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Electronic discovery, or eDiscovery, can play a central role in the corporate litigation process, and is increasingly expensive as companies retain more data and employees store that data in diverse locations.
Unlike regulations such as Sarbanes-Oxley, which placed many new requirements directly on organizations with a deadline for compliance, the electronic discovery amendments affect them only through the litigation process. Many companies faced with tight budgets aren't preparing in advance for litigation. This is clearly their right to do so. This bad decision can lead to astronomical costs of litigation when it finally does occur.
Penalties for failing to comply with a duty to preserve data range from monetary sanctions all the way to an "adverse inference" instruction. In this situation, a jury is instructed to assume any files and communications not produced were harmful to the defendant. Such an instruction all but guarantees defeat for a defendant.
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