Dec 13, 2011

E-Discovery: What Businesses Should Know

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[/caption] The Small Business Authority cannot and does not give legal or tax advice and nothing contained in this article should be construed as such. Before taking any actions based on this or any other article published by The Small Business Authority, we strongly advise you to consult with an attorney and/or your tax professional. Remember the Enron email scandal? As part of a federal investigation into the fraudulent activities going on at Enron in the early part of this century, hundreds of emails were released to the court and eventually to the public. ABC News¹ reported that many of these emails “could prove to be embarrassing,” not only for Enron but also for employees whose names were attached to the personal emails they'd sent that were now being revealed to the world. The gathering of these emails was an example of e-discovery, a trend that companies and individuals will continue to face as part of the digital era. What is E-Discovery? E-discovery is a broad term used to describe any situation in which electronic data, such as email or internet postings, are sought in a criminal or civil case. The discovery process allows plaintiffs and defendants to exchange information during pretrial preparation, and the court will actually compel information to be turned over if it’s relevant or "probative" to the case. In days past, discovery was limited to phone records, paper documents, and the like, since those were all that existed. Records were available only of the things people had chosen to write down, and the extensive amounts of paperwork turned over in cases were cumbersome to go through. Today, however, e-discovery is changing the game. According to figures compiled in a recent Law.com² article, Twitter users send more than 200 million status updates every day, and people on the internet send 13,800,000 messages every single hour. All these tweets and emails and instant messages and Facebook posts and chats that are flying around cyberspace create a written record of things that might otherwise have been discussed over the phone or in person. Because the records are digital, all of the data and information are stored somewhere and rarely eliminated, no matter how hard you try to get rid of the data. Further, the digital format makes it easy to sort through data quickly to find relevant information. These online communications are generally not privileged except in certain unusual and limited circumstances. This means that all of these records can be accessed as part of e-discovery, and they can have a significant impact on litigation by providing evidence of things that otherwise might have been unprovable. For example, according to USA Today,³ the twins who sued Facebook CEO Mark Zuckerberg argued that evidence existed in instant messages that would prove that Zuckerberg had stolen the idea for Facebook from their own website plan. Although a judge dismissed the twins’ suits, it’s easy to imagine a case in which a message sent and forgotten many years ago could be uncovered and used in litigation. The Risks of E-Discovery for Employers The biggest risk for employers is employees sharing information either about their employers or about their own activities that could get their employers in trouble. Even for honest business owners who aren't knowingly doing anything wrong, they could be held responsible for actions committed by employees who are acting on behalf of the company. This means the actions of their employees can land them in legal trouble if those employees share details about potential legal violations at work. There is also a risk of employees revealing trade secrets or posting criticisms about their employers, both of which can do serious business damage. Handling the Issue Law.com has suggestions for business owners wanting to protect themselves from e-discovery risks. The suggestions include establishing a reasonable social-media policy with clear boundaries, as well as providing training to make clear to employees what is and is not permissible use of social media. Law.com also recommends doing some monitoring of social-media posts to determine what is being said about the company. For more information, visit: 1. “Embarrassing Enron Email Exposed Online” 2. “From the Experts: Read the Fine Print Before You Tweet" 3. “Winkelvoss Twins, Narenda Claim Hidden IMs in Facebook Lawsuit”