A “Destroy All Data” Policy will not absolve You of Your Data Retention Responsibilities

If it really costs millions to do that [e-discovery], then you’re going to drive out of the litigation system a lot of people who ought to be there.” This quote by Supreme Court Justice Stephen Breyer cuts to the heart of current issues surrounding eDiscovery. A recent DCIG blog highlighted how out of control litigation costs have become and have left companies with hard decisions on whether it is best to settle cases based solely on the cost of eDiscoveryattempt to litigate or . But as companies face unprecedented economic pressure, a key question comes to mind, “Are these costs driving risky data retention strategies such as destroying all of your data?”

A December 2008 poll at Law.com showed immature processes is the rule across corporate America when it comes to eDiscovery. The survey found 30% of companies in the survey lacked even basic policies for preserving evidence for litigation discovery. So based on these statistics, it is reasonable to assume this lack of knowledge in eDiscovery coupled with immature processes could lead to higher risks being taken by companies.

But a question I regularly hear is, “Why not set a policy that mandates the quick destruction of data and delete everything quickly?” The thought process behind this is simple. If an eDiscovery event occurs, simply point to the policy and attempt to show a routine and good faith destruction of data and avoid the associated costs. While it is a tempting to adopt this policy in order to try to avoid the costs of eDiscovery, it is a flawed approach and could result in more harm than good for your company.

The “Safe Harbor” eDiscovery provision, otherwise known as Rule 37(f), provides a means for companies to limits sanctions if (and I quote): “Absent exceptional circumstances, sanctions cannot be imposed for loss of ESI resulting from a routine, good faith operation of an electronic information system.” Under this rule, a court may not impose sanctions on a party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an electronic information system.

Based on this wording it would appear reasonable why companies might take a risk and attempt to limit their legal risks by quickly and routinely deleting documents such as email. But there are several areas of concern for businesses that rely on routine data destruction processes when it comes to their eDiscovery strategy, such as;

  • eDiscovery is still evolving and the rules can be a moving target. Even when safe harbor would appear to extend to your company, the courts can bring a new wrinkle as it pertains to eDiscovery and suddenly your company could be facing a huge sanction. For example, a court ruling in the recent case titled Phillip M. Adams and Associates, LLC v. Dell, Inc., provided sanctions against ASUS for not preserving e-mails dating back to 1999, even though the plaintiff didn’t bring a claim against ASUS until 2005. This has cast serious questions on the future of rule 37(e).
  • What you view as routine destruction could in fact be spoilation. The above cited case is another good example of a company thinking they would be covered by safe harbor, and instead their idea of reasonable destruction of data through routine maintenance of their information system, was instead viewed by the court as spoilation of data that should have been held for litigation.
  • Legal hold of data is open to interpretation. Legal hold of data is a process for holding all relevant information pertaining to a case when litigation is reasonably anticipated. The term reasonable is open to interpretation by the courts, and court interpretation is rarely predictable.

The sheer volume of e-mail and its impact on eDiscovery continues to be a pain point for companies searching for answers to costs. Products such as Estorian’s LookingGlass provide an answer for companies looking to control the costs and complexities of e-mail in litigation. LookingGlass provides structure to historically unstructured data as well as providing search functionality for answering eDiscovery requests which becomes a valuable resource in controlling e-mail review costs.

In today’s economic climate it is understandable why companies are tempted to try and avert costs through risky data retention strategies. But, this high risk strategy will fail and the costs and consequences could financially ruin your company. Proper preparation and deploying technologies such as LookingGlass provide a vastly lower risk point than attempting to rely on policy and pray for safe harbor.

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