You, the companys regional director of sales, are sitting at your desk when your good friend and colleague Joe, visibly upset, tells you the "operations guys" are complaining that "sales" underbid the project, "as usual," and operations wont "take the hit for it this time." You, of course, find these remarks not only inaccurate but defamatory. With poor Joe shaking in front of you, and your own career suddenly shaky, you spot justice two feet away: your computer. All you need do to keep this outrage from gathering steam is to blast the historic incompetence of the operations team. You pound those keys. You punch "send." You copy everyone in the company with "a need to know."
The nightmare, you think, has been swept away. Youre happy. Joes happy. Like any fan of a good horror movie knows, the nightmare is making a sharp turn and sweeping your way.
The job, as operations predicted, goes bad. Your company is sued, and it sues right back. A year later youre in the witness chair. "Are your operations people competent?" youre asked. Your lawyers squirm. Twelve jurors stare at you. The judge waits. Behind you, on a large screen and in bold print, is your email.
"Sometimes yes, sometimes no, you say, trying to hedge.
"But on this specific job, were they? Would you like me to read what you wrote as this job was in progress?"
E-mail has become the construction industrys primary communications tool. Instant, cheap, efficient, and available, it is easy to use, save, store, sort and recall. But once sent, it cannot be deleted or destroyed. So take note: If litigation strikes, your company must preserve, collect and turn over all electronic data to opposing counsel. If it wont or cant, it may be subject to what lawyers and judges call "an adverse inference" and, in cases of intentional misconduct, an outright dismissal.
In one recent case, a court fined a company $2.75 million for deleting relevant e-mails in violation of a court order. In another, a court instructed a jury to presume that deleted e-mails would have been detrimental to the company that took such action, and further required the company to pay all costs and attorneys fees of the opposing party in connection with the dispute.
A company was also sanctioned for failing to preserve e-mails, even though such e-mails were automatically destroyed by a computer server in the ordinary course of business. The court granted an "adverse inference" against the company, instructing the jury to consider the missing e-mails as likely to have helped prove the plaintiffs claims.
The Federal Rules of Civil Procedure, which govern litigation in federal courts and serve as a model for the rules of procedure enacted by most states, require that all electronic documents, including e-mails, be exchanged during litigation, unless protected as privileged communications or attorney work product. Production of paper documents alone is not sufficient, even if such documents appear to convey the same information. All computers and servers must be searched to find the documents opposing counsel requests as well as the documents that prove ones own case. Even in companies that still conduct much of their business the old fashioned way, e-mails create an increasingly thorough documentary record of who said what to whom and when. If credible allegations of deleting pertinent files or messages surface, an opponent can obtain a court order requiring a party to turn over the computers themselves to a neutral master for forensic review.
Once litigation is reasonably anticipated, the parties have an affirmative duty to preserve all documents, including all electronic data, relevant to the potential litigation. Accordingly, all automatic deletions of electronic files, such as emails, which would otherwise occur in the normal course of business, must immediately cease once litigation is reasonably anticipated. Failure to observe the proper safeguards may expose a company to allegations of evidence spoliation, which could result in a wide range of sanctions and a fatal blow to the companys legal position.
While each party in litigation generally is responsible for paying its own attorneys and consultants fees, courts have at times shifted the costs of electronic discovery to the requesting party. The decision depends on the need for and availability of such information, the cost of the production relative to the amount in controversy, and the importance of the issues at stake in the litigation. In practice, the cost-shifting analysis is often driven by whether an undue burden is being imposed upon the party responding to requests for electronic documents.
Not long ago, cases arising from construction disputes rarely involved more than a few electronic files. Today, parties negotiate and enter into contracts, draft and transmit memos, communicate and exchange information electronically. More than 90 percent of all business documents are now created electronically, many of which are never converted to hard copy format. A single laptop typically contains hard drives that have up to 30 gigabytes of memory, the equivalent of 200 Bankers Boxes of paper. Employees scattered in the field may use a dozen or more laptops.
In addition to laptops and desktops, businesses operating on a network often rely on servers with a memory capacity equal to millions of pages of documents. What would have been carefully drafted and edited a decade ago now often appears in an e-mail hastily prepared and sent without viewing the words on paper. In many companies, icons on computer desktops have replaced filing cabinets as the primary locus of stored data. Confidential business information, including trade secrets, that in years past was carefully guarded now passes among employees, and even third parties, with barely a thought given to confidentiality.
Modern construction projects involve the coordination of multitudes of people and activities, leading inevitably to the creation and distribution of massive volumes of correspondence, bid documents, drawings, specifications, schedules, reports, change orders, requests for information, and for payment.
Many owners, contractors, engineers, and architects conduct their daily activities, whether on the project site or from remote home-office locations, by using laptop computers, personal digital assistants and cellular phones. Critical project-specific information involving cost, labor, and productivity data, is often maintained in electronic databases, such as Prolog, ProfitTool, Access, and Excel.
The list of discoverable electronically-stored information is virtually limitless. It includes email files, hard drives from employees laptops, project and home-office network servers, backup tapes, floppy disks, CD-ROMs, DVD-ROMs, voicemail messages and files, back-up email files, deleted emails, and Internet website information such as cache files and website log files.
So don't wait to implement a comprehensive electronic document management and retention policy, even without the threat of pending litigation.
Ira Genberg, a partner at the Atlanta-based law firm of Smith, Gambrell & Russell, is also the author of the best-selling novel Reckless Homicide. He can be reached at (404) 815-3638.