e-discovery 2.0

Once again Gartner has named Symantec as a leader in the Enterprise Information Archiving magic quadrant.  We’ve continued to invest significantly in this market and it is gratifying to see the recognition for the continued effort we put into archiving both in the cloud and on premises with our Enterprise Vault.cloud and Enterprise Vault products. Symantec has now been rated a leader 9 years in a row.

This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Symantec.

Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

 This year marks a transition in a couple of regards.  We are seeing an acceleration of customers looking for the convenience and simplicity of SaaS based archiving solution. The caveat being that they want the security and trust that only a vendor like Symantec can deliver.

Similarly the market has continued to ask for integrated solutions that deliver information archiving and eDiscovery to quickly address often complex and time sensitive process of litigation and regulatory requests.  The deep integration we offer between our archiving solutions – Enterprise Vault and Enterprise Vault.cloud – and the Clearwell eDiscovery Platform has led many customers to deploy these together to streamline their eDiscovery workflow.

An archive is inherently deployed with the long term in mind.  Over the history of Gartner’s Enterprise Information Archiving MQ, only Symantec has provided a consistent solution to customers by investing and innovating with Enterprise Vault to lead the industry in performance, functionality, and support without painful migrations or changes. 

We’re excited about what we have planned next for Enterprise Vault and Enterprise Vault.cloud and intend to maintain our leadership in the years to come. Our customers will continue to be able to manage their critical information assets and meet their needs for eDiscovery and Information Governance as we improve our products year after year.

With the New Year quickly approaching, it is worth reflecting on some of the key eDiscovery developments that have occurred during 2012. While legislative, regulatory and rulemaking bodies have undoubtedly impacted eDiscovery, the judiciary has once again played the most dramatic role.  There are several lessons from the top 2012 court cases that, if followed, will likely help organizations reduce the costs and risks associated with eDiscovery. These cases also spotlight the expectations that courts will likely have for organizations in 2013 and beyond.

Implementing a Defensible Deletion Strategy

Case: Brigham Young University v. Pfizer, 282 F.R.D. 566 (D. Utah 2012)

In Brigham Young, the plaintiff university had pressed for sanctions as a result of Pfizer’s destruction of key documents pursuant to its information retention policies. The court rejected that argument because such a position failed to appreciate the basic workings of a valid corporate retention schedule. As the court reasoned, “[e]vidence may simply be discarded as a result of good faith business procedures.” When those procedures operate to inadvertently destroy evidence before the duty to preserve is triggered, the court held that sanctions should not issue: “The Federal Rules protect from sanctions those who lack control over the requested materials or who have discarded them as a result of good faith business procedures.”

Summary: The Brigham Young case is significant since it emphasizes that organizations should implement a defensible deletion strategy to rid themselves of data stockpiles. Absent a preservation duty or other exceptional circumstances, organizations that pare back ESI pursuant to “good faith business procedures” (such as a neutral retention policy) will be protected from sanctions.

**Another Must-Read Case: Danny Lynn Elec. v. Veolia Es Solid Waste (M.D. Ala. Mar. 9, 2012)

Issuing a Timely and Comprehensive Litigation Hold

Case: Apple, Inc. v. Samsung Electronics Co., Ltd, — F. Supp. 2d. — (N.D. Cal. 2012)

Summary: The court first issued an adverse inference instruction against Samsung to address spoliation charges brought by Apple. In particular, the court faulted Samsung for failing to circulate a comprehensive litigation hold instruction when it first anticipated litigation. This eventually culminated in the loss of emails from several key Samsung custodians, inviting the court’s adverse inference sanction.

Ironically, however, Apple was subsequently sanctioned for failing to issue a proper hold notice. Just like Samsung, Apple failed to distribute a hold until several months after litigation was reasonably foreseeable. The tardy hold instruction, coupled with evidence suggesting that Apple employees were “encouraged to keep the size of their email accounts below certain limits,” ultimately led the court to conclude that Apple destroyed documents after its preservation duty ripened.

The Lesson for 2013: The Apple case underscores the importance of issuing a timely and comprehensive litigation hold notice. For organizations, this likely means identifying the key players and data sources that may have relevant information and then distributing an intelligible hold instruction. It may also require suspending aspects of information retention policies to preserve relevant ESI. By following these best practices, organizations can better avoid the sanctions bogeyman that haunts so many litigants in eDiscovery.

**Another Must-Read Case: Chin v. Port Authority of New York, 685 F.3d 135 (2^nd Cir. 2012)

Judicial Approval of Predictive Coding

Case: Da Silva Moore v. Publicis Groupe, — F.R.D. — (S.D.N.Y. Feb. 24, 2012)

Summary: The court entered an order that turned out to be the first of its kind: approving the use of predictive coding technology in the discovery phase of litigation. That order was entered pursuant to the parties’ stipulation, which provided that defendant MSL Group could use predictive coding in connection with its obligation to produce relevant documents. Pursuant to that order, the parties methodically (yet at times acrimoniously) worked over several months to fine tune the originally developed protocol to better ensure the production of relevant documents by defendant MSL.

The Lesson for 2013: The court declared in its order that predictive coding “is an acceptable way to search for relevant ESI in appropriate cases.” Nevertheless, the court also made clear that this technology is not the exclusive method now for conducting document review. Instead, predictive coding should be viewed as one of many different types of tools that often can and should be used together.

**Another Must-Read Case: In Re: Actos (Pioglitazone) Prods. Liab. Litig. (W.D. La. July 10, 2012)

Proportionality and Cooperation are Inextricably Intertwined

Case: Pippins v. KPMG LLP, 279 F.R.D. 245 (S.D.N.Y. 2012)

Summary: The court ordered the defendant accounting firm (KPMG) to preserve thousands of employee hard drives. The firm had argued that the high cost of preserving the drives was disproportionate to the value of the ESI stored on the drives. Instead of preserving all of the drives, the firm hoped to maintain a reduced sample, asserting that the ESI on the sample drives would satisfy the evidentiary demands of the plaintiffs’ class action claims.

The court rejected the proportionality argument primarily because the firm refused to permit plaintiffs or the court to analyze the ESI found on the drives. Without any transparency into the contents of the drives, the court could not weigh the benefits of the discovery against the alleged burdens of preservation. The court was thus left to speculate about the nature of the ESI on the drives, reasoning that it went to the heart of plaintiffs’ class action claims. As the district court observed, the firm may very well have obtained the relief it requested had it engaged in “good faith negotiations” with the plaintiffs over the preservation of the drives.

The Lesson for 2013: The Pippins decision reinforces a common refrain that parties seeking the protection of proportionality principles must engage in reasonable, cooperative discovery conduct. Staking out uncooperative positions in the name of zealous advocacy stands in sharp contrast to proportionality standards and the cost cutting mandate of Rule 1. Moreover, such a tactic may very well foreclose proportionality considerations, just as it did in Pippins.

**Another Must-Read Case: Kleen Products LLC v. Packaging Corp. of America (N.D. Ill. Sept. 28, 2012)

Conclusion

There were any number of other significant cases from 2012 that could have made this list.  We invite you to share your favorites in the comments section or contact us directly with your feedback.

The eagerly awaited Directive from The Office of Management and Budget (OMB) and The National Archives and Records Administration (NARA) was released at the end of August. In an attempt to go behind the scenes, we’ve asked the Project Management Office (PMO) and the Chief Records Officer for the NARA to respond to a few key questions. 

We know that the Presidential Mandate was the impetus for the agency self-assessments that were submitted to NARA. Now that NARA and the OMB have distilled those reports, what are the biggest challenges on a go forward basis for the government regarding record keeping, information governance and eDiscovery?

“In each of those areas, the biggest challenge that can be identified is the rapid emergence and deployment of technology. Technology has changed the way Federal agencies carry out their missions and create the records required to document that activity. It has also changed the dynamics in records management. In the past, agencies would maintain central file rooms where records were stored and managed. Now, with distributed computing networks, records are likely to be in a multitude of electronic formats, on a variety of servers, and exist as multiple copies. Records management practices need to move forward to solve that challenge. If done right, good records management (especially of electronic records) can also be of great help in providing a solid foundation for applying best practices in other areas, including in eDiscovery, FOIA, as well as in all aspects of information governance.”    

What is the biggest action item from the Directive for agencies to take away?

“The Directive creates a framework for records management in the 21^st century that emphasizes the primacy of electronic information and directs agencies to being transforming their current process to identify and capture electronic records. One milestone is that by 2016, agencies must be managing their email in an electronically accessible format (with tools that make this possible, not printing out emails to paper). Agencies should begin planning for the transition, where appropriate, from paper-based records management process to those that preserve records in an electronic format.

The Directive also calls on agencies to designate a Senior Agency Official (SAO) for Records Management by November 15, 2012. The SAO is intended to raise the profile of records management in an agency to ensure that each agency commits the resources necessary to carry out the rest of the goals in the Directive. A meeting of SAOs is to be held at the National Archives with the Archivist of the United States convening the meeting by the end of this year. Details about that meeting will be distributed by NARA soon.”

Does the Directive holistically address information governance for the agencies, or is it likely that agencies will continue to deploy different technology even within their own departments?

“In general, as long as agencies are properly managing their records, it does not matter what technologies they are using. However, one of the drivers behind the issuance of the Memorandum and the Directive was identifying ways in which agencies can reduce costs while still meeting all of their records management requirements. The Directive specifies actions (see A3, A4, A5, and B2) in which NARA and agencies can work together to identify effective solutions that can be shared.”

Finally, although FOIA requests have increased and the backlog has decreased, how will litigation and FOIA intersecting in the next say 5 years?  We know from the retracted decision in NDLON that metadata still remains an issue for the government…are we getting to a point where records created electronically will be able to be produced electronically as a matter of course for FOIA litigation/requests?

“In general, an important feature of the Directive is that the Federal government’s record information – most of which is in electronic format – stays in electronic format. Therefore, all of the inherent benefits will remain as well – i.e., metadata being retained, easier and speedier searches to locate records, and efficiencies in compilation, reproduction, transmission, and reduction in the cost of producing the requested information. This all would be expected to have an impact in improving the ability of federal agencies to respond to FOIA requests by producing records in electronic formats.”

Fun Fact- Is NARA really saving every tweet produced?

“Actually, the Library of Congress is the agency that is preserving Twitter. NARA is interested in only preserving those tweets that a) were made or received in the course of government business and b) appraised to have permanent value. We talked about this on our Records Express blog.”

“We think President Barack Obama said it best when he made the following comment on November 28, 2011:

“The current federal records management system is based on an outdated approach involving paper and filing cabinets. Today’s action will move the process into the digital age so the American public can have access to clear and accurate information about the decisions and actions of the Federal Government.” Paul Wester, Chief Records Officer at the National Archives, has stated that this Directive is very exciting for the Federal Records Management community.  In our lifetime none of us has experienced the attention to the challenges that we encounter every day in managing our records management programs like we are now. These are very exciting times to be a records manager in the Federal government. Full implementation of the Directive by the end of this decade will take a lot of hard work, but the government will be better off for doing this and we will be better able to serve the public.”

Special thanks to NARA for the ongoing dialogue that is key to transparent government and the effective practice of eDiscovery, Freedom Of Information Act requests, records management and thought leadership in the government sector. Stay tuned as we continue to cover these crucial issues for the government as they wrestle with important information governance challenges. 

The struggle to stay above the rising tide of information is a constant battle for organizations. Not only are the costs and logistics associated with data storage more troubling than ever, but so are the potential legal consequences. Indeed, the news headlines are constantly filled with horror stories of jury verdicts, court judgments and unreasonable settlements involving organizations that failed to effectively address their data stockpiles.

While there are no quick or easy solutions to these problems, an ever increasing method for effectively dealing with these issues is through an organizational strategy referred to as defensible deletion. A defensible deletion strategy could refer to many items. But at its core, defensible deletion is a comprehensive approach that companies implement to reduce the storage costs and legal risks associated with the retention of electronically stored information (ESI). Organizations that have done so have been successful in avoiding court sanctions while at the same time eliminating ESI that has little or no business value.

The first step to implementing a defensible deletion strategy is for organizations to ensure that they have a top-down plan for addressing data retention. This typically requires that their information governance principals – legal and IT – are cooperating with each other. These departments must also work jointly with records managers and business units to decide what data must be kept and for what length of time. All such stakeholders in information retention must be engaged and collaborate if the organization is to create a workable defensible deletion strategy.

Cooperation between legal and IT naturally leads the organization to establish records retention policies, which carry out the key players’ decisions on data preservation. Such policies should address the particular needs of an organization while balancing them against litigation requirements. Not only will that enable a company to reduce its costs by decreasing data proliferation, it will minimize a company’s litigation risks by allowing it to limit the amount of potentially relevant information available for current and follow-on litigation.

In like manner, legal should work with IT to develop a process for how the organization will address document preservation during litigation. This will likely involve the designation of officials who are responsible for issuing a timely and comprehensive litigation hold to custodians and data sources. This will ultimately help an organization avoid the mistakes that often plague document management during litigation.

The Role of Technology in Defensible Deletion

In the digital age, an essential aspect of a defensible deletion strategy is technology. Indeed, without innovations such as archiving software and automated legal hold acknowledgements, it will be difficult for an organization to achieve its defensible deletion objectives.

On the information management side of defensible deletion, archiving software can help enforce organization retention policies and thereby reduce data volume and related storage costs. This can be accomplished with classification tools, which intelligently analyze and tag data content as it is ingested into the archive. By so doing, organizations may retain information that is significant or that otherwise must be kept for business, legal or regulatory purposes – and nothing else.

An archiving solution can also reduce costs through efficient data storage. By expiring data in accordance with organization retention policies and by using single instance storage to eliminate ESI duplicates, archiving software frees up space on company servers for the retention of other materials and ultimately leads to decreased storage costs. Moreover, it also lessens litigation risks as it removes data available for future litigation.

On the eDiscovery side of defensible deletion, an eDiscovery platform with the latest in legal hold technology is often essential for enabling a workable litigation hold process. Effective platforms enable automated legal hold acknowledgements on various custodians across multiple cases. This allows organizations to confidently place data on hold through a single user action and eliminates concerns that ESI may slip through the proverbial cracks of manual hold practices.

Organizations are experiencing every day the costly mistakes of delaying implementation of a defensible deletion program. This trend can be reversed through a common sense defensible deletion strategy which, when powered by effective, enabling technologies, can help organizations decrease the costs and risks associated with the information explosion.

The times are changing rapidly as data explosion mushrooms, but the more things change the more they stay the same. In the archiving and eDiscovery world, organizations are increasingly pushing content from multiple data sources into information archives. Email was the first data source to take the plunge into the archive, but other data sources are following quickly as we increase the amount of data we create (volume) along with the types of data sources (variety). While email is still a paramount data source for litigation, internal/external investigations and compliance – other data sources, namely social media and SharePoint, are quickly catching up.  

This transformation is happening for multiple reasons. The main reason for this expansive push of different data varieties into the archive is because centralizing an organization’s data is paramount to healthy information governance. For organizations that have deployed archiving and eDiscovery technologies, the ability to archive multiple data sources is the Shangri-La they have been looking for to increase efficiency, as well as create a more holistic and defensible workflow.

Organizations can now deploy document retention policies across multiple content types within one archive and can identify, preserve and collect from the same, singular repository. No longer do separate retention policies need to apply to data that originated in different repositories. The increased ability to archive more data sources into a centralized archive provides for unparalleled storage, deduplication, document retention, defensible deletion and discovery benefits in an increasingly complex data environment.

Prior to this capability, SharePoint was another data source in the wild that needed disparate treatment. This meant that legal hold in-place, as well as insight into the corpus of data, was not as clear as it was for email. This lack of transparency within the organization’s data environment for early case assessment led to unnecessary outsourcing, over collection and disparate time consuming workflows. All of the aforementioned detractors cost organizations money, resources and time that can be better utilized elsewhere.

Bringing data sources like SharePoint into an information archive increases the ability for an organization to comply with necessary document retention schedules, legal hold requirements, and the ability to reap the benefits of a comprehensive information governance program. If SharePoint is where an organization’s employees are storing documents that are valuable to the business, order needs to be brought to the repository.

Additionally, many projects are abandoned and left to die on the vine in SharePoint. These projects need to be expired and that capacity must be recycled for a higher business purpose. Archives currently enable document libraries, wikis, discussion boards, custom lists, “My Sites” and SharePoint social content for increased storage optimization, retention/expiration of content and eDiscovery. As a result, organizations can better manage complex projects such as migrations, versioning, site consolidations and expiration with SharePoint archiving.  

Data can be analogized to a currency, where the archive is the bank. In treating data as a currency, organizations must ask themselves: why are companies valued the way they are on Wall Street? For companies that perform service or services in combination with products, they are valued many times on customer lists, data to be repurposed about consumers (Facebook), and various other databases. A recent Forbes article discusses people, value and brand as predominant indicators of value.

While these valuation metrics are sound, the valuation stops short of measuring the quality of the actual data within an organization, examining if it is organized and protected. The valuation also does not consider the risks of and benefits of how the data is stored, protected and whether or not it is searchable. The value of the data inside a company is what supports all three of the aforementioned valuations without exception. Without managing the data in an organization, not only are eDiscovery and storage costs a legal and financial risk, the aforementioned three are compromised.

If employee data is not managed/monitored appropriately, if the brand is compromised due to lack of social media monitoring/response, or if litigation ensues without the proper information governance plan, then value is lost because value has not been assessed and managed. Ultimately, an organization is only as good as its data, and this means there’s a new asset on Wall Street – data.

It’s not a new concept to archive email,  and in turn it isn’t novel that data is an asset. It has just been a less understood asset because even though massive amounts of data are created each day in organizations, storage has become cheap. SharePoint is becoming more archivable because more critical data is being stored there, including business records, contracts and social media content. Organizations cannot fear what they cannot see until they are forced by an event to go back and collect, analyze and review that data. Costs associated with this reactive eDiscovery process can range from $3,000-30,000 a gigabyte, compared to the 20 cents per gigabyte for storage. The downstream eDiscovery costs are obviously costly, especially as organizations begin to deal in terabytes and zettabytes. 

Hence, plus ca change, plus c’est le meme chose and we will see this trend continue as organizations push more valuable data into the archive and expire data that has no value. Multiple data sources have been collection sources for some time, but the ease of pulling everything into an archive is allowing for economies of scale and increased defensibility regarding data management. This will decrease the risks associated with litigation and compliance, as well as boost the value of companies.

While the truce in Kleen Products v. Packaging Corporation of America has cooled off the parties’ predictive coding dispute until next year, eDiscovery motion practice in this case is just now intensifying. In response to the current round of motions surrounding plaintiffs’ interrogatories and document requests, U.S. Magistrate Judge Nan Nolan has issued a lengthy order emphasizing that the parties’ discovery efforts should be collaborative and not combative. In particular, Judge Nolan has highlighted the significance of both cooperation and proportionality in conducting discovery.

Just as she did to resolve the parties’ disagreement over the use of predictive coding, Judge Nolan relied on a Sedona Conference publication to decide the instant dispute. Citing The Sedona Conference Cooperation Proclamation, Judge Nolan urged counsel to not “confuse advocacy with adversarial conduct” in addressing discovery obligations. In that regard, the plaintiffs were singled out for propounding an interrogatory that “violated the spirit of cooperation that this Court has encouraged.” The interrogatory was particularly troublesome because it requested information about defendant Georgia-Pacific’s organizational structure that plaintiffs agreed not to seek since defendant voluntarily provided plaintiffs with the names, titles and company division of the 400 employees who received litigation hold notices. Given that the court itself had brokered this arrangement, Judge Nolan opined that plaintiffs’ tactic “could have a chilling effect on both litigants and courts to engage in candid discussions.”

The interrogatory was additionally objectionable because it violated the proportionality standards found in Federal Rule 26(b)(2)(C). Not only did the laundry list of details that the interrogatory sought regarding the defendant’s 400 employees create an undue burden, such information was readily available from sources that were “more convenient, less burdensome, and less expensive.” Relying on the proportionality rule and The Sedona Conference Commentary on Proportionality in Electronic Discovery, the court granted the defendant’s motion for protective order and quashed the interrogatory.

Judge Nolan’s opinion repeatedly spotlights the role that cooperation and proportionality play in accomplishing discovery in a “just, speedy and inexpensive” manner. Moreover, the judge repeatedly praised the litigants for approaching eDiscovery in cooperative fashion: “The Court commends the lawyers and their clients for conducting their discovery obligations in a collaborative manner.” Indeed, the court went so far as to identify the numerous instances where motion practice had been avoided, including the predictive coding and search methodology dispute.

The Kleen Products case demonstrates that courts have raised their expectations for how litigants will engage in eDiscovery. Staking out unreasonable positions in the name of zealous advocacy stands in stark contrast to the clear trend that discovery should comply with the cost cutting mandate of Federal Rule 1. Cooperation and proportionality are two of the principal touchstones for effectuating that mandate.

The headline-grabbing news this week regarding Twitter facing possible contempt sanctions is an important reminder that organizations should consider developing a strategy for addressing social media governance. In criminal proceedings against protesters involved in the Occupy Wall Street movement, a New York state court ordered Twitter several weeks ago to turn over various tweets that a protester deleted from his twitter feed relating to the movement’s blocking of the Brooklyn Bridge last year. Twitter has delayed compliance with that order, which has invited the court’s wrath: “I can’t put Twitter or the little blue bird in jail, so the only way to punish is monetarily.” The court is now threatening Twitter with a monetary contempt sanction based on “the company’s earnings statements for the past two quarters.”

At first blush, the proceeding involving Twitter may not seem paradigmatic for organizations. While most organizations do not engage in civil disobedience and typically stay clear of potential criminal actions, the conduct of the protester in unilaterally deleting his tweets raises the question of whether organizations have developed an effective policy to retain and properly supervise communications made through social networking sites.

Organizations in various industry verticals need to ensure that certain messages communicated through social media sites are maintained for legal or regulatory purposes. For example, financial services companies must retain communications with investors and other records that relate to their “business as such” – including those made through social networking sites – for at least three years under section 17a-4(b) of the Securities Exchange Act of 1934. Though this provision is fairly straightforward, it has troubled regulated companies for years. Indeed, almost two-thirds of surveyed asset managers reported that “regulatory recordkeeping” remains their greatest challenge with respect to social media.

Supervision is another troubling issue. With the proliferation of smartphones, burgeoning “bring your own device” (BYOD) policies and the demands of a 24-hour workday, supervision cannot be boiled down to a simple protocol of “I’ll review your messages before you hit send.” Yet supervision is necessary, particularly given the consequences for rogue communications including litigation costs, lost revenues, reduced stock price and damage to the company brand.

Though there are no silver bullets to ensure perfection regarding these governance challenges, organizations can follow some best practices to develop an effective social media governance policy. The first is that companies should prepare a global plan for how they will engage in social media marketing. This initial step is particularly important for groups that are just now exploring the use of social media to communicate with third parties. Having a plan in place that maps out a contact and communication strategy, provides for supervision of company representatives and accounts for compliance with regulatory requirements is essential.

The next step involves educating and training employees regarding the company’s social media policy. This should include instructions regarding what content may be posted to social networking sites and the internal process for doing so. Policies that describe the consequences for deviating from the social media plan should also be clearly delineated. Those policies should detail the legal repercussions – civil and criminal – for both the employee and the organization for social media missteps.

Third, organizations can employ technology to ensure compliance with their social media plan. This may include archiving software and other technology that both retains and enables a cost-effective supervisory review of content. Electronic discovery tools that enable legal holds and efficiently retrieve archived social media content are also useful in developing an efficient and cost-effective response to legal and regulatory requests.

By following these steps and other best practices, organizations will likely be on the way to establishing the foundation of an effective social media governance plan.

The Sunshine State is shining a new ray of light on the information governance and eDiscovery space with new civil procedure laws addressing electronically stored information (ESI). The new rules, which go into effect September 1, 2012, are six years in the making and a product of many iterations and debate amongst practitioners, neutrals and jurists. While they generally mirror the Federal Rules of Civil Procedure (FRCP) and embrace much of Sedona’s Cooperation Proclamation, there are some marked procedural differences that generally accomplish these same goals.

For example, instead of mandating a meet and confer conference (a la the FRCP), the new state rules provide for these negotiations in a case management conference pursuant to Rule 1.200-1.201. None of the Florida rules are a surprise since they wisely promote early discussions regarding potential discovery problems, understanding of information management systems, and competency on the part of lawyers and their clients to effectively address litigation hold practices and preservation – just as the FRCP do.

There are comprehensive blogs that have already covered the nuts and bolts of how the rules change the practice of law in Florida with regard to ESI, as well as a fantastic video featuring Judge Richard Nielsen who piloted these principles in his Florida court. Perhaps the most interesting legal issues facing Florida have to do with the impact of the new rules intersecting with open government and record keeping, and what the burden of the government will be on a go forward basis to produce metadata.

This is not to say the private sector won’t have to make changes as well, because anyone litigating in Florida should take eDiscovery seriously given recent cases like Coquina Investments v. Rothstein. In this case, Judge Marcia Cooke boldly sanctioned the defendant(s) and their lawyers for failing to preserve, search and produce information relevant to the case. One of the issues in the case involved format; paper documents were produced by the defendant when they should have been electronically produced with relevant metadata.

The federal government has had a brush with this nexus, although it remains unresolved. In the NDLON case, Judge Scheindlin initially ordered the government to produce select metadata, but subsequently retracted her ruling. Critics of the initial holding claim she confused the discovery requirements of the FRCP and Freedom of Information Act (FOIA). While these two have different legal standards – (FOIA) reasonable and the (FRCP) proportional – this issue is a red herring.

The differing standards are not the true issue; the ability to conduct a thorough search to retrieve relevant information and produce metadata appropriately is the crux. FOIA is in many cases a more stringent standard than that of the FRCP, and this puts even more pressure on the government to improve their technology. The simple premise documents should be produced in the manner they were created, or alternatively, with all of the characteristics necessary to the merits of a proceeding, is not technologically difficult to attain. Nor is the redaction of sensitive information due to relevance or an exemption.

Florida’s most luminary legal contribution to information governance up until this point has been the most comprehensive body of legislation in the United States addressing the right to information and access to public records (Sunshine Laws). Early on, Florida embraced the concept that information created by the government needs to be accessible to the public, and has adopted policies and technologies to address this responsibility.

Florida has historically been the most transparent of all the states and proactive about clarifying how certain communications (specifically ESI) become public records. In the near future, these laws will further force Florida into becoming the most progressive state with regard to their information management and in-house eDiscovery capabilities. More than the laws being on the books, the sheer number of lawsuits increasingly involving the Sunshine Laws and ESI will be the impetus for much of this technological innovation.

Today we are in the age of information governance, and at the dawn of mainstream predictive coding for litigation. Increasingly, organizations are archiving information and deploying in-house eDiscovery capabilities pursuing the promise of gaining control of data, limiting risk, and deriving value from their data. The fact that civil litigants are suing the government frequently under the FOIA and Sunshine Laws creates a nexus that must and will be resolved in the near future.

The most brilliant part of NDLON’s first ruling regarding metadata was that it spoke to the concept of the FRCP and FOIA being aligned. Both are requests for production, and while they have differing legal standards, it is inefficient to conduct those searches in a different/unrelated manner once an information governance infrastructure has been implemented. When they collide, one has both to contend with and the new rules will bring this issue to resolve. The tools used for a discovery request can and should be the same as those used to comply with a FOIA production – and they should be in place from the start. For a state like Florida, a case involving the Sunshine Laws will consider this question, but now under more ESI-savvy rules. Florida cannot afford to be reinventing the wheel, or scrambling to comply with requests, a proactive infrastructure needs to be in place.

Florida’s new rules will impact all areas of state and local government, as well as educational institutions that are state funded in civil litigation. Questions about format, employee self-collection, retention and litigation hold are going to get very hot in the Sunshine State because the government is more accountable there. As said by Louis Brandeis, “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” This may be a rare case of state case law driving federal rulemaking, coupled with a need for technological advancement on the government’s part.

Gartner recently released its 2012 Magic Quadrant for E-Discovery Software, which is its annual report analyzing the state of the electronic discovery industry. Many vendors in the Magic Quadrant (MQ) may initially focus on their position and the juxtaposition of their competitive neighbors along the Visionary – Execution axis. While a very useful exercise, there are also a number of additional nuggets in the MQ, particularly regarding Gartner’s overview of the market, anticipated rates of consolidation and future market direction.

Context

For those of us who’ve been around the eDiscovery industry since its infancy, it’s gratifying to see the electronic discovery industry mature.  As Gartner concludes, the promise of this industry isn’t off in the future, it’s now:

“E-discovery is now a well-established fact in the legal and judicial worlds. … The growth of the e-discovery market is thus inevitable, as is the acceptance of technological assistance, even in professions with long-standing paper traditions.”

The past wasn’t always so rosy, particularly when the market was dominated by hundreds of service providers that seemed to hold on by maintaining a few key relationships, combined with relatively high margins.

“The market was once characterized by many small providers and some large ones, mostly employed indirectly by law firms, rather than directly by corporations. …  Purchasing decisions frequently reflected long-standing trusted relationships, which meant that even a small book of business was profitable to providers and the effects of customary market forces were muted. Providers were able to subsist on one or two large law firms or corporate clients.”

Consolidation

The Magic Quadrant correctly notes that these “salad days” just weren’t feasible long term. Gartner sees the pace of consolidation heating up even further, with some players striking it rich and some going home empty handed.

“We expect that 2012 and 2013 will see many of these providers cease to exist as independent entities for one reason or another — by means of merger or acquisition, or business failure. This is a market in which differentiation is difficult and technology competence, business model rejuvenation or size are now required for survival. … The e-discovery software market is in a phase of high growth, increasing maturity and inevitable consolidation.”

Navigating these treacherous waters isn’t easy for eDiscovery providers, nor is it simple for customers to make purchasing decisions if they’re correctly concerned that the solution they buy today won’t be around tomorrow.  Yet, despite the prognostication of an inevitable shakeout (Gartner forecasts that the market will shrink 25% in the raw number of firms claiming eDiscovery products/services) they are still very bullish about the sector.

“Gartner estimates that the enterprise e-discovery software market came to $1 billion in total software vendor revenue in 2010. The five-year CAGR to 2015 is approximately 16%.”

This certainly means there’s a window of opportunity for certain players – particularly those who help larger players fill out their EDRM suite of offerings, since the best of breed era is quickly going by the wayside.  Gartner notes that end-to-end functionality is now table stakes in the eDiscovery space.

“We have seen a large upsurge in user requests for full-spectrum EDRM functionality. Whether that functionality will be used initially, or at all, remains an open question. Corporate buyers do seem minded to future-proof their investments in this way, by anticipating what they may wish to do with the software and the vendor in the future.”

Information Governance

Not surprisingly, it’s this “full-spectrum” functionality that most closely aligns with marrying the reactive, right side of the EDRM with the proactive, left side.  In concert, this yin and yang is referred to as information governance, and it’s this notion that’s increasingly driving buying behaviors.

“It is clear from our inquiry service that the desire to bring e-discovery under control by bringing data under control with retention management is a strategy that both legal and IT departments pursue in order to control cost and reduce risks. Sometimes the archiving solution precedes the e-discovery solution, and sometimes it follows it, but Gartner clients that feel the most comfortable with their e-discovery processes and most in control of their data are those that have put archiving systems in place …”

As Gartner looks out five years, the analyst firm anticipates more progress on the information governance front, because the “entire e-discovery industry is founded on a pile of largely redundant, outdated and trivial data.”  At some point this digital landfill is going to burst and organizations are finally realizing that if they don’t act now, it may be too late.

“During the past 10 to 15 years, corporations and individuals have allowed this data to accumulate for the simple reason that it was easy — if not necessarily inexpensive — to do so. … E-discovery has proved to be a huge motivation for companies to rethink their information management policies. The problem of determining what is relevant from a mass of information will not be solved quickly, but with a clear business driver (e-discovery) and an undeniable return on investment (deleting data that is no longer required for legal or business purposes can save millions of dollars in storage costs) there is hope for the future.”

The Gartner Magic Quadrant for E-Discovery Software is insightful for a number of reasons, not the least of which is how it portrays the developing maturity of the electronic discovery space. In just a few short years, the niche has sprouted wings, raced to $1B and is seeing massive consolidation. As we enter the next phase of maturation, we’ll likely see the sector morph into a larger, information governance play, given customers’ “full-spectrum” functionality requirements and the presence of larger, mainstream software companies.  Next on the horizon is the subsuming of eDiscovery into both the bigger information governance umbrella, as well as other larger adjacent plays like “enterprise information archiving, enterprise content management, enterprise search and content analytics.” The rapid maturation of the eDiscovery industry will inevitably result in growing pains for vendors and practitioners alike, but in the end we’ll all benefit.

About the Magic Quadrant
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Global economic indicators point to increased trade with and outsourcing to emerging markets around the world, specifically the Asia Pacific (APAC) region. Typical U.S. sectors transacting with the East include: manufacturing, business process outsourcing (BPO)/legal process outsourcing (LPO), call centers, and other industries. The Asian Development Bank stated last year that Asia will account for half of all global economic output by 2050 if their collective GDP stays on pace.  The next 10 years will likely bring BRICS (Brazil, Russia, India, China and Japan) and The Four Asian Tigers (Hong Kong, Singapore, South Korea and Taiwan) into the forefront of the global economy. Combining this projected economic growth with the data explosion makes knowledge about the APAC legal system a necessity for litigators and international business people alike.

The convergence of the global economy across different privacy and data protection regimes has increased the complexity of addressing electronically stored information (ESI). Money and data in large volumes cross borders daily in order to conduct international business. This is true not only for Asian countries transacting with each other, but increasingly with Europe and the United States. Moreover, because technology continues to decrease the reliance on data in paper format, data will need to be produced and analyzed in the form in which it was created. This is important from a forensic standpoint, as well as an information management perspective.  This technical push is reason alone that organizations will need to shift their processes and technologies to focus more on ESI – not in only in how data is created, but in how those organizations store, search, retrieve, review and produce data.

Discovery Equals eDiscovery

The world of eDiscovery for the purposes of regulation and litigation is no longer a U.S. anomaly. This is not only because organizations may be subject to the federal and state rules of civil procedure governing pre-trial discovery in U.S. civil litigation, but because under existing Asian laws and regulatory schemes, the ability to search and retrieve data may be necessary.

Regardless of whether the process of searching, retrieving, reviewing and producing data (eDiscovery) is called discovery or disclosure or whether these processes occur before trial or during, the reality in litigation, especially for multinational corporations, is that eDiscovery may be required around the world. The best approach is to not only equip your organization with the best technology available for legal defensibility and cost-savings from the litigator’s tool belt, but to know the rules by which one must play.

The Passports

The knowledge level for many lawyers about how to approach a discovery request in APAC jurisdictions is often minimal, but there are resources that provide straightforward answers at no cost to the end-user. For example, Symantec has just released a series of “eDiscovery Passports™” for APAC that focus on discovery in civil litigation, the collision of data privacy laws, questions about the cross-border transfer of data, and the threat of U.S. litigation as businesses globalize.  The Passports are a basic guide that frame key components about a country including the legal system, discovery/disclosure, privacy, international considerations and data protection regulations. The Passports are useful tools to begin the process of exploring what considerations need to be made when litigating in the APAC region.

While the rules governing discovery in common law countries like Australia (UPC) and New Zealand (HCR) may be less comprehensive and require slightly different timing than that of the U.S. and U.K., they do exist under the UPC and HCR.  Countries like Hong Kong and Singapore, that also follow a traditional common law system, contain several procedural nuances that are unique to their jurisdictions.  The Philippines, for example, is a hybrid of both civil and common law legal systems, embodying similarities to California law due to history and proximity.  Below are some examples of cases that evidence trends in Asian jurisdictions that lean toward the U.S. Federal Rules of Civil Procedure (FRCP), Sedona Principles and that support the idea that eDiscovery is going global.

• Hong Kong. In Moulin Global Eyecare Holdings Ltd. v. KPMG (2010), the court held the discovery of relevant documents must apply to both paper and ESI. The court did, however, reject the argument by plaintiffs that overly broad discovery be ordered as this would be ‘tantamount to requiring the defendants to turn over the contents of their filing cabinets for the plaintiffs to rummage through.’ Takeaway: Relevance and proportionality are the key factors in determining discovery orders, not format.
• Singapore. In Deutsche Bank AG v. Chang Tse Wen (2010), the court acknowledged eDiscovery as particularly useful when the relevant data to be discovered is voluminous.  Because the parties failed to meet and confer in this case, the court ordered parties to take note of the March 2012 Practice Direction which sets out eDiscovery protocols and guidance. Takeaway: Parties must meet and confer to discuss considerations regarding ESI and be prepared to explain why the discovery sought is relevant to the case.
• U.S. In E.I. du Pont de Nemours v. Kolon Industries (E.D. Va. July 21, 2011), the court held that defendants failed to issue a timely litigation hold.  The resulting eDiscovery sanctions culminated in a $919 million dollar verdict against the defendant South Korean company. While exposure to the FRCP for a company doing business with the U.S. should not be the only factor in determining what eDiscovery processes and technologies are implemented, it is an important consideration in light of sanctions. Takeaway:  Although discovery requirements are not currently as expansive in Asia as they are in the U.S., if conducting business with the U.S., companies may be availed to U.S. law. U.S. law requires legal hold be deployed in when litigation is reasonably anticipated.

Asia eDiscovery Exchange

On June 6-7 at the Excelsior Hotel in Hong Kong, industry experts from the legal, corporate and technology industries gathered for the Asia eDiscovery Exchange.  Jeffrey Toh of innoXcell, the organizer of the event in conjunction with the American eDJ Group, says “this is still a very new initiative in Asia, nevertheless, regulators in Asia have taken steps to implement practice directions for electronic evidence.” Exchanges like these indicate the market is ready for comprehensive solutions for proactive information governance, as well as reactive eDiscovery.  The three themes the conference touched on were information governance, eDiscovery and forensics.  Key sessions included “Social Media is surpassing email as a means of communication; What does this mean for data collection and your Information Governance Strategy” with Barry Murphy, co-founder and principal analyst, eDiscovery Journal and Chris Dale, founder, e-Disclosure Information Project, as well as “Proactive Legal Management” (with Rebecca Grant, CEO of iCourts in Australia and Philip Rohlik, Debevoise & Plimpton in Hong Kong).

The Asian market is ripe for new technologies, and the Asia eDiscovery Exchange should yield tremendous insight into the unique drivers for the APAC region and how vendors and lawyers alike are adapting to market with their offerings.  The eDiscovery Passports™ are also timely as they coincide with a marked increase in Asian business and the proposal of new data protection laws in the region.  Because the regional differences are distinct with regard to discovery, resources like this can help litigators in Asia interregionally, as well as lawyers around the world.  Thought leaders in the APAC region have come together to discuss these differences and how technology can best address the unique requirements in each jurisdiction.  The conference has made clear that information governance, archiving and eDiscovery tools are necessary in the region, even if those needs are not necessarily motivated by litigation as in the U.S.