Is Your Small Business Ready For eDiscovery? (Yes, It Matters)

Takeaway: eDiscovery affects smaller businesses the same as it does larger ones. So, understand the processes/tools involved and get the right legal counsel for your needs. Remember, a little preparation now can save a lot of trouble later.???

What is eDiscovery? It’s a process attorneys use to explore the facts of a legal case.?

eDiscovery, short for Electronic Discovery, is a multi-step process that involves the identification, collection, preservation, review, and production of digital data in the context of legal proceedings or investigations. It was initially an extension of traditional paper-based discovery, but now is an essential aspect of many legal processes.

At its core, eDiscovery deals with different types of electronically stored information (ESI).

Electronically stored information, or ESI, is a broad category that includes various forms of digital data. This means emails, text messages, Word documents, PDFs, spreadsheets, databases, audio files, video recordings, and even data from Internet of Things (IoT) devices. Social media interactions, cloud storage contents, and proprietary software databases are also ESI. So, with this much diversity in ESI, you can imagine how complex eDiscovery can be.?

Luckily, we can break down eDiscovery into a series of steps.?

The eDiscovery process is generally divided into several key stages, each with its unique set of challenges and requirements:

1. Identification: Before anything else, parties must identify the potential sources of relevant ESI. This stage may involve interviews, preliminary surveys, and consulting with IT personnel to locate relevant data.
2. Preservation: Once potential data sources are identified, we must ensure that this information is not deleted, altered, or otherwise compromised. This is often done through legal holds, which are formal directives to preserve relevant data.
3. Collection: After identification and preservation, the data are collected for further analysis. But this needs to be done without changing/spoiling any data.
4. Processing: This stage involves organizing the collected data, often by indexing them and filtering out irrelevant information. The aim is to narrow the data set to a more manageable size for review.
5. Review: Legal professionals examine the processed data to identify what is genuinely relevant to the case. This is often the most time-consuming and costly part of the eDiscovery process.
6. Production: Finally, the relevant ESI is produced as evidence, following court or regulatory guidelines. This can involve converting data into specific formats or redacting sensitive information that isn't relevant to the case.

So, why should small businesses care about eDiscovery?

The notion that eDiscovery is solely for large corporations is a dangerous misconception. In reality, small businesses are just as susceptible to legal actions and compliance requirements as their larger counterparts – if not more so because they have limited resources and expertise. Here's why ignoring eDiscovery can be a mistake for your small business.

1. You’re vulnerable legally.

The digital footprint of a small business is often just as complex as that of a larger entity. Whether it's email communications, customer databases, or internal documents, small and large businesses alike have the same kinds of electronically stored information (ESI). And when legal issues arise – such as disputes with suppliers, employees, or customers – having an effective eDiscovery process can make the difference between a favorable outcome and an unfavorable one.

2. You run financial risks.

Failure to comply with eDiscovery requests can lead to severe financial consequences, including sanctions and fines. For a small business, these financial setbacks can be devastating. Moreover, it costs more to hastily implement eDiscovery measures in response to an immediate legal threat than to prepare for it proactively.

3. It’ll disrupt your flow.?

When hit with a legal request for electronic information, scrambling to find relevant data can disrupt your operations. Time spent searching for emails, files, and other documents is time not spent on running your business. A well-planned eDiscovery strategy can help you respond quickly and efficiently, minimizing operational setbacks.

4. You’re at a competitive disadvantage.

As businesses increasingly adopt digital solutions for their operations, data management can make a big difference. Poor data management practices, including inadequate eDiscovery readiness, can lose you business opportunities. Imagine losing a major contract because a competitor could comply with industry regulations better than you! Remember, small businesses are not exempt from regulations that mandate data retention and discovery. From GDPR in Europe to the Federal Rules of Civil Procedure (FRCP) in the United States, regulatory bodies don't distinguish between small and large businesses when it comes to data compliance.?

5. You’re risking your reputation.

In today's connected world, news of legal troubles or compliance failures can quickly damage a business's reputation. Small businesses often rely on community trust and word-of-mouth, so a single misstep in handling legal matters will have long-lasting negative effects amplified through social media and online reviews.

Here’s how you can prepare for eDiscovery.

You can ready your business for eDiscovery by doing the following.?

1. Conduct an ESI audit.

Before engaging in meaningful planning, you must assess the kinds of electronically stored information (ESI) your business generates and maintains. Understanding your data landscape is essential for crafting effective eDiscovery policies and procedures. So, do the following:

1. Inventory Sources: List all the systems and platforms where your business stores digital information. This includes not just servers and cloud storage, but also individual workstations, mobile devices, and even third-party applications.
2. Identify Data Types: Determine the kinds of data that each source contains. This could be customer data, financial records, internal communications, or other types of information.
3. Access Controls: Understand who within your organization has access to this data. This is crucial for maintaining data integrity and for defining roles in the eDiscovery process.

2. Implement a data retention policy.

A well-defined data retention policy serves as a blueprint for how your organization handles ESI throughout its lifecycle. It sets the rules for what is stored, where it is kept, how long it is maintained, and when it gets deleted. So, remember to:?

1. Draft the Policy: Work with legal advisors and IT specialists to create a comprehensive data retention policy.
2. Categorize Data: Classify different types of data based on their significance and legal implications. For example, financial records may need to be kept for a specific duration for tax purposes.
3. Define Timelines: Determine how long each type of data will be stored and the procedure for secure deletion.

3. Train your employees.

Even the best eDiscovery strategy can fail if your employees don’t know why or how to implement it correctly. So:?

1. Create Training Material: Develop or search for training modules that cover the basics of eDiscovery and your company’s specific policies.
2. Regular Updates: Keep your team updated on any changes in legislation or company policy that could affect eDiscovery procedures.
3. Monitor & Assess: Regularly evaluate employee understanding and conduct refresher courses as needed.

4. Choose the right tools.

Employing the right software tools can streamline eDiscovery, reduce human error, and improve outcomes. So:

1. Identify Needs: List the functionalities you need based on your eDiscovery requirements. This could range from search capabilities to data encryption and legal hold features.
2. Compare Solutions: Evaluate various eDiscovery tools on the market based on these requirements, cost, scalability, and user reviews. (Note that you can find eDiscovery services for as little as $25/month.)
3. Test and Implement: Opt for software that allows you a trial period to test its capabilities.?

5. Get proper legal counsel.?

Laws and regulations governing eDiscovery are complex and change frequently. So, a legal consultation is not a mere formality but a necessity for keeping your business compliant. That’s why you’ll need to:?

1. Find a Specialist: Look for legal advisors specializing in eDiscovery and related fields.
2. Initial Assessment: Have them review your existing practices and identify potential pitfalls or areas for improvement.
3. Regular Updates: Maintain an ongoing relationship for regular compliance checks and updates on legal developments affecting eDiscovery.

Hopefully, this post has shown you why eDiscovery is essential and what to do about it.?

As we’ve seen, eDiscovery is not something only larger businesses have to worry about. Rather, it’s a legal requirement that businesses of all sizes need to address. So, by proactively preparing for eDiscovery, you limit the risks and streamline your internal processes for data management. This post gives you a snapshot of eDiscovery in 2023, but it's crucial you continually assess and update your eDiscovery strategy to align with tech/legal changes. Remember, not knowing something isn’t a viable defense in the eyes of the law, and a little preparation now can save a lot of trouble later.