For those of us who started our working career with a desk calendar and a Rolodex, the computer age brought almost unimaginable information-management capabilities and convenience. In the construction industry, these renovations have proven especially useful. Interconnecting Blackberries, desktop computers and remote-access laptop computers have unleashed significant benefits, including enhanced and inexpensive internal and external communication. However, as with every technical advance there is some related pitfall or risk.
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Contractors should be mindful that e-mail and other electronic data and information must be preserved when it relates to reasonably foreseeable civil or criminal litigation (whether involved as a litigant or a third party) or a governmental agency investigation (for example, an investigation by OSHA, the Justice Department or a state attorney general).
Once the duty to preserve information arises, corporate management must take affirmative steps to preserve relevant electronic data that they know, or should within reason know, are relevant or might lead to the discovery of admissible evidence. The duty to preserve material evidence arises not only during litigation but also extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation. The willful destruction of evidence or the failure to preserve potential evidence in a pending or future litigation is called “spoliation” by the courts.
Courts are increasingly inclined to hold corporations accountable for spoliation. The punishment handed down for spoliation can be severe. In 2004, a federal judge punished a company for deleting relevant e-mails by deciding to instruct the jury during the trial that the contents of the e-mails would have been favorable to the party deprived of them. In addition, failure to properly manage electronic documents can produce increased litigation costs, regulatory penalties and court-imposed sanctions. A corporation will not be excused from the duty to preserve electronic evidence merely because of its size or the attendant expense or complexity of compliance.
Every company should consider how it will discharge its preservation duties before the occasion arises. Written policies and procedures should be prepared, which are practical and reasonable. There is no one-size-fits-all approach that will satisfy the needs of every company. The president of a small construction firm with a single computer network and a few employees may well develop a simple yet highly effective document-management policy that would be wholly inappropriate for a larger contractor. Unless some legal duty requires an organization to keep electronic information, the systematic destruction of electronic information is perfectly fine and defensible. The key is to know when it is necessary to retain all information and to take the appropriate measures to retain it.
A document retention and preservation policy should outline the steps that will be undertaken when a duty to preserve electronic information arises. At a minimum, this policy involves notifying all employees likely to possess relevant information to preserve such information. At the same time, employees must be instructed to cease the deletion or destruction of any relevant electronic records. This is sometimes referred to as a “litigation hold.” Management must communicate a litigation hold clearly, forcefully and promptly, and the company should document its efforts. Thorough and effective planning can minimize and manage these risks, whereas waiting until the situation arises to take action will likely lead to the costly destruction of records.