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BY JULIA NEYMAN
 /South Florida Business Journal/ January 12-18, 2007- Companies now must follow strict rules about how they store and retrieve electronic documents, thanks to new federal guidelines that went into effect last month.
The new rules come as the latest twist in an ongoing electronic discovery fights emerged: the NASD has filed a complaint against Morgan Stanley, accusing its executives of lying when they said thousands of e-mails needed for arbitration were permanently destroyed during the Sept. 11 attacks.
This clash, along with an earlier $1.5 billion judgment against Morgan Stanley for failing to produce digital documents for trial, may have been avoided had the new rules been in effect sooner than their December 1 start date.
Although electronic evidence has been used in trials for decades, the new, more uniform regulations aim to help companies avoid confusion over how they are supposed to store this information and to hold lawyers more accountable for producing e-discovery on demand.
“It’s a codification of things that existed all along,” said Tom Sadaka, a Miami information technology attorney who participated in the Sedona Conference, a precursor to the Dec. 1 rule change. “Hopefully, companies already have document retention policies in place, but now it’s in the forefront of their mind.”
Nowhere is the electronic data storage more important than in South Florida, where many document intensive fraud cases originate. American Document Management, a Fort Lauderdale company that specializes in handling electronic evidence for companies, has seen an increase in demand for its services in the months leading up to the rules change.
Founder and CEO Karen Unger said the change has been gradual, as more and more businesses have begun to rely primarily on electronic evidence. Now, 80 percent of ADM’s legal projects involve both hard and electronic evidence.
Electronic evidence is often much more prolific than paper evidence because of the tendency to duplicate documents or store several, similar versions of what is essentially the same thing, according to Unger and other legal industry experts.
“You have one document, but you’ll have 20 to 30 versions of it through the different e-mails and the different versions people have on their hard drives,” Unger said. “Most of our electronic cases are 50 to 70 times the amount of boxes we have in hard-copy cases.”
For attorneys, the rule change means an increased burden of educating company IT departments about storing evidence and ensuring that all parties involved in a lawsuit know the format in which to produce electronic documents. Attorneys’ greater responsibility also translates to increases in their training and specialization in electronic discovery.
Miami law firm Greenberg Traurig created a national e-discovery practice group last year, which has grown to 48 attorneys. Hilarie Bass, chair of the firm’s national litigation practice group, said the attorneys are extremely computer-savvy, tech-savvy litigators who have developed a unique expertise in the e-discovery area.
The e-discovery group assists clients in developing document retention policies and helps them determine where to look for evidence, be it in old text messages, laptops of ex-employees or digital data.
Unger said the e-discovery rules affect everything from corporate fraud cases to divorce battles.
“There isn’t a segment of society that doesn’t use a computer, and there isn’t a segment of society that doesn’t use e-mail,” she said. “And that’s all evidence.”
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