e-discovery 2.0

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.

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.

I was recently asked: “what are the first things you do when your client calls you about a case requiring e-discovery?”  So, for the benefit of all, I’ll post my answer.

My first caveat to the advice was context.  Since, while a lot of attorneys have attended CLEs or have read about e-discovery, it’s not the same in the real world.  As the old Spanish Proverb goes:

It’s not the same to talk of bulls as to be in the bullring.

Keeping in mind that reality may differ significantly from academics, here are some things to consider when the next e-discovery case comes up.   Please also keep in mind that these steps (like the EDRM workflow) aren’t linear and may in fact occur cyclically or in parallel:

1. Preserve, preserve, preserve

Nothing is more important than meeting the initial preservation obligation, which begins when litigation is “reasonably likely” – as opposed to just when the complaint is filed.  This first step in the long journey can easily be a trap for the unwary/unprepared.

The challenge once you’re past the trigger issue is to then identify the boundaries of the duty to preserve, i.e., what evidence must be preserved?   This inquiry is often initially comprised of identifying key players, date ranges and data types.

Another significant challenge in this step is to monitor and update the legal hold process.  And, given that litigation more often than not spans years, it’s easy to initially succeed at the preservation effort, but then later fail on execution.  The best way to minimize risk in this step is to move quickly from preservation to collection.  See Is Preservation in E-Discovery Overrated?

2. Work backwards

Once preservation (and ideally collection) is adequately covered, the next step is to start thinking about the end of the process and what success (or lack of failure) looks like.  The exposure and profile of the matter are important to consider when you embark upon an e-discovery project since it’s critical to scale discovery efforts appropriately.

One thing, in particular, that is very important to consider early in the process is the type of production format that will be preferred by reviewing counsel and the opposition.  TIFF-based image productions (which are historically well accepted) are often pitted against native file ESI reviews.  Either format may or may not be acceptable given the situation and the applicability of FRCP Rule 34.

3. Understand the technical landscape

Most attorneys, but for a rare few, aren’t capable of really comprehending technical nuances of the complex and interrelated IT systems found at most Fortune 2,500 enterprises.  Fortunately, they are quite adept at working with experts (either consulting or testifying) to help them get to the bottom of difficult to comprehend and explain issues.  The key is find the right technical people who understand IT systems and who can explain it to judges, juries, and attorneys alike, especially for some of the most common ESI repositories like: email servers, archival systems, shared network drives, instant messaging servers, archival repositories (e.g., tape libraries, real time back-up systems, etc.), records management systems, knowledge management systems, proprietary, but highly leveraged, internal applications, offsite repositories (e.g., hosted IT or email systems) and significant partner or subsidiary data stores.  In many instances it will make sense to leverage or create a map of the data universe so that nothing is missed and inaccessibility arguments can be cogently detailed.

4. Get your lingo straight

Assumptions, whether in e-discovery or not, are often dangerous.  In the complex undertaking where multiple parties are handling ESI it’s critical to make sure that everyone is on the same page especially since every company handles IT, records management, ILM and information security differently.  So, when working with these disparate constituents the outset of an engagement is the right time to make sure everyone is on the same page.  Therefore, standardize on a set of commonly used terms. Examples of potentially ambiguous topics include “imaging” ,“archive”, and “records.”

5. Don’t assume your client will really be helpful

I’ve been involved with hundreds of e-discovery engagements and I’ve found that almost universally the end client professes a profound willingness to help out.  And yet, actual “help” is relatively rare.  To qualify this, it may be prudent to ask several additional questions:

• Does the Client have the time to actually help?  Everyone at the client’s site has a day job that they’re tasked with above and beyond transient e-discovery needs.  So, while bandwidth generally is important, what’s more critical is the ability to comply with aggressive judicial deadlines.
• Are the people helping the ones you’d want to see on the stand?  It’s often not realistic to have internal folks (especially IT and Records Managers) stay isolated during the various pre-trial events – meet & confer conferences and potentially 30(b)(6) depositions so it’s important to evaluate how a given witness will fare when providing testimony.
• How likely is it that you client would throw you under the bus if things went wrong?  In my opinion, there is now more reason for outside counsel to manage the risks of an e-discovery project going awry.  See, Sullivan and Cromwell’s suit against EED.  Some will wisely bring in 3rd party consultants/experts to have a neutral, unbiased constituent in the process.

6. Build a budget and team (internal/external)

Everyone is probably now aware of how expensive e-discovery can be if managed improperly.  This makes it all that more imperative to work quickly to get a rough sense of the scope (which will lead to a budget) and the client’s willingness to absorb associated charges.  The most important step is to right-size the e-discovery effort with the risks inherent in the corresponding litigation/investigation.  Otherwise, there’s a high likelihood that e-discovery process will be over-engineered (too expensive) or under-scoped (cutting dangerous corners).

7. Figure out your risk profile

Similar to right-sizing the budget, it also makes sense to adopt a “horses for courses” approach to e-discovery since there is no singular way to handle a given matter.  For example, in one case you make take forensic images, restore backup tapes, capture instant messaging data, harness metadata, or decide to do an automated review with a with a “clawback” provision. In either case, the only mistake is to assume that an approach from another, dissimilar matter is warranted in the instant case.

8. Assume the opposition is better informed than you are

While this actually may not be the case, it’s a safer bet that assuming a level of naiveté that may not exist.  What is certain is that the Plaintiff’s bar is increasingly well informed and can be very aggressive.  They’ve seen the playbook that calls for baiting the opposition into a discovery misstep that can result in significant, case altering sanctions.  According to a recent survey, 63% of the polled attorneys said that e-discovery is being abused by counsel, so it’s important to be wary initially.

It’s also important to consider the potential reciprocity of a given matter and adjust your position accordingly.  In many instances it’s easy to consider your role only as a producing party, but with cross/counter claims it may be possible to simultaneously be propounding discovery and in the opposition’s shoes.

9. Prepare for an early case assessment

A recent industry survey found that effective early case assessment (ECA) approaches reduced overall litigation in half of the cases evaluated, and resulted in favorable outcomes for 76 percent of the cases.   The key to this methodology is to use the available next generation case analysis solutions earlier in the process, not just to review data for relevancy and privilege, but to:

• Identify the key players. This is critical in order to have a defensible legal hold process
• Evaluate the posture of the case to determine how it looks on the merits
• Diagnose potential outliers in the e-discovery process to facilitate meet and confer discussions and help create “inaccessibility” arguments
• Conduct a search term analysis for keyword negotiations during meet and confer discussions.  Objectively demonstrating the results of proposed search queries can go a long way in speeding up keyword negotiations

10. Don’t take search for granted

For many attorneys, e-discovery search is just like Lexis or Google.  Unfortunately, that isn’t the case.  Instead, it’s become highly complex and is now receiving significant judicial scrutiny.  In Victor Stanley v. Creative Pipe Judge Grimm suggested that attorneys need to rethink how they’ve traditionally managed the search process:  “[F]or lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread.”  It’s now important to devise (and share at early meet & confer conferences) a defensible search strategy that can withstand judicial scrutiny.

In the spirit of the popular New York Times magazine feature, with this post we inaugurate what we hope to be a long-running series of interviews with e-discovery luminaries to get their take on emerging ideas and trends (and hopefully have some fun as well).

Today’s questionee is e-discovery and forensics expert (and popular Law Technology News columnist) Craig Ball.  Craig’s combination of wit and insight speaks for itself, so let’s just get right to the questions.

1) The cases that are on everyone’s mind are O’Keefe/Lundin and Victor Stanley. What’s the practical impact of these rulings to the e-discovery practitioner?

Certainly these decisions have captured my enthusiastic attention.  Lawyers now have to devote greater care and thought to electronic search, and wake to the empirical evidence establishing the shocking shortfalls of keyword search in unstructured ESI collections.  The days of “let’s try these search terms and see what happens” are numbered.  Queries that will be run across mushrooming collections must pass muster in terms of noisiness, ambiguity, potential for misspelling, affinity to stemming, synonyms, slang, acronyms, IM-speak and other criteria unfamiliar to a profession that prides itself on precise expression.  Lawyers need to embrace concepts of “precision,” “recall” and “sampling” with the same fervor we once brought to the Statute of Frauds and the Rule Against Perpetuities.

Currently, lawyers on both the north and south sides of the docket are the unjust beneficiaries of slipshod search.  Requesting parties benefit from the economic leverage attendant to costly-yet-unavailing fishing expeditions while counsel for producing parties mint obscene pyramidal profits reviewing mountains of electrochaff.  Despite all the vitriol, rarely does either side’s counsel set out to exploit flawed searches.  It’s mostly blissful ignorance at work, coupled with little incentive to fix what’s broken.  Accordingly, Judges like Facciola and Grimm are picking up the baton and running with it.  It’ll be a long, tough race—and not every jurist will head for the tape—but I applaud those who’ve left the blocks!

Search demands nuance, discipline and scientific method.  Prepare to routinely test queries against sample collections, as soon that practice will be as commonplace as DNA testing in paternity cases.

2) What can e-discovery technology providers do to help?

At the risk of appearing ungracious, I can’t help but note that vendors eat at the same gluttonous table as lawyers, and vendor marketing is often so much snake oil.  Until the EDD vendor community takes a longer view of the market, stops building businesses for acquisition and starts building them to last, I don’t think they can be of much help.  The industry should stop pretending their processes and software are “proprietary” and touting their secret sauces.  Instead, how about delivering consistent, predictable service and pricing delivered by experienced, reliable and unflinchingly honest, genuinely knowledgeable personnel who welcome the chance to help lawyers understand this stuff.  If employees stayed around more than six months, that would be nice, too.

3) You recently participated in a new track at LegalTech West called FutureTech.  For those who missed it or the follow-up podcasts, what’s an emerging e-discovery trend that you think might take people by surprise?

Several come to mind.  Mediated meet-and-confer, for example.  The cost of a failed EDD effort can dwarf the amount in controversy, so it makes sense to turn to neutral, technically adept intermediaries to help resolve nettlesome questions, of scope, search, forms of production and cost sharing.  Folks just behave better when company comes.  I also foresee divergence between discovery and the other traditional phases of litigation.  We may see entirely different teams handle discovery in a zealous but non-confrontational manner, leaving the scorched earth stuff to others.

Another development that will sneak up on most lawyers is the growing marginalization of text.  As natural interfaces emerge—where you will talk or gesture to your computers—and as communication gets more real time and visual, words will manifest conduct less frequently.  Take YouTube.  I don’t get it—to me, it’s silly and boring—but it’s rich and exciting to my kids…and text is tertiary.

Something else that will change is where we look for evidence.  If you were pursuing discovery against a teenager, where would you go to locate their most revealing ESI?   Social networking (virtualized storage)?   Cell phones and laptops (portable devices)?   Gaming devices (alternate platforms)?  In ten years, don’t imagine they won’t favor and extend the tools they grew up with.

Data is the ultimate portable commodity, so it’s odd we don’t take our computing environments with us. We will. If desktop machines survive, they will be little more than screens with network connectivity temporarily hosting the virtual identities we carry in our pockets or store online. Local hard drives will be an increasingly irrelevant place to search for files as EDD turns to personal storage devices and online storage.

Other trends lawyers may not foresee: People will retain much more data as there will be little incentive and less time to make it go away. “Cheaper to keep her” will be how most of us deal with data.  Location data will be routinely tracked by many devices with GPS functionality on and about our person, so this will become a new and useful evidence stream.  Virtual machines will be used as forms of production.  Local storage will give way to cloud storage.  Hey, I could do this one all day!

4) You have an extensive background in both e-discovery and computer forensics. Do you see a convergence, or will they remain largely separate worlds from a process and technology perspective?

I see convergence already.  “Forensically sound” practices are creeping into EDD harvest and traditionally rigid approaches to disk forensics are being challenged by the practical realities of immense volume and mission-critical operations.   We see the growth of “live” forensics, hash values displacing Bates numbers and operating systems allowing more and more deleted information to be easily resurrected.

The tools and techniques of each discipline are also converging.  But there will remain a distinction between the two flowing from the unique ability of a skilled forensics examiner to distill the bits and bytes into a compelling tale of human strength or frailty.  It’s painfully easy to misread the significance of digital footprints.  There’s a component of science and art to computer forensics that will insure its distinction and growth.

We face convergent challenges, too.  In both forensics and EDD, the lure of lucre pulls in people who really ought to be doing something less harmful.  Lives, liberty, fortunes, and careers hinge on some computer forensic examinations; yet, some schools and tool sellers promote the notion that you can learn what you need to know over a long weekend.  Just as many copy shops decided they were e-discovery experts one dark night, a lot of poorly trained, incurious and careless forensic examiners are popping up all over.  I’m frankly appalled by some of what I see out there.   Where I hope we ultimately converge is a high standard of professionalism and proven expertise.

5) Finally, the question on the mind of every loyal “Ball in Your Court” reader: Which court is it — basketball, tennis, or volleyball?

I’ve never been much for team sports, but if I have to choose, I opt for the one played on the beach by fit, bikini-clad women.  I may be a hopeless nerd, but I’m not stupid.