The law has been evolving with regard to the issues related to requests for electronic discovery.  In many circumstances, traditionally, legal counsel would make a request for specific documents in connection with discover in litigation.  As the issues with regard to electronic documents and data recovery have evolved, it has become more common for forensic accountants to suggest, in addition to the requests normally made for paper documents, to include requests for “any and all electronic media” that contains the original records with regards to certain documents.

This can be particularly important in certain circumstances.  When understanding the general ledger (the heart and soul of the accounting system of a business), it may be difficult to gain details from printed volumes of paper with all of the minutia of the various transactions included but not summarized.  Since the general ledger system resides in electronic media at the company’s offices, it is now appropriate to make requests for electronic documents as well as the underlying paper.   With modern data-extraction tools, as well as traditional use of computer software, the forensic accountant may be able to provide a far greater degree of analysis by utilizing the electronic data than can be economically ascertained using paper data.  In addition, the use of various other software tools, especially those related to electronic spreadsheets and database software provide a wealth of information.  Some of this information can actually lead to understanding how a document was created, how it may have been changed, and additional underlying information, included in the document that may be pertinent to the litigation itself.

If plaintiffs were to allege that defendants improperly applied certain data with regard to the dispute (it does not matter what the underlying dispute is), a full and complete understanding of not only the ending data analysis that is produced in discovery, but also who took part in the thought process, who created which documents, when those documents were created, when and if they were edited and other data may be important to the plaintiff in the case.  It may also be important to the defendant in understanding what occurred as well as being prepared for explanations of the role different individuals may have played.

In a recent case, Magistrate Judge David J. Waxse opined in Williams v. Sprint/ United Management Company 2005WL 2401626,DKan (September 29, 2005) with regard to the production of metadata, Judge Waxse defined metadata as “information about a particular data set which describes how, when and by who[m] it was collected, created, accessed or modified and how it is formatted (including data demographics such as size, location, storage requirements and media information).”  Technical Appendix E to “the Sedona Guidelines: Best Practice Guidelines & Commentary for Managing Information & Records in the Electronic Age (Pike and Fisher, a division of IOMA) specifies that metadata includes all “of the contextual, processing, and use information needed to identify and certify the scope, authenticity and integrity of active or archival electronic information or records”.  While metadata might be altered either intentionally or inadvertently during its normal utilization, it routinely provides a significant amount of information to a knowledgeable user with regard to the history and etiology of the document that has been produced.

In many circumstances, the original requests for production of documents will not include any reference to metadata.  Notwithstanding this, Judge Waxse has indicated that his order includes the metadata (which did not, in the case at bar, specifically request metadata in the original request for production of documents, although it did request the electronic files) as there was no request for the purging of same through the Court. 

The interesting point here is that metadata has become significantly at issue in the production of electronic data, it can provide an extensive amount of information with regard to who was involved in the creation of the document, who may have changed the document, what changes may have been made over time, as well as related information.  While it is clear that this could make depositions and requests for admission into extraordinarily detailed and painful exercises, it also provides for an understanding and analysis of how documents came into play.

The case that Judge Waxse was reviewing related to a labor law issue and the issues of whether a reduction in force was or was not predicated in some part on the illegal use of age. 

David H. Glusman, CPA, DABFA, Cr.FA, CFS is Chair of our Forensic and Litigation Services Group and has over thirty-three years of experience . Contact David at dglusman@marg.com.