e-discovery 2.0

Without getting in Dutch with the key Sedona Conference principle that “what happens at Sedona, stays at Sedona” I thought I’d nevertheless write a post that focuses on the core topic at this year’s annual meeting, namely the case for cooperation in e-discovery.

According to the “Cooperation Proclamation” e-discovery is facing an unprecedented crisis:

“The costs associated with adversarial conduct in pre-trial discovery have become a serious burden to the American judicial system. This burden rises significantly in discovery of electronically stored information (”ESI”). In addition to rising monetary costs, courts have seen escalating motion practice, overreaching, obstruction, and extensive, but unproductive discovery disputes - in some cases precluding adjudication on the merits altogether - when parties treat the discovery process in an adversarial manner. Neither law nor logic compels these outcomes. With this Proclamation, The Sedona Conference launches a national drive to promote open and forthright information sharing, dialogue (internal and external), training, and the development of practical tools to facilitate cooperative, collaborative, transparent discovery.”

These sentiments about the “broken” nature of the discovery process echo in many ways the draft findings from the Interim Report & 2008 Litigation Survey from the Fellows of the American College of Trial Lawyers which stated:

“The joint study grew out of a concern that discovery is increasingly expensive and that the expense and burden of discovery are having substantial adverse effects on the civil justice system. There is a serious concern that the costs and burdens of discovery are driving litigation away from the court system and forcing settlements based on the costs, as opposed to the merits, of cases.”

In both instances, the core notion is that “we’ve met the enemy and the enemy is us” because it’s the participants in the process have collectively perverted the discovery process to the point it’s at today.

Sedona’s focus on this front has received at least some traction from the bench, as echoed in Mancia v. Mayflower Textile Servs. Co., 2008 WL 4595175 (D. Md. Oct. 15, 2008).  Mancia, written by leading e-discovery jurist Judge Grimm, was a fairly pedestrian employment litigation case where the parties had come to loggerheads over the e-discovery process.  Judge Grimm held that “[c]ourts repeatedly have noted the need for attorneys to work cooperatively to conduct discovery, and sanctioned lawyers and parties for failing to do so” citing both the Sedona Cooperation Proclamation and the Survey.

Judge Grimm also observed that the these recent lamentations about the costs of civil litigation aren’t terribly dissimilar to those voiced eighteen years ago when the Civil Justice Reform Act of 1990, 28 U.S.C. §§ 471 et seq., was passed:

“Perhaps the greatest driving force in litigation today is discovery. Discovery abuse is a principal cause of high litigation transaction costs. Indeed, in far too many cases, economics-and not the merits-govern discovery decisions. Litigants of moderate means are often deterred through discovery from vindicating claims or defenses, and the litigation process all too often becomes a war of attrition for all parties.”

Given the fundamentally adversarial nature of litigation, the Sedona initiative is either dramatically ambitious or simply tilting at windmills.  While generally a skeptic by nature, I think that the bench’s early participation and downstream behavior modification is the linchpin to reforming the litigating masses.  Given the long term “sales” cycle involved here, I doubt if we’ll know whether this effort will gain real traction for at least several years.

There’s a lot of excitement (and corresponding uncertainty) about the recent passing of Federal Rule of Evidence 502 (FRE 502), which was signed into law on Sept 19th.  The main reason that the legal community is excited about FRE 502 is because of the potential for cost savings by reducing the amount of money associated with the e-discovery review process, which is routinely viewed as the most expensive area in the entire e-discovery process.

In combination with the codification of a national standard to determine when a privilege has been waived, FRE 502 is primarily designed to make the use of claw-back agreements a truly viable prospect when doing e-discovery privilege review.  It should provide some panacea (ideally) for rapidly escalating e-discovery costs.  Or, at least that was the impetus behind the rule’s creation - according to the Comments:

“The proposed new rule facilitates discovery and reduces privilege-review costs by limiting the circumstances under which the privilege or protection is forfeited, which may happen if the privileged or protected information or material is produced in discovery. The burden and cost of steps to preserve the privileged status of attorney-client information and trial preparation materials can be enormous. Under present practices, lawyers and firms must thoroughly review everything in a client’s possession before responding to discovery requests. Otherwise they risk waiving the privileged status not only of the individual item disclosed but of all other items dealing with the same subject matter. This burden is particularly onerous when the discovery consists of massive amounts of electronically stored information.”

In short, FRE 502 is designed to establish uniform, nationwide standards for waiver of attorney-client privilege and work product protection, with the main goal being to protect producing parties against the inadvertent disclosure of privileged materials or work product in either federal or state proceedings.  The salient section is subsection (b) which states that when a disclosure of privileged information is made in a federal proceeding or to a federal agency, the disclosure does not constitute a waiver if:

1. the disclosure is inadvertent;
2. the holder of the privilege or protection took reasonable steps to prevent disclosure; and
3. the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).

The end game here is presumably to increasingly leverage automated review methodologies to save costs.  But, in order to facilitate this type of review methodology without taking on unhealthy levels of risk means that claw-back provisions must be as airtight at possible to prevent inadvertent electronically stored information (ESI) productions.  And yet, exactly how FRE 502 will work in practice is up to debate since there isn’t any case law interpreting it yet.

One area that’s top of mind is how this new Rule will impact the recent decisions on e-discovery search, including the Victor Stanley case authored by Chief Magistrate Judge Grimm.  Since FRE 502 contains a core “reasonableness” prong in section (b) it’s likely that Grimm’s proclamation about e-discovery search will still be controlling.  Grimm fundamentally had to evaluate whether the producing party’s search protocols and procedures were in fact reasonable.

“Defendants, who bear the burden of proving that their conduct was reasonable for purposes of assessing whether they waived attorney-client privilege by producing the 165 documents to the Plaintiff, have failed to provide the court with information regarding: the keywords used; the rationale for their selection; the qualifications of M. Pappas and his attorneys to design an effective and reliable search and information retrieval method; whether the search was a simple keyword search, or a more sophisticated one, such as one employing Boolean proximity operators; or whether they analyzed the results of the search to assess its reliability, appropriateness for the task, and the quality of its implementation.” (footnotes omitted).

In Victor Stanley, the producing party wasn’t able to demonstrate reasonableness because they didn’t strategically craft out their strategy nor conduct any sampling to make sure that the e-discovery search worked as designed.  This type of analysis would still seem to come into play under FRE 502 and so, as Grimm states, the use of either a best practices or collaborative approach to e-discovery would seem to be as important as ever.

Given that backdrop it’s just as important as ever that parties “show their work” when it comes to e-discovery search.   Whether FRE 502 will really make parties feel safe enough to use automated review processes (thereby reducing costs) will remain to be seen.  But, this first step which unifies standards and expectations is at least a very positive step.

To the casual observer, it is surprising that a small private company (AccessData) could even think of acquiring a larger, public one (Guidance Software). But that’s exactly what AccessData publicly proposed to Guidance’s shareholders on November 6, after Guidance’s board had rejected its offer of $4.50 per share.

Leaving aside the personalities involved, and the history of bitter rivalry between these two companies, it’s easy to see why Guidance’s board rejected the offer. First, it’s only a 19% premium over Guidance’s share price on October 6, the date that the offer was made. Second, given 23 million shares outstanding, AccessData is offering a total price of just over $100 million for a company with $90 million in revenue and about $25 million in cash. Compare that to other e-discovery acquisitions, such as FTI’s $88 million purchase of Attenex or Iron Mountain’s $158 million deal for Stratify, each of which only had about 30% of Guidance’s revenue, and you cannot help feeling that the price is very low. Third, there’s the question of where AccessData will come up with the money. It’s hard to believe they happen to have $100 million in cash lying around and, with the recent market meltdown, debt is much less of an option than it used to be.

Still, this is not necessarily bad news for Guidance Software. Since its IPO in October 2006, the stock has fallen from a high of $17 per share to a low of $2 per share. The public markets are very unforgiving to small software companies. Guidance has recently made some bold moves, announcing usage-based pricing for its e-discovery product and several notable customer wins, but nothing has moved the stock. So an acquisition offer may be just the ticket to boost the share price, especially if it encourages other, more attractive acquirers to throw their hats into the ring.

Stay tuned, this might get interesting.

Today’s questionee is Monica Bay, editor-in-chief of Law Technology News. Not only is she the author of The Common Scold, Law Technology Now podcasts, and co-author of the EDD Update blog, but she is also a rabid New York Yankees fan (as you will see below).  Let’s get to the questions.

1) As a lawyer, what advice would you give litigation support professionals to them to help foster more successful and productive litigation support-lawyer relationships?

In June, I wrote “Can You Adapt?” in Law Technology News which explores the changing terrain of EDD support staff. Increasingly, vendors, law firms and corporate counsel are hiring lawyers to handle e-discovery, particularly the review phase. This is creating tremendous opportunities for both attorneys and non-attorney professionals to further develop their careers, and make a whole lot of money (we’re already seeing poaching).

As for advice, it is the same I would give anyone in any job. Think baseball:

• Be a team player: It’s about the team, not the individual. You win and lose as a team. (See, Derek Jeter).
• Play your position well: Make yourself indispensible… be reliable, accurate, prompt, and anticipate needs. Raise your hand when there’s a job nobody wants to do because it’s too complicated or detailed. Extra points for utility players (See, Miguel Cairo).
• Home runs are great, but small ball wins more games. Watch the details. (See, Tampa Bay Rays)
• Take pre-emptive strikes: If you screw up, tell your boss immediately. It is far better for YOU to bring it to your boss than the reverse. Don’t try to hide problems (See, Tanyon Sturtz).
• Bring answers, not problems. Don’t whine. Instead of complaining about problems to your boss, come to her with alternatives. Show initiative and ingenuity. (See, Derek Jeter, Joe Girardi)
• Be low maintenance. ‘Nuf said. Even Manny got traded for being a pain. (See, Jeter, Abreu, Nady, Posada, et al)
• Don’t sit back and wait to be noticed. Ask for promotions. Do your homework, know the market, don’t take the first offer - negotiate. This is particularly important for women, who traditionally haven’t been encouraged to be assertive. (See Joe Torre, Joe Maddon)
• Don’t exaggerate your own importance. (See, Scott Boras, re: B. Molina, Rodriquez, etc.).
• Be loyal, work hard, kind, considerate, passionate, diligent, and work smart (See, Derek Jeter)

2) Socha-Gelbmann abandoning their existing ranking system: Good or bad (or both), and why?

Good.  George Socha and Tom Gelbmann, creators of the Socha/Gelbmann E-Discovery Survey, have said that they are rethinking how they rank, because too many folks were “foolishly” simply relying on their reports rather than doing the necessary due diligence to be sure they were buying the right products. I applaud them and look forward to the next iteration.

3) Helping strengthen the legal technology community is obviously a big passion of yours. Any new issues you are championing?

My latest crusade is the result of recent disheartening news reports that document severe gender gaps in pay for members of our profession; as well as the latest statistics about how painfully difficult it is for minority lawyers to climb partnership ranks, especially in large firms. Even among paralegal ranks there is a gender gap, which is especially ridiculous because that’s an area dominated by women.

There are no easy answers to these problems, but we simply must address them. In our October issue, I challenged every law firm managing partner, vendor CEO and company GC to immediately remedy gender pay gaps in their shops. There is no excuse for those. Solving the issue of obstacles facing career growth for women, minorities, gays and lesbians is a more challenging and nuanced problem, but one that we simply must make a top priority and continue to address. We cannot give up. It is only right and just. I wrote about this in our November issue, and will continue to keep it front and center in LTN.

4) Since it’s Halloween, we’ll ask a scary question. In your view, is e-discovery in its current state a help or a hindrance to the legal system?

The short answer is that it’s both. But e-discovery is here to stay, and the challenge before us is to work to develop systems and protocols that help us attain the real goal - to resolve disputes in a fair, speedy, reasonable manner.

I worry that litigation costs have so escalated that disputes today are being resolved more based on risk management assessments (e.g., the cost of the litigation) than the actual merits of the dispute.

5) Finally, be honest with us: How do you REALLY determine who gets to be in the President’s Corner?

Narrowing it down to the most newsworthy releases of the month, and then finding the one photo among all the finalists that’s actually in focus.

Concept or content search continues to be a hot topic within the e-discovery community.  There’s a continuous stream of articles that discuss it.  Some that point out the positive.  Others that point out the limitations.  The courts have also gotten involved in the discussion.  Judge Grimm refers to concept search in e-discovery in Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 WL 2221841 (D. Md. May 29, 2008).  Judge Facciola discusses concept search in Disability Rights Council of Greater Washington v. Washington Metropolitan Transit Authority, 242 F.R.D. 139 and other opinions.  Despite (or maybe because of) all the commentary on this topic, I find that while a lot of people think that concept search in e-discovery is good, many are not fully sure of exactly what concept search is, and how it is practically useful in e-discovery.   It’s pretty clear that after several years of commentary and hype, concept search has become something of a buzzword associated with many myths and misconceptions.  In an effort to better understand what concept search is and how it can help in e-discovery, I want to dispel two of the most common myths I have heard.

The “Concept Search is Concept Search” Myth

The first myth around concept search actually revolves around what it is.  In my experience, people tend to lump two different technologies together when talking about concept search: concept search and concept categorization.  It’s very common, for example, to see commentators say concept search even when what they are really talking about is concept categorization.  To make matters more confusing, people also use a plethora of other names including content search, content clustering or concept clustering when what they really mean is concept categorization.

So, what are the differences between concept search and concept categorization?  First, let’s start with concept search.  Concept search technologies find documents containing “concepts”.  I think that the Sedona Conference’s “Best Practices Commentary on the Use of Search & Information Retrieval Methods in E-Discovery“, provides a good definition of “concept” when used in a search context: “the combination of [a] query term and the additional terms identified by the thesaurus.”  In other words, concept search technologies find documents containing a specified term plus additional terms with similar meanings derived from a thesaurus.

Concept categorization, on the other hand, is actually not a search technology at all.  Concept categorization technologies do not “find” documents.  Rather, they categorize or group documents based on their similarity.   There are many different ways to group documents based on similarity.  Techniques include statistical (which assesses similarity based on word frequency), Bayesian classification (which weights words differently depending on factors in addition to statistical frequency, such as where the terms appear in a document), and semantic indexing (which takes into account the fact that many words used in a similar context may have a similar meaning).  It would take more time to describe these technologies in detail but the Sedona commentary has a good summary of these different technologies if you are interested in learning more.

As should now be apparent, these technologies are very different and using the same words to describe them is confusing.  It’s why it’s not surprising that a lot of the users of e-discovery services and software don’t have a strong understanding of what these technologies are or what benefits they can actually provide in practice.  Dispelling the myth that they can be lumped together is a critical first step in any conversation about concept search and how it can help in e-discovery.  This leads us to a second myth, that Concept Search is better than Keyword Search.  I’ll discuss this in my next blog post.