IT May Face New E-discovery Rules in December

Firms installing apps, anticipating legal requirements

New rules for electronic discovery of documents in civil cases go into effect in December. Lack of compliance could result in significant penalties for companies, legal experts and executives said.

The new rules were created by an advisory committee to the Judicial Conference of the United States, which oversees administrative and policy issues for federal courts, and were adopted by the U.S. Supreme Court on May 1, said Ron Hedges, magistrate judge in the U.S. District Court in Newark.

Unless Congress acts to change the rules, they will become effective on Dec. 1, Hedges said.

The new e-discovery rules are listed in a 300-plus page document that was created by the advisory committee.

The rules require that when two companies are involved in civil litigation, they must meet within 30 days of the filing of the lawsuit to decide how to handle electronic data. The parties must agree on which records are to be shared and in which electronic format, as well as on a definition for "accessible data," said John Bace, an analyst at Gartner Inc. in Stamford, Conn.

It was partly to ensure compliance with legal discovery rules that EMC National Life Co. in Urbandale, Iowa, started using an e-mail archiving service from Fortiva Inc. in Norwalk, Conn., as part of a general corporate document-retention policy. "The ability to do legal discovery with their searching capabilities sold us on [the Fortiva service]," said Marc Comstock, assistant vice president and technical services manager at EMC National Life.

The life insurance company has been using the Fortiva service and has stored 350,000 pieces of e-mail since February. Even so, a full-text search takes less than 10 seconds, Comstock said. But he noted that the company can't track Web-based e-mail and instant messaging documents and therefore could run into problems complying with enhanced e-discovery rules.

"Eventually, we'll have to find a way to [capture] text messages," he said.

New features in backup and archiving products may make it easier for users to retrieve their own data but could wind up opening corporations to more legal liability, said Deidre Paknad, CEO of PSS Systems Inc., a Mountain View, Calif.-based maker of software intended to help companies create and manage global retention policies. "Anyone in litigation is going to say that storing less data is always better. Retain what they need to -- nothing more, nothing less," because retaining more data than required could give an opposing side more ammunition, Paknad said.

Planning Ahead

Even organizations that may be exempt from such retention rules, such as public entities, are starting to take steps to comply with them. "We know that ultimately, it'll come to pass that we'll have to be compliant," said Jory Wolf, CIO for the city of Santa Monica, Calif., which has a population of 93,000. Wolf said it's unclear whether the new rules will require compliance by the city.

To help manage possible e-discovery requests, the city is setting up a document management system using Compulink Management Center Inc. 's Laserfiche document management system and Hewlett-Packard Co.'s Reference Information Storage System. The goal is to help employees keep track of documents and get rid of those they don't need, Wolf said.

Wolf has also set up new internal rules forbidding the use of instant messaging and Web-based e-mail that can't easily be archived and tracked. "We have IM turned off. We don't let them use private e-mail," he said.

Bace said that "organizations need to look at how implementing records management can help corporate performance. They need to use it to some business advantage, and not just as a business device."

The alternative is costly, Paknad noted. Previously, "it didn't cost you tens of millions if you screwed up," she said. "Now it will." 

Key Changes
E-discovery rules in civil lawsuits:

Require discussions between the court and both parties about electronic discovery.
Require both parties to agree on a format for electronic discovery.
Do not require litigants to produce electronic data that isn't readily accessible.

Source: John Bace, Gartner Inc.

Copyright © 2006 IDG Communications, Inc.

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