New electronic discovery rules have created the latest legal headache for HR and IT departments everywhere. And as a recent lawsuit shows, companies that aren’t up-to-date can get hit hard.

A discrimination suit was filed against a county government office in New York. The plaintiffs claimed key evidence was to be found in the county’s e-mail servers. But the county said the e-mails in question were no longer stored on the network. They could could get them from the archive of back-up tapes, but they’d have to pay employees or outside consultants an arm and a leg to search through about 420 reels of tape.

Normally courts let companies slide - or at least ask the parties to split the bill - when the cost of discovery is unreasonably high. However, in this case, the county was moving the e-mails to the back-up tapes even after it knew it was getting dragged into court - which is a violation of e-discovery rules. So the county had to perform the e-mail search and pay the full price, and it got fined for breaking the rules on top of that.

What you can learn

Of course, companies aren’t expected to save every piece of data indefinitely just in case a lawsuit comes up. But as the judge in this case said, when a company is in court, they “can’t just throw [their] hands up and say we don’t store [e-mails] in an accessible format and then expect everyone to walk away.”

The key is having a data retention policy and knowing when to go beyond it. As long as companies have a consistent schedule for how long they hang on to e-mails before wiping them from the server, courts have found those policies to be compliant.

The exception is in the case of a so-called “litigation hold.” In other words, when a company can reasonably expect that it’s going to wind up in court, it has to make sure every piece of data that might relevant to the case is saved in a readily accessible format. That means as soon as HR, or anyone else, gets word about possible legal action, IT needs to know so they work on protecting the necessary info.

Otherwise, the company get hit with a fine, and may even end up losing the case by default.

Cite: Toussie v. County of Suffolk