Partners in Preservation

Some outside counsel historically have felt that their clients' duty to preserve evidence rests primarily with those clients. The all-too-common practice was to fire off a memo to the client with some general guidance and then check it off the “to do” list. It was left up to the client to make sure proper steps were taken from there.

If that was ever a safe or defensible process, those days are long gone. Preservation is in the spotlight after a series of important decisions came down on the federal level in 2010. We'll touch on the cases specifically, but the takeaway is that the standard has been raised. While preservation is a well-established concept, the added complexities surrounding electronic information and data have changed the dynamic. It isn't that the preservation obligation is new ' it's just much easier to make mistakes and get into trouble than it used to be.

Today, outside counsel share the responsibility for ensuring that reasonable steps are taken to identify, preserve, collect and produce potentially relevant information. Rather than staying at arm's length from the issue, now outside counsel should be well versed in the issues and ready to roll up their sleeves to assist.

This article first reviews how evolving case law is driving this trend. It then examines ways that outside counsel can partner with their clients in order to fulfill their joint obligation to preserve information potentially relevant to pending or reasonably anticipated litigation or investigations.

The Post-Pension Committee World

Much has been written about Judge Shira Scheindlin's 89-page opinion in Pension Committee of the Univ. of Montreal v. Banc of America Securities (446 F. Supp. 2d 163, S.D.N.Y. Jan. 2010), so we will focus on its pertinence to outside counsel. The opinion notes several occasions when counsel failed to supervise the preservation process. According to Judge Scheindlin, such failure “did not meet the standard for a litigation hold,” including placing “total reliance on the employee to search and select what that employee believed to be responsive records without any supervision from Counsel.” (Id., at 28.)

The court criticized counsel for “delegat[ing] search efforts without any supervision.” (Id. at 42-3). Lackadaisical attitudes toward litigation holds by counsel, including delegating management of the litigation hold process to the custodians, are not sufficient to meet Judge Scheindlin's threshold standard for acceptable conduct by counsel.

As 2010 progressed, subsequent decisions, such as Rimkus v. Cammarata, Victor Stanley II and Orbit One, explored the issue of preservation, in particular reacting to various holdings of Pension Committee around issues of prejudice, sanctions, proportionality and willfulness. However, none of those cases leave much doubt about the need to issue timely legal holds.

In Jones v. Bremen H.S. (N.D.Ill., May 2010), Judge Susan E. Cox reinforced the need for counsel to be actively involved in preservation efforts. She found it unreasonable that the defendant instructed employees “to search their own e-mail without help from counsel and to cull from that e-mail what would be relevant documents.”

Based on evolving case law, a contemporary standard of practice seems to be emerging, at least at the federal level, where many courts expect counsel to oversee preservation and collection throughout the discovery process.

'Fire and Forget' Memos Are No Longer Adequate

Browning Marean, co-chair of the Electronic Discovery Readiness and Response Group at DLA Piper, recently wrote: “A legal hold is not a 'fire-and-forget missile,' [one] has to not only aim carefully, but keep control of it from beginning to end.” Sending a preservation memo alone may not be enough to insulate counsel against the risk of sanctions. Instead, counsel are well-advised to understand and oversee the whole preservation process. Judge Scheindlin pointed out that perfection isn't the standard, but lawyers must at least engage in proportionally appropriate good faith efforts to preserve and produce relevant evidence.

Here are several guidelines that outside counsel should consider when assisting their clients in successfully navigating the preservation process.

• Evaluate the client's capabilities. Clients vary widely with regard to their understanding of e-discovery obligations and level of litigation readiness. Some are serial litigants and have implemented preservation workflows that are “state of the art.” Others may not face litigation often enough that they have learned to meet the Pension Committee and Rimkus standards. If there is a gap, then outside counsel should help to fill it. Offer advice, tools and support that will get the preservation process started in a timely and effective way. There's no reason to lose the whole ballgame in the first inning, so to speak.
• Start with the basics. Litigators should aspire to high standards of preservation in the wake of Pension Committee and other cases. This includes implementing timely legal holds, preferably in written form with compliance acknowledgements from custodians. It is also necessary to suspend automatic deletion of potentially relevant data. A preferred practice is to send periodic hold updates and reminders to custodians who may have relevant information that has not yet been collected. Unless data is under threat of imminent destruction ' either because of the temporal nature of its storage or because it would be unreasonable to trust the custodian ' instructing custodians to identify relevant records and prevent the destruction of those records (a.k.a., “self-preservation”) can be a reasonable, cost-effective and defensible approach in most cases.
• Determine the scope of preservation efforts. There may be a fine line between “enough” and “too much” when it comes to preservation efforts and any associated costs. There is no “one size fits all” approach. Early attention to preservation issues and cooperative efforts with opposing counsel can help to head off potential problems down the road. Proactive steps and cooperation between counsel will also reinforce to the court the good-faith efforts of the parties. Once initial efforts have been taken to preserve electronically stored information (ESI), dig into the storage and retention practices for potentially relevant data. Whether or not you find it necessary to engage in formal “data mapping,” it is important to identify what information is potentially relevant to the particular matter at issue, where it resides, and who has control over it. In many corporations, information resides in multiple areas due to archiving, disaster recovery and information servers. Ask lots of questions and validate, then refine the scope of the litigation hold based on the answers.
• Document rigorously. We all know that litigants' actions may be judged with 20/20 hindsight, regardless of the fact that, in most jurisdictions, the applicable standard of care is based on “what was known at the time.” Carefully note what actions are being taken and why. To respond to a later challenge, it helps to have the process documented so that the court can see a good-faith effort was made using a repeatable, defensible process.
• Leverage technology. While information technology has made the preservation process immeasurably more complex, technology can also assist in the process. New software programs are available to automate the preservation workflow and enable inside and outside legal teams to collaborate seamlessly and have real-time information on the progress of preservation, collection, review and production efforts. This intelligence can prove invaluable in keeping the process on track and making adjustments as new information comes to light.
• Be prepared. Rules of procedure and case law open the door for discussions about preservation. Take the opportunity to engage in litigation readiness counseling. A proactive approach can improve outcomes and reduce risk when the next trigger event arises. Proactive attention to sound records management, legal hold processes and procedures, training of hold custodians, and formation of a cross-disciplinary litigation hold team can reduce future risks and costs. For many companies, the business case is much stronger than it used to be to invest in legal hold procedures and tools. Don't delay getting started on these efforts.

Conclusion

Evolving case law establishes that many courts expect counsel to be actively engaged in ensuring that key information is available to opposing parties and the court as litigation progresses. Without full and fair production of relevant documents and data, discovery process will be impaired and ultimately impede the resolution of litigations or investigations. By implementing some or all of the above steps, counsel can become an effective partner in helping to ensure that their clients are “litigation ready” and in full compliance with legal hold obligations.

Some outside counsel historically have felt that their clients' duty to preserve evidence rests primarily with those clients. The all-too-common practice was to fire off a memo to the client with some general guidance and then check it off the “to do” list. It was left up to the client to make sure proper steps were taken from there.

If that was ever a safe or defensible process, those days are long gone. Preservation is in the spotlight after a series of important decisions came down on the federal level in 2010. We'll touch on the cases specifically, but the takeaway is that the standard has been raised. While preservation is a well-established concept, the added complexities surrounding electronic information and data have changed the dynamic. It isn't that the preservation obligation is new ' it's just much easier to make mistakes and get into trouble than it used to be.

Today, outside counsel share the responsibility for ensuring that reasonable steps are taken to identify, preserve, collect and produce potentially relevant information. Rather than staying at arm's length from the issue, now outside counsel should be well versed in the issues and ready to roll up their sleeves to assist.

This article first reviews how evolving case law is driving this trend. It then examines ways that outside counsel can partner with their clients in order to fulfill their joint obligation to preserve information potentially relevant to pending or reasonably anticipated litigation or investigations.

The Post-Pension Committee World

Much has been written about Judge Shira Scheindlin's 89-page opinion in Pension Committee of the Univ. of Montreal v. Banc of America Securities (446 F. Supp. 2d 163, S.D.N.Y. Jan. 2010), so we will focus on its pertinence to outside counsel. The opinion notes several occasions when counsel failed to supervise the preservation process. According to Judge Scheindlin, such failure “did not meet the standard for a litigation hold,” including placing “total reliance on the employee to search and select what that employee believed to be responsive records without any supervision from Counsel.” (Id., at 28.)

The court criticized counsel for “delegat[ing] search efforts without any supervision.” (Id. at 42-3). Lackadaisical attitudes toward litigation holds by counsel, including delegating management of the litigation hold process to the custodians, are not sufficient to meet Judge Scheindlin's threshold standard for acceptable conduct by counsel.

As 2010 progressed, subsequent decisions, such as Rimkus v. Cammarata, Victor Stanley II and Orbit One, explored the issue of preservation, in particular reacting to various holdings of Pension Committee around issues of prejudice, sanctions, proportionality and willfulness. However, none of those cases leave much doubt about the need to issue timely legal holds.

In Jones v. Bremen H.S. (N.D.Ill., May 2010), Judge Susan E. Cox reinforced the need for counsel to be actively involved in preservation efforts. She found it unreasonable that the defendant instructed employees “to search their own e-mail without help from counsel and to cull from that e-mail what would be relevant documents.”

Based on evolving case law, a contemporary standard of practice seems to be emerging, at least at the federal level, where many courts expect counsel to oversee preservation and collection throughout the discovery process.

'Fire and Forget' Memos Are No Longer Adequate

Browning Marean, co-chair of the Electronic Discovery Readiness and Response Group at DLA Piper, recently wrote: “A legal hold is not a 'fire-and-forget missile,' [one] has to not only aim carefully, but keep control of it from beginning to end.” Sending a preservation memo alone may not be enough to insulate counsel against the risk of sanctions. Instead, counsel are well-advised to understand and oversee the whole preservation process. Judge Scheindlin pointed out that perfection isn't the standard, but lawyers must at least engage in proportionally appropriate good faith efforts to preserve and produce relevant evidence.

Here are several guidelines that outside counsel should consider when assisting their clients in successfully navigating the preservation process.

• Evaluate the client's capabilities. Clients vary widely with regard to their understanding of e-discovery obligations and level of litigation readiness. Some are serial litigants and have implemented preservation workflows that are “state of the art.” Others may not face litigation often enough that they have learned to meet the Pension Committee and Rimkus standards. If there is a gap, then outside counsel should help to fill it. Offer advice, tools and support that will get the preservation process started in a timely and effective way. There's no reason to lose the whole ballgame in the first inning, so to speak.
• Start with the basics. Litigators should aspire to high standards of preservation in the wake of Pension Committee and other cases. This includes implementing timely legal holds, preferably in written form with compliance acknowledgements from custodians. It is also necessary to suspend automatic deletion of potentially relevant data. A preferred practice is to send periodic hold updates and reminders to custodians who may have relevant information that has not yet been collected. Unless data is under threat of imminent destruction ' either because of the temporal nature of its storage or because it would be unreasonable to trust the custodian ' instructing custodians to identify relevant records and prevent the destruction of those records (a.k.a., “self-preservation”) can be a reasonable, cost-effective and defensible approach in most cases.
• Determine the scope of preservation efforts. There may be a fine line between “enough” and “too much” when it comes to preservation efforts and any associated costs. There is no “one size fits all” approach. Early attention to preservation issues and cooperative efforts with opposing counsel can help to head off potential problems down the road. Proactive steps and cooperation between counsel will also reinforce to the court the good-faith efforts of the parties. Once initial efforts have been taken to preserve electronically stored information (ESI), dig into the storage and retention practices for potentially relevant data. Whether or not you find it necessary to engage in formal “data mapping,” it is important to identify what information is potentially relevant to the particular matter at issue, where it resides, and who has control over it. In many corporations, information resides in multiple areas due to archiving, disaster recovery and information servers. Ask lots of questions and validate, then refine the scope of the litigation hold based on the answers.
• Document rigorously. We all know that litigants' actions may be judged with 20/20 hindsight, regardless of the fact that, in most jurisdictions, the applicable standard of care is based on “what was known at the time.” Carefully note what actions are being taken and why. To respond to a later challenge, it helps to have the process documented so that the court can see a good-faith effort was made using a repeatable, defensible process.
• Leverage technology. While information technology has made the preservation process immeasurably more complex, technology can also assist in the process. New software programs are available to automate the preservation workflow and enable inside and outside legal teams to collaborate seamlessly and have real-time information on the progress of preservation, collection, review and production efforts. This intelligence can prove invaluable in keeping the process on track and making adjustments as new information comes to light.
• Be prepared. Rules of procedure and case law open the door for discussions about preservation. Take the opportunity to engage in litigation readiness counseling. A proactive approach can improve outcomes and reduce risk when the next trigger event arises. Proactive attention to sound records management, legal hold processes and procedures, training of hold custodians, and formation of a cross-disciplinary litigation hold team can reduce future risks and costs. For many companies, the business case is much stronger than it used to be to invest in legal hold procedures and tools. Don't delay getting started on these efforts.

Conclusion

Evolving case law establishes that many courts expect counsel to be actively engaged in ensuring that key information is available to opposing parties and the court as litigation progresses. Without full and fair production of relevant documents and data, discovery process will be impaired and ultimately impede the resolution of litigations or investigations. By implementing some or all of the above steps, counsel can become an effective partner in helping to ensure that their clients are “litigation ready” and in full compliance with legal hold obligations.