76 J. Kan. Bar Assn. 3, 22 (2007). Byte Me! Protecting Your Backside in an Electronic Discovery World (Not Just for Litigators).

AuthorBy Kathy Perkins with Dave Deppe

Kansas Bar Journals

Volume 76.

76 J. Kan. Bar Assn. 3, 22 (2007).

Byte Me! Protecting Your Backside in an Electronic Discovery World (Not Just for Litigators)

Kansas Bar JournalVolume 76, March 200776 J. Kan. Bar Ass'n 3, 22 (2007)"Byte" Me! Protecting Your Backside in an Electronic Discovery World (Not Just for Litigators)By Kathy Perkins with Dave DeppeI. Introduction

"To see confusion clearly is to understand."1 I harken back to a law school class motto in my effort to understand the capabilities and intricacies of today's hardware, software, computer memory, and data storage systems in the context of our obligations - and opportunities - as lawyers. For a baby boomer, the developments are astounding. My newly acquired MP3 player holds substantially more data than the mainframe in the computer center when I was in college.

The courts, and we as practitioners, are just now realizing the extent and implications of the new technological era, which has permanently changed our communications, record keeping, data collection, and storage. The fallout is a little scary and can be enormously expensive and divisive for unwary litigants - and litigators. Wall Street brokerage firm Morgan Stanley and its law firm, Kirkland & Ellis LLP, learned this lesson the hard way in a Florida state court in 2005. A jury awarded investor Ronald Perelman $1.45 billion in a high profile fraud case, arising out of the sale of the Coleman Outdoor Co., against Morgan Stanley in which electronic discovery sanctions played a major role.2

Perelman moved for sanctions due to Morgan Stanley's destruction of e-mails and other noncooperative conduct in the course of electronic discovery. Essentially, the court granted the motion, found Morgan Stanley to be grossly negligent in turning over electronic documents, approved an adverse inference instruction due to spoliation, shifted the burden of proof for the fraud claim, and revoked the pro hac vice license of defendant's trial lawyer, two weeks before trial.3 In the midst of this, Morgan Stanley declared it had become clear that the court had "lost all confidence in any statement or representation made" by lawyers for Kirkland & Ellis LLP. Moreover, Morgan Stanley had put the firm on notice of "a potential malpractice claim" arising out of its representation.4

If mega law firms and their deep pocket patrons are finding themselves in this much trouble over compliance with electronic discovery, where does that leave lawyers who practice alone or in firms with fewer resources for cost-conscious clients? This article will explore practical suggestions for reducing the risks of noncompliance and capitalizing on the benefits of new technology, following these basic principles:

. Educate yourself on technology and terminology (and/or team up with an expert);

. Know the rules and how the courts are applying them;

. Communicate aggressively and proactively with your clients; and

. Utilize electronic discovery with common sense and creativity.

  1. What are we dealing with?

    It is estimated that more than 90 percent of all information generated today is in digital form.5 Nearly all business activities are computerized. The federal government is mandated by the Government Paperwork Elimination Act (GPEA) to reduce or eliminate paper from its operations. Electronically stored information (ESI) differs from its paper counterpart in volume, location, kind, and volatility.

    1. Differences in volume

      It was estimated that daily e-mail traffic for 2003 was almost equal to annual deliveries by the U.S. Postal Service.6 If printed, a gigabyte (GB) of ESI would yield an average of 75,000 pages. The average user generates 2 GB of data per year, or 150,000 pages. Assuming 2,500 pages to a banker's box, printing the typical user's annual data output would fill 50 boxes if printed. Responding to a discovery request for a particular custodian's data over a five-year period, as often is done in employment cases, becomes a monumental task.

    2. Differences in location

      Digital data and e-documents can be found in a myriad of locations, both stationary and portable. Servers and computer hard drives (including home PCs) are examples of stationary storage locations. Many transportable devices, including digital telephones, smart cards, flash drives, PDAs, CDs, and DVDs, also generate and/or store digital information. A distinguishing feature of digital information is that, until it is converted to hard copy, it does not exist apart from the medium in which it is stored. And, one must not forget "legacy data" - data that resides on obsolete or replaced equipment. All of this information is capable of being reproduced or copied and can be the object of a properly crafted discovery request in litigation.

    3. Differences in kind

      Metadata and system data have no counterpart in the paper world. Metadata is data about data, often hidden on a computer screen, but easily accessed. Examples include e-mail headers and routing information, word processing profiles and editing history, spreadsheet data sources and formulae, and database structure and relationships. System data is data about the use and operation of a computer system. It can show such things as computer log-ins, access to network resources, use of printer, fax, and other peripherals, as well as use of e-mail and the Internet. The closest counterpart in the paper world would be a filing cabinet filled with indexed hanging files with labeled manila subfolders. Unlike a classic filing system, however, metadata is created automatically.

    4. Differences in volatility

      ESI is far more volatile than paper documents. Data is subject to easy alteration and deletion through overwriting and routine handling. For example, when a Microsoft Office document is copied from one location to another, two of the three operating system time stamps will change such that the header maintains the original date and time while the "creation" and "accessed" time stamps in the operating system reflect the instant it was copied. To the untrained eye the document appears to have been altered.

      Many organizations have retention policies under which they purge e-mail and associated electronic documents according to a schedule. Other companies have purchased metadata scrubbing software that removes deletable fields of metadata from files attached to e-mails or residing on the network. Failure to take appropriate measures to secure the integrity of ESI in litigation leads to allegations of destruction of evidence (spoliation), whether intentional or unintentional, and to sanctions for discovery abuse. Scrubbing equates to shredding after there is a reasonable anticipation of litigation.

      On the other hand, it can be harder to get rid of ESI than it is to shred a document. "Delete" does not mean "destroy" in the cyber world; it means "ignore" unless a specific utility is employed to truly erase the ESI. The file information remains on the hard drive as "ghost files" or in slack space on the drive. Computers abhor a vacuum and fill blank space with digital "packing material." This is data left behind from previous files or from active working files. The data is not "saved" on the computer in lay terms, but it remains and can be retrieved years after it was originally created unless and until it is overwritten or forensically removed. Moreover, it can be transferred to other computers as unnoticed baggage during an upgrade or replacement of a computer system.

  2. What do the rules say?

    Even without the amendments to Rules 16, 26, 33, 34, 37, and 45 of the Federal Rules of Civil Procedure that went into effect Dec. 1, 2006, it is clear that the scope of discovery encompasses ESI. The U.S. District Court for the District of Kansas has also developed ESI Guidelines7 that indicate, among other things, counsel should become knowledgeable about their clients' information management systems and operation; include electronic information in Rule 26(a)(1) disclosures; and communicate with opposing counsel about electronic discovery issues, including scope, cost, format, and how to address privileged material. Although ESI has not yet been addressed by Kansas statute or court rule, and although to date there have been no reported cases in the Kansas state courts on this point, it is reasonable to assume that ESI would be included within the scope of Kansas discovery requests and that the federal rules may well be used for guidance when issues arise.

    Highlights of the amendments to the federal rules are:

    1. Parties must discuss e-discovery issues

      Rules 26(f) and 16(b) have been amended to require litigants, at the initial planning and scheduling stage of the litigation, to consider and address electronic discovery issues, including the form of production and the preservation of electronically stored information. At the initial planning conference, the parties' attorneys must discuss:

      1. Preservation of ESI

        Note that this is the first time the concept of preservation has been addressed by the federal rules. The integrity of metadata, not just the content of the document or system, must be preserved. By this point in the litigation a party should have a preservation plan in place. Information technology (IT) staff or a consultant should be involved to preserve existing information and build in tools to "journal" e-mail on a progressive basis to remove end users' ability to delete before they are captured for preservation.

      2. Disclosure and discovery of ESI according...

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