What are the chances that you or one of your employees could become the target of a federal civil lawsuit? It’s not an unrealistic scenario, particularly in today’s litigious environment. Let’s consider what would happen. Suddenly you’re served for digital discovery — e-discovery — and now you’re compelled to produce six years of electronic records. This would be an inopportune moment to learn about the risks and costs of failing to follow key regulations for the preservation and retrieval of electronic documents.

Discovery generally accounts for approximately 70% of the cost of litigation, giving it the potential to decimate your legal department’s budget. While the prospect of detailed data management may seem neither exciting nor lucrative to shareholders, there is no doubt the situation can become very expensive in its absence.

What are the Risks in E-Discovery? 

Information archiving has come a long way. In 196 B.C., there was the Rosetta Stone, which used hieroglyphic symbols and Demotic writing alongside Greek simultaneously to tell the same tale — ultimately helping us to decipher the ancient Egyptian scripts.

More recently, data audits would have largely involved the ransacking of filing cabinets, with any incriminating information easier to misplace amongst vast swaths of otherwise innocuous documents.

It’s a different story in the digital era, where advanced search functionality can locate indexed information instantaneously, or confirm its absence. Today we have all manner of electronic tools for information storage, including a nonprofit group whose primary focus is education, market research and certification for information professionals — the Association for Information and Image Management (AIIM). To demonstrate how far information archiving has come, at its founding in 1943, the AIIM was known as the National Microfilm Association.

Today, the AIIM explains that “the dynamic nature of electronically stored information (ESI) means critical documents can easily be overwritten, modified, destroyed or corrupted during normal use.” However, in a federal courtroom setting, how, when or where such a loss occurs is irrelevant.

Simply put, if a digital record requested in e-discovery turns up missing, a defendant can be in serious trouble. As the AIIM explains, “it does not matter whether this [loss] happens accidentally or maliciously. The result is the same — loss of potentially relevant evidence giving rise to probable criminal penalties, fines or court sanctions for spoliation.”

What are the Regulations for E-Discovery? 

In a federal civil lawsuit, you and your attorneys will be subject to the Federal Rules of Civil Procedure regarding digital e-discovery. This means you will need to understand and comply with Rule 34: Producing Documents, Electronically Stored Information.

Enacted Dec. 1, 2006, Rule 34 lays out a wide range of definitions, procedures and requirements. It essentially describes what a plaintiff is entitled to in terms of access to electronically stored information. Of course, this is reciprocal — your team can make similar demands of the plaintiff, so long as you follow the rules and procedures of both Rule 34 and Rule 26: Duty to Disclose; General Provisions Governing Discovery.

Requests may include anything and everything that is part of your daily digital footprint. That means spreadsheets, text documents, emails, photographs and recordings are all fair game. E-discovery can also expand to include social media posts, chat logs and videoconference records — if it is digital, they have the right to ask for it.

How Long Should You Preserve Your Data?

Data preservation requirements vary by industry. In financial services, regulation 17 CFR § 240.17a-4 requires broker-dealers to hold on to all internal and external communications, including website updates and social media posts, for a period of six years. Sometimes the rules vary by state, but in general, business owners should speak with their legal counsel or similar subject matter experts to determine the applicable legal regulations and review the case law.

Business owners should pay close attention to the expectations of the form of electronic data storage. An important aspect of ESI is the need for the preservation of metadata. Metadata is the information stored in a data file that tells the history of that file: who created it, who has opened or updated the file, when and where — and that’s just for starters.

For this reason, the court will not, for example, accept a compendium of emails or similar data rolled into a .pdf file. Rather, the plaintiff is entitled to explore these emails electronically as they would if they were stored in the normal course of business with their metadata intact.

E-Discovery: What are the Updated Governing Principles?

Following the enactment of e-discovery rules in 2006, several updates and adjustments have been enacted. In general, the courts began to realize requiring all businesses and individuals across all industries to ensure they back up and securely store all things digital in perpetuity seemed overly burdensome.

That’s why, in 2015, the Federal Rules of Civil Procedure (FRCP) introduced three governing principles for e-discovery. First, the FRCP took steps to limit the scope and expense of massive discovery queries. Second, the FRCP introduced greater flexibility surrounding penalties so long as the target of the discovery could demonstrate it took reasonable steps and could still produce at least a degree of the requested data. And finally, parties are instructed to be cooperative — seeking quick resolution as opposed to drawn-out proceedings.

So, there will be certain regulated industries with hard and fast rules — which if they apply to your company, you must follow. But others will be guided solely by the aforementioned principles. While they are softer than initially implemented, you still bear significant risk by failing to make sound efforts in data preservation and e-discovery.

E-Discovery in 2022: Tools and Best Practices

Wherever your business falls along the spectrum of electronic data backup and preservation, it’s important to maintain your data in an immutable manner. This ensures the court sees clear provenance — the metadata assures the files have not been tampered with, deleted or otherwise altered. Data archiving solutions can be used to pore over your entire digital footprint, making sure you never miss an update and capture all data that could become the subject of e-discovery.

Finally, it’s important to ensure that you have full access to your data at all times within a secure database that is indexed and searchable. This availability means you will be able to find and produce responses to specific e-discovery demands in a timely manner. In the end, it is better to be prepared than to find yourself in legal jeopardy.

Harriet Christie was appointed operations director at MirrorWeb, a data archiving solution based in Manchester, England, in 2020. Since then, she has helped oversee the evolution of the MirrorWeb product and service offering, as well as the business’ growth despite the challenging circumstances of 2020.