Why Your Startup Should Prepare for eDiscovery Litigation Holds

14 November 2022 by Ross eDiscovery startup litigation-hold

Takeaway: You can avoid court sanctions for data ‘spoliation’ by preparing for possible litigation holds in advance. This means creating a data retention policy, installing reliable archiving systems, and learning about the eDiscovery software your attorneys will use for litigation.

It’s much simpler to preserve data in paper documents than electronic ones.

‘Paper’ discovery is significantly less efficient than ‘electronic’ discovery (or eDiscovery) in litigation. That’s because eDiscovery applications give law firms vital tools to find and use responsive files faster. But electronic data does make it more complicated to preserve evidence – since there’s a lot of hidden data (we’ll cover this next) that you can mistakenly alter. Also, electronic data is so easy to store that there’s more of it lying around – making it a logistical nightmare to figure out where it all is and how to preserve it.

Importantly, you’ll need to be tech-savvy when dealing with digital ‘metadata.’

Every electronic file has valuable contextual information attached to it. This information is called ‘metadata’ – something computers continually gather and record. For instance, they’ll record who created a file, when it was created, the documents it’s linked to, etc. This metadata is like a digital footprint tracking the history of a file. And it can be a game-changing tool in eDiscovery. The issue is that metadata is hard to preserve (e.g., you can change an email’s metadata simply by opening it in Outlook), forcing small businesses to learn about the technology behind eDiscovery. Learn more about metadata.

Also, data ‘preservation’ requires more hands-on effort than automated data ‘retention.’

With so much electronic information lying around, most businesses have policies outlining which files to keep and which to delete. These data retention policies aim to free up storage space by discarding files that aren’t relevant for business or possible legal action later on. (This junk data can make up nearly 70% of the electronic files a law firm generates.) In contrast, data preservation is about finding and protecting specific files that might be useful in upcoming litigation. I.e., it defines which files shouldn’t be deleted as part of a company’s data retention policy. So, it’s about gathering evidence rather than freeing up storage space. And it’s a targeted activity rather than a company-wide process. Often, companies start preserving data when opposing counsel issues a preservation demand, but ideally, you’ll start at even a hint of upcoming litigation. And this requires a lot of hands-on effort.

Data preservation is so complex and continually evolving that there’s a whole industry built around it.

There’s an entire eDiscovery industry built around finding, collecting, managing, and preserving data. And this industry creates systems to help businesses strategize in advance instead of reacting on-the-fly to preservation demands. But designing these systems gets harder with continually-evolving cloud technology where we don’t always know who ‘owns’ a piece of data. For instance, who owns files shared via Slack? Or messages on Facebook? Businesses and law firms are used to handling data that sits on their internal servers, but you can’t use the same approach for data sitting on cloud servers in different states and/or countries.

There’s one constant through all this, though. And that’s the initial litigation hold notice.

Preservation happens in mini-cycles, as attorneys interview custodians, collect data, review it, and ask for more data based on what they’ve learned. But the whole process always begins with a litigation hold notice instructing specific custodians not to delete or alter case-related documents. The hold outlines the types of files to preserve, where they’re likely to be stored, how to preserve them, who to share them with, and more. Often the issuing party will try to collect the data as early as possible or install advanced document-management software to preserve it wherever it currently is. Also, they’ll likely follow up to ensure you’re following their instructions.

You’ll need to take these litigation holds seriously because courts issue sanctions for not preserving data properly.

If you mistakenly delete/alter requested data, courts might assume you’re trying to hide something and respond by issuing sanctions. The type of sanctions will depend on how much at fault you are, how badly the loss affects the case, and how easily the mistake can be fixed. So, they can vary from small fines/fees to (in rare cases) you losing the case by default. And they’re issued at even a hint of negligence. For example, in Northington v. H & M International, the defense couldn’t produce emails they should have had. So the jury was told to assume the defense was purposely hiding the emails. Also, you’ll have to respect the spirit of the preservation hold. For instance, in United States v. Briggs, the U.S. Government handed over all requested data, but in a form that wasn’t readable by eDiscovery search engines. So they had to pay for the cost and time needed to make that data searchable.

The lesson for startups and small businesses is to invest in reliable archiving systems.

The right archiving systems can help simplify data preservation and protect you from possible sanctions. For example, in Danny Lynn Electrical v. Veolia ES Solid Waste, the defendant didn’t receive sanctions because they had set up an email archiving system that automatically logged and protected all emails. So, the plaintiff couldn’t accuse them of interference, even though vital emails had been deleted. (The court ruled that the plaintiff had done their part in trying to protect all case-related data.)

Also, it’s worth learning how attorneys process eDiscovery data.

The more you learn about how attorneys use data for litigation, the more you’ll know what to preserve. So it’s worth exploring how eDiscovery applications work. And this is surprisingly easy with Cloud eDiscovery applications using simple-but-powerful tools like automatic OCR, an advanced search engine, document tags, secure redaction, multi-format productions, and more.

As a start, consider exploring GoldFynch – an easy-to-use eDiscovery service.

GoldFynch is an affordable eDiscovery service for law firms representing startups and small businesses like yours. Experiment with GoldFynch’s free ‘starter’ case, explore how your data will be handled (from upload to ‘production’), and recommend it to your attorneys to help cut eDiscovery costs. Law firms like GoldFynch because:

  • It costs just $25 a month for a 3 GB case: That’s significantly less than most comparable software. With GoldFynch, you know exactly what you’re paying for: its pricing is simple and readily available on the website.
  • It’s easy to budget for. GoldFynch charges only for storage (processing files is free). So, choose from a range of plans (3 GB to 150+ GB) and know up-front how much you’ll be paying. You can upload and cull as much data as you want, as long as you stay below your storage limit. And even if you do cross the limit, you can upgrade your plan with just a few clicks. Also, billing is prorated – so you’ll pay only for the time you spend on any given plan. With legacy software, pricing is much less predictable.
  • It takes just minutes to get going. GoldFynch runs in the Cloud, so you use it through your web browser (Google Chrome recommended). No installation. No sales calls or emails. Plus, you get a free trial case (0.5 GB of data and a processing cap of 1 GB) without adding a credit card.
  • It’s simple to use. Many eDiscovery applications take hours to master. GoldFynch takes minutes. It handles a lot of complex processing in the background, but what you see is minimal and intuitive. Just drag-and-drop your files into GoldFynch, and you’re good to go. Plus, you get prompt and reliable tech support (our average response time is 30 minutes).
  • Access it from anywhere, and 24/7. All your files are backed up and secure in the Cloud.

Want to find out more about GoldFynch?