The existence of litigation or an administrative investigation creates unique obligations for a party with respect to its documents, both paper and electronic. The term “document” includes virtually any form of recorded information, including the more traditional types of documents such as handwritten notes, agreements, invoices, memorandums, and emails to emerging forms of electronic information such as metadata, Internet history logs, temporary Internet files and websites.
This is the first in a series of blogs regarding these obligations focusing on the importance of preservation.
The proliferation of electronic information has impacted and changed what is required of parties to comply with three discrete obligations:
the obligation to preserve potentially relevant and material documents;
the obligation to identify all relevant and material documents; and
the obligation to collect all relevant and material records.
Once the information has been identified and collected, your lawyer will be able to review and produce the documents in accordance with the disclosure and production requirements in the Rules of Court or administrative rules.
While your lawyer will be able to assist its clients in satisfying these obligations, you must be aware that you will be required to invest time and effort into understanding IT practises and creating an efficient and practical plan to preserve, identify and collect relevant and material electronic documents.
The consequences for failing to properly preserve information can be serious in the litigation and administrative law context. In litigation, spoliation may contribute to an adverse finding by a court or a finding of contempt (which can result in fines and jail time) (Victor Stanley, Inc. v Creative Pipe, Inc. No. MJG-06-2662, 2010 WL 3703696 (D. Md. Sept. 9, 2010)). Under the Securities Act (Alberta), for example, the destruction of information or property constitutes obstruction of justice and an offence under the Act, with penalties ranging from a fine of no more than $5 million or imprisonment of not more than five years (Securities Act, RSA 2000, c S-4 at ss. 93.4 and 194). As a result, we recommend that all our clients understand their obligations and ensure that preservation steps receive sufficient care and attention.
A party is required to preserve, in their original format, all documents that could reasonably be expected to be potentially relevant and material to the litigation or administrative investigation. To satisfy the preservation obligation, we recommend that every party implement a litigation hold promptly once a litigation issue is identified or the company determines that an administrative investigation is likely to be undertaken (which could be weeks or months before legal counsel is retained).
A litigation hold is a formal notice to the affected individuals (employees or third parties) containing details about the information covered by the litigation hold and directions regarding preservation.
To implement a litigation hold, your lawyer will require your cooperation and that of your IT services. These parties will develop a plan to identify individuals and locations in which potentially relevant and material information may be stored. Your lawyer will also work with your IT services to review and modify IT processes that may automatically archive or delete this information.