Electronic Business Records as Legal Evidence

What Happens in Litigation after e-Discovery

E-mail Record Admissibility

American courts have long accepted computer records as evidence, but under some conditions. Typical computer records are “hearsay,” which are not admissible as evidence into the courtroom. However, an exception to the hearsay rule is that business computer records, shown to be reliable, are admissible. In theory, that sounds good for institutions that keep database records of customers typing things or clicking on this or that.

But practice is another story. Showing that computer records are “reliable” grows ever more difficult as the years pass between the beginning of an electronic transaction and the date of trial. It is no easy task for an IT department to maintain thorough documentation about the configuration and reliability of its infrastructure or documentation on the exact appearance of web pages as of any given date. What is even more difficult is for the IT department to produce a credible witness to attest to all of this in a trial.

American Express learned this lesson recently. American Express was a creditor in a bankruptcy. To document a $40,000+ credit card debt, the company produced computer records, together with a witness to testify about the computer system from which the records came. But the court was dissatisfied with the witness and concluded the company had failed to establish the reliability of its computer records. Hence a big institution, which has a reputation for being well-managed, could not collect a debt. American Express Travel Related Services Co. v. Vee Vinhnee, 336 B.R. 437 (9th Cir. Dec. 16, 2005).

The practical upshot of this case is not that business computer records are inadequate legal evidence. Rather, it is that when a company relies on computer records, the IT staff really has to be on the ball and capable of producing persuasive testimony when it is needed. Training in computer forensics could help.

As institutions initiate e-commerce contracts that will endure for years -- or as they rely on e-records to enable audit or investigation for misdeeds like misallocation of funds -- they must evaluate how they will preserve and vouch for their key records. An institution and its stakeholders (investors, regulators, auditors, partners, customers) cannot assume that the IT staff it has today will be around tomorrow to testify persuasively about the institution's records of a mouse-click or button-push that becomes the subject of a lawsuit.

P.S. Here's a technique to help a professional preserve electronic evidence of particular information, such as e-mail or text messages (or IM). The professional can authenticate a snapshot of the information with a voice signature.

1 comment:

  1. This is very informative and very useful stuff. Thanks very much for posting.