People unfamiliar with litigation in the United States often underestimate the depth and breadth of the litigation discovery process. Pretrial discovery allows the parties to gather and exchange information related to the cause of action on which the lawsuit is based.
Discovery is conducted in several ways, through written questions and answers (also known as interrogatories), oral questioning under oath outside the courtroom (depositions), requests to admit particular allegations (requests for admissions), written requests to produce and examine documents and other items, including records of medical examinations, site inspections, product testing, and exhumation (requests to produce), to name a few.
It is these document production requests that define “documents“ in broad, encompassing terms and make all records vulnerable to public scrutiny. Some people are shocked to learn that even documents stored at home or personal diaries are subject to discovery if their content relates to the subject of the lawsuit. It does not matter whether the information is stored in dusty file cabinets tucked away in dingy warehouses, in your basement or garage, or in a matrix of electronic immortality – where they sleep waiting for a mouse click to resuscitate them. Everything reasonably calculated to lead to discoverable evidence is fair game. Its physical location or its format is irrelevant. You need to cough it up.
The only exception to the rule is information that qualifies under privilege, such as the attorney-client privilege. That’s why privilege is such a powerful tool and the confidentiality necessary to preserve it must be diligently guarded.
Disorganized electronic files can send discovery costs skyrocketing. When Lexar Media sued Toshiba America Electronic Components for alleged misappropriation of trade secrets, unfair competition, and breach of fiduciary duty, Lexar’s discovery requests included e-mail and electronic files for an eight-year period. Toshiba identified more than eight hundred computer backup tapes responsive to the discovery demand, but translating the data was estimated to cost between $1.5 and $1.9 million.
As electronic documents and communications have become part of the business mainstream, such documents increasingly represent the bulk of document production in litigation. Historically, cheap data-storage solutions have made it easy to keep large amounts of data without organizing them in any meaningful way. But this unstructured data is difficult to review and costly to sort. The price of managing a hundred gigabytes of data in litigation, for example, which represents approximately 7.5 million printed pages, can exceed $1 million – and that does not include the cost of attorney review.
The failure to properly maintain and produce electronic documents can be painful. When securities broker Laura Zubulake sued her employer UBS Warburg for sex discrimination, for example, she claimed the company failed to keep incriminating e-mail that would prove her case. Based on the evidence presented, the Court agreed with her. When the company failed to produce the e-mails the court instructed the jury that it could make negative inferences from the lost documents. The jurors did. Then they returned with a $29 million verdict in favor of Zubulake.
To avoid costly negative inferences that result from mislaid and mistakenly deleted documents, smart companies adopt document retention programs tailored to their specific businesses. That doesn’t mean you’re required to keep everything forever. However, it does mean crafting an appropriate document retention policy and avoiding document retention disasters. It also helps to create a data map that identifies where your documents (paper and electronic) are stored, including the documents’ custodian. Having a road map available to help you quickly identify where to look for relevant information can save time and money.