Any company that has been a party to litigation has learned the hard way about the aggravation of producing the electronic documents demanded in the discovery process.
Lawyers call this “e-discovery,” and parties to litigation might think the “e” stands for expensive. Construction projects are document intensive. Common to most projects are bids, contracts, drawings, specifications, schedules, submittals and shop drawings, RFIs, change orders, pay applications, daily reports, meeting minutes, timesheets, payroll records, photos, inspections and many other types of documents—and most are now generated, transmitted, received, maintained and stored electronically. Daily communications among project team members also are transmitted by email or text.
A single project can easily result in a million pages of data. Typically, a company in litigation will receive a request to collect, preserve, review, label and deliver massive amounts of this data to the other party, and it may make similar demands to the other side. While software can ease this process, much of the work has to be done by people, often lawyers, who are trained in this type of review. It can be quite expensive.
There is no way to make litigation and electronic discovery inexpensive, but there are ways to reduce the expense if both sides communicate and commit to the process, and if a company manages its data so that it is easily accessible in the event litigation arises.
Costs Can Be Reduced If Both Sides Cooperate
Federal courts are sympathetic to this problem and recently amended procedural rules to deal with the growing problem of too much data and the corresponding rising costs of litigation. The main objective of the new rules is to establish proportionality in requests for data. Under the new rules, electronic documents must be produced only if they are “relevant to any party’s claim or defense” and “proportional to the needs of the case.”
Some of the factors that will be considered by courts in determining proportionality are the importance of the issues at stake, the amount of money in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues and whether the burden or expense of the proposed discovery outweighs its likely benefit.
In other words, is the request reasonable? Broadly worded requests that would require a party to spend significant resources to produce documents that are not important or that are only tangentially related will no longer be enforced by the courts.
In practice, the new rules require detailed discussions to occur early on among lawyers, project team members and IT professionals in order to identify the issues in the case, categories of documents, and the specific custodians and likely locations of documents. The rules encourage the parties to reach agreement on the scope and method of exchanging electronic discovery documents, but the courts are empowered to intervene when the parties cannot settle these issues agreeably.
The new federal rules also come down hard on parties that don’t preserve or produce electronic discovery. Parties in a federal court action are required to preserve relevant electronic documents “in anticipation of litigation.” The consequences to parties that fail to take reasonable steps to preserve documents when it is foreseeable that litigation may occur vary depending on whether the party simply failed to act reasonably or whether the information was intentionally lost or destroyed.
For example, a judge can allow a party to include evidence of the loss of information and instruct the jury in the evaluation of that evidence when the failure to preserve is unintentional. If a party intentionally failed to preserve information to keep an opposing party from using it as evidence in the case, a judge may instruct the jury to assume that the lost information was unfavorable to the party that failed to preserve it. The court can even grant a default judgment against the non-preserving party. When litigation is foreseeable, parties should identify a list of custodians with potentially relevant information and immediately implement a litigation hold on those users.
Change Internal Processes
Internal procedures can go a long way in reducing the costs of assembling electronic discovery. A company can require all project-related emails to include a project number in the subject line and then set a rule in the mail server that archives the project emails into a designated project archive folder. Email policies can require users to save incoming and outgoing emails in a separate sub-folder for each project. Individual project servers can be used to store all electronic information related to a specific project. These relatively easy fixes can return substantial savings when a company is called on to produce documents.
Understanding how and where electronic information is stored in a company is vital. Keep system maps and network diagrams current, and maintain accurate records of the assignment of workstations, laptops, cell phones and tablets.
Other helpful procedures include forbidding the use of non-company email accounts to transmit work-related emails, creating retention policies for email and other information, and maintaining a reliable backup system for all servers and email accounts.
Most construction companies will defend or initiate litigation from time to time, and that makes it imperative to anticipate the possibility of electronic discovery. Construction companies should call on a team of lawyers and IT professionals to periodically assess whether storage and organization of documents makes them optimally accessible in litigation.