As paper-based data go by the wayside, counsel must be prepared to collect, produce and review electronic evidence.

By Patricia Nieuwenhuizen
(Originally published in the National Law Journal)

To the uninitiated, electronic discovery may seem straightforward, requiring only a disk to copy selected files. A closer look, however, reveals a complicated technical process that, if not performed correctly, can result in serious ramifications for both attorney and client, including monetary sanctions and even default judgment.

The number of e-mail users has increased dramatically in recent years, jumping from 8 million in 1991 to 108 million in 2000. E-mail has become a primary form of business communication; office workers exchange 25 billion messages daily. If home and Web-based (hotmail, Yahoo!, etc.) e-mail use is considered, the number of messages increases to 6.8 trillion per year.

Experts contend that 30% of electronically stored documents are never printed to paper. In order to conduct full discovery, reviewing electronic data is absolutely essential; otherwise, nearly one-third of all potential evidence could be left unexamined.

E-mail is often used casually and conversationally, with many users believing that their messages are easily deleted. The informality of e-mail and the mistaken belief that it is impermanent often results in "smoking gun" e-mail that can make or break a case.

The Microsoft antitrust lawsuit demonstrated how devastating e-mail evidence can be, even to the most technologically savvy company. In U.S. v. Microsoft Corp., the Department of Justice accused Microsoft of anti-competitive practices, including improperly using its Windows monopoly to achieve dominance in the Internet browser and e-commerce markets.

Microsoft's anti-competitive behavior was graphically illustrated in a series of internal e-mail messages. In 1990, for example, Mark Slade of Microsoft wrote to Bill Gates about his proposal to divide the market with Intuit: "I positioned the proposal like this, WE'D RATHER NOT COMPETE WITH YOU. INSTEAD OF GROWING THE MARKET, WE'D BOTH JUST SPEND A LOT OF $ FIGHTING EACH OTHER FOR SHARE. SO HOW ABOUT THIS? [sic] You guys continue to do a great job on DOS and Mac. We're investing in a line of Windows sm biz/home products anyway, so we'll just round out the line…and together we'll grow the business."

The Microsoft antitrust complaint contained numerous quotes regarding Internet Explorer, including this damaging one from Microsoft's Christian Wildfeuer: "It seems clear that it will be very hard to increase browser share on the merits of IE4 alone. It will be more important to leverage the OS asset to make people use IE instead of Navigator."

Road to discovery
As these examples illustrate, discovery of electronic data is essential because much of the information is not available through traditional paper discovery processes. The Federal Rules of Civil Procedure provided as early as 1970 that electronic evidence is discoverable and admissible. In addition, most states have adopted parallel provisions that define discovery documents to include electronic data, and numerous courts have held that electronic evidence is discoverable and admissible. "Today it is black letter law that computerized data is discoverable if relevant."

A discovery request aimed at the production of records retained in some electronic form is no different, in principal, from a request for documents contained in any office file cabinet." Electronically stored information is discoverable under Fed. R. Civ. P. 34 if it otherwise meets the relevancy standard prescribed by the rules.

In the "former" age of paper-based discovery, attorneys conducted discovery in centrally located file rooms and other locations where files might be kept such as off-site storage facilities and file and desk drawers in offices of key individuals, calendars, diaries, handwritten notes, and files maintained by assistants and secretaries to key individuals.

Although the medium has now changed in part from paper to electronic, the same methodology applies to the sources and locations of electronic data for discovery purposes. For example, the examination of potentially discoverable files on a party's central network server is analogous to the examination of potentially discoverable paper files in a central file room.

Other possible sources of electronic discovery include hard drives, notebook computers, personal digital assistants (such as the PalmPilot), Zip drives, CDs, diskettes and other removable media. Further, litigants may seek electronic discovery from PCs or servers no longer in use, backup tapes or electronic archives.

Tipping the scales
In recent cases, electronic evidence has proved to be a deciding factor. For example, in Siemens Solar Industries v. Atlantic Richfield Co., the plaintiff won a $150 million fraud judgment related to its purchase of ARCO's solar energy technology, thin-film silicon (TFS), after e-mail messages showed that the defendants knew the technology was not commercially viable. Siemens discovered "smoking gun" e-mail from ARCO employees, including this statement: "[I]t appears that TFS is a pipe dream, let Siemens have the pipe."

In Vermont Microsystems Inc. v. Autodesk Inc., a trade secrets case, the plaintiff prevailed based on similarities between the parties' versions of computer-aided design software. Electronic discovery revealed that a former Vermont Microsystems employee had brought the secrets to Autodesk: "[L]ess than three months after he arrived at Autodesk, Berkes sent an e-mail to his colleagues detailing the technical specifications . . . The specifications mirrored those of VMI's. . . . The overall architecture of the two programs is similar and in some cases identical.

Mishandling electronic evidence--whether intentional or inadvertent--can raise claims of spoliation and malpractice, give rise to sanctions and even result in default judgment. In Crown Life Ins. Co. v. Craig, an insurance company that failed to produce electronic data was sanctioned, including entry of a default judgment on its counterclaim.

In Carlucci v. Piper Aircraft Corp., sanctions of $1 million were imposed on Piper for destroying computer evidence after the lawsuit had been filed. In Lauren Corp. v. Century Geophysical Corp., the Colorado appellate court awarded the plaintiff attorneys' fees and costs because of the defendant's destruction of computer hardware.

Electronic evidence must be collected carefully to ensure its authenticity and chain of custody for admissibility, and to avoid spoliation. Electronic evidence service providers can assist legal teams in taking basic steps to assure proper chain of custody, including such measures as working from copies of electronic data to ensure that no information is added, changed or deleted from the original; using drive-imaging technology; properly restoring data from backups and archives; and employing industry-standard security and preservation methods.

Once data has been collected, images of the drives have been made, and the remaining files have been restored, the real challenge will remain: how to effectively review and manage gigabytes, or even terabytes, of data.

Sorting out the bits
Federal and state rules normally require that electronic data be produced in useable form. Simply turning over the data in its native format may be insufficient. And even if the data is useable, the information cannot simply be turned over in its entirety because it may contain privileged information or trade secrets.

Often, the biggest challenge in dealing with electronic evidence is the volume of information. In order to manage this data overload effectively, legal teams must separate the wheat from the chaff.

Technology can and should be harnessed to sift through large amounts of data. First, data can be screened through a pre-process inventory of file directory listings. The inventory should contain diagnostic information such as file types; the number of files in each category; and file sizes, locations and sources. This will provide the legal team with an overview of the data and may permit the elimination of entire categories of files from individual review.

Second, electronic evidence providers can help legal teams filter out certain data before individual document review begins. For example, data may be filtered by file type so that irrelevant types, such as program and system files, can be excluded from analysis. Data can also be filtered by date range. In many class actions, for example, parties agree not to produce documents outside the "class period" or a mutually agreed-upon time frame.

Third, keyword searching can help reduce attorney time spent on the review of irrelevant documents such as recipes, golf invitations and the like. Files that do not contain specific keywords can be eliminated from review, thereby substantially reducing the information to be individually analyzed.

Fourth, electronic evidence providers have developed sophisticated processes that enable data de-duplication of redundant information. Multiple copies of the same e-mail or document can be excluded from individual review, thus reducing attorney review time and increasing consistency.

Paper or Plastic?
After electronic information has been narrowed, the remaining data may still comprise gigabytes or terabytes. There are several approaches to the review of electronic data. The appropriate method depends on the amount of data and the available time frame, budget, hardware and personnel.

The first option is traditional paper review. This requires printing the subset of documents remaining after file type and date filtering, keyword searching and de-duplicating. The printouts are then reviewed so that relevant, non-privileged paper documents can be produced.

A second option for reviewing electronic data is enhanced paper review. Here, technological tools augment traditional paper review by printing documents with electronically applied Bates numbers, and using slip-sheets to separate each document. Attorneys mark the slip-sheets with production or privilege status. This process can be further enhanced by scanning or entering the production information into a database.

The third and newest option for reviewing electronic discovery information is paperless review. Tools now offered by select providers can enable fully electronic review. For example, e-mail (including attachments) and hundreds of other document types can be transformed into an image-enabled, fielded, fully searchable database. This paperless review process eliminates the need for printing, copying, Bates labeling, scanning, optical character recognition conversion and coding.

Once the database has been created, the legal team can use it to search and review e-mail, attachments and files, electronically tagging those records to be produced and those to be withheld. The team can then choose whether to produce electronic files or Bates-numbered TIFFs on paper. Furthermore, this production-related information can be simultaneously tracked within the database, so the legal team can know what has been reviewed, what has been produced, when and to whom. The electronic data can be integrated with traditional litigation support data from paper-based productions, allowing the legal team to work from one central source.

Electronic evidence is clearly discoverable and admissible, and it represents an increasingly important issue for legal teams. The biggest challenge with electronic evidence is not its collection or preservation, but rather the development and implementation of strategies and techniques for managing such large amounts of data. Proactive and effective legal teams, with the help of front-running electronic evidence service providers, can apply cutting-edge research and development to meet these challenges effectively.


Patricia Nieuwenhuizen, a 1985 graduate of the University of California Hastings College of Law, is a former civil litigator. Currently she is general counsel and CEO of Fast Track Litigation Support LLC, which provides computer evidence services, litigation support, deposition summaries and legal staffing services. Prior to founding Fast Track in 1993, she practiced law at several San Francisco law firms, including Morrison & Foerster. Andrew Crain, an attorney and project manager at Fast Track, provided research support for this article.

Cites and endnotes, which were previously published with this article, are available upon request.