Intel last week provided a window into just how screwed up even wealthy, forward looking companies are around document retention for pending litigation. In the law biz these policies go under the general term of “litigation hold”. Intel is in Federal court on an anti-trust suit filed by competitor AMD in June 2005.

The recent changes in the Federal Rules of Civil Procedure (FRCP) added explicit requirements for electronically stored information (ESI) on December 1st, but litigation hold policies have been around for ages (for more info see Sto’Mo’s 3 Minute Guide to Electronic Discovery and Today’s the Day: New FRCP Rules Now in Effect). Which makes Intel’s behavior even more peculiar.

Let 1,000 litigation hold policies bloom
Intel’s email system automatically purges emails after short time, said by Intel to be about three months. It was only in October of 2005 that they started a weekly backup of the emails of executives whose actions might be relevant to the case. Until then they asked that employees voluntarily retain any emails that might be germane. Even after the backups started, an employee could receive and delete an email immediately to avoid having it backed up.

In effect, Intel replaced a single corporate litigation hold policy with one for every employee. With potentially billions of dollars damages at stake may one be forgiven for thinking that one of the world’s most successful high-tech companies might have done better?

Dumb, yes; malicious, maybe not
There is no evidence now that Intel sought to hide incriminating emails, which could bring disastrous “adverse inferences” from the judge if the case goes to a jury. Yet AMD’s legal team will be looking for evidence that Intel is hiding something, and if they find any Intel will have no one but itself to blame.

Intel will now invest in software that automatically preserves the emails of designated employees. One has to wonder why they waited until now.

The StorageMojo take
The resolution of Intel’s email retention liability may add to the evolving case law of ESI and electronic discovery. It certainly should serve as a warning to large companies that audited litigation hold policies are a necessity.

A sheepish “oops!” and a good-faith effort to recover lost documents may protect a company if no evidence of a cover up is found today, but in a few years judges and corporate audit committees will not be so forgiving. Get your litigation hold policies in order now, or face real pain sooner rather than later.

Comments welcome, please. I’m spending much of the day on an airplane headed back to StorageMojo’s Fortress of Solitude in the Arizona mountains, so moderation will be a bit slow.