When we were in school, we learned what to do when the fire alarm bell sounded. As parents we teach our children about the immediate steps to be taken when the smoke detector sounds at home. Now there is yet another alarm bell that should be installed in every lawyer's life, a bell we'll call "the E-Discovery Alarm."

In years gone by, when a client called to report being sued, there was time for the lawyer to leisurely reflect on the lawsuit, begin gathering facts, perhaps compose a motion to dismiss, and only then begin to think about gathering documents and evidence necessary to defend the claim. With the adoption of the electronic discovery amendments to the Federal Rules of Civil Procedure and, more importantly, the new awareness on the part of the courts and trial bar of the significance of electronic documents in the corporate world, that has all changed. Now, when the client calls to report that the U.S. marshal has paid a visit with a summons and complaint, an alarm bell should sound—the E-Discovery Alarm.

There are two important truths underlying the need to install this alarm. First, electronic documents and evidence are transitory—easily lost, overwritten, or modified—and thus immediate action must be taken to prevent loss of that evidence. Second, the very real threat of being sanctioned for permitting spoliation of evidence is the most serious challenge facing corporate defendants in litigation today. Spoliation—the loss of evidence at a time when the corporation knows that such evidence is relevant to some issue in litigation—can result in sanctions ranging from substantial monetary penalties to the loss of important defenses in the litigation and, in the most serious cases, the entry of a default judgment.

Those two facts have dramatically altered the timeline both for corporate clients that are involved in litigation and for the lawyers who represent them. While every lawsuit and every corporate client present different challenges, there are some basic steps that should be considered (if not acted upon) by outside counsel (and expected by in-house counsel) in virtually every corporate lawsuit. Following are some basic tips for preparing to respond when your client calls.

Plan Ahead
No firefighter responds to a plea for help without preparation and training. Similarly, no lawyer should face the E-Discovery Alarm bell without advance preparation. There are two steps to this preparation. The first is having an understanding of the rules, procedures, and expectations of the courts. However, there is more involved than simply reading the rules. Much of the law concerning electronic discovery has been made in case law predating the effective date of the rules' amendments. Courts have been focusing on these issues for the last half dozen years and a significant body of law has developed defining expectations of courts with respect to how counsel and corporations will respond to the e-discovery obligations in commercial litigation. One of the series of decisions offered by Judge Shira Scheindlin known as the Zubulake cases is often quoted in this regard. In the case known as Zubulake V, Judge Scheindlin said:

Now that key issues have been addressed and national standards are developing, parties and their counsel are fully on notice of their responsibility to preserve and produce electronically stored information.

Judge Scheindlin is not alone in expressing these high-performance standards for lawyers in electronic discovery matters; the performance bar clearly has been raised.

Any lawyer who is likely to become involved in a dispute involving electronic discovery, whether in-house counsel or outside counsel—and that means virtually any lawyer involved in any form of litigation today—needs to have an understanding of the basic principles evolving in these court decisions. The lawyer also needs to have an understanding of the systems and tools that are available to support litigation: computer programs for litigation support; computer programs for production of documents, tracking documents, and reviewing documents; collection techniques in software, etc.

Further, the lawyer must obtain an understanding of the technology infrastructure of the client. The more you know in advance of the actual dispute about how the corporation's systems are structured, what kinds of data are processed and stored, and what rules apply to retention of this information, the better equipped you will be to respond correctly and quickly when the E-Discovery Alarm bell sounds. Ask, what is the corporation's record-retention policy, if any? Is that policy being applied to electronic records? Is the corporate IT department aware that there is a record-retention policy that may impact the way in which it operates its departments and systems? Asking these questions before the call comes can avoid disaster later.

Putting the Freeze On
A party to litigation has a duty to preserve all evidence—physical, paper, and electronic—from the moment it becomes "reasonably aware" of the relevant fact that litigation is about to be brought. Mere knowledge of facts likely to lead to a claim may constitute reasonable awareness and trigger the duty. Suffice it to say that a failure to recognize these obligations to preserve in a timely way and to apply them to sources of electronic data has been a very significant cause of the imposition of sanctions by federal courts for the consequent loss of potentially relevant evidence. Those sanctions have ranged from monetary penalties to loss of defenses or witnesses to default judgments. Courts talk about this preservation process as the imposition of a "litigation hold" on relevant records.

Thus, preparing for e-discovery issues to arise means planning for and properly implementing a litigation hold that will ensure the client meets its preservation obligation, not only with respect to paper documents but also with respect to electronically stored information, or ESI as it is commonly referred to today.

Implementation of a litigation hold involves far more than simply sending out a directive from outside counsel or general counsel mandating that relevant documents be saved. In the electronic world, courts expect that lawyers will take the additional step of ensuring that data and documents that exist on the date of the hold are still around when it comes time to produce them for discovery. That may mean taking snapshots of existing systems. It may mean duplicating hard drives of key employees or stopping the routine recycling of backup tapes. None of these are steps that can be taken quickly, especially if the first time you think about preservation is when you actually are required to implement the hold.

Advance planning means having the tools and systems in place and having personnel trained in the steps necessary to implement the preservation obligations of a hold with respect to electronic documents and data. It means providing some training to the information technology staff so that they understand what is expected of them and, equally important, what the consequences of failure may be to the corporation.

From the perspective of outside counsel taking on a new client in an electronic discovery matter, all of this planning and preparation must be compressed into the implementation of the hold itself and, unless the new corporate client is already prepared for the challenge, it means seizing the opportunity for early interviews of appropriate personnel and the IT staff to identify systems and potential sources of relevant documents.

When the Bell Sounds
Just as first responders are trained to take certain actions when first arriving on the scene of a fire or other disaster, lawyers have to be ready to act when the summons and complaint are received or when other facts are learned that give notice of the impendency of litigation.

The first step obviously is ensuring that notice of the hold goes out to relevant employees. One challenge is sufficiently identifying the categories of potentially relevant documents so that they can be understood by the lay employees charged with the duty of preservation. Often early in the lawsuit, it is difficult to clearly identify all of the potential categories of relevant documents. Nevertheless, some attempt must be made to particularize the litigation hold notice to the facts of the case. A second challenge is identifying the relevant employees. That means early interviews of the corporate client and key personnel to gather a few basic facts concerning the client's involvement in the matter and to identify key personnel likely to possess relevant information and documents.

That initial notice and those initial interviews may not be sufficient, however. In large corporations, any one key employee may know only a few of the other key employees likely to be custodians of ESI. Thus, prudence dictates that there be a follow-up to the initial hold notice and a second round of personal interviews of those new custodians disclosed in the early interview process.

Thus, the initial hold notice and early interviews represent only a first step. Almost inevitably, in litigation involving a corporation of any significant size or involving facts of any complexity, counsel should plan on a follow-up notice expanding the litigation hold and particularizing the specifics of what is to be preserved as more is learned about the case.

Most courts view this process as protected by the attorney-work product or the attorney-client privilege. However, it is important to keep in mind that there may come a time when litigation counsel has to demonstrate the level of diligence applied by the corporate defendant in preserving documents in order to avoid sanctions.

It is almost a certainty in litigation involving electronic discovery that something will be lost that should have been preserved. Perhaps the relevance of the document was not immediately known or perhaps the existence of a system or database containing the relevant data did not come initially to light. Opposing counsel will be sure to jump at the opportunity to move for sanctions. Your only defense may be to show that the corporation exercised reasonable diligence in attempting to preserve relevant evidence. Thus, care should be taken to segregate the procedural aspects of preservation and information collection from the substantive communications that take place as counsel prepares to defend the client on the underlying claims of the new lawsuit.

Gathering the Goods
One of the changes made to the Federal Rules is the requirement imposed upon the parties to make an early disclosure of the sources and types of ESI that may contain potentially relevant evidence that may ultimately be subject to production. If the party is an individual or a small business, this is probably a relatively easy task. For large corporations with hundreds if not thousands of file servers located in many geographic locations, the challenge can be immense.

Thus, another of the early tasks facing the lawyer is determining which systems and data sources must be searched and how they will be searched. Also part of that process is deciding how potentially responsive data will be retrieved for privilege and ultimately produced to the opposing party. Does the client have the resources or personnel, including software and hardware, necessary to accomplish this task in both a timely and safe manner? This means working very closely with the corporate information systems staff to make the right decision. When the corporation has insufficient resources to meet the challenge, the task then is to identify a third-party vendor who can assist in this process. Today, there are literally hundreds of companies holding themselves out as electronic discovery vendors and experts, ranging in size from a few dozen employees to hundreds of employees. Many say they "can do it all." However, each brings a different skill set and a different tool set to the table and, of course, there is always the cost factor to be considered in making a choice.

In selecting a vendor, you will have to think about whether it has sufficient capacity to handle the anticipated volume of data to be searched. Can the vendor meet the time requirements likely to be attached to search and retrieval? Opposing parties always seem to insist on production on a faster timetable than is realistically possible with respect to ESI. Then there is the question of the end product to be delivered to opposing parties. Is the delivery method consistent with the in-house litigation support tools that you will be using? Is the solution that the vendor proposes a cost-effective approach considering the amount in controversy and the resources of the client to afford such discovery?

Early in the case, consider whether to negotiate with opposing counsel with respect to the sources of ESI to be searched. If opposing counsel is attuned to the cost and delays associated with broad-reaching searches for discoverable ESI, he or she may be willing to abandon the "leave no stone unturned" approach to demanding production of relevant information and agree to target the search only to the sources most likely to contain the hidden treasures sought in discovery. If a limitation of sources is not possible, then work toward a prioritization of sources and a staging of discovery agreeable to opposing counsel, deferring until a later day searches of some of the more expensive sources of ESI or those sources less likely to contain data.

Absent agreement of opposing counsel, it also may be possible to seek relief from the court with respect to the sources to be searched. Such relief will not easily be obtained, so you should document the costs and burdens you seek to avoid through your proposed limitations. In this respect, your chosen vendor can supply you with some of that evidence in the form of an expert affidavit. Don't go into a motion like this without substantial documentation to back you up, because opposing parties will likely demonstrate their belief that "all" relevant evidence should be produced.

Preparing for Production
It is becoming increasingly common practice for the parties to sit down during the Rule 26(f) conference to negotiate an electronic discovery protocol. A well-drafted protocol spells out the details of how ESI will be produced. In many cases, a protocol also will determine how and what sources of ESI will be searched. A typical electronic discovery protocol should cover

1. the production (PDF, TIFF, or native);
2. numbering or control techniques;
3. production of load files, OCR, and metadata;
4. search terms to be applied, if any;
5. acceptable methodologies for redaction of electronically produced documents;
6. clawback agreements for privilege; and
7. time frame for search and production.

It is virtually impossible to make intelligent decisions with respect to any of the foregoing issues unless you know your client's systems and resources as well as your vendor's capabilities and limitations. Ideally these agreements should be negotiated by the parties at an early stage and incorporated into the court's Rule 16 scheduling order. Changes to Rules 26(f) and 16 underscore the urgency of moving quickly when the E-Discovery Alarm sounds to gather the facts and resources necessary to deal with the electronic discovery issues in today's litigation.

Forms of electronic discovery protocol used in other cases are often contained in reported decisions and thus samples are readily available. However, care should be taken to avoid treating the electronic discovery protocol as mere boilerplate; any form of order should be tailored to your particular case.

Conclusion
A failure to "get it right" in responding to the e-discovery challenge can have disastrous consequences for both lawyer and client. If evidence is lost or ESI is inadvertently altered in the production process or relevant sources are not searched, serious sanctions can loom ahead for both the lawyer and the client. Moreover, in serious cases, there may be criminal penalties to be paid (remember Arthur Andersen?) and, for lawyers, professional discipline for failing to live up to the applicable codes of professional conduct.

Don't assume that merely by reading the rule amendments you know enough about production of electronically stored information to meet this challenge. Know your obligations under the rules and case law, know the limitations of your own knowledge and expertise with respect to technology, and, lastly, know who to call on for help when the E-Discovery Alarm sounds.