Recent Amendments to the Federal Rules of Civil Procedure: Will Your Business be Affected?
Effective December 1, 2006, Congress amended the Federal Rules of Civil Procedure, which govern civil lawsuits in federal courts. These amendments establish new obligations as to how your company stores, preserves and manages electronic information that may relate to pending and potential business or employment disputes. Companies unprepared to respond to litigation and the production of electronically-stored information in a systematic and efficient manner may incur significantly increased legal fees and related expenses as a result of the amendments.
Electronic information has always been subject to discovery in the litigation process. However, the amended Federal Rules of Civil Procedure now require parties to lawsuits to discuss at a very early stage of the litigation what electronic data the parties have, what electronic data they will be requesting, how the data will be produced, and any potential issues relating to this production. The amended rules also contemplate that every business will have a document retention policy in place to preserve information that may be relevant to potential disputes. Although the amended Federal Rules of Civil Procedure apply only to lawsuits filed in federal court, we anticipate that state court rules will be amended in the near future to include similar provisions.
With proper advance planning, your business can efficiently manage the electronic discovery process, reduce your company’s litigation costs, and gain strategic advantages in litigation. Our experience over the last several years has been that those businesses that do not have electronic document retention policies and practices in place before litigation begins incur significantly increased expenses and legal fees in gathering, reviewing and producing electronic information after litigation is filed. For example, a company’s unnecessary retention of many years’ worth of data and business communications that serve no useful business purpose can become the target of an adversary’s discovery “fishing expedition” in an attempt to find support for what may otherwise be a baseless claim or defense. The company is then faced with spending unnecessary time and disruption to its business operations in gathering such excess information, and additional legal fees and expenses in having its lawyers and information technology providers review and analyze the increased volume of information. In some instances, the increased fees and expenses can be many times what the company would have spent had the company adopted and followed an appropriate information retention policy.
To help your company plan ahead and comply with the new rules, we recommend that you develop and implement an appropriate information retention plan. If your company already has a information retention plan in place, we recommend that your existing plan be reviewed in light of the new rules. The planning process should begin with a general understanding of the requirements of the amended Federal Rules of Civil Procedure, and should also include an understanding of the types of information that may be requested during the litigation discovery process, a plan as to how information will be produced in the event of litigation, and identification of the individuals at the company who will be responsible for managing the policy on an ongoing basis and in the event a potential or actual lawsuit arises.
