The Need For A Document Retention Policy
For security purposes and for business protection, all businesses should have a well thought out document retention policy, which should include management of electronic documents.  It does no good to shred paper documents when the electronic versions may still exist.

Many companies operate without any kind of formal document retention policy.  Paper files are closed and stored, and little or no attention is paid to the electronic counterparts of what is in those files.  And the electronic versions will likely contain much more information than their paper siblings.

One of the problems in this area is that there are at least two distinct reasons for retaining documents.  One is for disaster backup.  It gives the company the ability to restore data in the event of some sort of computer crash. This is quite different from electronic record keeping, which allows the user to manage documents so that they can be retrieved, if necessary, in some sort of cost efficient manner.

Even a good written document retention policy needs to be audited to make sure it is in compliance.  Having such a policy and testing compliance has several benefits:

• Volume can be controlled;
• The type of documents retained can be managed;
• Documents can be organized to allow for later retrieval in a reasonable time and at a reasonable cost; and
• A good faith defense can be maintained in the event that certain documents cannot be located.

A good document retention policy cannot be accomplished in a vacuum.  It requires that the Information Systems (“IS”) people are aware of the legal reasons for document retention and that the management team understands the technical limits of the IS department.

What To Do When The Lawsuit Comes
Whatever document retention system you had before litigation, or investigation, it goes out the window when you are on notice that one or the other is coming.  NOTHING should be destroyed under these circumstances:

• When litigation is imminent;
• When litigation has been filed; and
• When the company knows or should know that documents may eventually become relevant in litigation.

A policy that is haphazardly followed may be as bad or worse than no policy at all.  For example, in In re Prudential Ins. Co. of America Sales Prac. Litig., uncoordinated implementation of the Prudential document retention was held to have denied its opponents relevant evidence, and resulted in substantial sanctions.  There was no evidence presented that Prudential had acted maliciously.

And in another case, a default judgment was entered against a defendant who purposely destroyed records that might be detrimental to it in litigation.

The recent Arthur Andersen fiasco reminds us how important the records retention issue can be.  An Arthur Andersen partner recently admitted, “I obstructed justice.  I instructed people on the (Enron project) to follow the document retention policy, which I knew would result in the destruction of documents.”

When the law firm of Vinson & Elkins was sued in the Enron class action litigation, it  was reported that it took the cautious but expensive step of trading out all its hard drives and preserving the old ones—at an estimated cost of $800,000.

How Long Is Long?
Keeping everything forever is generally a bad idea.  Keeping too much can make retrieval a bigger problem than it needs to be.  This can actually be used as an offensive weapon by some.  There are stories of a website instructing people to sue a certain company and ask for certain kinds of documents.  People were told that the company’s records were so voluminous that it would rather pay a settlement than go through the production process.

Just because you “can” keep something a long time, doesn’t mean you “should.”  Some organizations simply box up old files and store them away without any attempt to cull out what should not be kept.  Now that electronic document storage is so inexpensive, the “easy” decision may seem to be that everything should be electronically stored.  Generally speaking, that is a mistake.  Most organizations should not retain documents longer than they are needed; yet most do retain them in one form or another. 

How long should documents be retained?  Perhaps 75% of all documents created have no legally required retention period.  For the other 25%, there are retention periods in statutes or regulation periods, statutes of limitations, or other factors requiring their retention.

And how will they be retained?  Tapes are fragile.  Humidity and heat affect microfilm.  And will the medium you use be readable when you need it?  Do you remember CP/M, an early operating system?  Or 5¼ inch floppy disks?  Will the Word® document you save today be readable in 10 years?  Should it be saved in a static form such as PDF or TIFF?

The decision regarding how long to keep documents should be a combined management/legal decision.  Certain documents are not legally required to be maintained, but may be helpful for historical purposes.  After all, people die, retire, quit, or even have honest differences in their recollections of what took place.  Management needs to decide what makes sense for the organization.

Whose Cost Is It?
While the responding party normally bears the cost of gathering responsive documents, Federal Rules 34 and 26(c) allow courts to shift the cost of document production upon a showing of “undue burden and expense.”  In some cases, courts require some sort of expense sharing, or may require the requesting party to pay the entire cost.

An example of the reasoning employed by some courts can be found in Rowe Entertainment, Inc., et al. v. The William Morris Agency, Inc., et al., in which eight cost shifting factors were considered: (1) specificity of the discovery requests; (2) likelihood of a successful search; (3) availability from other sources; (4) purposes of retention; (5) benefit to the parties; (6) total costs; (7) ability of each party to control costs; and (8) the parties’ resources.

Why Keep It At All?
Given the grief involved in document retention, companies may ask why they should retain anything.  Obviously, the documents may be needed for the company’s own defense.  There may be a statutory or common law duty to retain the records in their original form.  And the company will have the best chance of defeating a spoliation claim if it has a “reasonable” records management policy that is consistently enforced.

A finding of spoliation can be very costly.  Even in jurisdictions where there is no independent tort of spoliation, courts have given juries an instruction on “spoliation of evidence” which essentially say that if a party destroyed it, you can assume that it was harmful to that party.

Not only traditional “documents” must be preserved, but it is also important that other electronic media such as website content be retained as well.  While there is little case law to date, at law, a California court sanctioned a party under a spoliation theory when it changed its web site during litigation.

Who Pays For All This?
The approach many courts took in the early years was that since the company chose electronic storage, it bore the cost of production in a readable format.  In McPeek v. Ashcroft, the Court recognized that electronic document creation is the norm.  Some courts now hold that the less likely it is that something relevant will be found; the more likely it is that the requesting party will pay.  Some of the considerations discussed are:

• The likelihood of retrieving relevant facts;
• The degree of relevance of the information sought;
• The specificity of the request;
• Availability from other sources; and
• The cause of difficulties or expenses in retrieving.

Many courts encourage cost sharing or a sampling to determine the “success” of the discovery efforts.  Some, however, continue to maintain that the cost of complying with an electronic discovery request is simply a cost of doing business.

Why A Forensic Expert?
Many companies will want to use their own MIS/IT specialists to gather information.  Computer forensics can be defined as the employment of a set of predefined procedures to thoroughly examine a computer system using software and tools to extract and preserve evidence.  Forensic analysis goes well beyond the simple gathering of information.  Even turning on a computer can corrupt evidence. Did you know, for example, that:

• Booting up the system may alter time stamps;
• Routine system maintenance may alter or destroy data;
• Saving new data may overwrite old data;
• Installing new software may overwrite data; and
• Using virus programs may alter data.

Forensic experts can image a computer without ever turning it on; enabling them to testify that the data has not been altered in any way.  Forensic experts understand the protocols necessary to make their findings admissible.  They can assist in protecting the data and the chain of evidence by following forensic procedures including:

• Identify the target computer system and peripherals;
• Secure the immediate area;
• Record the exact date and time;
• Note any information visible on the computer screens;
• Disconnect any modems or networking cables;
• Conduct an orderly shutdown; and
• Locate and secure any storage media.

Forensic experts have the tools and know where to look.  They examine such areas as:

• Allocated file space;
• Swap files;
• File slack; and
• Unallocated space (deleted files).

What Will The Forensic Expert Need?
The forensic expert can help counsel identify what information should be requested in discovery.  Records may include:

• Word processing documents, including drafts or versions not necessarily in paper form;
• Databases or spreadsheets;
• E-mail, voicemail, or other computer-stored communications; and
• Relevant system records, such as Internet logs, history use files and computer access records.

Places to look may include:

• Active computer files on network servers;
• Computer files on desktops, laptops, local hard drives, etc.;
• Backup resources, wherever located;
• Archival storage, wherever located;
• Laptops, home computers, PDA’s, etc.; and
• Media or hardware on which responsive data may have been “deleted” but may be recoverable.

Some Of The Lingo
A bit (Binary Digit) is the smallest unit of information.  It is magnetically encoded and represents 0 or 1 in binary numerals.

A block usually consists of 512 bytes.

A byte (Binary Term) consists of 8 bits.

A cache is a small fast memory holding recently accessed data, designed to speed up subsequent access to the same data.

A cookie is a packet of information sent by an HTTP server to a World-Wide Web browser and then sent back by the browser each time it accesses that server.

A file is a basic unit of storage.  It consists of numbers, words, images, or instructions.  It is stored as space allows, in groups of blocks.

To partition means to divide a physical disk into smaller, usable logical segments.

A sector holds a single block of data.

Conclusion
Although computers have been utilized in business for years, we are still discovering the many ways in which the manner in which they preserve data can be a sword or a shield.  To be forewarned is to be forearmed.

Joel Mirman is a Shareholder and member of the Litigation Practice Group.  He can be contacted at jmirman@bdblaw.com or 614.227.4264.

Thomas R. Brule (Buckingham Cleveland^SM)  has been selected to co-lead a round table discussion at the Annual International Franchise Association meeting to be held in San Antonio, Texas in February, 2003.  The round table topics will deal with franchise issues as they relate to real estate and measures a franchisor can take to protect its sites and good will throughout the country. 

Business Law Practice Group

Bret A. Adams and Paul J. Hess, Jr. (Buckingham Columbus^SM) presented at the Columbus Bar Association Sports/Entertainment Committee’s CLE Issues in Sports Law in Ohio.  Their topics were:  “Sports Contracts and Negotiation,” “Ohio Agent Law,” “The Proposed Federal Legislation (SPARTA) to Regulate Sports Agents,” and “Uniform Athlete Agents Act.” 

Bret A. Adams and Paul J. Hess, Jr. also spoke on “Current Trends in Sports Law” sponsored by the Columbus Bar Association. 

Also, Paul J. Hess, Jr. presented “Legal Aspects of Sports Marketing” at the Columbus State Community College. 

Rana M. Gorzeck and Mary Sue Donohue (Buckingham Boca Raton^SM) gave a presentation, on behalf of the Firm, titled “The Patriot Act,” to the local chapter of American Woman’s Society of Certified Public Accountants at the Tower Club in Fort Lauderdale, Florida.

Robert W. Malone (Buckingham Akron^SM) was the Chair of the Cleveland Tax Institute Panel for the Cleveland Bar Association.

Employment Law Practice Group

Ashley M. Manfull, Vincent J. Tersigni (Buckingham Akron^SM), Jason M. Baasten, Robert C. Meyer, Tod T. Morrow (Buckingham Canton^SM), Gerald B. Chattman, Natalie F. Grubb, and Debbie Sesek (Buckingham Cleveland^SM) were presenters at Buckingham’s 14^th Annual Employment Law Seminar.  Their topics included:  Effective Use of Employee Separation Agreements, Family and Medical Leave Act Compliance Update, 2002 Update on the Americans with Disabilities Act, How to Address Union Organizing Campaign Issues, Workplace Accidents and Aggressive, and Workers’ Compensation Claims Management Issues. 

Vincent J. Tersigni (Buckingham Akron^SM) conducted a workshop on “Managing Employment Law Issues in the Workplace” for the Ohio Housing Authorities Conference Directors Retreat in Cambridge, Ohio.

Vincent J. Tersigni also presented “Fundamental Issues in Employment Law” for the Akron Bar Association and “Splitting Hairs – Legal Aspects of Drug Testing in the Workplace.”

Health Law Practice Group

Thomas W.  Hess and Joel H. Mirman (Buckingham Columbus^SM) presented a series of seminars sponsored by the Association of Ohio Philanthropic Homes, Housing, and Services for the Aging.  Their topic was “Nursing Home Malpractice in Ohio:  Successful Case Management from Investigation to Trial.” 

Christopher S. Humphrey (Buckingham Akron^SM), Eric M. Simon (Buckingham Cleveland^SM), and Thomas W. Hess (Buckingham Columbus^SM) presented at a series of Buckingham Health Law Seminars for Long Term Care Providers.  The topics were "Effectively Managing HIPAA Issues, Patient Bill of Rights/Negligence Litigation Update, and The Survey Process.

Patrick H. Reymann (Buckingham Akron^SM), Joseph J. Feltes (Buckingham Cleveland^SM) and Dirk E. Riemenschneider (Buckingham Columbus^SM) presented at a series of Buckingham Health Law Seminars for Hospitals and Physicians.  The topics included:  Effectively Managing HIPAA Issues, Medical Malpractice/Negligence Litigation Update, and 10 Major Physician Billing/Coding Problems.

Litigation Practice Group

Robert E. Pershes (Buckingham Boca Raton^SM) presented “Electronic Evidence and How Do You Get It” in Washington D.C. at the Annual Meeting of the American Intellectual Property Lawyer Association.   

Real Estate & Construction Law Practice Group

Robert A. Hager (Buckingham Cleveland^SM) spoke on “Lien Law” for Lorman Education Services.

Trusts & Estates Practice Group

Phylip J. Divine (Buckingham Akron^SM) presented at the Canton Estate Planning Forum sponsored by the Akron/Canton Chapter of the Ohio Society of CPAs. 

Thomas J. Sigmund (Buckingham Columbus^SM) gave a presentation on the “New Qualified Plan Designs After EGTRRA” at the Columbus Tax Conference sponsored by the Columbus Bar Association.