Robust Document Retention Policy Key First Step in Complying with Duty to Preserve and Avoiding Litigation Sanctions

The first steps in successfully navigating the sometimes rocky shoals of discovery in the electronic age occurs long before any litigation has been filed, threatened or even contemplated. The first steps are drafting, implementing and ensuring compliance with a robust document retention policy. A document retention policy, properly drawn, lays the groundwork needed to assure compliance with a party's duty to preserve evidence and can insulate an organization from sanctions even if documents are lost or destroyed.

The duty to preserve evidence arises anytime litigation (or a government investigation or audit) is commenced, threatened or reasonably anticipated. Although the duty to preserve evidence relates to all evidence and not just electronically stored information (or "ESI"), both the ever increasing volume of ESI and its often ephemeral nature pose particular challenges in preservation. 

Courts grappling with complex e-discovery issues frequently look to The Sedona Conference® for guidance. See e.g. Aguilar v. Immigration and Customs Enforcement Div. of U.S. Dept. of Homeland Sec., 255 F.R.D. 350, 355 (S.D.N.Y. 2008) ("Courts have found the Sedona Principles instructive with respect to electronic discovery issues."). See also Romero v. Allstate Ins.Co., 2010 WL 4138693 (E.D. Pa., CA No. 01-3894, Oct. 21, 2010) (extensive citations to the Sedona Principles and Commentaries). The Sedona Conference® brings together judges, lawyers, academics and other experts to discuss important issues in complex litigation (as well as in antitrust law and intellectual property rights). The Conference has looked deeply into the challenges posed by e-discovery, issuing Best Practice Guidelines for Managing Information and Records in the Electronic Age, followed by several commentaries relating to particular aspects of e-discovery. 

In the fall 2010 edition of The Sedona Conference Journal®, the Conference published its Commentary on Legal Holds: The Trigger & The Process, which offers 11 guidelines to aid in compliance with the duty to preserve evidence. Failure to comply with the duty to preserve can lead to significant and even outcome-determinative sanctions against a party to litigation, as well as significant monetary sanctions against the lawyer or law firm representing the sanctioned party. Lawyers and litigants, therefore, are well-advised to consider and follow, when practicable, the guidelines suggested by the Conference. (The Conference cautions, however, that the Guidelines "are not intended and should not be used as an all-encompassing 'checklist' or set of rules that are followed mechanically." (emphasis in original)) 

A party accused of failing to comply with its duty to preserve evidence will be judged against a reasonableness and good faith standard. Against that backdrop, Guideline 2 states: "Adopting and consistently following a policy or practice governing an organization's preservation obligations are facts that may demonstrate reasonableness and good faith." In other words, adopting a well-reasoned document retention policy — long before any litigation or government action is even threatened — which is consistently followed and which is followed when the duty to preserve evidence arises will prove to be a good part of the reasonableness and good faith defense to any motion for sanctions for failure to preserve ESI or other documents.

All document retention policies need to include provisions for implementing what is now commonly termed a "litigation hold" — that is, procedures for advising the appropriate personnel within an organization to preserve appropriate documents, including ESI, in an appropriate manner. Thinking through and formalizing these procedures in a written document retention policy well prior to actually needing them will enable a prompt, but careful and well thought out response to the threat or initiation of litigation. Without such formalized procedures, an organization is more likely to find itself implementing a litigation hold that is too late, too vague, and too narrowly distributed, possibly leading to the inadvertent failure to preserve ESI, which an opponent in litigation will do everything it can to paint as a bad faith destruction of evidence. 

Depending on the size of an organization, drafting and implementing a document retention policy can be a challenging and tedious process, but one well worth it for a variety of reasons, only one of which is that it can be a powerful tool in insulating an organization from very serious sanctions that can be levied if the duty to preserve evidence is not fulfilled.