e-discovery 2.0

David Isom and I have collaborated a number of times over the years on a variety of electronic discovery presentations and articles.  So, when I saw that California was proposing new state electronic discovery rules that had some interesting variances vis-à-vis the FRCP, I thought David might be able to give us the benefit of his unique and sage perspective.

1. David, as the author of the definitive piece about inaccessibility under the Federal Rules of Civil Procedure (The Burden of Discovering Inaccessible Electronically Stored Information: Rules 26(b)(2)(B)& 45(d)(1)(D)), how many litigators do you think really understand and use these provisions?

I sense that litigators with a basic understanding of the new electronic discovery rules know that the inaccessibility rule exists and provides some protection for parties against unduly burdensome discovery.  Few seem to have noticed that Rule 45 contains an inaccessibility provision whose language is similar to the Rule 26(b)(2)(B) inaccessibility protection for parties, but whose protections as applied to subpoenaed nonparties are greater than the protections for parties.  Here are the three most basic and exciting (or excruciating, depending upon your side of the fence) impacts of the new inaccessibility rules:

(1) The inaccessibility rule has completely changed a nonparty’s leverage to narrow subpoenas seeking electronically stored information (ESI).  Subpoenaed nonparties now have protection against fishing expedition subpoenas that did not exist before — to narrow subpoenas, or to require the payment of costs and attorney fees in responding to broad subpoenas.

(2) Cost-shifting, for parties as well as nonparties, is now controlled by the inaccessibility rules.  Several federal courts have recently held that discovery cost-shifting is allowed only if these inaccessibility rules provide for cost-shifting under the circumstances.

(3)  The inaccessibility rules must be asserted and asserted timely if they are to provide protection.  For example, after counsel for nonparty Office of Federal Housing Enterprise Oversight spent $6 million of our money responding to a subpoena in In re Fannie Mae Securities Litigation, 552 F. 3d 814 (D.C. Cir. 2009), counsel tried to recover the money on an inaccessibility cost-shifting argument.  To which the United States District Court and the Court of Appeals for the District of Columbia said, in essence:  you might have had a good idea, and saved your client $6 million, had you raised the arguments before agreeing to produce the documents and spending all that money.  But you agreed to produce the ESI and cannot come back now and get any protection.  You should have studied the inaccessibility rule.

2. So, assuming we’re still early in the learning curve, do you think these FRCP provisions are really gaining traction either in practice or in the case law?

Judging by the number of reported decisions, the inaccessibility rules are receiving as much attention as the other new features of the federal electronic discovery rules.  Which, I suppose, is damnation by faint praise — a large percentage of the reported cases are about what should happen because lawyers didn’t understand or apply the rules properly. Cason-Merenda v. Detroit Medical Center, 2008 U.S. Dist. LEXIS 51962 (E.D. Mich. July 7, 2008) is a good example.  There, defendant’s counsel produced ESI without any objection and without pre-identifying the ESI as inaccessible.  After production, counsel tried to get their opponents to share the cost of producing the allegedly inaccessible ESI.  The court correctly held that the ESI must be identified as inaccessible in advance of the production to give the seeking party the option to decide whether the discovery is really worth the candle, especially given the prospect that the cost of production might be shifted to the seeking party.

3. What are your thoughts on the new California state provisions regarding “inaccessible” ESI where they’re proposing a different treatment and slightly different burden?  And, will this approach ultimately weaken responding parties abilities to make “inaccessible” claims successfully?

I am not an expert on California law, but am keenly interested in what the states are doing with electronic discovery.  As of this writing (May 2009), it appears that California Assembly Bill No. 5 has not yet been enacted.  Yet, here are some thoughts about how the inaccessibility provisions of this bill, if enacted, would compare to the federal rules of inaccessibility.  The bottom line is that the California bill is remarkably similar to the federal rules on inaccessibility issues.

Under the federal rules, a party seeking protection for inaccessibility initiates the process by “simply” (so far, the courts have tolerated fairly sparse identifications as satisfying this requirement) identifying the sources of information claimed to be not reasonably accessible because of undue burden or cost.  The subpoenaed nonparty seeking protecting can initiate by identifying the ESI sought as not reasonably accessible in an objection, motion to quash or motion for protective order.  In the federal system, either the seeking party or the protecting party or nonparty can move to test the issue (one by a motion to compel, the other by a motion for protective order).

The California bill is nearly identical to the federal process.  The bill provides that a person resisting a subpoena for ESI on inaccessibility grounds may “oppose” the subpoena.  If this means that such a person can either object or move to quash or move for a protective order, it appears to be the same as the federal rule.  The California bill specifies that a party resisting a production request on inaccessibility grounds initiates protection by identifying the types or categories of sources of electronically stored information that it asserts are not reasonably accessible.  This is similar to the federal rule, whose text requires identification of “sources”, but whose committee notes clarify that merely “types or categories of sources” of inaccessible, responsive ESI need be identified.  The California’s Legislative Counsel’s Digest indicates that the process for protecting inaccessible ESI, apparently for both parties and subpoenaed nonparties, can be initiated by moving for a protective order, or by opposing or objecting to the subpoena or request.

Even if there are any distinctions in the above processes, the two processes appear to merge thereafter.  In both systems, the motions to test inaccessibility must be preceded by a conference of counsel to attempt in good faith to resolve the issue, together with a certificate that such an attempt has been made.  In both, the person seeking protection has the burden of proving inaccessibility (this is even true in the federal system where the process is initiated by the seeker’s motion to compel).  In both systems, if the holding party proves inaccessibility, the burden shifts to the seeking party to show good cause for producing the ESI, despite its inaccessibility.

And in both, if good cause is shown, the court may still impose conditions upon production, including cost-shifting.  In both, the factors that the courts are to consider in determining good cause are similar — more accessible, less burdensome sources; cumulativeness of the discovery; whether the burden or expense of the discovery would outweigh the likely benefit of the discovery, considering such things as the importance of the issues, the amount in controversy and the resources of the parties.  One possible difference between the California bill and the federal rules on good cause is that the California bill requires the court to limit discovery if any of the listed factors exists, where the federal rules and committee notes seem to envision a pure balancing.

In sum, the California bill essentially adopts the federal approach.

Some confusion has arisen because California commentators have drawn a distinction between the California bill and a misinterpretation of the federal rules.  One commentator, for example, stated that “under the federal rules, if ESI is inaccessible, the responding party simply doesn’t need to produce such documents.”  This ignores the affirmative identification duty that I discussed above.

4. With the rapid advancements in ESI restoration technologies, which the Comments to the Rule anticipated, are backup tapes in your mind still “inaccessible”?

The rules make it clear that inaccessibility cannot be measured by technology category alone.  The test does not depend upon the type of technology involved, but upon the balancing of need, technology, importance, spoliation, relevance, alternative sources and potential benefit against overbreadth, burden and cost.  So, if backup tapes are the only source available for important, relevant information because more accessible relevant sources have been spoliated, backup tapes will not be deemed inaccessible.  Without spoliation, if relevant ESI is available on active sources, backup tapes may not be discoverable.

Perhaps the main reason that categories of technology cannot be deemed per se accessible or inaccessible is that the technology is changing so fast.  Many search tasks that were expensive and difficult five years ago are much more doable now.

5. Finally, what do you think the future holds for these FRCP sections?

The inaccessibility rules will continue to be the main battleground where the great debates about the value and cost of electronic discovery will be fought, since these rules are specifically tailored to balance all of the interests in that debate.

Some groups are claiming that electronic discovery is wasteful and expensive, and that the new rules exacerbate the problem.  Of course, the federal rules ought always to be analyzed for problems and need for improvement, but I haven’t heard informed, thoughtful, helpful suggestions for improvements to the federal rules in the recent debate.  Overall, I see the adoption of the federal rules as having helped reduce the cost of electronic discovery, not increased the cost.

Over the past 4 years, I have had hundreds of conversations with corporate counsel and “legal IT”, meaning technical folks charged with supporting the legal team. More and more of them are looking to lower their costs by bringing e-discovery in-house. But as they work through that process, there’s one question that consistently comes up, even today – namely, “When [insert name of software company] says they “do” e-discovery, what exactly does that mean?”

There has been progress towards answering this question, thanks mainly to the analyst community. George Socha and Tom Gelbmann’s EDRM framework has been immensely helpful in breaking down electronic discovery into its component steps. Other analysts, like Debra Logan at Gartner, were quick to embrace the framework, prompting every software provider to follow suit. As a result, there is today a common language that everyone uses to describe the e-discovery process.

The Electronic Discovery Reference Model (EDRM) breaks down the e-discovery process into a series of steps. Companies looking to buy e-discovery software to lower costs typically map different software products to each of these steps, to make sure that they cover the entire process.

But having a universally-agreed framework is only half the answer. To eliminate customer confusion, there also needs to be agreement on how different software products fit into the framework. This is especially important since there is no single, end-to-end solution for e-discovery which covers all aspects of EDRM. So customers are forced to think about how different software solutions fit together. And that is where things begin to fall apart.

Many software vendors feel it is advantageous to claim that they do everything, even though they do not. Customers are rightly suspicious of those claims, and so press vendors to provide more detailed information – hence the question, “when you say you do e-discovery, what exactly does that mean?”

In light of that, how can litigation support teams, corporate counsel, or legal IT people figure out which e-discovery solution best meets their needs? From observing this decision-making process hundreds of times, I have found 3 simple steps are incredibly helpful.

Step 1: Read the analyst reports

Two reports in particular make for required reading. One is Gartner’s MarketScope Report, which is available for free at certain sites; the other is the 451Group’s recent e-discovery report, which is summarized in a publicly available presentation. The helpful thing about the 451 Group’s report is that it tells you which software companies do which parts of the EDRM process. You do have to buy the report to get the full picture (it’s well worth it!), but the publicly available presentation will give you a flavor for their analyis, and I have drawn from that presentation in the figure below:

Analyst firms like the 451 Group map software vendors to the EDRM framework according to what they actually do, which is often different from what software vendors claim they do.

The 451 Group’s analysis highlights several important points. First, it shows that there is no single end-to-end solution. Even the products of giants like EMC (SourceOne), HP (IAP), and IBM (CommonStore) only solve one piece of the puzzle, information management. Second, it shows that customers have choices at each stage of the EDRM process. For example, to solve the problem of identification, collection, and preservation of electronic information, customers can choose from solutions as diverse as Guidance EnCase (forensic collection), Index Engines (back-up tapes) and Mimosa NearPoint (email archive). Third, it provides an independent assessment of what vendors do, as opposed to what they may claim. For example, Kazeon claims analysis and review capabilities, whereas the report shows its product does identification, collection, and preservation; Recommind claims its Axcelerate eDiscovery and MindServer products do processing, whereas the report finds that they do not.

Step 2: Evaluate the products prior to purchase

Just as anyone would test-drive a car prior to purchase, it’s critical to test-drive e-discovery software. Any vendor should be willing to provide their software free of charge for an evaluation on-premise. The most effective evaluations are when the customer uses the product themselves, either on a live case or test data. This is far preferable to just sending the data to the vendor who then loads it into their system, as in that scenario there are too many opportunities for the vendor to hide their product’s shortcomings.

Step 3: Check references carefully

The trick with references is to insist on relevant references. It’s not good enough for the vendor to dredge up some random person who says nice things; or even a credible knowledgeable person who is using the product in a completely different way. For example, if a company is happy with Autonomy’s IDOL for enterprise search, that does not tell you much about what Autonomy might be like for e-discovery. What really counts are references from other customers who are using the product for the same application that you are.

All this can sound like a lot of work, but I have seen people go through the process in as little as a month, and be much happier for it. A little work up front can save a lot of time (and heart-ache!) later on.

The bashing of our judicial system seems to have reached a fevered pitch.  Groups like the American College of Trial Lawyers (”ACTL”) have proclaimed in a recent report that while the “civil justice system is not broken, it is in serious need of repair.”  The blame game seems to have judges and attorneys alike pointing fingers.  The Fellows of the ACTL (perhaps not surprisingly) seems to pin some of the blame on the judiciary:

“Judges should have a more active role at the beginning of a case in designing the scope of discovery and the direction and timing of the case all the way to trial. Where abuses occur, judges are perceived not to enforce the rules effectively.”

Groups like the Sedona Conference chalk up many of the ills to the failure to cooperate, so much so that they’ve orchestrated a cooperation proclamation – which has picked up enough support by the bench to have garnered several cites in the case law (see e.g., Mancia).

The bench for its part seems to put some of the onus on litigators and their reticence to get with the times.  William A. Gross. Constr. Assocs., Inc. v. Am. Mfrs. Mut. Ins. Co., 2009 WL 724954 (S.D.N.Y. Mar. 19, 2009) is the latest example of such a proclamation.  In this construction defect case, Judge Peck (a Sedona devotee) issues what he hopes will be a “wake-up” call to the bar about the need for “careful thought, quality control, testing, and cooperation with opposing counsel in designing search terms or ‘keywords’ to be used to produce emails or other electronically stored information (‘ESI’).”  In Gross, the court had to mediate an e-discovery dispute where the requesting party propounded a blatantly over-inclusive search request crafted by the requesting parties.  Unfortunately, the responding entity was a non-party and they simply dig their heads in the sand.  In order to facilitate a resolution this left the Court in the “uncomfortable position” of having to craft a “keyword search methodology for the parties, without adequate information from the parties (and Hill).”

Judge Peck’s exasperation with these antics was palpable.  Summing up the problem by citing Judge Grimm and Victor Stanley he stated: “This case is just the latest example of lawyers designing keyword searches in the dark, by the seat of the pants, without adequate (indeed, here, apparently without any) discussion with those who wrote the emails.”  He further noted: “[w]hile this message has appeared in several cases from outside this Circuit, it appears that the message has not reached many members of our Bar.”

After noting both Sedona and Judge Facciola (of O’Keefe and Equity Analytics fame) Peck’s opinion reached a crescendo:

“Electronic discovery requires cooperation between opposing counsel and transparency in all aspects of preservation and production of ESI. Moreover, where counsel are using keyword searches for retrieval of ESI, they at a minimum must carefully craft the appropriate keywords, with input from the ESI’s custodians as to the words and abbreviations they use, and the proposed methodology must be quality control tested to assure accuracy in retrieval and elimination of ‘false positives.’ It is time that the Bar-even those lawyers who did not come of age in the computer era-understand this.”

While it’s easy to see who Peck blames in this brouhaha, it takes (at least) two to tango.  Meaning that litigants on both sides of the “v” must move beyond the typical “seat of the pants” electronic discovery wrangling.  And, judges need to be savvy enough to spot the issues to help/force the parties into such an enlightened/cooperative state.  Nothing short will get the job done.