'Can't Touch This'

No one would confuse the stereotypical IT geek with someone as cool as one-time hip-hop mogul M. C. Hammer.

Yet, sometimes when the IT staff sacrifices lawyers' work habits on the altar of implementing a “litigation-hold” policy, it seems like Hammer's simple musical advice rules the day: “U Can't Touch This.”

From the lawyers' side of the divide, the IT department's well-intentioned effort to comply with procedural rules to enforce a litigation-hold policy often seems like interference with our professional duties to clients, and how we do our jobs.

A Required Procedural Point

Why do we need this conflict? Because litigation hold has become legally required, from time to time. The Dec. 1, 2006, electronic-discovery amendments to the Federal Rules of Civil Procedure (“FRCP”) attempted to provide guidelines on how to apply the common-law duty to preserve evidence to constantly changing (and expanding) electronic data. In particular, Rule 37(f) discusses how threatened or pending litigation requires an interruption in normal data purges, which are so critically needed in our litigious world, where every idle musing in a casually tossed-off e-mail seems to be captured forever for future plaintiffs to find in discovery. Here's what the rule says:

Electronically Stored Information. 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. From, “Committee Note to Federal Rule of Civil Procedure 37(f).” (Emphasis added.) (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

As the comments to the Rules amendment explained:

(This safe harbor clause for suspension of a document retention policy once litigation has begun) focuses on a distinctive feature of computer operations, the routine alteration and deletion of information that attends ordinary use. Many steps essential to computer operation may alter or destroy information, for reasons that have nothing to do with how that information might relate to litigation. As a result, the ordinary operation of computer systems creates a risk that a party may lose potentially discoverable information without culpable conduct on its part. Under Rule 37(f), absent exceptional circumstances, sanctions cannot be imposed for loss of electronically stored information resulting from the routine, good-faith operation of an electronic information system. Rule 37(f) applies only to information lost due to the routine operation of an information system only if the operation was in good faith. From, “Committee Note to Federal Rule of Civil Procedure 37(f).” (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

However, once litigation is “pending or reasonably anticipated,” the rules change:

Good faith in the routine operation of an information system may involve a party's intervention to modify or suspend certain features of that routine operation to prevent the loss of information, if that information is subject to a preservation obligation. The good faith requirement of Rule 37(f) means that a party is not permitted to exploit the routine operation of an information system to thwart discovery obligations by allowing that operation to continue in order to destroy specific stored information that it is required to preserve. When a party is under a duty to preserve information because of pending or reasonably anticipated litigation, intervention in the routine operation of an information system is one aspect of what is often called a “litigation hold.” Among the factors that bear on a party's good faith in the routine operation of an information system are the steps the party took to comply with a court order in the case or party agreement requiring preservation of specific electronically stored information. From, “Committee Note to Federal Rule of Civil Procedure 37(f).” (Emphasis added.) (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

In other words, a typical IT policy requiring routine deletion may have to do a 180-degree shift to preserve the status quo, at least until the litigation ends. Of course, the new procedural rules also apply to the perhaps more common “policy” of doing nothing until a threat is received, and then reacting on an ad hoc basis.

Yet, the challenge of the litigation hold cannot be avoided. What case today does not involve electronic evidence, such as e-mail and digital files? As the comments to the new rules warned:

The volume and dynamic nature of electronically stored information may complicate preservation obligations. The ordinary operation of computers involves both the automatic creation and the automatic deletion or overwriting of certain information. Failure to address preservation issues early in the litigation increases uncertainty and raises a risk of disputes. ' The parties' discussion should pay particular attention to the balance between the competing needs to preserve relevant evidence and to continue routine operations critical to ongoing activities. From, “Committee Note to Federal Rule of Civil Procedure 26(f).” (Emphasis added.) (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

Take a Clear Tack

But too often, the one-size-fits all compliance advice from the IT and legal departments on implementing such a litigation-hold policy seems as arbitrary and unhelpful as Hammer's warning ' “U Can't Touch This!” (the data). Certainly, from the opponent's perspective, the more data preserved the better, and to be produced in response to its demands for copies of hard drives, millions of e-mail messages in native format, and fishing trips through employees' home computers and Web-based e-mail accounts.

Moreover, such “across the board preservation” is clearly not required by the rules. The commentary to revised Rule 26(f) at several points recommends discussion of practical issues to limit the preservation obligation, as early as possible, to avoid undue burdens of a broad freeze, while at the same time meeting the legitimate needs of the parties in discovery:

The parties' discussion should pay particular attention to the balance between the competing needs to preserve relevant evidence and to continue routine operations critical to ongoing activities. Complete or broad
cessation of a party's routine computer operations could paralyze the party's activities. Cf. Manual for Complex Litigation (4th) '11.422 (“A blanket preservation order may be prohibitively expensive and unduly burdensome for parties dependent on computer systems for their day-to-day operations.”) The parties should take account of these considerations in their discussions, with the goal of agreeing on reasonable preservation steps. From, “Committee Note to Federal Rule of Civil Procedure 26(f).” (Emphasis added.) (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

Even worse, the oft-dispensed save-everything, touch-nothing advice also blatantly ignores two economic realities of business and law in 2008: IT staffing and memory resources are limited. While it would be nice to have IT staffers with time to do all the litigation-hold data-assembly required by a zealous application of all the electronic discovery that is permitted by the amended federal rules, modern day-to-day pressures often leave the IT department scrambling to locate all the possible evidence when it learns that a litigation hold has been called by senior counsel or manager, much less handle a normal workload.

However, the benefits of an effective, but practical litigation-hold policy can be critical ' and the costs of an ineffective policy can be steep. As a North Carolina court noted in a 2006 case involving millions of dollars of e-discovery expenses:

(T)rial courts should always be cognizant that e-discovery decisions, especially those involving inaccessible data, have the potential to be outcome determinative because of the costs involved. Bank of America et al. v. SR International Business Insurance Company, Ltd., Superior Court of Justice, Mecklenburg County (No. 05-CFS-5564) Nov. 1, 2006.

(For the expensive downside, see, “How Much Will Qualcomm Cost e-Commerce?”, in the April 2008 edition of e-Commerce Law & Strategy, available online at www.ljnonline.com/issues/ljn_ecommerce/24_12/news/150254-1.html.)

From an attorney's perspective, making decisions about document-retention ' and access to client files generally ' on the basis of the IT department's enforcement of policies on litigation holds, seems to be the proverbial tail wagging the dog. In contrast, consider the mindset behind an IT director's quote about what attorneys are “allowed” to have, from an IT department making rules on document-retention based on technical needs ' rather than the attorneys' preference on how best to do their work:

They allow e-mail but then they have personal PST files out there, they allow users to have instant-messaging clients and home e-mail accounts ' they have their documents scattered so far that when a litigation hold comes on, that's where the complexity comes in.” (Emphasis added.) (See, www.law.com/jsp/legaltechnology/pubArti cleLT.jsp?id=1202421520352.)

Learn to Adapt to New Ways

While we all recognize the stressful demands placed on the IT department to manage a huge volume of documents in multiple locations, it would be even more shocking for traditional lawyers to permit administrative support staff to decide what to “allow” them to use to defend their clients. Unfortunately, the realities of litigation today make such a perspective obsolete. Given the large damages awards imposed when electronic documents have been mismanaged in litigation, holding ancient documents may not only be a move potentially harmful to the client being served, but also to a lawyer's career.

Since it appears inevitable that lawyers must “learn to stop worrying and love the litigation hold” (with apologies to Peter Sellers and Stanley Kubrick), consider some of the professional compromises that a litigation hold imposes on attorneys.

Attorney Attention:
Oh, We Were Busy

The first problem that arises when a litigation hold must be put in place is the competition for an attorney's time. When a client is sued (or about to be), its executives presumably will want to speak to the company counsel about the claim, its merits and how it will be handled. At the same time, the client wants to speak with its attorney, but that lawyer must also attend to the implementation of the litigation hold at the firm, and at the client's IT department. IT may know what to do in general, but it probably doesn't know enough about the case to actually do it until the attorney has identified all persons whose records must be frozen (including current and ex-staffers).

Simultaneously, the lead attorney must also put out the hold notice, and segregate and preserve his or her own files. In a law firm, the mid-level associates who may have had the most hands-on involvement in the underlying matter will almost certainly be called to the senior partner's office to explain the nature of the claim, and to provide their analysis of its merits so that the partner can counsel the client.

While all this lawyering is going on, IT must patiently wait for instructions from the lawyers that will be needed to implement the hold. While sound hold policy suggests separating those involved in the underlying matter from implementation of the hold (to eliminate the opportunity and incentive to corrupt evidence), the IT department simply can't know the deal or case without help from those who lived it.

Reviewing Documents to
Refresh Memory

The next practical problem will come when the attorneys naturally want to jump back into the file to review what happened in light of the actual claim that was filed. Such review risks corruption of the electronic documents (and their metadata) if IT has not yet had a chance to preserve them, especially if the documents are opened immediately upon attorneys seeing the complaint before IT has been notified. Many deals today are negotiated entirely electronically, from letter of intent to .PDF closing binder. In an environmentally conscious world of e-mail signatures urging the reader to think about the environment before printing, few, if any, of those e-mails may have been printed out. Therefore, everyone scrambling to review the file to be able to discuss the response with the client will have to turn to the electronic files ' only to be met with a flashing “DO NOT PASS GO” warning properly posted by the IT department (if it replied in a timely fashion to the hold announcement) ' until IT's preservation (with metadata intact) is in place.

In fact, if the client or its senior attorneys had wind of the threat before the claim was filed, they may already have gone back into the “live” files and irreversibly corrupted relevant metadata ' especially if everyone involved has not been trained on the practicalities of preservation and electronic-document handling. (That situation would beg the question of how early litigation threats should have triggered instructions to put a hold into effect.)

Automatic Deletion Programs

As referenced in the revised Rule 37(f), one of the principal obligations after a litigation hold is triggered is the suspension of otherwise ongoing deletion policies. As noted in the comments quoted earlier, this duty to stop otherwise normal housekeeping was deemed critical to protect the judicial process when “the evidence” may exist only in electronic format. Automatic destruction of electronic files, therefore, would compromise the ability to have a fair resolution of the claim for both sides.

Yet, despite these high-minded ideals, shutting off an automatic deletion program may cause immediate problems. Systems may be in place to send automatic warnings demanding deletion of e-mail because of excessive storage volume ' especially when the typical litigation situation may not resolve itself for many months, or even years. Diligent employees may simply follow those instructions, unless the hold procedure prevents such deletion.

An attorney, especially a litigator, may be involved in multiple litigated cases, so that “turning back on” the routine maintenance functions could be delayed for an extended period ' compromising all the IT department's storage strategies. Spread that situation over even a medium-sized firm, and soon the harried IT department may be forced to manage separate holds that affect a majority (if not all) attorneys in the firm, and their support staff.

e-Mail Outside the Wall

Because attorneys will inevitably use the technology that makes their professional lives most convenient (notwithstanding IT directives to funnel all work through firm servers), IT may soon find itself forced to retrieve e-mail from personal accounts, home computers, Web-mail services and other locations less convenient for IT to manage. IT may prohibit them, but attorneys scrambling to keep business and please clients (especially when out of the office) will always use what works best, and (vow to) clean it up when they are back in the office.

The Parent/Child Relationship of
Lawyers and the IT Staff

As anyone who has worked in a law firm knows, lawyers with egos often like to go their own way, whether it is good for them (or the firm), or not. As a result, some may simply ignore a hold directive, especially if compliance would take time away from currently billable work or other immediately demanding projects. More benignly, an attorney may simply be out of the office, whether on vacation or working remotely on a deal, and not see the hold for some time. In either case, IT must become the shepherd of the hold, tracking down everyone who had been involved in the original deal, and all the related records ' again at the expense of completing its current work.

Not Tipping Your Hand

One respected commentary on practice under the new rules, The Sedona Principles Addressing Electronic Document Production, explicitly warns of the risk of an unpredictable response to a heavy-handed hold memo: “It must be recognized that in some circumstances, a legal hold notice may be ' inadvisable (e.g., the notice itself may trigger evidence destruction efforts by the employee under investigation).”

Not only must IT manage many aspects of the hold implementation, but it must do so without attracting the attention of the staff involved with the case and the client ' an unlikely scenario.

IT Must Dictate to Attorneys

In several cases, courts have chastised firms that announced litigation holds but didn't do enough to enforce them fully because management trusted that key employees would obey the hold order. In Hawaiian Airlines, Inc. v Mesa Air Group, Inc., 2007 WL 3172642 (Bankr. D. Hawaii 2007), the court refused to allow a firm to expect that a “valued, trusted, high level employee of the company” would not act contrary to the e-discovery rules by “doing wrongful and foolish things, like destroying evidence, under the pressure of litigation.” Instead, the company “could and should have taken reasonable steps” to prevent such actions affirmatively.

Similarly, the fact that a company's attorneys “may have instructed a litigation hold (was) not relevant,” where company employees deleted key documents anyway, as was seen in In re September 11th Liability Insurance Coverage Cases, 03 Civ. 332 (SDNY June 18, 2007). Another court rebuked a firm's “cursory compliance efforts, including the misplaced reliance on custodian self collection.” Samsung Electronics v. Rambus, 439 F.Supp. 3d 524 (E.D. Va. 2006): “It is not sufficient ' for a company merely to tell employees to save relevant documents. This sort of token effort will hardly ever suffice.”

How Much Follow-up Is Enough?

In NTL, Inc. Securities Litigation, 2007 WL 241344(SDNY 2007), the court held that simply circulating two document-hold memoranda was “grossly negligent,” because many employees never received them, and “no concerted effort to collect the relevant (electronic evidence) took place.” Similarly, one attorney writing on the “response to the e-Discovery Alarm” wrote: “[I]nitial notice and those initial interviews may not be sufficient, however. In large corporations, any one key employee may know only a few of the other key employees likely to be custodians of ESI ["electronically stored information"]. Thus, prudence dictates that there be a follow-up to the initial hold notice and a second round of personal interviews of those new custodians disclosed in the early interview process” (www.abanet.org/buslaw/blt/2007-09-10/smith.shtml).

These opinions almost suggest that if a firm's hold policy didn't preserve the smoking gun, it won't be good enough for a court that is looking after the fact with 20/20 hindsight.

Preparation Short Course Pointers

Of course, these are but a few of the practical problems that confront an e-commerce firm and its counsel ' who is ultimately responsible for compliance with e-discovery rules, as the celebrated Qualcomm court held (see, Qualcomm, Inc. v. Broadcom Corp., 2008 US Dist. Lexis 911 (SD Ca. Jan. 7, 2008)).

Even a casual search online will easily find additional horror stories ' and countless suggestions on how to avoid them. The importance of management buy-in, the sense of urgency and timely response, and (from counsel's perspective) the need to intrude on its client to compel compliance with the policy all could arise as equally important practical obstacles to a successful hold.

Moreover, as these examples of practical problems show, the hold interposes a clear tension between what management attorneys have told IT to do, and what other attorneys will tolerate ' which is a much bigger cultural issue at a law firm or business than a hold-policy question.

Therefore, from the perspective of the e-commerce company and its counsel, which would rather do business and make money than spend the money it hasn't yet earned on litigation support, several points seem clear.

1. Preparation is critical. A plan helps when detailed technical action must be taken quickly and, possibly, confidentially.

2. Vendors. The firm should select a reliable e-discovery vendor. The repeated criticisms of “self-help holds,” even putting aside intentional obstruction and the need to continue to conduct ordinary business, makes it clear that litigants shouldn't try a litigation hold “at home.”

3. Model. A particularly thorough, practical analysis of implementing a litigation hold appears in “The Electronic Discovery Reference Model” (available online at www.edrm.net). The “modules” on preservation and planning long before the lawsuit is a gleam in the eye of opposing counsel. Each is quite helpful in making plans for implementing a live hold. (See, http://edrm.net/wiki/index.php/Preservation_-_Implementation_of_Perservation/Litigation_Hold#Implementation_Considerations; and http://edrm.net/wiki/index.php/Preservation_-_Considerations_Before_the_Duty_to_Preserve_Attaches.) Also, the concepts in the Sedona Principles provide comprehensive suggestions on how to transform the abstractions of the federal rules' general guidelines into realistic, day-to-day operating principles (see, www.thesedonaconference.org/content/miscFiles/TSC_PRINCP_2nd_ed_607.pdf): “The obligation to preserve electronically stored information requires reasonable and good faith efforts to retain information that may be relevant to pending or threatened litigation. However, it is unreasonable to expect parties to take every conceivable step to preserve all potentially relevant electronically stored information.”

Don't Self-destruct

The challenge of an immediate and complete litigation-hold response, while simultaneously meeting all these objectives, may seem like trying to stop the world (in the words of the British New Wave/post-punk rock group Modern English's classic 1980s melody “I Melt with You”) for counsel, and for the IT staff (with front-line responsibility), but the task is all the more complicated as they also try to conduct normal business and prepare to defend the litigation at the same time.

But for those not up to the task, or who don't comply, things won't be getting better, since their careers may “melt” with one another's ' and perhaps even melt with the not-so-gentle push of a sanctioning judge.

No one would confuse the stereotypical IT geek with someone as cool as one-time hip-hop mogul M. C. Hammer.

Yet, sometimes when the IT staff sacrifices lawyers' work habits on the altar of implementing a “litigation-hold” policy, it seems like Hammer's simple musical advice rules the day: “U Can't Touch This.”

From the lawyers' side of the divide, the IT department's well-intentioned effort to comply with procedural rules to enforce a litigation-hold policy often seems like interference with our professional duties to clients, and how we do our jobs.

A Required Procedural Point

Why do we need this conflict? Because litigation hold has become legally required, from time to time. The Dec. 1, 2006, electronic-discovery amendments to the Federal Rules of Civil Procedure (“FRCP”) attempted to provide guidelines on how to apply the common-law duty to preserve evidence to constantly changing (and expanding) electronic data. In particular, Rule 37(f) discusses how threatened or pending litigation requires an interruption in normal data purges, which are so critically needed in our litigious world, where every idle musing in a casually tossed-off e-mail seems to be captured forever for future plaintiffs to find in discovery. Here's what the rule says:

Electronically Stored Information. 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. From, “Committee Note to Federal Rule of Civil Procedure 37(f).” (Emphasis added.) (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

As the comments to the Rules amendment explained:

(This safe harbor clause for suspension of a document retention policy once litigation has begun) focuses on a distinctive feature of computer operations, the routine alteration and deletion of information that attends ordinary use. Many steps essential to computer operation may alter or destroy information, for reasons that have nothing to do with how that information might relate to litigation. As a result, the ordinary operation of computer systems creates a risk that a party may lose potentially discoverable information without culpable conduct on its part. Under Rule 37(f), absent exceptional circumstances, sanctions cannot be imposed for loss of electronically stored information resulting from the routine, good-faith operation of an electronic information system. Rule 37(f) applies only to information lost due to the routine operation of an information system only if the operation was in good faith. From, “Committee Note to Federal Rule of Civil Procedure 37(f).” (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

However, once litigation is “pending or reasonably anticipated,” the rules change:

Good faith in the routine operation of an information system may involve a party's intervention to modify or suspend certain features of that routine operation to prevent the loss of information, if that information is subject to a preservation obligation. The good faith requirement of Rule 37(f) means that a party is not permitted to exploit the routine operation of an information system to thwart discovery obligations by allowing that operation to continue in order to destroy specific stored information that it is required to preserve. When a party is under a duty to preserve information because of pending or reasonably anticipated litigation, intervention in the routine operation of an information system is one aspect of what is often called a “litigation hold.” Among the factors that bear on a party's good faith in the routine operation of an information system are the steps the party took to comply with a court order in the case or party agreement requiring preservation of specific electronically stored information. From, “Committee Note to Federal Rule of Civil Procedure 37(f).” (Emphasis added.) (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

In other words, a typical IT policy requiring routine deletion may have to do a 180-degree shift to preserve the status quo, at least until the litigation ends. Of course, the new procedural rules also apply to the perhaps more common “policy” of doing nothing until a threat is received, and then reacting on an ad hoc basis.

Yet, the challenge of the litigation hold cannot be avoided. What case today does not involve electronic evidence, such as e-mail and digital files? As the comments to the new rules warned:

The volume and dynamic nature of electronically stored information may complicate preservation obligations. The ordinary operation of computers involves both the automatic creation and the automatic deletion or overwriting of certain information. Failure to address preservation issues early in the litigation increases uncertainty and raises a risk of disputes. ' The parties' discussion should pay particular attention to the balance between the competing needs to preserve relevant evidence and to continue routine operations critical to ongoing activities. From, “Committee Note to Federal Rule of Civil Procedure 26(f).” (Emphasis added.) (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

Take a Clear Tack

But too often, the one-size-fits all compliance advice from the IT and legal departments on implementing such a litigation-hold policy seems as arbitrary and unhelpful as Hammer's warning ' “U Can't Touch This!” (the data). Certainly, from the opponent's perspective, the more data preserved the better, and to be produced in response to its demands for copies of hard drives, millions of e-mail messages in native format, and fishing trips through employees' home computers and Web-based e-mail accounts.

Moreover, such “across the board preservation” is clearly not required by the rules. The commentary to revised Rule 26(f) at several points recommends discussion of practical issues to limit the preservation obligation, as early as possible, to avoid undue burdens of a broad freeze, while at the same time meeting the legitimate needs of the parties in discovery:

The parties' discussion should pay particular attention to the balance between the competing needs to preserve relevant evidence and to continue routine operations critical to ongoing activities. Complete or broad
cessation of a party's routine computer operations could paralyze the party's activities. Cf. Manual for Complex Litigation (4th) '11.422 (“A blanket preservation order may be prohibitively expensive and unduly burdensome for parties dependent on computer systems for their day-to-day operations.”) The parties should take account of these considerations in their discussions, with the goal of agreeing on reasonable preservation steps. From, “Committee Note to Federal Rule of Civil Procedure 26(f).” (Emphasis added.) (See, www.uscourts.gov/rules/EDiscovery_w_Notes.pdf.)

Even worse, the oft-dispensed save-everything, touch-nothing advice also blatantly ignores two economic realities of business and law in 2008: IT staffing and memory resources are limited. While it would be nice to have IT staffers with time to do all the litigation-hold data-assembly required by a zealous application of all the electronic discovery that is permitted by the amended federal rules, modern day-to-day pressures often leave the IT department scrambling to locate all the possible evidence when it learns that a litigation hold has been called by senior counsel or manager, much less handle a normal workload.

However, the benefits of an effective, but practical litigation-hold policy can be critical ' and the costs of an ineffective policy can be steep. As a North Carolina court noted in a 2006 case involving millions of dollars of e-discovery expenses:

(T)rial courts should always be cognizant that e-discovery decisions, especially those involving inaccessible data, have the potential to be outcome determinative because of the costs involved. Bank of America et al. v. SR International Business Insurance Company, Ltd., Superior Court of Justice, Mecklenburg County (No. 05-CFS-5564) Nov. 1, 2006.

(For the expensive downside, see, “How Much Will Qualcomm Cost e-Commerce?”, in the April 2008 edition of e-Commerce Law & Strategy, available online at www.ljnonline.com/issues/ljn_ecommerce/24_12/news/150254-1.html.)

From an attorney's perspective, making decisions about document-retention ' and access to client files generally ' on the basis of the IT department's enforcement of policies on litigation holds, seems to be the proverbial tail wagging the dog. In contrast, consider the mindset behind an IT director's quote about what attorneys are “allowed” to have, from an IT department making rules on document-retention based on technical needs ' rather than the attorneys' preference on how best to do their work:

They allow e-mail but then they have personal PST files out there, they allow users to have instant-messaging clients and home e-mail accounts ' they have their documents scattered so far that when a litigation hold comes on, that's where the complexity comes in.” (Emphasis added.) (See, www.law.com/jsp/legaltechnology/pubArti cleLT.jsp?id=1202421520352.)

Learn to Adapt to New Ways

While we all recognize the stressful demands placed on the IT department to manage a huge volume of documents in multiple locations, it would be even more shocking for traditional lawyers to permit administrative support staff to decide what to “allow” them to use to defend their clients. Unfortunately, the realities of litigation today make such a perspective obsolete. Given the large damages awards imposed when electronic documents have been mismanaged in litigation, holding ancient documents may not only be a move potentially harmful to the client being served, but also to a lawyer's career.

Since it appears inevitable that lawyers must “learn to stop worrying and love the litigation hold” (with apologies to Peter Sellers and Stanley Kubrick), consider some of the professional compromises that a litigation hold imposes on attorneys.

Attorney Attention:
Oh, We Were Busy

The first problem that arises when a litigation hold must be put in place is the competition for an attorney's time. When a client is sued (or about to be), its executives presumably will want to speak to the company counsel about the claim, its merits and how it will be handled. At the same time, the client wants to speak with its attorney, but that lawyer must also attend to the implementation of the litigation hold at the firm, and at the client's IT department. IT may know what to do in general, but it probably doesn't know enough about the case to actually do it until the attorney has identified all persons whose records must be frozen (including current and ex-staffers).

Simultaneously, the lead attorney must also put out the hold notice, and segregate and preserve his or her own files. In a law firm, the mid-level associates who may have had the most hands-on involvement in the underlying matter will almost certainly be called to the senior partner's office to explain the nature of the claim, and to provide their analysis of its merits so that the partner can counsel the client.

While all this lawyering is going on, IT must patiently wait for instructions from the lawyers that will be needed to implement the hold. While sound hold policy suggests separating those involved in the underlying matter from implementation of the hold (to eliminate the opportunity and incentive to corrupt evidence), the IT department simply can't know the deal or case without help from those who lived it.

Reviewing Documents to
Refresh Memory

The next practical problem will come when the attorneys naturally want to jump back into the file to review what happened in light of the actual claim that was filed. Such review risks corruption of the electronic documents (and their metadata) if IT has not yet had a chance to preserve them, especially if the documents are opened immediately upon attorneys seeing the complaint before IT has been notified. Many deals today are negotiated entirely electronically, from letter of intent to .PDF closing binder. In an environmentally conscious world of e-mail signatures urging the reader to think about the environment before printing, few, if any, of those e-mails may have been printed out. Therefore, everyone scrambling to review the file to be able to discuss the response with the client will have to turn to the electronic files ' only to be met with a flashing “DO NOT PASS GO” warning properly posted by the IT department (if it replied in a timely fashion to the hold announcement) ' until IT's preservation (with metadata intact) is in place.

In fact, if the client or its senior attorneys had wind of the threat before the claim was filed, they may already have gone back into the “live” files and irreversibly corrupted relevant metadata ' especially if everyone involved has not been trained on the practicalities of preservation and electronic-document handling. (That situation would beg the question of how early litigation threats should have triggered instructions to put a hold into effect.)

Automatic Deletion Programs

As referenced in the revised Rule 37(f), one of the principal obligations after a litigation hold is triggered is the suspension of otherwise ongoing deletion policies. As noted in the comments quoted earlier, this duty to stop otherwise normal housekeeping was deemed critical to protect the judicial process when “the evidence” may exist only in electronic format. Automatic destruction of electronic files, therefore, would compromise the ability to have a fair resolution of the claim for both sides.

Yet, despite these high-minded ideals, shutting off an automatic deletion program may cause immediate problems. Systems may be in place to send automatic warnings demanding deletion of e-mail because of excessive storage volume ' especially when the typical litigation situation may not resolve itself for many months, or even years. Diligent employees may simply follow those instructions, unless the hold procedure prevents such deletion.

An attorney, especially a litigator, may be involved in multiple litigated cases, so that “turning back on” the routine maintenance functions could be delayed for an extended period ' compromising all the IT department's storage strategies. Spread that situation over even a medium-sized firm, and soon the harried IT department may be forced to manage separate holds that affect a majority (if not all) attorneys in the firm, and their support staff.

e-Mail Outside the Wall

Because attorneys will inevitably use the technology that makes their professional lives most convenient (notwithstanding IT directives to funnel all work through firm servers), IT may soon find itself forced to retrieve e-mail from personal accounts, home computers, Web-mail services and other locations less convenient for IT to manage. IT may prohibit them, but attorneys scrambling to keep business and please clients (especially when out of the office) will always use what works best, and (vow to) clean it up when they are back in the office.

The Parent/Child Relationship of
Lawyers and the IT Staff

As anyone who has worked in a law firm knows, lawyers with egos often like to go their own way, whether it is good for them (or the firm), or not. As a result, some may simply ignore a hold directive, especially if compliance would take time away from currently billable work or other immediately demanding projects. More benignly, an attorney may simply be out of the office, whether on vacation or working remotely on a deal, and not see the hold for some time. In either case, IT must become the shepherd of the hold, tracking down everyone who had been involved in the original deal, and all the related records ' again at the expense of completing its current work.

Not Tipping Your Hand

One respected commentary on practice under the new rules, The Sedona Principles Addressing Electronic Document Production, explicitly warns of the risk of an unpredictable response to a heavy-handed hold memo: “It must be recognized that in some circumstances, a legal hold notice may be ' inadvisable (e.g., the notice itself may trigger evidence destruction efforts by the employee under investigation).”

Not only must IT manage many aspects of the hold implementation, but it must do so without attracting the attention of the staff involved with the case and the client ' an unlikely scenario.

IT Must Dictate to Attorneys

In several cases, courts have chastised firms that announced litigation holds but didn't do enough to enforce them fully because management trusted that key employees would obey the hold order. In Hawaiian Airlines, Inc. v Mesa Air Group, Inc., 2007 WL 3172642 (Bankr. D. Hawaii 2007), the court refused to allow a firm to expect that a “valued, trusted, high level employee of the company” would not act contrary to the e-discovery rules by “doing wrongful and foolish things, like destroying evidence, under the pressure of litigation.” Instead, the company “could and should have taken reasonable steps” to prevent such actions affirmatively.

Similarly, the fact that a company's attorneys “may have instructed a litigation hold (was) not relevant,” where company employees deleted key documents anyway, as was seen in In re September 11th Liability Insurance Coverage Cases, 03 Civ. 332 (SDNY June 18, 2007). Another court rebuked a firm's “cursory compliance efforts, including the misplaced reliance on custodian self collection.” Samsung Electronics v. Rambus , 439 F.Supp. 3d 524 (E.D. Va. 2006): “It is not sufficient ' for a company merely to tell employees to save relevant documents. This sort of token effort will hardly ever suffice.”

How Much Follow-up Is Enough?

In NTL, Inc. Securities Litigation, 2007 WL 241344(SDNY 2007), the court held that simply circulating two document-hold memoranda was “grossly negligent,” because many employees never received them, and “no concerted effort to collect the relevant (electronic evidence) took place.” Similarly, one attorney writing on the “response to the e-Discovery Alarm” wrote: “[I]nitial notice and those initial interviews may not be sufficient, however. In large corporations, any one key employee may know only a few of the other key employees likely to be custodians of ESI ["electronically stored information"]. Thus, prudence dictates that there be a follow-up to the initial hold notice and a second round of personal interviews of those new custodians disclosed in the early interview process” (www.abanet.org/buslaw/blt/2007-09-10/smith.shtml).

These opinions almost suggest that if a firm's hold policy didn't preserve the smoking gun, it won't be good enough for a court that is looking after the fact with 20/20 hindsight.

Preparation Short Course Pointers

Of course, these are but a few of the practical problems that confront an e-commerce firm and its counsel ' who is ultimately responsible for compliance with e-discovery rules, as the celebrated Qualcomm court held (see, Qualcomm, Inc. v. Broadcom Corp., 2008 US Dist. Lexis 911 (SD Ca. Jan. 7, 2008)).

Even a casual search online will easily find additional horror stories ' and countless suggestions on how to avoid them. The importance of management buy-in, the sense of urgency and timely response, and (from counsel's perspective) the need to intrude on its client to compel compliance with the policy all could arise as equally important practical obstacles to a successful hold.

Moreover, as these examples of practical problems show, the hold interposes a clear tension between what management attorneys have told IT to do, and what other attorneys will tolerate ' which is a much bigger cultural issue at a law firm or business than a hold-policy question.

Therefore, from the perspective of the e-commerce company and its counsel, which would rather do business and make money than spend the money it hasn't yet earned on litigation support, several points seem clear.

1. Preparation is critical. A plan helps when detailed technical action must be taken quickly and, possibly, confidentially.

2. Vendors. The firm should select a reliable e-discovery vendor. The repeated criticisms of “self-help holds,” even putting aside intentional obstruction and the need to continue to conduct ordinary business, makes it clear that litigants shouldn't try a litigation hold “at home.”

3. Model. A particularly thorough, practical analysis of implementing a litigation hold appears in “The Electronic Discovery Reference Model” (available online at www.edrm.net). The “modules” on preservation and planning long before the lawsuit is a gleam in the eye of opposing counsel. Each is quite helpful in making plans for implementing a live hold. (See, http://edrm.net/wiki/index.php/Preservation_-_Implementation_of_Perservation/Litigation_Hold#Implementation_Considerations; and http://edrm.net/wiki/index.php/Preservation_-_Considerations_Before_the_Duty_to_Preserve_Attaches.) Also, the concepts in the Sedona Principles provide comprehensive suggestions on how to transform the abstractions of the federal rules' general guidelines into realistic, day-to-day operating principles (see, www.thesedonaconference.org/content/miscFiles/TSC_PRINCP_2nd_ed_607.pdf): “The obligation to preserve electronically stored information requires reasonable and good faith efforts to retain information that may be relevant to pending or threatened litigation. However, it is unreasonable to expect parties to take every conceivable step to preserve all potentially relevant electronically stored information.”

Don't Self-destruct

The challenge of an immediate and complete litigation-hold response, while simultaneously meeting all these objectives, may seem like trying to stop the world (in the words of the British New Wave/post-punk rock group Modern English's classic 1980s melody “I Melt with You”) for counsel, and for the IT staff (with front-line responsibility), but the task is all the more complicated as they also try to conduct normal business and prepare to defend the litigation at the same time.

But for those not up to the task, or who don't comply, things won't be getting better, since their careers may “melt” with one another's ' and perhaps even melt with the not-so-gentle push of a sanctioning judge.