Advising Clients on the Preservation of Electronically Stored Information to Avoid Malpractice Claims

posted by Patricia M. Noonan on Thursday, December 8, 2016

Electronically stored information

Newly adopted federal rules have softened the impact of unintentionally lost electronically stored information (ESI) in federal court litigation, but consequences still remain.

In many state court jurisdictions, lost ESI can result in an adverse jury instruction, dismissal or default judgment. If an attorney does not advise a client early and repeatedly to preserve ESI, the attorney could face a malpractice claim when the client suffers ramifications to its lawsuit from ESI spoliation.

In federal litigation, any discovery request for ESI must initially satisfy Federal Rule 26(b)(1). The new amendments to the rule modify the prior broadly worded relevancy standard for the scope of discovery by placing upon the parties and the court a collective responsibility to consider the proportionality of all discovery to the needs of the case.

Federal Rule 37(e) was also amended to address the varying and often harsh standards applied by the federal circuits for imposing sanctions for a litigant’s failure to preserve ESI. The amended rule permits a court to order sanctions, such as an adverse jury instruction, dismissal of the action or a default judgment, only upon a finding that the party acted with intent to deprive another party of the information’s use in the litigation.

In circumstances where ESI, which should have been preserved in the anticipation of litigation, is lost because a party failed to take reasonable steps to preserve the information, and the information cannot be restored or replaced through additional discovery, the court may order other curative measures, but none greater than necessary to cure a party’s prejudice from the loss of information.

Many state court jurisdictions have yet to follow the lead of the federal court and continue to grant the more serious sanctions for unintentionally lost ESI.

In light of these potential ramifications, the standard of care may require attorneys to properly advise their clients on this matter.

When a client anticipates impending litigation, a consulting attorney should advise them to immediately issue an internal litigation hold letter which informs all employees, managers and custodians of the anticipated litigation and provide specific instructions regarding the preservation of relevant ESI.

The attorney should further advise the client to affirmatively monitor compliance with the hold and to suspend any existing destruction policies. Thereafter, the client should be instructed to periodically re-issue the litigation hold to remind employees of the hold and to alert new employees.