E-DISCOVERY REQUIREMENTS
DEFINITION (ERD) - NEW

RBZane Advisory Group has developed and recently announced a unique and comprehensive offering to help clients mitigate the potentially negative impact of electronic discovery (e-discovery) as a result of required litigation discovery.

Revisions to the Federal Rules of Civil Procedure first released in 2006, specifically address the discovery process relating to digital evidence. These rules formalize a new category of evidence: Electronically Stored Information (ESI). RB Zane’s “best practices” approach to discovery enables enterprises to identify all the key elements required for a cost effective and auditable e-discovery program. With RBZane’s assistance, clients are able to expeditiously determine where and how ESI is stored in the event of a litigation. If clients have not properly defined their processes and procedures, mandatory discovery requests can result in unnecessary and costly delays and business impacts. In addition, companies are subject to excessive fines if they are not able to comply in a timely manner or if there has been “spoliation”, which is the intentional or inadvertent deletion of discoverable ESI.

Once the critical business requirements are determined, specific action plans will be developed to prevent and/or reduce losses. Pursuant to RBZane providing a thorough analysis tailored to each client, data retention schedules are defined and become the key to defining the specific solutions. Thus enabling the client to effectively implement and manage an efficient e-discovery program. Our “hands on” approach focuses on each client’s specific requirements and scales the project to meet that client’s needs.

Based on the mutually agreed to engagement scope, our fees for determining IT & Business application priorities, developing an appropriate e-discovery strategy and specific solutions is dependent on the number of business applications, client locations, and the technology environment. We will spend approximately five (5) days on site and complete the Statement of Work (SOW) deliverables over an elapsed time of 3-5 weeks, depending on the client’s availability and schedule.

Compiling the required information typically is the responsibility of the IT department. After the necessary information is compiled, it may be reviewed by your legal team, often at a cost of hundreds of dollars per hour to determine what information is relevant. This is one of the hidden costs of litigation. Although spoliation is often the reason for fines and other sanctions, a well defined and managed e-discovery program can provide Safe Harbor, meaning there will be no penalties for deleting electronically stored information in keeping with routine operation of IT systems.

The following Deliverables will be provided from the Phase I assessment consulting engagement:

• Identification of gaps in procedures and processes for requesting and responding to requests for required ESI information
• Identification of all critical applications and storage dependencies
• Analysis of data retention policies and identification of potential issues for e-discovery, for example how tape storage could result in additional cost
• Review of current data backup and offsite storage practices as they relate to e-discovery
• Complete written report assessing each of the critical e-discovery components and provide specific recommendations to ensure the client’s e-discovery program meets Federal and the client’s specific requirement

Should the client implement the specific recommendations, RBZane will provide assistance and submit a Phase 2 proposal and SOW

Revisions to the Federal Rules of Civil Procedure made in 2006 specifically address the discovery process relating to digital evidence. These rules formalize a new category of evidence: Electronically Stored Information (ESI). Previously, electronic evidence was included in the category of “documents.” Under the new rules, companies subject to the discovery process may be required to produce files in their native formats, and the metadata may also be subject to discovery. While cases filed in state courts have different some variation as to specific standards, many of the high profile cases are in fact brought in Federal Court. Rules which govern e-discovery include Federal Rules of Civil Procedure (FRCP) Rule 16, Rule 26, Rule 33, Rule 34, Rule 37 and Rule 45. In addition to these rules, there are local rulings, which may also affect how e-discovery requests are interpreted. Failure to abide by these rules can have severe financial repercussions.

Huge fines have been levied for violation of discovery rules

Fines for failing to properly comply with e-discovery requests have cost companies millions of dollars. For example, Qualcomm was fined $8.5 million for failing to turn over emails and other electronic records in 2008. Even prior to formal e-discovery rules companies have been fined for failure to produce ESI. Morgan Stanley settled fines totaling $15 million for alleged violations of discovery rules in 2005. Phillip Morris was fined $2.5 million in 1999. UBS Securities paid $2.1 million in fines for failure to preserve emails in 2005. Clearly, courts have been very willing to impose very large monetary fines for companies who are ill prepared. So the question is can you afford not be prepared?

What is ESI?

This includes documents, spreadsheets, and transactions in databases, emails and instant messages (if company sponsored). The responsibility to preserve and produce these items will typically fall to the IT department. IT departments are responsible for locating and collecting the information, and even restoring the information from tape if it does not exist in another format. Once that is complete, the information must be reviewed your legal team and ultimately produced if it is relevant. While intentional or inadvertent deletion of discoverable ESI (also referred to as Spoliation) is often the reason for fines and other sanctions, another hidden cost of litigation is the review of ESI by your attorneys. One unprepared company was given 6 weeks to come up with requested ESI, which required 10 people working 50 hours/week (including attorneys billing up to $600/hr) to timely complete the request. This company incurred a cost of nearly $10 million to defend against a $50 million fraud investigation.

What is Spoliation?

Spoliation is defined as “the deliberate or inadvertent modification, loss or destruction of evidence by a party who has been put on notice of litigation but has failed to take appropriate steps to preserve potentially relevant data” (Commonwealth Legal, 2008). Spoliation claims typically result from a lack of a comprehensive ESI life cycle.

Safe Harbor - FRCP Rule 37(e)

A well-defined plan of ESI management can provide protection or Safe Harbor for a company acting in good faith. Safe Harbor means there will be no penalties for deleting electronically stored information in keeping with routine operation of IT systems, provided the party took reasonable steps to preserve it. However, this means that companies must have granular retention policies in place, and technology to enforce those policies and audit the enforcement as well.