The duty to preserve electronically stored information (ESI) cannot be understated. Recent court decisions highlight that courts will take steps when a party’s loss of relevant ESI prejudices the other party—even if the loss was unintentional. Where the loss of relevant ESI is determined to have been intentional, the court may impose an adverse inference, enter a default judgment, and impose sanctions. It is therefore imperative that counsel and clients understand when the duty arises, and the scope of the obligation. Having a preservation plan is essential to effective litigation-cost management and corporate responsibility.
The duty to preserve begins when litigation is reasonably foreseeable. Courts will consider the extent to which a party was on notice that litigation was likely and that the information would be relevant. A variety of events may alert a party to the prospect of litigation, even a simple letter that hints at litigation, and the duty to preserve is not obviated by any settlement negotiations or alternative-dispute-resolution process. A written and specific litigation hold should promptly be issued under counsel’s review and direction to insure that all relevant data within the client’s control is preserved. The client (and any person who may have documents relevant to the claims or defenses in his or her possession, custody, or control) should be notified that they must locate, retain, and preserve all documents, in paper and electronic form, that may be relevant to the claims or defenses in the matter, including, but not limited to, in files or on workstations, laptops, tablets, network servers, USB drives, other external media, handheld devices, voicemail systems, or backup tapes. Email systems, whether in office, home, or other locations, must also be preserved. The preservation duty extends to email folders, including but not limited to any active files, archives, drafts, trash/recycle bins, sent items, and any other place where emails might be stored to be sure that that these materials are also segregated and preserved. If any of this data is in danger of being deleted from any email system or any other electronic device, immediate steps should be taken to ensure that does not occur.
New emails sent or received with regard to the underlying matter should be saved to a litigation-hold folder if possible, both manual and through IT.
The instructions should include those affirmative actions that are required to preserve relevant ESI, and compliance with the duty should not be delegated only to individual employees. This should include an instruction that everyone must immediately cease destroying documents that might be relevant to the claims or defenses in the matter. Any backup tapes that may contain such emails or other ESI should be preserved. Metadata should also be preserved. However, preservation of backup tapes and metadata should not be confused with their later production. Questions as to the scope of this directive should be resolved in favor of preservation and retention. Any question about the relevance of a document should be addressed to counsel.
Clear procedures should exist as a matter of company policy, prior to any particular need for issuing a litigation hold. The procedures should include standards for when a preservation duty begins, and the prompt investigation procedures for when the organization reasonably foresees litigation. They should further include having a document-retention policy that addresses ESI, as well as a specific, detailed hold policy with designated personnel to monitor compliance with the policies, and implement the hold when appropriate to do so. This should also include identifying all record custodians, legal, and IT persons who may be affected, and notifying them of their obligations. All recipients should sign an acknowledgment indicating their understanding that they must preserve the types of documents described in the hold memorandum and any other documents that they think might be relevant to the matter, and their understanding that, if they have any questions regarding the types of documents that are required to be preserved, or if they know the identity of others who might have possession of such documents, they should contact counsel.
When a litigation hold is implemented, it should be thoroughly documented. This can assist in avoiding future claims by adverse parties, and provide a defense. The stronger and more transparent the mechanics and procedures of a litigation hold, the less room for mistakes, and the better the policies are effectively communicated to all responsible personnel, the more defensible the preservation strategy and procedure will be when it is needed.
Steven D. Ginsburg is with Duane Morris LLP in Atlanta, Georgia.