Implementing An Electronic Records Policy As A Means 2

American Bar Association

Forum on the Construction Industry

Annual Meeting – 2011

David DeusnerBradley Arant Boult Cummings LLP.

Norman JetmundsenVulcan Materials Company

Workshop A

Implementing an Electronic Records

Policy as a Means of Reducing

Discovery Cost

Fantasy Park Project

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Fantasy Park

Project

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Owner Profile

• Developer with diverse investment properties

• Multi-national company

• Several offices with over 1,000 employees

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General Contractor Profile

• Construction contractor for 8 years

• Involved in numerous complex

construction projects

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Fantasy Park Project

• 2 year, $50 million project

• 1 year late due to changes and delays

• Thousands of electronic documents and millions

of emails exchanged between:

Owner

General Contractor

Architect

Subs

Others6

Owner’s Position

• Claims $10 million in cost overruns and lost

profits

• 6 months prior to filing suit, sends letter to

Contractor

You breached the contract

I have suffered damages

Pay up!

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Contractor’s Position

• Responds saying delay was caused by Owner and

its Architect

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Lawsuit

• 6 months later, Owner files suit seeking $10 million

• Both sides meet with counsel to discuss:

Facts

Strength of claims

Costs of litigation, including discovery

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Owner’s Lawyers

• Decent case

• Contractor may have valid defenses, but must

go through discovery phase

Estimate that electronic discovery will cost

$500,000

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Contractor’s Lawyers

• Excellent case

Delays clearly the fault of Owner and Architect

Recommend filing counterclaim for damages

• Rough valuation of Owner’s claims = $300,000

• Rough valuation of Contractor’s counterclaims =

$3,900,000

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Contractor’s Lawyers

• Two major problems:

Some employees deleted emails at completion of

project because they were never directed to

preserve.

Laptops from the job-site were sent back to

corporate office - IT dept. immediately wiped hard

drives to re-issue to other job-sites

Estimate electronic discovery will cost $5 million

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Result

• Contractor forced to settle lawsuit

• Why?

Discovery costs more than the net value of the

claim

Potential exposure for employees’ deletions of

emails

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What Was the Difference?

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Owner

• Document retention policy

• Email archive

• Document management system

• Litigation hold policy and procedure

• Sophisticated e-discovery counsel

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Owner e-discovery Cost

• 2 million emails/yr x 3 yr = 6 million emails

• Emails

Non-Records deleted at 180 days

Indexed and archived

Searchable

• Emails for review = 1 million = ~100 GB

• Total projected cost: $500,000

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Contractor

• NO document retention policy

• NO email archive

• NO document management system

• NO litigation hold policy and procedures

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Contractor e-discovery Cost

• 2 million emails/yr x 3 yrs = 6 million emails

• 5 years in business (before this project) x 2 million

emails/yr = 10 million additional emails

• Closet full of back-up tapes with little identification

• Exposure to spoliation sanctions

• Total projected cost: $5 million

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Lessons Learned

• Electronic Records Policy

• Litigation Hold Policy

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Electronic Records Policy

• Key concerns:

Electronic records management TEAM to create

WRITTEN policy and procedures

Develop data map to identify all sources of potential ESI

Determine what kinds of Records to retain and their

value and routinely and systematically purge non-records

Eliminate .pst files and centralize email

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Electronic Records Policy

• Key concerns:

Train employees on email usage

Monitor compliance and/or automate policies

Eliminate backup tapes

Ensure that ell electronic data is in a searchable

format where it resides

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Litigation Hold

• Key concerns:

Trigger: reasonable anticipation of litigation

Written legal hold directive

Supervise and monitor compliance

Provide feedback mechanism and follow-up

Third parties in possession of information

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Q & A

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When All Else Fails

• Video clip goes here.

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