Electronic Data: What It May Cost You

Electronic Data: What It May Cost You

 

 
Email and computerized records are an integral part of the business community. Sending emails, text messages or storing a variety of work-related information on cell phones, computers and vast networks are commonplace, even to the extent that portions of the workforce no longer remember the ancient days of typewriters and carbon paper. Yet, the ease with which we can store and retrieve such information can have repercussions when it comes to legal conflicts. The process of determining who knew what, where it was stored and exactly what was maintained via electronic records can be as costly a question as the ultimate outcome in an otherwise nondescript legal dispute.
 
Too often people think electronic data complications arise only for bigger companies or corporations, but the truth is they hit medium and smaller companies as hard or harder than the larger corporation. Due to the sheer amount of information stored in a single hard drive, let alone a network, and the related costs and time to ferret through such information can be a backbreaker. Some companies erroneously believe they have limited the electronic storage of information to simple issues such as accounts payable or payroll issues.  Yet, many never think twice about the sheer volume of inter-office and outside emails they send from “work computers” on a daily basis. Having to catalog and sort the volume of emails on a company’s computer can be the difference between deciding to fight a lawsuit and being forced to settle early on a questionable claim.  
 
Imagine a business dispute with one side demanding the inspection of the computer hard drives of the other party. Immediate concerns include the costs involved in turning over hard drives or even whole computer systems, the disruption to the business (what key functions require that equipment, what backups exist, what this will mean to clients) and the sheer volume of information that will need to be sorted or reviewed. While many people think the delete button erases files permanently, business litigation data-recovery experts specialize in searching background information on your system. While the delete function makes items disappear from the forefront, the underlying data can exist for years in the digital background until it is overwritten. This type of information is often a focus of the electronic discovery in business disputes and entails significant additional costs.
 
Email can be a quiet killer as it relates to the volume of electronic data. People tend to think of email as an abstract concept. People email without thinking that each email document is a separate, reproducible document, particularly when using a “work” computer. These casual emails can be costly for both employers and employees, and add to the sheer volume of materials to be reviewed.  While it is generally understood that work emails can be monitored by employers, employees often fail to recognize that the volume of emails they create on computers will lead to a massive increase in the amount of information needing to be reviewed in litigation. Too often, people think they have expectations of privacy by falling back to outside web email services for “private” email as opposed to the “work” email. However, if used on a “work” computer or network, electronic records can be stored on that computer network or hard drive creating records of those communications.
 
Exact costs in producing electronic data will vary from case to case and even in locales, but are generally carried by the party being asked to produce the data. Assuming a company has limited computer resources, costs can range from $500 to $1,500 per hard drive that needs to be extracted. Using outside electronic sorting programs initially does not seem too prohibitive at $2 a megabyte (a sample rate obtained in Southern California), but that figure becomes frightening at $20,000 for a single ten gigabyte drive. Picturing the costs for entire networks becomes a nightmare. And these figures are basic estimates which do not take into account the amount of time expended by attorneys to review the results. 
 
How can you avoid these pitfalls? Think ahead for your business. Most employers already have some company policy relating to computer use and storage of electronic data. Do not just give this lip service, but actually ensure your employees recognize the impact these electronic records can have on your business and potential costs down the road. Depending on the volume of electronic information, installing software to organize and archive electronic documents could save time and money down the road. We cannot all preemptively deal with every situation that will arise, but organizing the extraneous usage can help limit recovery costs if they arise down the road.
 

Stephen T. Sigler is a shareholder and trial lawyer at Neil Dymott. He specializes in civil litigation with emphasis in general and professional liability. Mr. Sigler may be reached at (619)238-1712 or ssigler@neildymott.com

 

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