New Discovery Rules Means Strategy & Expense

New federal rules on discovery of electronic data mean that targets of civil and their defense attorneys must develop strategies for preserving and evaluating their data or suffer expensive consequences, according to consultants.

Their advice was offered yesterday during a Web seminar sponsored by Chicago-based insurance broker Aon, which discussed amendments to the federal rules of civil procedure that became effective this month.

Cliff Shnier, vice president for Aon Consulting financial advisory and litigation consulting group, noted that the volume of information that is stored on computers has made it necessary for the rule changes.

He noted that a computer holding 30 GB of information can equal 50 file cabinets of paper files, an amount of information that was never dreamed of back in the day of paper files.

Under the duty of preserve, when a suit has been filed, or when one of the parties has reason to believe a suit might take place, information has to be maintained. In the electronic age, that can mean taking the initiative and halting computer programs that could erase the data.

The most expensive segment of this process is in the review phase, when individuals will spend time reviewing each electronic file. Mr. Shnier said it is important to have the technology that allows for review of the files electronically to remove information that is not relevant to the civil case.

Without the ability to remove such information, the review process could prove so expensive that it could put the one of the parties in a position of settling because the cost is too great to work through.

"You should not be forced to throw in the towel when you don't have too," Mr. Shnier said.

Another concern is when data is copied. Care must be taken to ensure that no appearance of alteration occurred during the processing of data.

He pointed out that is important to document everything and if there is a problem, get out in front of it and tell the court before the other side can make an issue of it.

Companies should put in place an electronic preservation policy and make sure employees understand it. The court requires the parties meet early in the process and information be preserved early on in the process, Mr. Shnier explained.

Violations of new procedure rules can result in expensive sanctions by the court, Mr. Shnier added.

Joining Mr. Shnier was Jerry Barbanel and Daryk Rowland, co-global practice leaders, financial advisory and litigation Aon Consulting.

During a question and answer period, Mr. Rowland pointed out that one person in the company cannot be relied upon to do preservation work. An outside individual, who is expert in this area, should be brought in to oversee and start the process.

Mr. Barbanel said one area companies need to pay attention to is in their acquisitions. It will be more difficult to fold that into the parent company's technology system, and could remain unknown until discovery, causing problems later on.

They noted that it is important to bring in a forensic expert who knows how to bring the information properly and testify to the veracity of the information.

The entire Web seminar is available by logging onto www.aon.com/webseminars/.