How Court Rules Can Impact Your Business
The Federal Rules of Civil Procedure (FRCP) govern the process that federal courts follow when hearing cases of a civil nature. Although federal courts are required to apply the substantive law of a particular state when deciding a case, they use the FRCP as their rules of procedure.
Recent changes to the FRCP have caused a ripple through not only law firms and the courts, but also through businesses of every type around the country. While procedural court rules generally reach only inside the courtroom, the new amendments to the FRCP mandate that companies change their entire approach to maintenance and preservation of electronic records.
Once in litigation, a substantial amount of time will be devoted to discovery. This phase of the case encompasses requesting and obtaining documents, taking depositions of key players, and exchanging requests and responses for written information. Accordingly, the rules relating to discovery procedure and practice are a large part of the overall rule structure.
The ubiquitous nature of e-mails has changed the entire discovery process and indeed can have major impacts on cases. In reaction, the new rules have expanded the standards and requirements upon the parties to identify, evaluate, collate and produce electronic records. A central feature of the new rules is the requirement that the parties are obliged early in litigation to divulge the existence of and describe relevant electronic records. As a result, a company that has destroyed its e-mail records prematurely, or that cannot account for the electronic records it does possess, may face greater penalties — including substantive impact to its case — than those provided under the earlier rules.
Companies that feel relatively insulated from federal litigation should nonetheless be aware of the rule changes. Indeed, the FRCP often represent the first wave of civil rules that wash across the various state courts. Changes at the federal level often mean parallel changes to the various state rules. Businesses should expect the federal changes to percolate through the state court systems during the next several years.
Parties are required to hold early-stage conferences that include discussions of e-record issues and planning for discovery. As such, litigants will be expected to quickly have a handle of what e-records they possess, where they are, what form they are in, how accessible they are, how voluminous they are and the likely costs to compile them.
Under the new federal rules, companies should have an incentive to be more organized and to maintain more complete e-mail and electronic data archives. A company that has destroyed its e-mail records prematurely, or that cannot account for electronic records, may face penalties in court, including substantive impacts to its case and sanctions for both the violating party and its counsel. Even if sanctions are not levied, parties can incur substantial costs and efforts litigating over unnecesary discovery issues. Further, a litigant that makes early representations about its records that later prove to be inaccurate may lose credibility in the eyes of the court and the opposing party.
All electronic files and data in your possession should be maintained and preserved. Your company needs to understand the nature and scope of the company's electronic data, the policies regarding the storage of the data, and the capabilities of the system in terms of producing certain data at a moment's notice. If your company does not have a standard retention policy, you should consider implementing one immediately.
This understanding and planning may be critical to not only compliance with the new rules, but also to substantial cost savings associated with discovery. Failure to do so could lead to expensive and protracted litigation, including severely jeopardizing your chances of defending against or succeeding on a particular claim.
About the Authors
Tim Hughes is Of Counsel to the law firm of Bean, Kinney & Korman in Arlington, Va. He can be reached by email at email@example.com or by phone at 703-671-8200.
Bradley J. Hansen, Esq., is an attorney with the northern Virginia law firm of Hughes & Associates PLLC. He specializes in franchise, construction and complex civil litigation. Hansen can be reached at firstname.lastname@example.org, or by calling 703-671-8200.
This article is not intended to provide legal advice, but to raise issues on legal matters. You should consult with an attorney regarding your legal issues, as the advice you may receive will depend upon your facts and the laws of your jurisdiction.