“You want me to search all of our databases, BlackBerrys and laptops for what?” That’s a question many companies are asking in horror as they grapple with the relatively new phenomenon of electronic discovery (commonly known as e-discovery). As you may have already experienced, e-discovery can not only increase the legal fees associated with litigation (whether you are suing or being sued), but also put a strain on your precious internal resources. In some cases, this reality may cause you to assess risk strictly in economic terms, with little or no emphasis on the substance of the case or legal precedent. Given the uncertainty that accompanies any litigation, focusing narrowly on the bottom line might not always be a bad strategy. But one thing is for sure, e-discovery creates new challenges when it comes to evaluating your dispute resolution options.

Developing Your Plan

A few years ago, the rules that govern cases pending in federal courts (which have also been adopted in certain state courts) began requiring the exchange of electronic documents by parties involved in a lawsuit. Complying with these new e-discovery rules requires significant information technology expertise. How do you make sure that you capture all relevant e-mails that were sent and received by your employees? In what format must the e-mails be produced: TIFF, PDF, native? What about documents, including drafts, that are sent and received internally and externally?

Compliance with e-discovery rules also requires significant preparation—even before you become involved in a lawsuit. Does your company have a document retention policy? How long are you required to keep documents on your "system"? What do you do with documents or e-mails created by employees who are terminated or leave on their own accord? Is there anyone at your company who has a handle on how electronic records are kept? Do you have a mechanism to segregate documents that are protected by the attorney-client privilege?

Suffice it to say, never before has the burden been greater on businesses to comply with these rules and prepare for potential litigation. For some companies, the electronic discovery rules have changed how they maintain and disclose information, much like the revolutionary Sarbanes-Oxley legislation did in 2002.

Help Is on the Way

A recent study published by the Institute for the Advancement of the American Legal System and the American College of Trial Lawyers concludes that "electronic discovery is a 'morass' and 87% of respondents believe that electronic discovery is too expensive." The report also concludes that increased litigation costs are causing legitimate cases either not to be filed or to be settled with little regard to the underlying merits of the case.

Based on the results of the study, both organizations are in the process of drafting suggested changes to the federal rules that govern discovery, with the goal of addressing the expense and inefficiencies associated with e-discovery. In particular, they hope to restore Rule Number 1 of the Federal Rules of Civil Procedure, which calls for a "just, speedy, and inexpensive determination of every action and proceeding."

In the meantime, it is critical for companies to carefully assess the implications of the current e-discovery rules.