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Electronic Data Storage is Great...Until You Get

Sued A little prior planning can prevent big headaches later

Chris Madsen, Claims Associates

I’mjustoldenoughtorememberwhenthebusinessworld dealt with paper, as opposed to megabytes of data. Running out of storage space literally meant there was no more physical room to house more paper. That meant, gasp, actually destroying old files to make room for new ones,orperhapsconvertingpaperstoimagesonmicrofilm or microfiche. Really important documents and films had to be stored in fireproof cabinets or vaults. Now, when we run out of storage space, we buy bigger hard drives or add another server to the lineup and we hedge against data failures or destruction by storing backups off-site or backing up to “the cloud. ”

Most of us are familiar with the discovery process involved in litigation. The lawyers exchange requests for information in the form of interrogatories (questions to answer) and requests for production (inspection or copies ofdocuments).Intoday ’sworld, “documents”prettymuch includes “data, ” so in addition to any paper files, request for production also encompass things like spreadsheets, drafts of reports or letters, emails, photos, text messages, and all sorts of other things that may never have been on paper. It can really be overwhelming and finding and producing these things can be time consuming and expensive. But, you can take some steps to make things easier on yourself, and perhaps better position yourself if and when litigation arises.

Thefirststepistodevise,activelymanage,andvigorously enforce a thorough data retention policy. Your lawyers wouldloveitifyoudestroyedalldatatheseconditbecame un-needed or outdated. In reality, businesses (including governmental entities) need some legacy data to perform their functions today. And, it is also important to bear in mind that statutes, business contracts, or other legal mandates may require that certain information be held for some particular length of time. A good retention policy balances these needs. It also looks at all data, wherever it may reside, including servers, backups and cloud files, down to individual employee email accounts, workstation harddrives,andexternaldevices(likeflashdrives).Ifyou can devise and enforce a good policy so you are keeping onlywhatyouhaveto,justlikeintheoldfilecabinetdays, you are going to be in much better shape in the event of litigation.

The second step is to know your obligations. Parties to litigation have obligations to preserve and produce information. The lawyers will help you with the produce part.Thedutytopreserve,however,mayarisewellbefore anyone serves a lawsuit or gives notice of a claim. Courts have generally held parties have a duty to preserve information that may be relevant as soon as litigation is reasonably anticipated. What is “reasonably anticipated” willvary,butsufficetosayathreattosueoversomegiven situation will most likely trigger the duty to preserve. Whenthathappens,agoodorganizationhasaplaninplace tosuspendpartofthatvigorousdataretentionplantomake sure all emails, documents, and files touching on the dispute are pretty much frozen in place.