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Preparing for e-discovery: Why firms need data retention policies

originally published by The Lawyers Weekly

By some estimates, any given billion-dollar corporation faces more than 500 lawsuits every year. And for some, litigation expenses may be their largest unfunded liability.

Ballooning these expenses are settlements conceded when litigation costs don’t seem to justify arguing a case.

Litigation preparedness can mitigate the e-discovery slice of this liability, but achieving this state isn’t easy. Few people, for instance, can precisely balance storage costs against the effective mitigation of discovery risks – what can you throw away and what must you keep? An all-too-common disconnect between corporate and e-discovery document retention needs doesn’t help.

The bad news: there is no one-size-fits-all litigation preparedness playbook. The good news: best practices are emerging.

And for “paperless” offices, there’s even better news: they have already invested in many of the policies, procedures, tools and training that support e-discovery preparedness.

Procedures, tools and training flow from clear policies. “Our clients make sure they have a current documented records retention policy in place for all forms of information,” said Caroline Sweeney, the Minneapolis, MN-based director of practice group technology services for Dorsey & Whitney LLP.

Taking “what to keep/what to destroy” decisions out of the grey and into black and white keeps a firm’s data collection (and storage and e-discovery costs) more manageable. According to Michelle Mittermair, litigation services senior product consultant for LexisNexis Canada Inc. (which owns The Lawyers Weekly), “Retention strategies and policies need to come from collaboration between IT, legal and records management executives.”

Once policies are set, effective data retention procedures can flourish. Certain common practices include the “paperless” habit of scanning paper once it arrives and handling only the electronic versions.

Dominic Jaar also argues for reducing both data duplication and the number of areas where people store data to shrink the scope of e-discovery forays. “Lawyers must ask where employees save documents,” said the legal counsel for the Montreal-based e-discovery firm Ledjit Consulting. “Network drives? PCs? USB keys? Mobile drives?” The more places a lawyer needs to check, the poorer a company’s “information hygiene.”

Keeping files on servers also enables people to send links to those files rather than sending entire copies as attachments, which results in unwanted duplication.

Such servers were once filled with user-created file folders. Today, content management systems simplify the centralization, tagging and management of documents. They also reduce errors by pruning the human element from document management.

“Smart technology does the initial legwork for categorizing, classifying, maintaining and destroying information in a thoughtful, methodical way,” said Joel Wuesthoff, principal of LECG, LLC, a global expert services company based in Emeryville, CA.

As with any IT acquisition, the tool should fit the business and its existing systems, and not the other way around. “We seek to understand what a company is going through, what its requirements are, its systems, its culture,” Wuesthoff added.

“Whenever you buy software, you want to see who it integrates with,” Mittermair said.

Two types of training typically suffice in e-discovery-ready organizations. At one level, everybody who handles company information needs high-level instruction on what to do and why and how to do it.

“Information management used to be a centralized function when everything was in hard copy,” said Mary Ann Benson, director of consulting services for e-discovery firm Epiq Systems Inc. “Now it’s electronic and it’s dispersed. People are their own records managers.”

Benson suggests that companies clarify document retention practices for non-technical users using simple questions like “If this was paper, would you keep it?” and “Do you really need to reply all on an e-mail?” She also suggests people use the phone to settle matters that require a lot of back-and-forth.

In addition, Jaar recommends the creation of an e-discovery “SWAT team,” ready to act on e-discovery holds. Members of this team improve their knowledge and abilities by attending conferences and otherwise staying abreast of developments in e-discovery.

To help the SWAT team, Sweeney suggests creating a data map – in effect, a litigation hold playbook. Data maps list the kinds of documents usually involved in a given type of matter, where they’re found and who to contact. “At a meet and confer, attorneys are more easily informed because they have a document they can refer to,” Sweeney said.

Some companies entrust full time directors of e-discovery to bring their organizations to e-discovery preparedness. As well as expertise in law and IT, an e-discovery director must know the business itself – intimately – to serve its best legal interests. “Technology counsel (another term for e-discovery director) knows the IT infrastructure, company needs, the type of litigation and so forth,” said Jaar.

“You must understand the legal and business climate in which you operate,” Wuesthoff added.

An internal director may be more likely than outside counsel to control costs. “They want to over-collect, err on the side of caution,” said Jaar. “But the cost may be disproportionate relative to the potential relevance of data.”

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