Electronic Document Management and Retention in Litigation

Electronic document management is becoming a necessity. While a records management plan can help, there is one circumstance where even the best plans have trouble: when litigation affects the business.

Anyone who has had the displeasure of navigating a company or organization through the litigation process knows its burden on company time, resources and daily business. In almost all lawsuits, the parties involved are required to disclose to one another any relevant, non privileged, documents. One of the most daunting tasks that company personnel face when participating in litigation is compiling all of the documents and records that the business has an obligation to produce.

The hassle and cost of document production has increased dramatically with more use of computers, handheld devices, memory cards, optical discs and the like. The sheer volume of data and information in electronic form that a company has can be enormous. Computer systems and other electronic devices also affect behaviour. In the past, an informal comment or conversation would most likely be conducted by telephone or “around the water cooler”. Such conversations are now frequently conducted via email or instant messages. This creates a formal record of the conversation, which may be producible, where none would have existed before.

A company embroiled in litigation has a legal obligation to preserve and produce its electronic documents for litigation purposes the same as relevant paper-based materials. What happens if this is violated? It might mean an adverse inference being drawn. It could also lead to criminal liability for intentionally destroying evidence.

Therefore, it is crucial for businesses to implement some form of data retention policy. A data retention policy is a set of guidelines that a company follows to determine how long it should keep certain records and when it can destroy or delete this data. The policy should address how long to keep a document, how and where to store the document and how to dispose of it. The specific solutions will depend on the type of document and other surrounding factors.

Without an appropriate data retention policy in place, the destruction of documents becomes unnecessarily complicated. Which would you rather happen: explain that a document was destroyed because of a long-standing plan, or leave open the inference that it only “disappeared” after litigation started? The company should ensure that notification of this policy is given to all employees and officers. Relevant employees and officers should also be informed of any threatened, actual or anticipated litigation so they can act accordingly. When litigation arises, a company’s IT department must also be advised to cease the routine recycling of backup tapes that may contain relevant records.

Remember: the plan should not churn ahead no matter what. American courts have held that an obligation to suspend the retention policy arises when the party has notice that the evidence is relevant to litigation, or when a party should have known that the evidence may be relevant to future litigation. Once the duty to preserve electronic evidence arises, senior management should advise employees of this obligation. A party or anticipated party must retain all relevant documents in existence at the time the duty arises and any relevant documents created thereafter.

If you think that the rules for suspending a plan are blurry at best, you are right. While there is no set timeline for retaining email and other electronic documents, it is prudent to implement a policy which is based on the company’s experience. The policy should be based on past litigation and claims history and should be instituted and applied in good faith. A reasonable document retention policy that is enforced and consistently followed will go far in protecting your business from liability for the intentional destruction of evidence.