Should small revisions to governing policies such as the FRCP be viewed as granular wins and losses for in-house legal professionals? Despite lofty aspirations to examine jurisprudence in the broad context of business and society, it seems that corporate legal is often stuck playing checkers when they should be playing chess. Maybe it’s time to zoom out.
Admittedly, it’s tempting to interpret changes as small gains or losses; we’re all human, and like to root for the home team play by play. Either your corporation will likely benefit from a change, or it won’t. But with General Counsel steadily growing in business importance and gaining more presence in the c-suite, there’s also the increased need to think strategically outside of litigation. One excellent – and timely – example is the recent revision of the FRCP’s rules on spoliation of ESI.
With the revised version of Rule 37(e) of the FRCP approved this April, in-house counsel are likely breathing a quiet sigh of relief behind closed doors. But perhaps they shouldn’t be, or at least not until they’ve discussed the changes within the broader context of business strategy. The rule now clarifies the conditions that must be satisfied in order for ESI loss to be considered worthy of sanctions, and in general, there is agreement that the addition of more specific wording will cut down on the number of plaintiffs seeking adverse inference instructions. We’ve gotten rid of “good faith” in favor of descriptions that actually define what isn’t. In theory, it should make it more difficult to apply the assumption that missing information is inherently damaging information.
At first, it seems like a windfall for increasingly complex enterprise data environments. Data moves quickly, and even the most conscientious organizations can have information slip through the cracks over time. Inadvertent spoliation charges -- due to routine management and deletion of data -- were an unintended and surly side effect of the original 2006 wording, which paradoxically had set out to create a safe harbor for organizations that made reasonable efforts at governance. The exercise of determining what should be construed as reasonable (or, at best, non-negligent) was what caused an unintended fuss. The new revision has made it much clearer as to what is required for sanctions to be imposed.
It’s not quite getting off the hook for information management practices, though. And that’s where business strategy comes in: corporate counsel need to increasingly view information governance as a strategic, business-wide implementation rather than a tool that just checks off legal requirements. The requirements themselves are subject to adaptation and change, and it behooves the organization to have a system in place that is sufficiently robust and capable of evolving along with the requirements they address. After all, what is written in the FRCP is only the foundation for subsequent court interpretation. The proof is in the pudding: just as the original version of the rule effectively split the circuit courts into two “camps” that each had their own favored interpretations, the revisions may have unforeseen implications once in put into practice.
At the end of the day, information is the lifeblood of the business, and managing data in the most comprehensive way possible will provide immense benefits to the business as a whole, rather than just corporate counsel. Legal teams’ pursuit of defensibility should not be a mere line item, but rather a foundational backbone that supports the needs of other business units as well. Effective data practices can meet existing requirements as well as open doors to future uses such as analytics. When everyone has overlapping needs that need to be met, everyone can benefit from an approach that takes all into account. Besides, even with the new language for 37(e), a party fighting sanctions will have the upper hand with a more comprehensive information management approach. Having a well-defined process for managing all data will make it easier to prove that the organization did NOT “fail to take reasonable steps” for its preservation efforts.
So yes, keeping an eye on the perpetual push-and-pull nature of proposed changes to the FRCP lends itself well to not seeing the forest for the trees. Proposed changes, of course, have great importance with respect to the approaches taken by in-house legal teams, and they should accordingly be closely monitored. But favorable clarifications or edits to the rules should be a reason for introspection rather than gloating.In short, the edits to 37(e) by no means relieve organizations from the duty to continually advance their information governance efforts. Data governance is a long journey, not a destination. Think of the bigger picture: to do so is a strategic business need, not just a legal one.