New rules make firms track e-mails, IMs

updated 7:07 p.m. ET Dec. 1, 2006

WASHINGTON - Companies that help businesses track and search their e-mails and other electronic data are experiencing a surge of interest in the wake of federal rule changes that clarify requirements to produce such evidence in lawsuits.

Roger Matus, chief executive of Concord, Mass.-based InBoxer Inc., said Friday his company is getting at least five times as many inquiries as it did six months ago for software that can accelerate the search and retrieval of electronic information.

“Companies used to be focused on how they store information,” Matus said. “Now they’re focusing on how to retrieve it.”

The new rules, which took effect Friday, require U.S. companies to keep better track of their employees’ e-mails, instant messages and other electronic documents in the event the companies are sued, legal experts say. They are part of amendments to federal rules governing civil litigation and were approved by the Supreme Court’s administrative arm in April after a five-year review.

Companies and other parties involved in federal litigation must now produce “electronically stored information” as part of discovery, the process by which both sides share evidence before a trial. Federal and state courts have increasingly been requiring the production of such evidence in individual cases, and the new rules clarify that the data will be required in federal lawsuits.

Under the new rules, an information technology employee who routinely copies over a backup computer tape could be committing “virtual shredding” once a lawsuit has been filed, said Alvin F. Lindsay, a partner at Hogan & Hartson LLP and expert on technology and litigation.

Companies still could routinely purge their archives if the data aren’t relevant to cases companies have pending or expect to face, though specific sectors such as financial services remain governed by other data-retention rules.

Company lawyers and information-technology staff will have to work more closely together to ensure that routine erasing of backup data doesn’t pose legal problems, Lindsay said, while also ensuring that lawyers know where their company’s data are stored.

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