Thanks to the growing use of unified messaging systems and upcoming changing to federal electric discovery rules, companies should brace themselves not only for new burdens of email and electronic records retention, but for heightened obligations to manage and retrieve voicemail messages and other audio files as well.

Hicks

“I expect that very few companies are well-prepared,” says Josephine Hicks, a litigator with the law firm Parker Poe Adams & Bernstein. “My guess that most are ill-prepared and have not even thought about it, and don’t have practices in place to handle that efficiently.”

Mary Mack, technology counsel for e-discovery technology-services provider Fios, sees corporate readiness for dealing with audio files in even bleaker terms.

“I’m inclined to say zero,” she says, when asked what percentage of companies are well-positioned to deal effectively with demands from regulators or litigation opponents for audio files.

The situation is partly due to the tiny number of cases so far where audio files were caught up in discovery issues, she says; Mack estimates the number as “very, very small … maybe less than 1 percent.” But, she warns, that will soon change—driven by new technology that makes it easier to store audio files electronically and to search the files without listening to them from beginning to end.

Unified Messaging Systems

Gordon

The culprit technology is unified messaging systems, where voicemail can be attached to an email like any other file. With older, traditional types of voicemail, “people didn’t save very much or the system had a very limited capacity for saving voicemail,” says Philip Gordon, chairman of the e-discovery task force at the law firm Littler Mendelson. “With unified messaging systems, voicemail messages go into your email inbox. This will result in a lot more voicemail being preserved and potentially being litigated over.”

Which companies are likely to encounter request for audio files first? Mack predicts the energy and financial services industries, since they are frequent targets of class-action lawsuits and operate large call centers. The numbers only will go up from there, as plaintiff lawyers and regulators like the Securities and Exchange Commission get on the bandwagon.

“You’re going to find requests for voicemail and things like that rising. The SEC and other agencies will start asking for them as well,” she says, and companies will have to grapple with how to manage and, when necessary, produce relevant voicemails and other audio files.

The expensive way, Mack says, will be to put headsets on attorneys and have them listen to the audio files in question—while billing the client at the usual attorney rates, and potentially listening to thousands of hours of recordings. More efficient is to use new software that makes audio files searchable in a fast, useful, and reliable fashion, she says.

The number of companies producing technologies to search audio files still is relatively small compared to the hundreds of providers offering solutions for email, but it is expected to grow as demand increases.

BEST PRACTICES

Below is an excerpt from a legal bulletin published by law firm Littler Mendelson, titled “How To Win The Battle Over Electronic Discovery In Employment Cases.”

Step 1: Develop & Implement a Reasonable Data

Retention & Destruction Policy

Electronic discovery can easily become a bludgeon in the hands of plaintiff’s counsel for three principal reasons. First, electronic records are stored in vast quantities on a wide range of storage media, including network and e-mail servers, workstations, laptops, personal digital assistants (PDAs) and portable storage media, such as CDs, UBS drives, and floppy disks. Consequently, searching for, retrieving, reviewing and producing electronic records can be very time consuming and costly. Second, retrieving electronic records from back-up tapes created for disaster recovery purposes can be exorbitantly expensive because this

process often requires the services of data recovery specialists and the re-creation of the antiquated computer environment in which the data originally was created. Third, employees are in a position to eliminate electronic records from easily accessible storage media — whether intentionally or accidentally–thereby making the employer vulnerable to charges of spoliating evidence and making it more likely that a court will sanction the employer and/or order the employer to spend substantial sums to recover the otherwise easily retrievable data from back-up tapes.

Employers can significantly mitigate each of the three factors that make electronic discovery an effective weapon in the hands of aggressive plaintiff’s counsel by developing and implementing a data destruction and retention policy. Electronic records destroyed in accordance with such a policy obviously are unavailable to be produced, reducing the cost of searching for documents, reviewing them for relevance, privilege, and trade secrets and ultimately producing them. As long as the records destruction policy was implemented before litigation was on the horizon, establishes reasonable and legitimate guidelines for data destruction, and is uniformly enforced, courts generally will not sanction employers that have followed the policy and destroyed electronics records that would have been discoverable had they existed when the employer first received notice of the litigation.

Step 2: Promptly Inform Employees of the

“Litigation Hold”

An organization becomes subject to a duty to preserve potentially discoverable information when it knows, or reasonably should know, that the information might be discoverable in litigation. In the employment context, the duty attaches, at a minimum, when the employer is served with notice that a formal proceeding has commenced–for example, by service of a complaint or receipt of a charge of discrimination or other notice that a government agency will be conducting an investigation. The duty can be triggered even before a formal proceeding is commenced, most commonly when an employee’s attorney sends a demand letter, even if the letter does not include a demand to preserve evidence. Litigation counsel should be consulted as soon as the duty to preserve is triggered, or even when it is unclear whether the duty has been triggered.

When the duty to preserve evidence does attach, the organization must implement a “litigation hold.” The “litigation hold” entails (a) an immediate suspension of any routine practice, policy or procedure of destroying any documents or data that are potentially relevant (including electronically stored records, such as email and instant messages); and (b) collection and preservation of such documents/data for use in the litigation. Given the ease with which electronic records can be deleted, discarded or overwritten, implementing an effective litigation hold requires detailed instructions to employee-witnesses, records-management personnel, and information technology (IT) staff.

These employees should promptly be sent a memorandum that

achieves the following:

Informs them that the organization is under a duty to preserve relevant evidence, including both paper documents and those that are stored electronically and that all document destruction in accordance with organizational policy must be suspended.

Explain that the litigation hold applies to information on the company’s network servers, email server, workstations, laptops, portable hard drives, PDAs, employee personal computers and all other storage media, such as diskettes and CDs, as well as to all file types, including email, word processing documents, spreadsheets and Power Point presentations.

Identify the categories of documents that must be preserved and the time frame encompassed by the litigation hold.

Explain that failure to comply with the instructions could result in discipline for the employee and the imposition of sanctions on the organization.

The IT Department should receive additional instructions.

These include the following:

Disable any computer programs that automatically

destroy potentially relevant evidence, such as email and

instant messages.

Remove from the recycling routine any accessible backup media

(i.e., backup media from which data can be easily retrieved

without a restoration process) for the relevant time period.

If it would not be unduly burdensome, store the hard drives of the computers used by employees likely to be key players in the litigation until it can be determined whether it would be cost prohibitive to create a mirror image of those hard drives.

Do not discard or re-issue any computers used by a departing employee likely to be a key player in the litigation.

Source

How To Win The Battle Over Electronic Discovery In Employment Cases (Littler Mendelson; April 2005)

“Voicemail is now where email was a number of years back,” says Robert Brownstone, law and technology director at the Fenwick & West law firm. “In terms of be able to search content and get at content—being able to segment or chop up wave files or whatever audio format they’re in—people will need specialized tools.”

One such tool has been developed by Nexidia, which has created a technology that searches the content of audio files phonetically. Such an approach allows someon to search for whatever people are taking about, says Jeff Schlueter, vice president of Nexidia, which recently partnered with Fios.

The technology is not necessarily cheap, senior Nexidia director Dave Fishel admits, but he contends it can be less expensive than listening to every recording at issue in a dispute. He notes that in one recent trial against Merck over its recalled drug Vioxx, the judge gave Merck 20 days to produce relevant voicemails. “Twenty days is not enough time to listen to everything,” Fishel says.

New Electronic Discovery Rules

Schoenberg

It’s been known for years that electronically stored information is discoverable in litigation, but the new e-discovery rules that take effect in federal court on Dec. 1 make this explicit and provide extra incentive “to have procedures in place,” says Tony Schoenberg, a commercial litigator with the law firm Farella Braun & Martel.

“It was already important to address these issues, but now it’s even more so,” he says, noting that while some larger companies have paid attention to this new reality, smaller and mid-size companies “have been playing catch-up.”

Although the new federal rules say that information that is not “reasonably accessible” is not subject to discovery, Schoenberg says that this provision may not apply to audio recordings—no matter how time-consuming and expensive it may be for a company to sift through the recordings for relevant information.

According to Schoenberg, the notes of the advisory committee that drafted the new rules suggest that “reasonably accessible” means “something more than, ‘It’s hard to search’ … If you’ve got a voicemail file in an inbox, my sense you couldn’t claim it’s not reasonably accessible just because you might have to open up and listen to it.”

Brownstone, of Fenwick & West, says the issue is sure to be litigated, but believes that any argument that audio files are not reasonably accessible “is not a winning argument ultimately.”

Brownstone

Still, Brownstone doesn’t expect that judges will open the floodgates to voicemail, either. “I think judges will be sympathetic to the fact that it is harder to get at content of audio files,” he says. “As a practical matter, I think judges will deal with [audio data] the same way they deal with other discovery: push the parties to come to some middle ground.”

What To Do Now

Gordon, of Littler Mendelson, says that companies must ensure that their policies for document retention and destruction cover voice data, and that people within the company understand that.

“When we are working with our clients to implement the litigation hold, we make them aware that voicemail is encompassed within their duty to preserve and talk about their current retention mechanisms for voicemail,” he says. “Sometimes that might require notice to a third-party service provider and working with the provider to preserve stored voicemail … As long as the information is the company’s information rather than the vendor’s information, the company would appear to be responsible for making sure the third-party vendor doesn’t destroy information within the scope of a litigation hold.”

Hicks, of Parker Poe, says companies should pay particular attention to audio files because they potentially could be more damaging than email and other kind of written documents.

“I have always told clients that, before they hit ‘send’ when they send out a fax or email, envision themselves sitting in a witness chair or a trial, with that letter or email blown up and being questioned about it by a lawyer in front of a jury,” Hicks says. “Now I have to tell them, before you leave someone a blistering message, envision yourself hearing your voice being played back in front of the jury. The aspect of a voice recording adds a whole new dimension.”

(Click here for this week’s related coverage, Electronic Discovery Rules: FAQs.)