Originally from Electronic Disclosure in International Arbitration

The U.S. Federal Rules of Civil Procedure (FRCP) on Electronically Stored Information (ESI) were implemented on 1 December 2006 to address changes in U.S. litigation that few anticipated. Risks have emerged that litigants and their counsel are struggling to come to grips with. Attorneys, both in-house and outside counsel, are faced with the challenge of technology issues that they are not well-equipped to understand. Judges are equally challenged to rule on issues that few fully comprehend. A complaint has been filed. The litigant has met with their outside counsel, who advises them that their ESI is now subject to discovery; that their IT staff may be subject to deposition; that they must immediately take steps to preserve all ESI data or risk spoliation sanctions and that they should be prepared for the large costs of compliance. The general counsel is trying to explain this to the business managers, who cannot believe what they are hearing. After all, the allegations in the complaint are without foundation. Cannot their outside counsel somehow make this go away? The head of litigation has cancelled his vacation plans. Did no one see this coming?

Yes, those of us who work in litigation knew this was coming. Litigants had been increasingly requesting electronically created and stored documents for a number of years. The courts had been increasingly granting those requests. It was becoming clear that since most “documents” are now created electronically, and few ever make it to paper form, the underlying concepts driving discovery needed to be modified to address this.

RISK AND COST

The earliest significant risk arises from the duty to preserve potentially relevant ESI when legal proceedings are “reasonably anticipated”. Failure to do so can result in spoliation sanctions, so the importance of document preservation cannot be underestimated. The means to preserve a wide variety of ESI is not a simple matter and can be costly and burdensome.