New Federal Rules Clarified

A number of media outlets have recently reported on "a new law that requires companies to keep all their emails forever". These reports refer to the new Federal Rules of Civil Procedure for eDiscovery, which went into effect on Dec 1, 2006.

- ESI or "electronically stored information" is now definitively subject to legal discovery (lawyers can no longer agree to completely ignore electronic content merely because they are more comfortable with paper documents);

Transparency - at the beginning of every case, the lawyers now must "meet and confer", including to exchange information about the "sources" of information from which their client companies are, and are not, producing information. Essentially, this is requiring companies to throw open the doors of their IT departments to the lawyers, who will inevitably seek to discover company information from many "sources", and who may attack the way companies manage, preserve and destroy their information. (Additionally, information now has to be produced in a "reasonably usable" format, likely leading to more productions in native file formats.)

- Preservationthe concept of "litigation hold" or preservation of relevant information is not new, but it is now officially required in every federal case. This means that every time a company is placed on notice of a new case, the company must identify the information that is potentially relevant to that case, and preserve it for subsequent production to the other side in the case. For example, if a set of files that normally has a 1 year retention period is potentially relevant to the "Smith v. ABC Corp" case, those files must be retained by ABC Corp not just for 1 year, but for the life of the Smith case. Most enterprise customers have dozens or hundreds of cases at any given time, and without good tools to find and preserve what's relevant, they may end up "saving everything" for fear of destroying the wrong things. This will lead some to retain more information for longer periods. For many, saving everything will be too painful, and this creates a strong incentive to implement proactive processes and policy management of information.

Since every company that does business in the US is subject to litigation risk, the impact of these new rules is widespread and significant. In sum, eDiscovery increases the costs and risks of (i) failing to implement policy management of information (including so that it can be defensibly disposed of when it no longer has value), and (ii) failing to implement a repeatable and cross-functional business process for eDiscovery.