This post was written by Seth H. Row is an independent legal consultant to Smarsh, and a litigator and electronic discovery consultant in Portland, Oregon.

The threat of being penalized for inadvertently destroying evidence in litigation is a frequent recurring nightmare in the executive ranks of many large corporations these days. Companies are now routinely being fined or made to pay their opponents’ attorney’s fees for losing electronic documents – particularly email – that may prove critical in litigation.

Some companies think that they can rely on disaster-recovery backup tapes to save them if litigation-hold procedures fail or are not initiated quickly enough, and email is deleted from the server. In truth, reliance on backup tapes is both potentially costly, and risky. Because of these costs, an investment in an archiving solution that is designed to preserve and retrieve email may pay for itself many times over if destruction of evidence becomes an issue in even one piece of litigation.

Cost. As anyone who has ever had to deal with them knows, backup tapes present unique challenges. Tapes are designed to restore an entire system, not to retrieve individual electronic records, and thus data on tapes is stored in a highly compressed manner. In order to be useful, the tape’s data – often the entire email database – has to be “restored.”

The high costs of restoring tape were laid out in a decision issued November 16 from the Southern District of Florida. In Calixto v. Watson Bowman Acme Corp., the plaintiff learned that an individual former employee’s email account had been purged when that individual was terminated. The plaintiff demanded that the defendant company restore 30 monthly backup tapes to search for the employee’s missing email. The defendant’s vendor provided a cost estimate of $40,000 just to restore the data on the tapes so that a keyword search could be performed. (The good news for the defendant: it avoided restoring all of the tapes because, fortunately, the tapes were carefully labeled by date and the missing email was only likely to exist on one tape.)

Courts are becoming more and more likely to order restoration of tapes if data is likely to exist nowhere else, and are now less likely to consider backup tapes “not reasonably accessible.” In part this is because the cost of restoration relative to other litigation costs has been decreasing. In addition, discovery of email is now so commonplace that courts no longer hesitate to allow parties to plumb a data system for the proverbial “smoking gun.”

And, even before an allegation of lost evidence (“spoliation” in legal parlance) is made, using backup tapes will cause a company in litigation to incur costs to avoid what happened in Keir v. UnumProvident Corp., a case from New York, where a company faced significant sanctions because its IT staff allowed a critical six days of email on backup tape to be overwritten. Therefore, if there is any risk that email evidence may not have been preserved appropriately, companies are advised to stop recycling backup tapes. This forces the company to incur costs to purchase new tapes, designate additional storage, and devote personnel time to changing the business routine.

Risk. Backup tapes capture everything, by design. Irrelevant, extraneous and potentially harmful information that was deleted from active storage pursuant to a proper record retention policy will still exist on the backup tape – and may be required to be produced to the other side. As blogger Larry Wescott has adroitly pointed out, using backup tapes for e-discovery thus subverts the very purpose of a record retention policy. Moreover, backup tapes can become corrupted, and are susceptible to mislabeling or improper indexing. Because they are not designed as an archiving system to preserve individual records, using them for that purpose is risky.

Companies looking for a system to protect them from inadvertent spoliation of email evidence are better advised to consider an archiving system designed to preserve email while allowing it to be easily searched and retrieved at less cost, and with less risk, than backup tapes. The return on investing in an archiving solution that does not impose additional costs for retrieving email will be great if the company can avoid restoring backup tapes even in one piece of litigation.

Seth H. Row is an independent legal consultant to Smarsh, and a litigator and electronic discovery consultant in Portland, Oregon. Seth has over ten years of experience handling business, employment, and insurance recovery disputes. He is currently Of Counsel to Parsons Farnell & Grein LLP. Previously he was affiliated with Holland & Knight LLP, an AmLaw 100 firm, and was a law clerk to a federal trial judge. He is a frequent speaker and author on electronic discovery and federal practice and procedure, and is the editor of the Federal Practice Handbook for the District of Oregon.