigation Holds

The law imposes an affirmative duty upon organizations to preserve relevant information when litigation is reasonably anticipated, threatened or pending. This duty to preserve includes an obligation to identify, locate and maintain information that is relevant to specific, predictable and identifiable litigation. This duty supersedes any document management or destruction policies established by the organization. (See The Sedona Conference Commentary on Legal Holds, http://www.thesedonaconference.org/content/miscFiles/Legal_holds.pdf).

Once a duty to preserve evidence is triggered, a “litigation hold” (also called a “legal hold”) should be implemented to ensure that potentially discoverable ESI is properly preserved. Since litigation support professionals often have the best knowledge of a company’s network architecture, internal and external storage media and usage policies, LSPs play a critical role in the litigation hold process. “A talented litigation support professional can be central to a company’s ability to manage the publication and release of a company’s litigation holds,” says Solow. Because an in-house litigation support professional has not only the proximity to the data and the tools required to manage and review the information, they are a perfect choice to monitor and track the implementation, enforcement and lifting of such legal holds.”

LSPs draft and implement litigation hold policies and communicate these policies to IT, legal and records management staff. These policies might include “suspension of hard drive recycling procedures, creation of new backup plans to ensure preservation of data, and suspension of data destruction policy throughout the organization until positive identification of relevant custodians,” Rana says.

LSPs also identify and implement electronic tools that satisfy preservation obligations and halt the schedule destruction of relevant information ensure that all back up tapes are identified and stored. “I often consult with the client's IT staff and advise them on the tools needed to utilize this process, key areas of concern and focus, and feedback on disastrous results if certain steps aren't taken,” Rana said.

In addition, LSPs can also maintain detailed records of the steps taken by the IT department, ensure proper notification of data preservation by management and establish a method by which recipients certify that they understand the content of the notification, Rana says. Moreover, “LSPs can ensure that the litigation hold notice is distributed regularly within the organization and a log is kept of all versions of the notices, including the author, recipients and the dates of such distribution,” says Rana.

To increase efficiency and automate the legal hold process, many organizations are investing in litigation hold software (see sidebar regarding selecting technology). This software allows users to manage the legal hold lifecycle, including cases, custodians, notifications, acknowledgements, collections and dispositions in multiple matters. Some applications capture and track the master custodian and systems list over the course of a case and display the discovery and hold activities for each person and system involved in every matter.

Since executing a defensible process for managing and tracking the lifecycle of multiple legal holds in a large global organization is a complex task, it is becoming necessary to implement an automated system. “One of the benefits of these systems is that they can integrate into other systems in the company – archive systems, case management systems, etc. - and identify all the holds each person is subject to,” Poteet says. She notes that smaller companies that lack the financial resources to purchase legal hold software can implement it on a case-by-case subscription basis.

Planning is Key

Today’s complex business environment and growing volumes of ESI make e-discovery compliance a daunting task for many organizations. A comprehensive litigation readiness plan is a vital tool in controlling the risks and costs of e-discovery. By creating e-discovery teams, establishing document retention/destruction policies, inventorying ESI, creating data maps and implementing legal hold procedures, litigation support professionals can take a proactive role in reining in costs, navigating ESI and helping organizations to comply with future e-discovery requests.