At X Corp. (a California company rendered anonymous here because of ongoing litigation), a terminated worker filed a grievance alleging improper dismissal based on discrimination. Cited was an intraoffice directive to let the employee go. "You know how these people are," the memo noted. "They're not team players." The plaintiff's lawyers had retrieved the "explanation" from the company's unattended collection of electronic mail.

X sought to protect itself against repeat ordeals. For expertise, it turned to Electronic Evidence Discovery, in Seattle, whose managing director, John Jessen, is renowned for his ability to reconstruct hidden, lost, and erased data from computer systems. In a case similar to X's, another employer confidently showed a fired employee's lawyer the textbook-perfect letter of dismissal that employee -- a woman -- had been given. Jessen countered with an earlier E-mail communiquÉ' he had reclaimed from files presumed deleted. The four-letter-word-strewed diatribe from the company's president to its personnel director essentially read, "Dump the bitch."

The routine Jessen established for X purges the company's E-mail backup tape; erases the entire E-mail hard disk and overwrites it with nonsense characters; then erases the disk again. It's an expensive and time-consuming precaution. Why so extreme? "X was inadvertently nailed through E-mail, simply because, taken out of context, one in-house person's quote would sound bad to a jury," explains Jessen. "And it could happen again. Companies should develop strategies to minimize the litigation liability of their electronic data."

Even for small businesses, fear of E-mail abuse isn't as irrational as it may sound. Jessen is currently working with 40 small businesses involved in electronic-data litigation. In one, an E-mail message between two engineers said, "I don't know how much our company stole from [the plaintiff], but it must have been a lot, because our product looks just like theirs." Nerdish gossip -- but possibly authoritative sounding enough to sway the court.

In 1986 Congress passed the Electronic Communications Privacy Act, which holds that nothing on a company computer can be considered private. Seemingly, it gives an employer the right to read -- and obliterate -- computer files at will. But some states have overridden parts of the ruling. So, Jessen urges, advise your E-mail users --

That anything they write could be held against the company as well as themselves, since it's available to anyone with access to company computers.

Not to rely on uppercase for emphasis; to the unsophisticated, caps make points look more significant than they were meant to be.

Not to joke or be sarcastic; insider humor is inevitably misinterpreted by outsiders.

You needn't run your E-mail system wholly on the basis of liability avoidance, but some discretion doesn't hurt: taking the time to define and implement an electronic-data-security plan could save you a bundle in litigation costs down the road. -- Researched by Phaedra Hise

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