Does your company use email, text messages, websites or software? If so, when your company is sued and you’re forced to turn over portions of this data in a lawsuit, you’ll pay roughly $18,000 per gigabyte of data eventually produced. This does not include the cost of paying your lawyer to actually litigate the matter.
To put a gigabyte in perspective, the average hard drive sold by two major manufacturers in 2016 was 1,400 gigabytes. According to a 2016 study, a gigabyte equates to roughly 4,000 to 5,000 electronic documents. Looking at Outlook emails specifically, that study reported 4,873 emails per gigabyte on average. The average business email user sent and received a total of 121 emails a day in 2014, and that number is almost certainly higher now. Using these numbers, you’ll accrue a gigabyte of emails from one employee in about 40 days.
To fully understand the scope of this problem, some legal background is required. When your company is involved in a lawsuit in Arizona, the company will be required to hand over any documents “that may be relevant to the subject matter of the action.” After your company makes this initial disclosure, both your company and the other party will get an opportunity to request any documents that they think are relevant to the lawsuit, and if those requests are reasonable, your company and the other party will also hand over that information.
In 2006, the rules governing these disclosures and requests were amended to include “electronically stored information,” otherwise known as ESI. ESI includes “writings, drawings, graphs, charts, photographs, sound recordings, images, and other data … stored in any medium from which information can be obtained.” This includes emails, Word documents, PDFs, internet browsing history, Facebook data, phone location data and any other form of electronically stored data. In the event of a lawsuit, you will be required to disclose any ESI that may be relevant, and the other side can ask you for any ESI they think is relevant.
To summarize the problem: your company generates about a gigabyte of emails per employee every 40 days. This does not include any Word documents, PDFs, texts, internet browsing history, transaction records or other data your company produces. In the event you are sued, you’ll pay roughly $4 per document that you have to disclose in litigation. You are legally required to hand these emails over, frequently without even being asked.
So what is the solution? Some companies have tried the questionable practice of deleting all company emails essentially as soon they receive them. But because any party to a lawsuit has a duty to save any information that might be relevant the minute litigation “might reasonably be anticipated,” some of these companies have received massive fines, known as sanctions, from courts for this practice. Other companies have tried to reduce the $18,000/gb cost by just “dumping” the data on the other side without processing or reviewing it. But this practice has again led to inadvertent disclosure of sensitive information, sanctions, or sometimes professional discipline for the lawyer in the case.
So you can’t simply delete all your ESI, you can’t just hand it all over without reviewing it, and it costs an exorbitant sum to review and produce the ESI created in the normal course and scope of your business. Solving this problem is at the heart of effective Information Governance. Information Governance (or IG) is a general term for the way an organization manages their data. Effective IG involves a wide range of functions, but one primary way it can keep litigation costs low is through keeping your business’s data organized. In this context, effective IG would involve implementing managerial and technological solutions to organize and delete emails at reasonable intervals or to save all relevant emails when litigation begins.
One recent report suggested that 85 percent of stored data is “redundant, obsolete, or trivial (ROT).” I learned recently at an industry conference that it’s possible that 60 percent of a business’s data has either nothing to do with the business or has little to no business value, such as employee’s personal information, emails about food left too long in the company fridge, or spam and marketing emails. Simply reducing these types of data through policies and technology can significantly cut litigation costs. The fewer documents you have to look through, the cheaper your production will inevitably be. If you send your lawyer 100,000 emails, you pay your lawyer’s hourly rate even if 85 percent of them are political chain letters or ads for pet food. One possible solution would involve implementing a document retention policy that balances the need to retain certain documents against their relative value to your business. Such a policy can reduce the amount of information at issue in litigation, reduce storage costs, and mitigate exposure in the event of a data breach.
Another major concern is whether your business will be able to quickly and cost-effectively preserve emails once litigation has begun. By implementing centralized email and document storage at your business you can reduce duplicates and make implementing legal holds more efficient, as well as more easily back-up and secure your firms data. A new Microsoft product, Office 365, actually has technology built into it to help an IT professional effectuate legal holds.
At the end of the day, effective IG is about company policies and procedures. Do you have policies or technology in place to prevent employees from deleting relevant emails? Do you have a way for IT to quickly identify where key documents may be located? Do you know whether your employees use personal accounts to conduct work-related activities? These are just a few of the questions your lawyer will likely ask if you get involved in a lawsuit where ESI is at issue. Having answers to them in advance will make your lawyer’s job easier, and save your business money.
If you have any questions, please email me at fpetersen@mcrazlaw.com.
