e-discovery 2.0

The New Year has now dawned and with it, the certainty that 2012 will bring new developments to the world of eDiscovery.  Last month, we spotlighted some eDiscovery trends for 2012 that we feel certain will occur in the near term.  To understand how these trends will play out, it is instructive to review some of the top eDiscovery cases from 2011.  These decisions provide a roadmap of best practices that the courts promulgated last year.  They also spotlight the expectations that courts will likely have for organizations in 2012 and beyond.

Issuing a Timely and Comprehensive Litigation Hold

Case: E.I. du Pont de Nemours v. Kolon Industries (E.D. Va. July 21, 2011)

Summary: The court issued a stiff rebuke against defendant Kolon Industries for failing to issue a timely and proper litigation hold.  That rebuke came in the form of an instruction to the jury that Kolon executives and employees destroyed key evidence after the company’s preservation duty was triggered.  The jury responded by returning a stunning $919 million verdict for DuPont.

The spoliation at issue occurred when several Kolon executives and employees deleted thousands emails and other records relevant to DuPont’s trade secret claims.  The court laid the blame for this destruction on the company’s attorneys and executives, reasoning they could have prevented the spoliation through an effective litigation hold process.  At issue were three hold notices circulated to the key players and data sources.  The notices were all deficient in some manner.  They were either too limited in their distribution, ineffective since they were prepared in English for Korean-speaking employees, or too late to prevent or otherwise ameliorate the spoliation.

The Lessons for 2012: The DuPont case underscores the importance of issuing a timely and comprehensive litigation hold notice.  As DuPont teaches, organizations should identify what key players and data sources may have relevant information.  A comprehensive notice should then be prepared to communicate the precise hold instructions in an intelligible fashion.  Finally, the hold should be circulated immediately to prevent data loss.

Organizations should also consider deploying the latest technologies to help effectuate this process.  This includes an eDiscovery platform that enables automated legal hold acknowledgements.  Such technology will allow custodians to be promptly and properly apprised of litigation and thereby retain information that might otherwise have been discarded.

Another Must-Read Case: Haraburda v. Arcelor Mittal U.S.A., Inc. (D. Ind. June 28, 2011)

Suspending Document Retention Policies

Case: Viramontes v. U.S. Bancorp (N.D. Ill. Jan. 27, 2011)

Summary: The defendant bank defeated a sanctions motion because it modified aspects of its email retention policy once it was aware litigation was reasonably foreseeable.  The bank implemented a retention policy that kept emails for 90 days, after which the emails were overwritten and destroyed.  The bank also promulgated a course of action whereby the retention policy would be promptly suspended on the occurrence of litigation or other triggering event.  This way, the bank could establish the reasonableness of its policy in litigation.  Because the bank followed that procedure in good faith, it was protected from court sanctions under the Federal Rules of Civil Procedure 37(e) “safe harbor.”

The Lesson for 2012: As Viramontes shows, an organization can be prepared for eDiscovery disputes by timely suspending aspects of its document retention policies.  By modifying retention policies when so required, an organization can develop a defensible retention procedure and be protected from court sanctions under Rule 37(e).

Coupling those procedures with archiving software will only enhance an organization’s eDiscovery preparations.  Effective archiving software will have a litigation hold mechanism, which enables an organization to suspend automated retention rules.  This will better ensure that data subject to a preservation duty is actually retained.

Another Must-Read Case: Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011)

Managing the Document Collection Process

Case: Northington v. H & M International (N.D.Ill. Jan. 12, 2011)

Summary: The court issued an adverse inference jury instruction against a company that destroyed relevant emails and other data.  The spoliation occurred in large part because legal and IT were not involved in the collection process.  For example, counsel was not actively engaged in the critical steps of preservation, identification or collection of electronically stored information (ESI).  Nor was IT brought into the picture until 15 months after the preservation duty was triggered. By that time, rank and file employees – some of whom were accused by the plaintiff of harassment – stepped into this vacuum and conducted the collection process without meaningful oversight.  Predictably, key documents were never found and the court had little choice but to promise to inform the jury that the company destroyed evidence.

The Lesson for 2012: An organization does not have to suffer the same fate as the company in the Northington case.  It can take charge of its data during litigation through cooperative governance between legal and IT.  After issuing a timely and effective litigation hold, legal should typically involve IT in the collection process.  Legal should rely on IT to help identify all data sources – servers, systems and custodians – that likely contain relevant information.  IT will also be instrumental in preserving and collecting that data for subsequent review and analysis by legal.  By working together in a top-down fashion, organizations can better ensure that their eDiscovery process is defensible and not fatally flawed.

Another Must-Read Case: Green v. Blitz U.S.A., Inc. (E.D. Tex. Mar. 1, 2011)

Using Proportionality to Dictate the Scope of Permissible Discovery

Case: DCG Systems v. Checkpoint Technologies (N.D. Ca. Nov. 2, 2011)

The court adopted the new Model Order on E-Discovery in Patent Cases recently promulgated by the U.S. Court of Appeals for the Federal Circuit.  The model order incorporates principles of proportionality to reduce the production of email in patent litigation.  In adopting the order, the court explained that email productions should be scaled back since email is infrequently introduced as evidence at trial.  As a result, email production requests will be restricted to five search terms and may only span a defined set of five custodians.  Furthermore, email discovery in DCG Systems will wait until after the parties complete discovery on the “core documentation” concerning the patent, the accused product and prior art.

The Lesson for 2012: Courts seem to be slowly moving toward a system that incorporates proportionality as the touchstone for eDiscovery.  This is occurring beyond the field of patent litigation, as evidenced by other recent cases.  Even the State of Utah has gotten in on the act, revising its version of Rule 26 to require that all discovery meet the standards of proportionality.  While there are undoubtedly deviations from this trend (e.g., Pippins v. KPMG (S.D.N.Y. Oct. 7, 2011)), the clear lesson is that discovery should comply with the cost cutting mandate of Federal Rule 1.

Another Must-Read Case: Omni Laboratories Inc. v. Eden Energy Ltd [2011] EWHC 2169 (TCC) (29 July 2011)

Leveraging eDiscovery Technologies for Search and Review

Case: Oracle America v. Google (N.D. Ca. Oct. 20, 2011)

The court ordered Google to produce an email that it previously withheld on attorney client privilege grounds.  While the email’s focus on business negotiations vitiated Google’s claim of privilege, that claim was also undermined by Google’s production of eight earlier drafts of the email.  The drafts were produced because they did not contain addressees or the heading “attorney client privilege,” which the sender later inserted into the final email draft.  Because those details were absent from the earlier drafts, Google’s “electronic scanning mechanisms did not catch those drafts before production.”

The Lesson for 2012: Organizations need to leverage next generation, robust technology to support the document production process in discovery.  Tools such as email analytical software, which can isolate drafts and offer to remove them from production, are needed to address complex production issues.  Other technological capabilities, such as Near Duplicate Identification, can also help identify draft materials and marry them up with finals that have been marked as privileged.  Last but not least, technology assisted review has the potential of enabling one lawyer to efficiently complete the work that previously took thousands of hours.  Finding the budget and doing the research to obtain the right tools for the enterprise should be a priority for organizations in 2012.

Another Must-Read Case: J-M Manufacturing v. McDermott, Will & Emery (CA Super. Jun. 2, 2011)

Conclusion

There were any number of other significant cases from 2011 that could have made this list.  We invite you to share your favorites in the comments section or contact us directly with your feedback.

For more on the cases discussed above, watch this video:

Fulbright & Jaworski has conducted their Litigation Trends survey for nearly the past decade and the results are always interesting since they tend to capture the mindset of inside counsel and litigators as they anticipate the upcoming year.  In their 8th Annual Litigation Trends Survey, Fulbright noted that 92% of U.S. respondents predict that litigation will either increase or stay the same in the upcoming year.  This trend bodes well for players in the litigation services and eDiscovery sectors, and confirms the counter cyclical nature of the industry.  Breaking down the perceived increases across industry verticals, the Survey noted that the biggest anticipated jumps were in the technology, financial services, healthcare and insurance sectors.  Meanwhile energy (the leading sector from the prior year) was one of the few that predicted a decrease.

Going behind the scenes, there were a number of factors that caused respondents to predict litigation increases.  First and foremost, respondents indicated that “stricter regulation was the number one reason” for the increases, particularly with insurance, financial services, health care and retail sectors.  These concerns around regulatory compliance have been increasingly keeping GCs and corporate boards awake as the governance climate continues to heat up.  This regulation driver showed a demonstrable increase with 46% of all respondents having retained outside counsel to assist with regulatory proceedings, up from 37% in the prior year.  The Survey noted that U.S. companies facing a regulatory investigation were most likely to be under pressure from the DOJ (27%), State Attorney General (24%), OSHA (18%), the EPA (16%) and U.S. Attorney (13%).  Also on the regulatory front, U.S. respondents have increasingly begun to recognize the potential jurisdictional reach of the U.K. Bribery Act, with 25% of U.S. companies stating that they have already conducted a review of existing procedures in preparation for implementation.

In addition to managing risk, most in-house counsel are keenly concerned with controlling litigation costs.  The good news here is that associated costs are predicted to be generally flat.  Yet, eDiscovery remained the largest category targeted for increased spending, with 18% of respondents making this their top priority.  Interestingly, though, large enterprises seem to have been doing a good job of getting eDiscovery expenses under control (likely by taking expensive elements of the EDRM in-house), with these expenses declining among the largest companies, from 42% last year to 24% this year.

The Survey noted that the use of cloud computing has gained speed, with 34% of all public companies using the cloud.  And yet, only 40% of those companies using cloud computing have had “to preserve and/or collect data from the cloud in connection with actual or threatened litigation, disputes or investigations.”  This number appears curiously light, and it should definitely rise during the upcoming year as the plaintiff’s bar gets more savvy about this relatively new source of responsive electronically stored information (ESI).

On the narrower eDiscovery front, the Survey honed in on newer issues like cooperation.  Here, the Survey noted that this Sedona-sponsored concept still hasn’t completely taken hold, with nearly 40% of all respondents claiming that “their company has not made the effort to be more transparent or cooperative” due to a litigation strategy of “defending on all fronts.”  This area appears particularly muddled, with one third saying their previous attempts haven’t been reciprocated and another quarter feeling that their company was already transparent.

All in all,  the 2011 Fulbright Litigation Trends Survey notes trends that appear to be largely in line with the primary drivers of (1) managing risk and (2) lowering litigation costs.  On the risk side, compliance with an increasingly complex regulatory environment is offsetting any potential lull in the litigation environment.  And, on the cost side, eDiscovery continues to be a hot button issue, particularly with the relatively new challenges associated with ESI distributed on social media, cloud computing and mobile sources.

Symantec today issued the findings of its second annual Information Retention and eDiscovery Survey, which examined how enterprises are coping with the tsunami of electronically stored information (ESI) that we see expanding by the minute.  Perhaps counter intuitively, the survey of legal and IT personnel at 2,000 enterprises found that email is no longer the primary source of ESI companies produced in response to eDiscovery requests.  In fact, email came in third place (58%) to files/documents (67%) and database/application data (61%).  Marking a departure from the landscape as recently as a few years ago, the survey reveals that email does not axiomatically equal eDiscovery any longer.

Some may react incredulously to these results. For instance, noted eDiscovery expert Ralph Losey continues to stress the paramount importance of email: “In the world of employment litigation it is all about email and attachments and other informal communications. That is not to say databases aren’t also sometimes important. They can be, especially in class actions. But, the focus of eDiscovery remains squarely on email.”   While it’s hard to argue with Ralph, the real takeaway should be less about the relative descent of email’s importance, and more about the ascendency of other data types (including social media), which now have an unquestioned seat at the table.

The primary ramification is that organizations need to prepare for eDiscovery and governmental inquires by casting a wider ESI net, including social media, cloud data, instant messaging and structured data systems.  Forward-thinking companies should map out where all ESI resides company-wide so that these important sources do not go unrecognized.  Once these sources of potentially responsive ESI are accounted for, the right eDiscovery tools need to be deployed so that these disparate types of ESI can be defensibly collected and processed for review in a singular, efficient and auditable environment.

The survey also found that companies which employ best practices such as implementing information retention plans, automating the enforcement of legal holds and leveraging archiving tools instead of relying on backups, fare dramatically better when it comes to responding to eDiscovery requests. Companies in the survey with good information governance hygiene were:

• 81% more likely to have a formal retention plan in place
• 63% more likely to automate legal holds
• 50% more likely to use a formal archiving tool

These top-tier companies in the survey were able to respond much faster and more successfully to an eDiscovery request, often suffering fewer negative consequences:

• 78% less likely to be sanctioned
• 47% less likely to lead to a compromised legal position
• 45% less likely to disclose too much information

This last bullet (disclosing too much information) has a number of negative ramifications beyond just giving the opposition more ammo than is strictly necessary.  Since much of the eDiscovery process is volume-based, particularly the eyes-on review component, every extra gigabyte of produced information costs the organization in both seen and unseen ways.  Some have estimated that it costs between $3-5 a document for manual attorney review – and at 50,000 pages to a gigabyte, these data-related expenses can really add up quickly.

On the other side of the coin, there were those companies with bad information governance hygiene.  While this isn’t terribly surprising, it is shocking to see how many entities fail to connect the dots between information governance and risk reduction.  Despite the numerous risks, the survey found nearly half of the respondents did not have an information retention plan in place, and of this group, only 30% were discussing how to do so.  Most shockingly, 14% appear to be ostriches with their heads in the sand and have no plans to implement any retention plan whatsoever.  When asked why folks weren’t taking action, respondents indicated lack of need (41%), too costly (38%), nobody has been chartered with that responsibility (27%), don’t have time (26%) and lack of expertise (21%) as top reasons.  While I get the cost issue, particularly in these tough economic times, it’s bewildering to think that so many companies feel immune from the requirements of having even a basic retention plan.

As the saying goes, “You don’t need to be a weatherman to tell which way the wind blows.”  And, the winds of change are upon us.  Treating eDiscovery as a repeatable business process isn’t a Herculean task, but it is one that cannot be accomplished without good information governance hygiene and the profound recognition that email isn’t the only game in town.

For more information regarding good records management hygiene, check out this informative video blog and Contoural article.

A famous quote from intellectual George Santayana provides an appropriate backdrop for organizations to better understand why they should deploy technology to strengthen their litigation response effort.  As Santayana explained in The Life of Reason: Reason in Common Sense, “[t]hose who cannot remember the past are condemned to repeat it.”

The “past” can be a powerful playbook in the game of eDiscovery.  Fortunately for organizations, the lessons of eDiscovery history abound.  Indeed, the decisions that courts issue every day across the United States and in other countries provide substantial guidance on what organizations should and should not do to properly prepare for the discovery phase of litigation.

One of the principal lessons that can be gleaned from American court cases in 2011 is that technology can help organizations address the demands of eDiscovery in litigation.  Technology has assumed such a significant role because it facilitates the oversight process that lawyers must engage in to ensure that pertinent documents are preserved for discovery.  This year alone, the failure to exercise that oversight has in many instances culminated in evidence destruction and sanctions.

That message was emphasized this summer by a Virginia based federal court in a hotly contested trade secret dispute.  In E.I. du Pont de Nemours v. Kolon Industries (E.D. Va. July 21, 2011), the court determined that it would issue an adverse inference jury instruction against defendant Kolon Industries as a sanction for its evidence spoliation.  The spoliation at issue occurred when Kolon deleted emails and other records relevant to DuPont’s trade secret claims.  After being apprised of the lawsuit and then receiving multiple litigation hold notices, several Kolon executives and employees met together and identified emails and other documents that should be deleted.  The ensuing destruction was staggering.  Nearly 18,000 files and emails were deleted.  Furthermore, many of these materials went right to the heart of DuPont’s claim that key aspects of its Kevlar© formula were allegedly misappropriated to improve Kolon’s competing product line.

Surprisingly, however, the court did not finger the Kolon employees as the principal culprits for spoliation.  Instead, the court laid the blame on Kolon’s attorneys and executives, reasoning they could have prevented the destruction of information through better oversight.  The hold process was particularly flawed.  The notices were either too limited in their distribution, ineffective since they were prepared in English for Korean-speaking employees, or too late to prevent or otherwise alleviate the spoliation.  Given the logistical challenges of implementing a hold in this instance, perhaps only the automated functions of technology such as archiving software might have strengthened the oversight process and obviated the spoliation that took place.

The lack of attorney oversight also factored into another pertinent sanctions order this year, this time from a federal court in Chicago.  In Northington v. H & M International (N.D.Ill. Jan. 12, 2011), the court issued an adverse inference jury instruction against a company that destroyed relevant emails and other data.  The spoliation occurred in large part because the company neglected to establish a global litigation response effort.  For example, there was no process for issuing or ensuring compliance with a litigation hold.  Nor was counsel engaged in the critical steps of preservation, identification or collection of electronically stored information (ESI).  Into this vacuum stepped rank and file employees – some of whom were accused by the plaintiff of harassment – who were tasked with identifying and collecting discoverable emails from their workstations.  Predictably, key documents were never found and the court had little choice but to promise to inform the jury that the company destroyed evidence.

The problems associated with the lack of oversight in DuPont and Northington are compelling reasons why organizations should consider using technology tools as part of their overall litigation response strategy.  One of the most helpful tools in this regard is archiving software.  Indeed, having the right archiving solution in place might have preserved the spoliated records in these actions.

For example, archiving software can be programmed to prevent employees from deleting emails and other electronically stored information.  By ingesting data into a central repository and leaving copies of the materials on local computers, employees could have access to their archived records.  They would not, however, be able to delete those documents from the software archive.  In addition, a litigation hold could have been placed on archived data to prevent automated retention rules from overwriting information.  Either of these features might have prevented much of the spoliation – and the resulting sanctions – that occurred in both the DuPont and Northington cases.

The automated functions of archiving technology can benefit a company’s litigation response in other ways.  For example, such a tool may limit the amount of potentially relevant information available for follow-on litigation.  Absent a legal hold, retention rules that are programmed into the software will ensure that ESI is expired once it reaches the end of a designated period.  In DuPont, such a feature could arguably have eliminated entire categories of older documents before a duty to preserve those materials ever ripened.  This facet not only has the potential to reduce legal exposure, but also the attendant costs associated with reviewing those documents in litigation.

DuPont, Northington and other cases from the recent past delineate the steps companies can take to address the challenges of eDiscovery.  Organizations do not have to “repeat” past mistakes that victimized clients and counsel alike.  Instead, they can implement the right technology tools as part of a thoughtful, proactive approach to litigation.  By so doing, organizations will avoid Santayana’s judgment by “remembering” the lessons of eDiscovery history.

If you’re anything like Dr. Evil, Tears for Fears, or Napoleon, ruling the world is at or near the top of your to-do list, and part of ruling the world is having as omniscient a knowledge as possible of what’s going on, in order to better control it. Ruling the world has also long been the dream of many software vendors, who want to own and understand all the information in an enterprise in order to, um, provide maximum value to their customers… oh, and also to lock them in to a single underlying platform that allows them to control as much of the organization’s information management decisions as possible.

In some cases, these dual interests are aligned. However, in e-discovery, it’s not so clear. Over the last couple of years, many vendors have pushed a notion of “index everything” or so-called “proactive” e-discovery, in which you have instant access to all the information in your enterprise, in real-time, from which to drive your e-discovery process. But is this feasible? Or even desirable?

The Myth of the Silver Bullet

It can be tempting for IT to turn to an enterprise search solution that can index all data sources – laptops, desktops, file servers, SharePoint servers, databases, email archives, content management systems – and enable e-discovery across the entire enterprise in an instant. The reality is that while such a solution may work for enterprise search in small and medium-sized companies with a finite scope of data, the level of complexity in scale and defensibility of operations makes this simply not an achievable approach for e-discovery at most large enterprises. As Anne Kershaw and Joe Howie of the Electronic Discovery Institute noted in their just-published Judges’ Guide to Cost-Effective E-Discovery:

“There is no single silver bullet that solves all problems associated with escalating discovery costs and delays. As noted above, the single most effective cost reduction method is the focused collection of records most likely to contain relevant information. Some argue that e‐discovery is best accomplished by taking large amounts of data from clients and then applying keyword or other searches or filters. While, in some rare cases, this method might be the only option, it is also apt to be the most expensive. In fact, keyword searching against large volumes of data to find relevant information is a challenging, costly, and imperfect process. A much better approach is to ask key client contacts to help you locate core relevant information and then, by reading that information, determine other sources of relevant information.”

What are the specific reasons why a targeted collection approach is superior? From our conversations with clients as we have been developing our solution to this problem over the last couple of years, three major drawbacks to the index-everything approach stand out.

1. Impact to Existing IT Environment

While the collect-and-preserve approach employed by Clearwell is widely accepted for e-discovery, index-everything and preserve-in-place solutions have recently emerged, originating from other enterprise applications such as knowledge management and enterprise search. These approaches from other domains have significant disadvantages when applied to e-discovery, including impact to existing IT infrastructure and processes that result in increased cost and complexity. For instance, the scope of e-discovery can exceed the amount of information being indexed by knowledge management or enterprise search applications. According to Forrester, the majority of enterprise search implementations range in size from the hundreds of thousands to tens of millions of records, not billions of documents that are potentially discoverable during litigation. Consequently, index-everything solutions must index a much larger volume of data across a broader range of applications and data stores than would typically be necessarily for enterprise search.

Indexing such a large amount of data has implications for the entire IT environment. These solutions either crawl data repositories over the network or employ agents on local desktops and laptops to find new and modified files. IT organizations using these solutions report experiencing disruptions including:

• Requiring read access and permissions to numerous line-of-business applications and storage systems where data resides

• Significant increases to disk I/O for enterprise applications, network file shares, and client machines

• Increased network consumption as large amounts of data are read over the network

• Increased consumption of local hard drive space on employee desktops and laptops for search indexes and redundant copies of preserved files

• Scheduling resource-intensive indexing tasks during off-peak hours, impacting the ability of IT departments to complete backups during shrinking backup windows

Taken together, these issues add cost and complexity to the deployment of index-everything and preserve-in-place solutions. This often results in organizations not fully deploying the solution after purchasing licenses and spending months or years trying to integrate with their existing systems.

2. Risk of Missing Critical Data

Another key concern of organizations seeking to meet e-discovery requests is the ability to find all relevant files and documents for a case. Missing even a few important documents may result in multimillion dollar fines and sanctions. UBS and Morgan Stanley each paid $29.2 million and $12.5 million, respectively, for losing key files during litigation. It is therefore critically important that e-discovery solutions have the ability to not only index and search common file types, but also a range of less common but equally important files such as those within nested container files, encrypted files, and TIFF images containing text. Solutions that originate from applications outside the e-discovery domain often skip these files because 100% accuracy is not required for other applications such as enterprise search. Across organizations with billions of documents, there may be hundreds of thousands of potentially relevant files which are in the dark and unknown to legal teams because they are not indexed.

Index corruption is another commonly reported issue with index-everything solutions that results in incomplete search results. Search indexes are susceptible to data corruption just like any other computer file, but the large size of indexes containing billions of records increases the probability of errors. In fact, this is a common problem of most archive solutions and other solutions that manage billions of records. A corrupt search index will result in incomplete results or in the worst case scenario, the inability to conduct searches until the index is repaired. In some situations, data must be re-indexed to rebuild a corrupt search index which is time consuming due to the slow speed of some solutions.

The net result isthat in-place solutions increase the likelihood of missing critical data, exposing the organization to considerable legal and financial risk.

3. Time Delays and Uncertainty in Searches

When embarking on a project to make all enterprise data searchable for e-discovery, an important consideration is indexing speed in relation to total outstanding data and projected data growth. Organizations deploying such a solution typically have a large amount of existing data that needs to be indexed, and this index must be continually updated as data is modified and new data is created. Many companies report that although vendors claim high processing rates, these high rates erode over time as companies index greater amounts of their existing data, increasing the size of search indexes. Beyond an application’s ability to index data, there are exogenous factors affecting indexing performance including network speed, disk I/O, and latency. Along with index size and the number of search indexes, these factors can also affect search query performance, resulting in searches that take hours or days to return results.

Another issue facing organizations deploying index-everything solutions is that end users may be creating and modifying documents faster than the solution can index them. As a result, there is a widening gap between the state of data in the wild and the solution’s picture of that data, leading to incomplete search results. Equally troubling, search results may include files that were moved after the search engine indexed them, and so they appear in the results but cannot be viewed, retrieved, or preserved. End users clicking on the link to an item may receive an error similar to the “404 Error: File Not Found” that everyone has experienced when browsing the web. This presents a significant defensibility problem in e-discovery, and IT teams often end up tracking down these missing files one-by-one to ensure they are preserved. The result is that organizations may be exposed to unnecessary legal risk while IT teams have the additional burden of manually tracking down hundreds of files for each legal matter.

A Better Approach to Collection and Preservation

Recognizing the challenges of collection and preservation, Clearwell has developed a targeted approach that enables organizations to defensibly collect and preserve data without increasing the work of IT or exposing the organization to risk. Targeted collection provides an easy way for IT or Legal teams to collect from all critical data sources and securely manage collected data in a preservation store for the duration of a case. Unlike index-everything and preserve-in-place approaches, Clearwell is up and running quickly, delivering value in hours or days without the cost and complexity of lengthy multi-month deployment timelines. In addition, Clearwell’s targeted collect-and-preserve approach has a number of benefits over in-place approaches:

Minimal impact to IT infrastructure: Clearwell only collects potentially relevant data from custodians involved in a case or investigation, targeting resources at the most important data instead of wasting resources on indexing all data across the entire organization. As a result, targeted collection requires less impact to existing applications and storage systems, does not cause significant increases to disk I/O or network consumption, and does not require agents to be installed on client machines or servers.

Finds all critical data: Purpose-built to support the complex and difficult to read file types required by e-discovery, Clearwell can index and search all critical content such as nested container files, encrypted files, images containing text, and hidden content.

Up-to-date collection: Clearwell collects all relevant data for e-discovery by targeting information that is related to custodians in the case. Because this approach is not limited by legacy indexing approaches, Clearwell is able to collect data that has been recently modified or moved.

Maintains existing workflow: With Clearwell, end users are able to continue using their existing workflows and business processes without interruption. Using targeted collection, Clearwell can collect data in the background without altering data where it resides. When users create or modify files in the normal course of business, Clearwell incrementally collects new data automatically.

Reduces risk: Targeted collection significantly reduces the risk of spoliation by retaining data in a secure preservation store, providing a defensible process that maintains chain of custody. As a result, data cannot be tampered with by end users or accidently lost on laptops, desktops, or other data repositories not under the control of IT.

Collecting and preserving evidence are critical steps in the e-discovery process. Solutions that promote indexing everything as the optimal solution for your e-discovery problems might be conceptually promising, but create new challenges for IT and increase risk in practice. As a result, organizations are seeking a solution that enables them to respond effectively to e-discovery without causing major disruptions or exposing the organization to additional risk. Clearwell’s targeted approach solves the challenges of collection and preservation by making it easy to collect data from all critical data sources and preserve data defensibly, without incurring greater risk or disrupting the organization’s business processes.

Yesterday, Clearwell announced a new module for identification and collection, which is available with Version 6 of its e-discovery platform. This sits alongside the existing modules for processing/analysis and review/production, extending Clearwell’s capabilities upstream to a part of the e-discovery process typically done by IT. The new module has already been purchased by GlaxoSmithKline, Nisource, and several other enterprises and government agencies, and the initial response has been incredibly positive. I wanted to say a few words about what led Clearwell to add the Identification and Collection Module, and how it’s different from other solutions.

Over the past few years, I have seen a transformation of the e-discovery software market. Previously, there were no specific people within corporations or government agencies dedicated to e discovery, and no formal budget was allocated to it. As a result, purchase decisions were typically made at the departmental level by legal or information security people who could “find the money” by borrowing from other projects. In stark contrast to that, today most major corporations have people specifically responsible for electronic discovery, and many of them have company-wide initiatives to lower costs by bringing e-discovery in-house. Companies are issuing more and more formal RFPs; performing proof-of-concepts as part of the evaluation process; and creating committees of both legal and IT to make purchase decisions.

Some vendors have sought to play up a “gap” between legal and IT teams when it comes to e-discovery. They manufacture survey information claiming that collaboration and communication between legal and IT is decreasing. Our experience has been exactly the opposite. At corporations like Coca Cola, Home Depot, and hundreds of others, we find close, collaborative relationships between legal teams and the IT professionals dedicated to help them. There’s now a new career path, sometimes called “legal IT” or “e-discovery manager”, for technically savvy IT folks who understand legal’s requirements. I was happy to see at LegalTech this year that legal professionals would often come by our booth with a colleague and say to us, “I brought my IT guy with me because I want him to see this”.

It is precisely because legal and IT are working so closely together that they want a single product to manage all their e-discovery activity. That’s what led us to add the Identification and Collection Module.

Why is offering a single product for everything from identification through production such a big deal? Clearwell’s approach offers two main advantages over alternative solutions. First, like earlier versions of Clearwell, the Identification and Collection Module is very easy to use – so much so that, with IT’s permission, legal could even manage the collection process itself. For example, existing products like Guidance Encase require users to write scripts to create filters for targeted collections; with Clearwell, everything is point-and-click through a simple web UI. That makes identification and collection accessible to non-technical users.

Second, because identification, collection, processing, early case assessment, review and production can now all be done using a single product, Clearwell is able to provide end-to-end reporting through the entire e-discovery life-cycle. For example, Autonomy’s disparate e-discovery products (Introspect, Aungate, etc.) require multiple log-ins, all have different UIs, and different data models. With Clearwell, all of these are the same, giving you complete control over your data – at significantly lower total cost of ownership.

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The Chinese philosopher, Lao-tzu, once said “a journey of a thousand miles begins with a single step.”  This truism has been applied in a myriad of ways over the years, but it applies with equal measure to the process of taming the multifaceted challenge that is electronic discovery.  Simply put, conquering ediscovery is always a journey.  And for enterprises like The Home Depot, they know first hand that you can’t simply look at the end result and wish for the journey to be complete.  Instead, it’s paramount to embrace all the steps along the path and develop good habits that work both for the first and the last mile.

Many enterprises clearly understand the benefits of in-house discovery that include lower processing and review costs, earlier access to case facts, better control over the processes, etc.  But some struggle with how to begin their journey, for any number of reasons (lack of knowledgeable staff, failure to get executive buy-in, inability to build a compelling business case, etc.).  Fortunately, the folks at Home Depot have recently completed their journey and have offered to share secrets they leveraged throughout the process.

In a similar fashion to best selling author’s Stephen R. Covey’s “The 7 Habits of Highly Effective People” David Steel, Sr. Counsel and Barbara Squires, Paralegal at The Home Depot will host a web seminar to walk us through the some of the e-discovery habits that helped them successfully navigate their way through the process.  The web seminar is titled “5 Habits to Create a Highly Effective In-House E-Discovery Process” and it’s free to attend. Since we don’t want to steal their thunder, we won’t divulge their habits now, but suffice it to say that every company can learn from their experiences.  And, after the web seminar I’ll devote more blog time to further expansion of each habit.

Since it’s our raison d’être to help companies complete their e-discovery journey, we’re excited to have The Home Depot on to share stories from their journey, all in the hope that others, just embarking on their own expedition, can be just as successful.

Learn More On Litigation Software & Ediscovery Litigation.

After more than ten years of IT experience and over a year of experience as an attorney working exclusively with e-discovery, I am delighted to join the E-Discovery 2.0 team.  I am a member of the South Carolina Bar Association and the American Bar Association.  In this and future posts, I will try to bring a practical perspective or view from the trenches to this blog – a look at how to deal with some of the day-to-day problems facing e-discovery practitioners today.  I will begin with a discussion about how to approach the decision to move e-discovery in-house, and although the desire to build a solution “in a day” is tempting (and sometimes precipitated by necessity), a solution that will stand the test of time and provide the greatest ROI requires a bit more planning and care.

E-Discovery can sometimes be thought of as an ailment that requires a quick remedy in the form of software or services.  We continue to be reminded, however, that e-discovery is much more than a fleeting malady; it is an ongoing business problem that must be treated with the same diligence and meticulous execution as regulatory compliance or data security.

So where should the prudent practitioner begin?

Every good IT project manager I have ever worked with always had the same mantra when it came to solving a problem with technology – make sure the business problem has been well defined and establish detailed requirements before venturing into the marketplace.  So, why are so many companies sending out form RFPs containing canned text expecting to find a miracle “end-to-end” e-discovery solution in a relatively short period of time?  The answer, I believe, lies both in the abundance and availability of generic information about e-discovery and the fact that most companies looking to bring e-discovery in-house are already feeling the pain of rising costs and demands on existing staff.  They are, in short, trying to conquer their e-discovery problem in a day.  To truly conquer the problem, it should be attacked from the areas causing the greatest pain and expense first, and those areas should be thoroughly examined using proven project management techniques.

If e-discovery is indeed a significant business process, then companies must address that problem using the same proven methods that they have been using for years to solve other business problems.  For example, every company today, believe it or not, has an e-discovery solution in place.  If the company was sued tomorrow, and there was a significant e-discovery component to the matter, the company would likely react in a certain way based on a number of factors – hire outside consultants, work with a litigation support provider, rely on their outside counsel to coordinate e-discovery, etc.  So why not predict that reaction, analyze it, and determine where the greatest expense and pain lies in that process?  From that data, the company can decide which portions of the e-discovery workflow, if any, should be brought in-house, and it can seek out best-of-breed solutions rather than settling on the first end-to-end vendor that comes knocking.  The next step is to rely on those time-honored project management edicts – define the business problem and establish concrete requirements.  Then the company will be armed with the most powerful weapon in the marketplace – the power to distinguish.

The burning question, then, is how does the company decide which portions of the e-discovery workflow to bring in-house?  The answer is relatively simple: you follow the money (right out of the front door in many cases).  Where is the company spending most of its e-discovery budget, and are those portions of the workflow good candidates to bring in-house?  Typically, processing data and review are the most expensive phases of any e-discovery project.  The logic here is simple: if you send 100GB of ESI to outside counsel to review, it will be more expensive and time-consuming than sending only 20GB.  Thus, processing, analysis, and first-pass review are great candidates to be brought in-house from an ROI perspective, and bringing these phases in-house could facilitate a form of early case assessment given the right solution.

Now, suppose a company decides to bring processing, analysis, and first-pass review in-house, also leveraging their chosen technology solution for early case assessment.  Now what?  The process can simply be repeated.  Given the solution implemented, what happens if we get sued tomorrow?  What other portions of the e-discovery workflow will need to be outsourced and how will we do that?  What will that cost?  Is there a better way?  The company can continue this process until it determines that either all portions of its e-discovery workflow have been successfully brought in house or the ROI of bringing additional portions of the workflow in house does not justify additional projects at that time.  This analysis should then be repeated on a regular basis to ensure the current solution is still meeting the needs of the organization and that market or industry shifts have not created additional opportunities for cost savings.

Although an effective and defensible in-house e-discovery solution likely cannot be built in a day, a carefully crafted plan of attack and a thorough understanding of the organization’s particular needs can strategically position it for long term success.

Part IV of this series on reducing e-discovery costs described how bringing e-discovery in-house can reduce costs.  One of the major decision points when in-sourcing e-discovery is to decide which parts of the e-discovery process should be in-sourced.  In making this decision, each company should look at the nature of their e-discovery process today, which parts of the e-discovery workflow they currently perform in-house, if any at all, and which are currently outsourced.  They should then look at which outsourced parts would produce the best return on investment (ROI) if in-sourced.

When most companies look at their current litigation software process, they often find that they are already in-sourcing the first stages of e-discovery: identification, preservation and collection.  While there are some companies that will occasionally outsource these steps, especially when there is a need to perform forensic collections, most sizable companies are already doing most of these steps themselves, though often advised by outside counsel.  For example, most companies will identify the custodians and sources of electronically stored information (ESI) in conjunction with outside counsel.  Litigation hold notices will be sent internally and data will be collected by the company’s IT, legal IT and/or internal forensic/investigations team.  It is typically at this point that e-discovery moves outside the company as the data is transferred to a litigation support service provider and/or law firm who perform processing, analysis, review, and production.

When a company takes a look at how they can reduce their e-discovery costs, they are most often looking at two high-level options:

1. Whether they can streamline their existing internal identification, preservation and collection processes
2. Whether they should bring processing, analysis, review and/or production in-house

There are of course exceptions to this.  Some companies do outsource their collection for example, especially when collection might need to be done in remote offices.  But the majority of companies seem to fall in the above categories.  Distinguishing these two options is important because the ROI analysis and decision-making process related to streamlining an existing process is very different than the analysis and decision-making related to bringing a process in-house.

When performing an ROI analysis of these different options, one typically comes to two conclusions.  The first is that both are often ROI positive projects.  The second is that in-sourcing some aspects of processing, analysis and review is far and away the biggest “bang for the buck” project that most companies can undertake when it comes to reducing e-discovery costs.  The biggest reason for the second conclusion is that the majority of the costs incurred during e-discovery are processing and review costs.  In a previous post where we analyzed e-discovery costs, we found that processing and review typically represent over 90% of these costs.  As a result, in-sourcing some or all aspects of processing, analysis and review can save very significant amounts of external processing fees and attorney review costs.  In contrast, while there can be real savings to improving and automating identification, preservation and collection, the size of savings pales in comparison because these steps represent less than 10% of the total cost of e-discovery.

The best approach to reducing e-discovery costs, of course, would be to do both of these projects: improve identification, preservation and collection as well as in-source processing, analysis and review.  However, if you have to sequence these projects or pick only one (a popular requirement in this economy) then in-sourcing processing, analysis and review is the one to pick.

As the Mark Twain quote goes, there are “lies, damn lies and statistics.”  In this case, however, and regardless of the exact numbers, two recent surveys provide some very interesting directional trending.  The first is Fulbright & Jaworski’s 6^th Annual Litigation Trends Survey.  In addition to covering a range of general and vertically oriented topics, they also focus on ediscovery specifically.  Not surprisingly, reducing e-discovery costs bubbles up to the top of the list as major initiatives for most respondents.  Interestingly though, remediation plans attacking this problem seem to fall into two different camps.  On the one hand, 24% of respondents plan on outsourcing certain e-discovery tasks further leveraging preferred partners.  Conversely, the method that leads the pack (at a whopping 47%) is the corporate initiative of taking components of e-discovery in-house.  Other methods were listed, but most didn’t appear to have critical mass, including: using clawback agreements more, enforcing document retention policies, and negotiating with the opposition over the scope of discovery.

Similarly, Clearwell Systems recently conducted a survey in partnership with analyst firm Enterprise Strategy Group titled Trends in Electronic Discovery – A Market Perspective, which attempted to pinpoint similar pain points and solutions. The questions focused more on 2010 planning and they found a general expectation of more litigation/regulatory inquiries where 53% of the respondents expect the number of lawsuits and regulatory inquiries to increase by at least 20% in 2010, with 13% of respondents planning for an increase of 50 percent or more.  Again, not surprisingly, many plan on attacking this increase in litigation (and the corresponding e-discovery costs) by bring parts of the process in house.  In fact, 48% indicated that they currently have an active project to bring segments of the e-discovery process in-house. And for those that aren’t currently in the building process, 87% of respondents plan to budget for technology that specifically supports the electronic discovery process in 2010.

Given the length of time required for planning, RFPs and e-discovery tool procurement, clearly time is of the essence for companies that want to take advantage of internal solutions in the 2010 time frame.  Failure to get off the dime means that an enterprise is more likely to get caught in the middle of deliberation, versus deployment.

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