Summary and implications

With the imminent introduction of new court rules on disclosure of electronically stored information, the focus is once again on preservation and retrieval of electronic documents in court proceedings. In this article we explain:

  • What the new rules on e-disclosure say;
  • What the new rules will mean for your business; and
  • How you can best prepare in order to minimise the impact of the new rules on e-disclosure on your business.

The new rules

The new court rules on electronic disclosure, which take effect from October 2010, seek to clarify how parties should approach electronic disclosure when involved in litigation.

The new rules will require parties to disclose, by way of completing an electronic questionnaire, the extent of the search they intend to carry out in order to locate all electronic documentation that may be potentially relevant to the case. The questionnaire must be completed at an early stage in the proceedings and requires the parties to specify:

  • The type, location and custodian of any electronic documentation;
  • The type of databases on which such documentation is stored;
  • The searches that the party intends to carry out to find such documentation, including date ranges, keyword searches and search engines;
  • Whether they foresee any potential problems in locating such documentation; and
  • The searches for electronic documentation that they expect the other party to carry out.

Parties now have a clear obligation to agree the scope and extent of the electronic disclosure required.

What it means for your business

The questionnaire provides the parties involved in litigation with a useful starting point when seeking to manage the disclosure of their electronic documentation and the costs entailed in providing such disclosure. The questionnaire will act as a useful checklist of the issues in relation to electronic disclosure that the parties should consider.

As a result of considering their disclosure obligations at this early stage, it may mean that the parties identify those documents on which some of the key issues in the case may turn sooner than if the exercise were not carried out. This could potentially save time and costs as the disclosure could lead to early settlement of the dispute.

How the court will interpret what the scope of a reasonable search is and how the search should be carried out under the new rules, is yet to be seen. However, through the implementation of the new rules and the questionnaire, it is clear that parties to litigation must take their obligations seriously in relation to the disclosure of electronic communications.

Steps to take to prepare for electronic disclosure

The introduction of the new questionnaire provides a good opportunity to consider your obligations and to review your organisation’s policy. The following issues arising from preservation and disclosure of electronically stored information are worth reviewing:

  1. The meaning of ‘document’ in an electronic context;
  2. Your duty to preserve information and the consequences of not complying;
  3. Your duty to conduct a reasonable search for documents.

a) What is the meaning of ‘document’ in an electronic context?

The court rules define a ‘document’ as anything in which information of any description is recorded. This is a very wide definition and can encompass electronic information such as:

  • Word processing, spreadsheet, database and presentation files;
  • Sound and video files;
  • Program and system files;
  • Text messages;
  • E-mail and electronic diary entries;
  • Metadata (i.e. information which is embedded into a document, detailing who created and edited the document and how);
  • ‘Deleted’ documents, which although ‘deleted’ from active use may still be present on your hard drive or server;
  • Temporary files; and
  • Back-up data.

A s relatively informal media such as e-mails and text messages form part of the data which may need to be disclosed, it is worth reminding all staff to use these media with care, keeping in mind that these messages may need to be disclosed in court proceedings in the future.

b ) What is the duty to preserve information and what are the consequences of failure to do so?

As soon as the possibility of litigation arises, you will have a duty to preserve all relevant evidence. Whilst this is potentially very complex and expensive in the arena of electronic information, the general rule is that the cost and time incurred should be kept proportionate to the amount in dispute.

Failing to comply with the duty to preserve information can result in serious consequences, ranging from costs penalties to proceedings for contempt of court and even criminal offences.

It is prudent to review your company policy regularly to ensure you are prepared. For example, you may want to consider the following:

  • What procedures do you have in place to back up data at a company wide level?
  • Is data being stored on employees’ local drives or home computers and if so, is it being caught by your back-up process?
  • What happens to employees’ e-mail and diary entries when they leave the company?

c) What is the level of duty to search for documents?

When disclosing documents in litigation, you have a duty to conduct a ‘reasonable search’ for documents which are relevant to the case, but bearing in mind that not all located documents will necessarily be discloseable. This will include searching for electronic documents.

The factors relevant in deciding whether a search is ‘reasonable’ are:

  • The number of documents involved;
  • The nature and complexity of the proceedings;
  • The ease and expense of retrieving any particular document; and
  • The significance of any document which is likely to be located during the search.

When deciding the parameters of the search, you should consider all possible sources of information including:

  • Desktop computers;
  • Laptop computers;
  • Mobile phones;
  • PDAs;
  • Servers;
  • Portable storage media (eg. CD-ROMs, DVDs and USB drives).