Our Digital World (E-Discovery)

I originally wrote the following article on e-discovery in 2006 for a LexisNexis newsletter. Given that this is a holiday week, I thought I'd save some time and recycle this piece; plus, e-discovery is still highly relevant to the in-house practice. Also, I thought I'd better publish this before CSI is cancelled and the controlling analogy becomes obsolete.

Happy Thanksgiving to All !

All the Things We Leave Behind
Our Digital World: Transforming the Records of our Existence

Call it the CSI factor. Detectives on popular television shows, such as CSI, tirelessly scrutinize crime scenes for the fabric threads, skin cells, single hairs, and chemical traces that will clinch cases against evildoers. These shows highlight the detailed molecular fingerprint that each person leaves behind in the wake of their daily actions. We may think we pass our days with the evanescence of a ninja, yet we leave behind solid and indisputable evidence of our presence and our actions.

So too it is with businesses. In days gone by, the vast majority of our working thoughts and utterances evaporated inconsequentially like breath on a frosty morning. With the rise of the digital world and its new methods of communications (e-mail, instant messaging, voice mail), our quotidian efforts are now frozen and recorded, ready to be thawed out and played back for the benefit of a prosecutor or plaintiff.

Size estimates of the digital wake created by today’s corporations are truly astounding. Businesses create over seventeen trillion e-documents annually. Nearly sixty billion e-mails are generated each day (you may believe that you are cc’ed on at least two billion of these). Not only are there more e-mails than ever, but also the size of an average e-mail continues to grow. In a recent study, one research group found that an average individual sent or received nearly 10MB of e-mail each day in 2003 with an estimated increase to 46MB a day in 2005. Some researchers posit that 99% of all new corporate data is created electronically, with something less than a third ever being printed as a hard copy.

Adding to the ever-increasing layers of digital data are metadata, which is the additional information contained in an electronic version of a document (e.g. when created, when last modified, revision marks, stored comments) that its paper counterpart may not contain.

The ease of creating digital data is surpassed only by the ease of storing it. Back in the day, the costs and effort involved in creating and storing paper documents acted as a brake on the preservation of documents. Today companies routinely save nearly everything in back-up servers or stored tapes. One Fortune 100 company calculates that it routinely stores 800 terabytes of information, which would convert to an eye-popping half –trillion (yes, that’s a “tr”) pages if printed out. For a visual reference, one terabyte of data printed out would fill a small ballroom.

In my early days in private practice, I remember mind-numbing days spent reviewing ancient insurance policies and related letters to assess coverage claims. Looking back, I realize, however, that I only had to survey one hundred bankers’ boxes of materials. With the proliferation of digital documents, so easily created and so permanently recorded, such a task undertaken today is exponentially larger. Dante would certainly assign this task to a special circle of hell.

The ever-rising digital flood would only be an annoying social by-product of technology, like cell phones in restaurants, except for the complicating factors of the myriad laws and regulations governing the retention of documents and data. Sarbanes-Oxley, SEC regulations, the Internal Revenue Code and HIPPA all contain document retention mandates. Courts are also imposing significant penalties for spoliation of digitally stored documents, including monetary damages, adverse inference instructions and the occasional entry of judgment.

Court rules are beginning to reflect the immense importance of electronic discovery. For example, the District Court of New Jersey has promulgated a local rule that requires counsel to investigate a client's information management and other digital storage systems, including historical and backup information, prior to a discovery conference. Counsel must also list individuals with knowledge about the client's information management systems. Most critically, the local rule imposes an obligation for the parties to confer and attempt to agree on electronic discovery issues. Clearly, sophisticated handling of e-discovery and related issues provides a substantial advantage in both prosecuting and defending lawsuits.

However, even as the courts grapple with current electronic communications methods, technology marches on. If dealing with e-mail, its attachments and its metadata were not enough, there are new collaborative applications that promise to add more complexity to e-discovery. According to a recent Business Week article, companies such as Disney, Kodak, Yahoo! and the US military are switching their emphasis from e-mail to other software applications to create virtual workplaces.

These new applications include user-editable websites known as wikis (Hawaiian for “fast”), web diaries known as “blogs” (short for weblogs), instant messaging (IM), and groupware such as Microsoft's SharePoint. There is no doubt that a communication as ephemeral as IM is legally considered a document and is subject to the same retention policies and discovery requirements as any other written communication. Similarly, documents created using the other collaborative applications mentioned above will also be subject to discovery and the real-time collaborative nature of these software tools, so appealing for business users, will prove vexing for litigators.

The ultimate lesson is that our digital world mandates that a company take control of its record creation and retention process in ways infinitely more rigorous than ever before. Relegating document life-cycle management to an ad hoc system is a recipe for disaster.

On the front end of the document life cycle, employees must be trained and frequently reminded that despite the informal, uninhibited style encouraged by modern written communications, such documents are not private, not anonymous, nearly indestructible and subject to litigation discovery. Employees should consider whether a document is even necessary, particularly in areas that are controversial and subject to misunderstanding.

An additional side benefit of mastering the records management process is the salutary effect it can have on knowledge management efforts. Having a comprehensive document storage taxonomy can help a company leverage the knowledge inherent in its corporate databases.

It is beyond the scope of this article to tailor suggestions for the multitude of corporations facing electronic document retention and discovery issues, but prompt and thoughtful action is a must. Otherwise you may find yourself one day on a witness stand being called to account for some piece of data, some molecule of your self, that you didn’t even know you left behind.