Preparing For Life Under The New FRCP: The Corporate Counsel Checklist

Friday, December 1, 2006 - 01:00

As the sheer volume of electronic documents has exploded in recent years, from faxes to emails to instant messaging, managing litigation as it relates to electronic discovery has grown increasingly challenging. For corporate counsel, December 1, 2006, will be a day of good and bad news as the long-awaited changes to the Federal Rules of Civil Procedure take effect. The good news: The new rules will bring some clarity and standardization to what has been a crazy quilt of laws and regulations governing electronic discovery. The bad news: Corporate counsel will need to be prepared right away for the changes the new rules bring.

These new rules will have a major impact on how most organizations manage their electronic data, with an eye towards litigation and the preservation of electronic evidence. In order to be prepared, here are eight action items that in-house counsel need to check off their lists before Dec. 1.

1. Book YourConference Rooms Early

Under the new Rule 26(f), parties must meet and confer within 99 days of the filing of the complaint or 69 days after the first responsive pleading, whichever comes first.

This is not much time for in-house counsel to identify the key players involved in litigation, much less to get a handle on the potentially discoverable data and determine which of outside counsel can best represent the company in the courtroom. As soon as an organization is hit with a lawsuit, in-house counsel need to pull together a team that includes in-house and outside counsel, IT staff, any electronic discovery vendors and the primary business people that may have information about the matter in dispute.

Once assembled, the team must start preparing immediately to meet with the opposite side for the Rule 26(f) conference in an attempt to gain agreement on the parameters of e-discovery including the scope, preservation issues and how to manage production.

2. Know Your Retention Policy

As e-discovery rules have evolved jurisdiction by jurisdiction, the courts have been demanding litigants become more familiar with their records retention policies. If an organization has not yet done this, then it is critical for in-house counsel to gain familiarity with - and get involved with - their company's records retention system.

While many in-house counsel might point to existing records retention programs, in some cases these programs are rather similar to the ethics program that existed at Enron - great on paper, but not quite as effective in practice. Surprisingly, many in-house counsel are already aware of the weaknesses inherent in these current programs, as shown in a study by Cohasset Associates Inc. In this study, a poll of in-house counsels asked, 'If legally challenged, how confident are you that your business organization could successfully demonstrate that its electronic records are accurate, reliable and trustworthy - many years after they were created?' Only 38 percent of respondents said they were confident, quite confident or very confident in the retention program. A third said they were not at all confident in their record-keeping process.

With the new rules taking effect, in-house counsel now need to get involved in developing and implementing an effective records retention program, for both litigation purposes and corporate governance reasons.

However, the job isn't over once the records retention program has been implemented. Changes in technology can happen seemingly overnight, with most such changes resulting in a plethora of new electronic data, as anyone with a BlackBerry probably knows. Other factors can also impact a company's records retention policies, including acquisitions and software conversions. In-house counsel must be vigilant and plan to touch base regularly with the IT staff and outside counsel about possible changes that may be needed for records retention.

3. Determine How AccessibleYour Data Is

As soon as any discovery request is made or simply when an organization can reasonably anticipate litigation, it is time to determine exactly what materials may be potentially discoverable. This includes understanding how backed-up data has been stored - whether on CD, tapes or hard drives - and then consulting with the IT department to find out where other potentially discoverable data may be lurking.

Rule 26(b)(2) differentiates between potentially relevant data that is accessible and that which is not accessible. However, in a motion to compel discovery or for a protective order, the burden of responsibility falls to the responding party to prove that the data is inaccessible. Should the data be successfully determined as not accessible, the court may still order discovery of that data if the requesting party can show good cause for production.

4. Ensure Document Destruction Holds Are Enforced

Once both parties have agreed on the scope of the discovery, a litigation hold should be immediately issued. The hold needs to be specific, it needs to be clear and it needs to be in the hands of the right people. After issuing the hold, in-house counsel also needs to follow up to ensure that the hold is being carried out correctly. Revisions to the hold may also be required during the course of litigation if the discovery parameters change. Note that once the litigation has ended, the hold should be lifted.

5. Take A Hard Look At Your Discovery Review Software

The new rules present an opportunity for organizations to re-evaluate their discovery review software and systems. A key consideration is whether these tools are up to the task of handling massive amounts of electronic data more quickly than ever.

When evaluating existing or new review software, several other factors should also be considered. Can the discovery review tools accommodate multiple formats, as may be required under the new rules? Are the tools flexible enough to integrate with an existing document management system, if any? Are the tools secure and will they ensure confidentiality? Rule 26(b)(5)(B) is more generous than the previous rules when it comes to calling back confidential information that has been inadvertently produced as part of discovery. Nonetheless, it's far better never to have released that information to the opposing side in the first place.

6. Name Your Point Person, Most Knowledgeable And Otherwise

Under the rules, a person must be identified who is 'most knowledgeable' about the matter at hand. Thus, locating someone with both legal and technical expertise becomes more important under the new rules.

7. Find Safe Harbor

FRCP Rule 37(f) provides a safe harbor for companies that have inadvertently destroyed a potentially relevant document, despite 'good faith efforts' to maintain and abide by a records retention program. This is a positive development if a company has, indeed, created a systematic approach to records retention and destruction. If it can be proven that a solid system is in place, the courts will look more kindly on the accidental deletion of some documents.

8. Make Friends With The IT Folks

While not documented in the new rules, developing a positive, productive relationship with the information technology department will become more important than ever after December 1. As the new rules make clear, legal departments will need to take more ownership of how e-data is managed, stored and destroyed. This will rely heavily on IT people to make sure the processes and systems are working as they should, and that in-house counsel understand how these systems work.

Although the new Federal Rules of Civil Procedure may at first seem overwhelming to in-house counsel, these rules will bring a much-needed sense of order to what has been a jumble of legislation and regulation. By preparing now, business organizations can get ready - or as ready as possible - for the next litigation and e-discovery request.

Key Rules Changes

With the amendments to the Federal Rules of Civil Procedure set to take effect on Dec. 1, in-house counsel need to be especially familiar with several changes, including:

Rule 16: Pretrial Conferences; Scheduling; Management. The amendment to Rule 16 says the court can issue scheduling orders for 'provisions for disclosure or discovery of electronically stored information' that could possibly be discussed by parties in conference.

Rule 26(b)(2): General Provisions Governing Discovery; Duty of Disclosure; Discovery Scope and Limits; Limitations. Under the amendments, there is no duty to produce data which is reasonably identified as inaccessible because of burden or cost. However, the court can still order production with good cause.

Rule 26(b)(5)(B): General Provisions Governing Discovery; Duty of Disclosure; Discovery Scope and Limits; Claims of Privilege or Protection of Trial Preparation Materials; Information Produced. Under this amendment, information that has been inadvertently produced in discovery that is subject to a claim of privilege or protection can be 'called back.' Upon being notified, the party that received the documents is required to promptly return, sequester or destroy the files.

Rule 26(f)(3) and (4): General Provisions Governing Discovery; Duty of Disclosure; Conference of Parties; Planning for Discovery. After December 1, when parties confer under this rule they will discuss any issues relating to preserving discoverable information and any issues related to disclosure or discovery of electronically stored information. This includes how electronically stored information should be produced. If the parties agree on a procedure for claims after production, the parties should discuss whether to ask the court to include this agreement in an order.

Rule 34: Production of Documents and Things and Entry Upon Land for Inspection and Other Purposes. The new amendments expand the definition of Rule 34 to now include 'electronically stored information.' Previously, the rules had only recognized 'data compilations' and 'tangible things' as discoverable information. The new rules will require litigating parties to search for discoverable material in multiple electronic document formats and types in order to determine all potentially relevant and privileged information before producing that data.

Matthew Blake is the Vice President of Professional Services at OnSite E-Discovery. Mr. Blake has been the E-Discovery lead for many complex global discovery matters including internal investigations, antitrust, and the Foreign Corrupt Practices Act. Mr. Blake has published multiple works on Electronic Evidence and its growing demand.

Please email the author at mblake@onss.com with questions about this article.