Record Management, Electronic Discovery, and the Changing Legal Landscape

1. Record Management, Electronic Discovery, and the Changing Legal Landscape Dino Tsibouris dino@tsibouris.com (614) 228-9707 www.tsibouris.com

2. More Trouble for Morgan StanleyE-mail ‘destroyed’ in 9/11 attack is found • $1.5 billion judgment for failing to produce thousands of backup tapes of digital documents • Paid the SEC $15 million to settle allegations of e-mail mishandling pursuant to SEC investigations • NASD accusing Morgan Stanley of failing to provide millions of e-mail messages to investigators and plaintiffs and falsely claiming the documents had been lost in the Sept. 11, 2001 attacks

3. Destruction of E-Mails $566,838 Mistake • Samsung destroyed e-mails in patent case • Mosaid Technologies alleged Samsung infringed patents for DRAM chips • Court cited Samsung’s “breathtaking and absolute spoliation” and “extremely reckless behavior” Source: New Jersey Law Journal 09/04

4. Sources of Electronic Data • 90% of data is created electronically • 30% is never printed • Sources: • Databases - Purchasing, Payables, Receivables, Email, ERP • Hard Drives, Network Backup Tapes • File Slack, Deleted & Encrypted Files • Meta Data & System Logs

5. Is this your “document retention” system?

6. THE IMPORTANT SLIDE • Having a Document Retention Policy and Process is essential • A “Cut & Paste” Policy is risky • Having a Policy / Process that you do not actually implement & enforce is dangerous

7. Best Practices • Destruction of records under a RIM plan estimated to reduce discovery costs by 25 – 30% • Categorize documents as “business” and “non-business” communications • Establish the term for document and data retention • Establish uniform indexing procedures

8. Records: Asset or Liability?

9. Business Drivers

10. Sarbanes-Oxley • SEC Regulation S-X Rule 2-06 • Audit record retention • Electronic records created, sent or received in connection with the audit or review containing conclusions, opinions, analyses or financial data related to the audit or review • Retention period of seven years

11. HIPAA • All paper and electronic records must be part of a comprehensive records management program • 6 year retention period may apply

12. ESIGN LAWS • If a law requires record retention, may comply by retaining the records electronically • The contract or record must be accurately reflected, remain accessible to all parties entitled to have access and be in a form that is capable of being reproduced for future reference

13. Records Management • Maintain up-to date records & information management policies, procedures and schedules • Audit your procedures • Modify policy & procedures • Document the process

14. Records Management • Sedona Guidelines • SOX • Industry Best Practices • Emphasis is on your Processes and Procedures

15. Records Management • Maintain and track policies, procedures & schedules for litigation defense • Document past RM compliance • Consistently follow good faith process • Include documentation of inactive record keeping systems

16. Records Management • Maintain and use an in-house glossary of records management terminology • Business units should use common terms • Technology terms must be part of the glossary

17. Records Management • Know where each record series is stored • Know what is the general content of each series • Available formats or media • Identify personnel or Experts who can assist with any large electronic systems

18. Records Management • Be prepared to assist Legal in identifying and preserving relevant records or associates within those business units • System to track all legal holds • Education/training/tools to preserve records

19. Records Management • Need to create tools to automatically suspend all automatic destruction processes legal hold records • Need to be able to assist legal counsel in identifying and protecting attorney-client information

20. Records Management • Include a “routine good faith operation” for destroying records and information • Different processes for different types of record systems • Document the destruction processes

21. Records Management • Automate systems where appropriate • Will prevent Rule 37 Sanctions • “Normal” changes will not protect willful destruction or unchecked overwriting

23. The Times They Are A’Changin • Effective December 1, 2006 • Pretrial planning required • “Electronically Stored Information” • Format selection

24. The Times They Are A’Changin • Litigation “holds” • Safe Harbor • Failure to comply results in sanctions • State courts will follow

25. IT IS A RECORDS MANAGEMENT ISSUE • IT Terminology now part of discovery process • Where is it stored? • How is it transmitted? • What format is used?

26. Rule 34 Electronically Stored Information Any party may serve on ... [an]other party a request (1) to produce ... inspect, copy, test, or sample any designated documents or electronically stored information — including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations stored in any medium from which information can be obtained — translated, if necessary ... into reasonably usable form ...

27. Rule 34 Electronically Stored Information • Amended Rule 34(a) • “Documents” includes ESI unless clearly distinguished from “documents" • Requesting party may specify form of production • Network access

28. Rule 34 Electronically Stored Information • Amended Rule 34(b) • Native File Production provision • Requesting party may specify the form of ESI production • Form more important for ESI • Preserve searchability

29. Rule 26 Conference to Plan Discovery Except [when] exempted ... parties must, ... confer to ... make or arrange for the disclosures required by Rule 26(a)(1), to discuss any issues relating to preserving discoverable information, and to develop a proposed discovery plan that indicates the parties’ views and proposals concerning: ... (3) any issues relating to disclosure or discovery of electronically stored information, including the form or forms in which it should be produced;

30. Rule 26 Conference to Plan Discovery • Amended Rule 26(f) • Early attention to discovery of ESI • Describe ESI to be sought • Preservation of relevant data • Form of ESI disclosure • Privilege or protection

31. Rule 26 Conference to Plan Discovery • Cost shifting • Must only preserve relevant data • No duty to preserve all paper, emails, backup tapes

32. Rule 26 Conference to Plan Discovery • Collect electronic communication, records management, retention and legal holds policies • Understand the importance of ESI in the case (or lack of it) • Prepare to explain to the court your policy: how it is used and enforced - and gaps

33. Rule 26 Conference to Plan Discovery • Prepare to describe what is a “record” in your organization (and why other data is not) • Know where relevant information may be kept • Know IT staff who can locate where relevant information is kept • Can you help determine what is reasonably accessible and what is not?

34. Rule 26 Initial Disclosures • Amended Rule 26(a)(1)(B) • Each party must disclose before discovery begins a copy or description (by category and location) of all documents, ESI, and things in the other party's possession, custody or control that it may use to support its claims or defenses.

35. Rule 26 Production Issues and Accessibility • Amended Rule 26(b)(2)(B) • No need to provide ESI if there is an undue burden or cost • Party seeking discovery may move to compel • Party claiming undue burden or cost has burden of proof

36. Rule 26 Production Issues and Accessibility • Reasonably accessible ESI that is relevant must be produced • Do not need to produce ESI from sources that are inaccessible • Rule does NOT address duty to preserve relevant information on those sources during litigation

37. Rule 26 Production Issues and Accessibility • RM application: • Help your attorney locate and track confidential or privileged records • Be a primary contact to help manage production • RM = rules, IT = tools • Create procedures in advance, where practical – and update them

38. Rule 26 Burden of Proof • Explanations such as "inactive" or "backup" unlikely to suffice • Court can compel party to produce even if they meet burden of proof when there is good cause • Creates a “balancing test”

39. Rule 26 Privileged and Trial-Preparation Info • ESI includes metadata • Shows the history and context of the information • Links to other information • May reveal privileged or confidential information

40. Rule 45Subpoena Practice • Amended Rule 45(a)(1) - subpoena may specify form or forms to produce ESI • Amended Rule 45(d)(1)(B) - ESI default form is "a form or forms in which the person ordinarily maintains it or in a form or forms that are reasonably usable"

41. Rule 45Subpoena Practice

42. Rule 45Subpoena Practice • Amended Rule 45(d)(1)(C) - the same ESI need only be produced in one form • Amended Rule 45(d)(1)(D) - ESI from sources identified as not reasonably accessible because of undue burden or cost need not be produced

43. Rule 37Safe Harbor Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

44. Rule 37Safe Harbor • Added Rule 37(f) • Term "routine operation" refers to the way systems are "generally designed, programmed, and implemented to meet ... technical and business needs" • Must exercise “good faith”

45. Rule 37Protection is Narrow • Procedures must be established, documented and followed • Incentive for destruction? • Coordinate with other regulations • Safe harbor only applies to sanctions "under these rules"

46. Rule 26 Conference to Plan Discovery • Develop defensible practices • Consistent application of RM procedures • If no overall plan, look for some patterns of consistency • Be able to educate and warn your attorney about “issues”

47. Questions & Answers