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Discover Or Else: New Rules On Electronic Evidence

As of Dec. 1, companies and their IT departments must produce more kinds of information earlier in the litigation process--and if they can't, they'd better be ready to explain the reason

The U.S. legal system last week made good on its promise to get stricter in compelling companies to produce electronically stored information as evidence in civil court cases. As of Dec. 1, companies and their IT departments must produce information earlier in the litigation process, and if they can't, they'd better be ready to explain why.

If you're not a fan of ambiguously worded legal documents, what follows is an executive summary of the amended Federal Rules of Civil Procedure.

You have to know what information your company is storing and where it's located. If you have a policy governing how long your company stores information before it's purged, be prepared to prove that policy was in effect and enforced before the court's request for information. And if you think it's going to be too difficult or expensive to find court-requested data, you'll need to prove it.

E-mail has been used as evidence in court cases for years; the amended rules also cover electronic documents, spreadsheets, image and sound files, and database info. The language is inclusive enough to cover any electronic media developed in the future. The amended rules explicitly state that requested information must be turned over within 120 days after a complaint has been served on a defendant. If this deadline isn't met, it's possible that electronic evidence could be ruled inadmissible. Or in the instance of a defendant sitting on potentially damaging evidence, courts can levy fines and other penalties.


The amended rules are to CIOs what Sarbanes-Oxley was to CFOs, says Riki Fujitani, a former attorney who's now president of IT service provider Hoike. While the rules apply to federal cases, state courts tend to follow the higher courts, he adds.

Tips For Complying
Maintain a list of all servers that store both structured and unstructured data
Implement and enforce a policy that defines which types of files are retained and for how long
Develop a strategy for managing the storage needs of rapidly growing e-mail systems
Add an archiving system to all e-mail servers
Train IT pros on their responsibilities under the amended rules
Data: Azaleos CTO Keith McCall
The courts are showing their understanding that information is much easier to retrieve from modern storage technologies, while at the same time acknowledging that finding the right information on obsolete media could be just as difficult as digging up a paper document in a warehouse of filing cabinets.

Noticeably missing in the amended rules are guidelines that quantify what it means for data to be too time-consuming or expensive to produce. The courts prefer to let judges create case-based rules as such cases are tried.

The larger the company, the more likely it's already been subject to requests for electronic discovery. In a survey by Enterprise Strategy Group, 91% of 568 e-mail, database, and compliance pros at companies with more than 20,000 employees said their organizations had been issued a discovery request for e-mail last year.

One thing that's anything but ambiguous is the legal system's disdain for companies that intentionally destroy electronically stored information. Morgan Stanley in May paid $15 million to settle Securities and Exchange Commission charges that it destroyed more than 200,000 e-mails and failed to cooperate with SEC investigators looking into Wall Street business practices. As part of the probes, the SEC between 2000 and 2004 asked Morgan Stanley to hand over copies of e-mail it believed to be relevant, but "Morgan Stanley did not search diligently for backup tapes containing responsive e-mails until 2005," according to an SEC statement in May.

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Electronically stored data is fast becoming more timely and relevant than paper evidence. While the amended rules give the courts the flexibility to determine accessible versus inaccessible data, don't expect much sympathy when judges suspect you may be withholding potentially important evidence. Paul Lewis, director of the data forensics practice of risk analysis firm Protiviti, testified in May 2005 before the rules committee: "If information exists in bits and bytes on a medium, it's accessible." You must look under every stone to find the truth, Lewis added, not just the stones in plain view.

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