Coming Soon to a Wisconsin Courtroom Near You?

It looks like Wisconsin will soon join a number of states (roughly half of the country) who have amended or adopted rules of civil procedure to include specific provisions regarding discovery of electronically stored information. 

After considering the issue for several months, the Wisconsin Judicial Council filed a petition with the state Supreme Court proposing amendments to the state statutes that provide the rules of civil procedure. 

In general, the proposed amendments are consistent with, and based on the 2006 amendments to the Federal Rules of Civil Procedure regarding electronic discovery.  For example, the proposed amendments:

  1. Encourage the parties to discuss electronically stored information early in the discovery process;
  2. Address the format in which electronically stored information should be produced;
  3. Limit the information that must be produced to reasonably accessible information; and
  4. Contain a safe harbor provision to protect a party who destroys information in good faith according to a routine records retention policy.

Despite these general similarities, the proposed amendments differ from their federal counterparts in three important respects. Unlike their federal counterparts, the proposed amendments:

  1. Provide a definition for "electronically stored information" that is "intended to be broad enough to cover all current types of computer based information yet flexible enough to encompass future changes and technological developments." 
  2. Do not require the parties to discuss electronically stored information at a discovery conference because Wisconsin does not require a discovery conference.  Instead, the proposed amendments "encourage the courts to address the management of electronic discovery early by adding electronically stored information to the list of items that can be addressed by scheduling order, although it is not required."
  3. Do not contain a claw-back procedure to protect parties who inadvertently produce privileged or protected information. According to the Judicial Council, "waiver of privilege is more properly addressed under the rules of evidence, including the attorney client privilege and the work product doctrine, than in the discovery rules."  

The Supreme Court is expected to hear public comment on the proposed amendments soon, but the hearing date has not yet been scheduled.  Stay tuned!

In Tough Economic Times, Make the Case

Michelangelo is arguably the greatest artist of our time. However, many successful records managers will tell you that they use comparable skills to maintain an effective record retention program because implementation and compliance is more of an art than a science.

Corporate attorneys frequently counsel clients that it is riskier to have a retention program that is not followed than not having one at all, and in tough economic times, retention programs are sometimes cut as cost saving mechanisms. As corporate counsel, we can offer our clients practical information to prevent this outcome by preparing them to communicate the business case for maintaining the program.

 Below are some key messages that record managers can communicate to top level management:

 -Communicate the return on investment: describe reductions in storage costs and savings 

  resulting from time spent searching for records


 -Manage for Change: monitor changes in technology, organizational structure, and workforce

  demographics that effect record retention and develop new ways of doing things


 -Operate in the Legal Context: keep up with changes in law and educate employees,

  integrate legal expertise, integrate legal requirements in retention and disposition schedules


 -Proceed Consistently with Standards: use standards to demonstrate the program's

  expertise, competence and authority


-Use Cooperative Approaches: work with other offices to streamline work and utilize office



-Explain the Return on Investment: emphasize cost reductions, contribute to the value chain

 and to business operations, improved customer relations, better decision-making and

 protection from losing litigation


 -Advocate for the Program: reinforcement of good business practices, competitive edge,

  IT management, protection from litigation, framework for managing email, save money

  and space, preservation of essential documents and disaster preparedness


Under mounting pressure to cut costs, it is easy to succumb to the adage that money saved is money earned. However, there are ways to counsel our clients to argue that the short-termed benefit of cost reduction through eliminating a record retention program does not outweigh the long-term savings in the value chain. Having an effective record management system is a business imperative because efficient management of records contributes to overall corporate profitability.

Documents Kept in the . . . Irregular Course of Business?

In yet another example of why records managers should be coordinating with legal on storage of documents, the U.S. Federal Court of Claims has held that documents archived in a manner other than the regular course of business do not comply with Rule 34 of the FRCP. 

In Ak-Chin Indian Community v. United States, 85 Fed. Cl. 397 (2009), documents stored in a different filing system than they were kept prior to transfer to storage were held not to have been kept in the ordinary course of business.  In that case, the plaintiffs were suing the government and wanted to get their hands on responsive documents kept in a bunch of boxes at the American Indian Records Repository (AIRR).  The boxes were indexed using an off-the-shelf commercial software package that "captures information about the source, files, and documents in [each] box [which information is subsequently] entered into the . . . database."  Id. at 398.  People digging around the database for, say, documents responsive to discovery requests, could run queries to search for them.  Id.  So, when served with discovery requests, the government turned to its handy database, ran a few queries to find the boxes that likely contained responsive documents, and sent the database query results along to the plaintiffs.  Id. at 399.  The plaintiffs filed a motion to compel, arguing that this didn't constitute a production of responsive documents organized and labeled by category of request as required by Rule 34 of the Rules of the U.S. Court of Federal Claims.  Id. 

Under Rule 34, "[a] party must produce documents as they are kept in the ordinary course of business or must organize and label them to correspond to the categories in the request."  Id. (quoting RCFC 34(b)(2)(E)(i)).  The Ak-Chin court held that the documents at the AIRR were not maintained in the ordinary course of business under Rule 34, because prior to transfer to the facility, they were reorganized from the filing system of the local agency offices to conform with the AIRR filing system (not wholly surprising, considering that AIRR was a records repository and records are not always in tip-top shape, organizationally-speaking, when they are first unearthed from the mess that makes up most people's filing cabinets). Id.  The court explained that "documents in storage are no longer in the usual course of business, they are kept in the usual course of storage," such that the only option under Rule 34 was to label and categorize the documents.  Id. at 400.  For documents transported to storage to still be kept in the ordinary course of business, the court said, the documents must be stored in the same way they were kept.  Id. The court was also concerned that the filing system at AIRR did not permit a meaningful review if the plaintiff was dissatisfied with the production.  Id. at 401.  Because only the boxes were indexed, not the specific documents in the boxes, the government was out of luck.  Id.

Take home message? Know just how your documents are arranged in storage in relation to how they're kept before they're retired to archives, boxes, and closets or you may incur additional costs to produce them.

Tax-exempt organizations - the IRS wants you to think about record retention policies

Commenting on tax forms, Albert Einstein once said, "This is too difficult for a mathematician. It takes a philosopher."

Einstein might appreciate the latest changes in filing for tax-exempt organizations. In an attempt to foster transparency and ease the filing organization's administrative burden, the IRS recently redesigned the Form 990 (the annual information return that most tax-exempt organizations are required to file). The redesign asks a variety of questions regarding the filing organization's governance, including the question, "Does the organization have a written document retention and destruction policy?"

Although a portion of the new governance section "asks [for] information about policies and practices that are not required by federal law," the Sarbanes Oxley Act imposes criminal liability on organizations, including tax-exempt organizations, that destroy records with the intent to obstruct a federal investigation. Many tax-exempt organizations have responded to the Sarbanes Oxley Act by adopting and implementing record retention policies. The IRS recommended that organizations  "review[...] the new governance questions, which generally must be answered based on policies and practices in place on or before the last day of the 2008 tax year."

If your organization must check the "no" box for 2008 , consider implementing a policy for the 2009 tax year. Whether your organization deals with mathematicians, philosophers or neither, it's good business practice for your tax-exempt organization.

New Year's Resolution: Discovery Hold Policy

So you are in tip top physical condition, you give regularly to charity, you call your mom every other day, and you don't miss the sauce a bit.  Sounds like you're in the market for a New Year's resolution! 

How about this: does your company have a litigation hold policy that covers electronically stored information?  According to a recent Deloitte survey, 30 percent of U.S. companies do not have a formalized process in place regarding legal holds, which are policies that guard against the destruction of relevant evidence when legal action is threatened. 

As has been chronicled on this blawg and elsewhere, the potential pitfalls of poorly executed or nonexistent litigation hold policies are serious, and certainly outweigh the relatively small cost of implementing such a policy.

One thing is certain--electronic information will continue to play a larger and larger role in discovery.  Therefore, if your company has not yet implemented a policy to deal with it, shake the confetti out of your hair on New Year's Day, and pledge to tackle the problem early in the year.


Quality Not Quantity

The adage that "quality, not quantity matters" certainly applies to the maintenance of business records. Businesses often devote numerous hours to developing lengthy schedules defining what records must be kept and for how long. While the development of a comprehensive schedule is important, the quality of the records to be maintained is just as important. Records must be of a sufficient quality to allow companies to defend against legal claims.

One important quality consideration is how to store the records. Records should be stored so that records can be easily located when necessary to respond to a discovery request. Failure to do so can result in burdensome costs.

In In re Brand Name Prescription Drugs Antitrust Litg., 1995 WL 360526 (N.D. Ill. 1995), an Illinois district court required a defendant corporation to sort through volumes of stored email at its own expense. Pursuant to the plaintiff's discovery request, the records had to be formatted before the plaintiff could search and retrieve the email records. The court held that the defendant should bear the discovery cost of $50,000 to $70,000. Reasoning that the translation of data into a useable form by the discovering party is a foreseeable burden because electronic records should be available with the same openness as traditional forms.

As in this case, companies face increasing requests to produce electronic records. However, the take away is that ineffective storage can be risky and costly for both traditional records and electronic records. Therefore, retention programs should consider the quality of records to minimize risk and high costs associated with discovery.

Text Messages Live Forever? Or no?

Interesting Slate article about some of the nuts and bolts behind retention of text messages. . . how long they are stored on your phone, how long your wireless carrier will store them, and how your corporate record retention policies might affect those issues (as Detroit Mayor Kwame Kilpatrick recently learned the hard way).