Sam Levenson, a respected humorist and author, said “You must learn from the mistakes of others. You can’t possibly live long enough to make them all yourself.” Sam’s words are amusing and wise. There is much to learn from the mistakes of others, even when considering the destruction of evidence in litigation.
When a business learns that a lawsuit may be on the way, it must save evidence. That used to mean only documents. But today, a company also has to save electronic data. That means not only documents in its filing cabinets, but also the data on its computers, back-up tapes, zip drives, voicemail systems, Blackberries, digital cameras, or myriad other devices capable of storing information.
The consequences for failing to save evidence can be severe. In a recent case involving the defection of an employee to a competitor of one of our clients, a global company engaged in the development, delivery, and support of advanced defense, security, and aerospace systems, we learned that the employee “scrubbed” his computer only hours before we were to analyze it for evidence of theft of trade secrets. As a result, the employee was sanctioned by the judge to the tune of more than $40,000 and the judge also agreed to tell the jury about the illegal conduct.
In another recent case, we obtained a jury verdict in excess of $6 million in favor of an Ohio-based diamond dealer and against an international, New York-based diamond manufacturer. The case was about the theft by the manufacturer of a 5.56 carat pink diamond. At the center of manufacturer’s defense was a video. But because the diamond manufacturer deleted the original digital evidence and only preserved a “copy” of part of the original video, it was pretty obvious that it may have been altered. The jury agreed.
There are three steps a company can take to protect itself:
- Have a good data retention policy in place that includes knowing what hardware and programs are in use and where data is stored.
- Construct a clear “litigation hold” policy that targets the employees most likely to have relevant data and ensures that data is timely collected.
- Form a litigation-hold team made up of the people most knowledgeable about the business and its data management.
Taking these steps will allow a business to provide efficient, consistent and effective management of its data and ensure compliance with preservation obligations.