e-discovery 2.0

Recently, I moderated a panel at the Masters Conference with John Loveland, Sonya Thornton, and Bruce Markowitz entitled: How Defensible is Your E-Discovery Process? (Click here to read a summary of the panel.) It was well attended, and I think that the draw (aside from the esteemed panel) was that this topic still remains very vexing for most practitioners.

Initially, we started at ground zero with the notion that defensibility is in most instances equated with the “reasonableness” standard, which is pervasive across many areas of the EDRM spectrum… from preservation to production.  Instances include:

• Preservation — “[a]s soon as a potential claim is . . . identified, a party is under a duty to preserve evidence which it knows, or reasonably should know, is relevant to the future litigation.”
• FRE 502 (b) – the disclosure does not operate as a waiver in a Federal or State proceeding if the (2) the holder of the privilege or protection took reasonable steps to prevent disclosure;
• General Privilege Waiver — In SEC v. Badian, 2009 WL 222783 (S.D.N.Y. Jan. 26, 2009)(link), “there is no basis … to conclude that there were precautions [to prevent the disclosure], let alone whether they were reasonable.”
• FRCP 37(e) — Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

While the foregoing isn’t exhaustive it does highlight the persistent nature of the reasonableness standard as practitioners seek a defensibility sanctuary.  The good news is that the law doesn’t require perfection and there are also a number of ways to obtain reasonable defensibility:

• Demonstrable acceptance by the opposition – here the notion is that collaboration with the opposition allows the parties to comfortably move ahead with their discovery process and even if it’s not objectively reasonable, the parties consent to the protocol will in most instances carry an imprimatur of reasonableness.
• Auditing / process transparency.  Similar to the first bullet, auditing the process and giving the opposition visibility into the process steps will often make it hard for them to lodge successful downstream challenges.
• Adherence to Local Rules (See 7th Circuit Pilot Program) or judicial order.  Another avenue than can provide some degree of safety is compliance with a discovery protocol mandated by local rules, although that compliance may ultimately be challenged.
• Statistical confidence intervals / sampling – the use of statistics as a way to bolster process defensibility is starting to come to maturity and in the future I think that detailed precision, recall and other statistical indicates will play a large role in e-discovery defensibility.

None of these steps can be guaranteed to really get you off the hook from a rapid opposing party calling foul, but using them in a “belt and suspenders” fashion will certainly help buttress any discovery process.

For more illumination on the topic please see the following video of my interview with John Loveland, who’s waxing poetically about discovery defensibility.

On of August 14, 2009, the California Judicial Counsel amended their Rules of Court to augment discussion of electronic discovery issues during the meet and confer process.

Rule of Court 3.724 was amended to require discussion of “Any issues relating to the discovery of electronically stored information” no later than 30 calendar days before the date set for the initial case management conference.  The broad language (i.e., “any”) was augmented by eight specific categories that must be expressly discussed:

(A) Issues relating to the preservation of discoverable electronically stored information;

(B) The form or forms in which information will be produced;

(C) The time within which the information will be produced;

(D) The scope of discovery of the information;

(E) The method for asserting or preserving claims of privilege or attorney work product, including whether such claims may be asserted after production;

(F) The method for asserting or preserving the confidentiality, privacy, trade secrets, or proprietary status of information relating to a party or person not a party to the civil proceedings;

(G) How the cost of production of electronically stored information is to be allocated among the parties;

(H) Any other issues relating to the discovery of electronically stored information, including developing a proposed plan relating to the discovery of the information;

Many of these issues track FRCP language (including forms of production, preservation, privilege issues, etc.).  However, section G seems somewhat novel given the historical “American Rule” where the producing party is required to bear all necessary costs of production.

Curiously missing, in comparison with FRCP 26 B(2)(b), is the need to discuss the handling of “inaccessible” ESI, although this could easily be subsumed in the “any other issues” language of section H.  Also missing is a discussion about proposed searching and/culling protocols (aka “keyword negotiations”) which are often part of the core meet and confer topics in Federal court.

Nevertheless, the scope is broad enough to require *a* discussion of all likely relevant electronic discovery issues, which was often lacking historically.  Once that discussion starts, reasonably savvy counsel should be able to flesh out most of the significant issues.  And, given this broad language a judge would presumably give them a hard time for any material omissions.

We’ve devoted a number of posts to the topic of ECA, ranging from a quest to define the acronym, all the way to the cost savings benefits of the ECA approach.  And, while there seems to be relative unanimity around the beneficial aspects of ECA, there still seem to be a number of myths and misconceptions.  So, ala the Mythbusters, we’ll run these myths through the gauntlet to see which survive scrutiny.

Myth #1: ECA Is Only Valuable if Performed “Early”

Certainly, ECA is best leveraged and will be most valuable when performed at the outset of litigation.  As has been stated before, it has value on two primary fronts, the first being the ability to scope electronic discovery (both in terms of cost and timelines).  The next is the more traditional value proposition where ECA is used to get an understanding of the case facts to enable the strategic decision making process.

As such, there are scenarios where an ECA methodology would still generate value even if performed “later” in the mater.  For instance, with bifurcated, class action litigation initial discovery about the class may occur months before discovery on the merits.  In this instance using a later ECA approach would still make sense since discovery about the case facts may not have been possible earlier on.  Similarly, “late” ECA may still hold value when new parties or claims are added to an existing lawsuit, or when there’s a substantial change in case direction, data, or custodians.

Myth #2: ECA Is Only Performed With Technology

Sure, enterprise grade ECA products  are an important part of the mix, but the products won’t perform an ECA by themselves.  There’s just too much subjective decision making involved in the assessment process.   Therefore, the right people are critically important — not only in terms of experience performing this analytical work, but also in their ability to capably testify about the underlying decision making process.  It’s also important to be able to follow a repeatable and defensible processes to show that the “recipe” used was aligned with industry best practices and wasn’t ginned up for a particular engagement.

Myth #3: ECA Only Works With Large ESI Volumes

Yes, ECA methodologies makes a lot of sense for large, bet-the-company matters because even modest savings when processing, analyzing and reviewing terabytes will easily approach six to seven figures.  However, smaller matters will still benefit from better budgetary insights that facilitate informed matter management.  And, in a way there’s almost more benefit from being able to quickly evaluate (fight/settle) smaller suits since the transactional costs are so high relative to the amount in controversy.  In both scenarios it’s important to view objective case data to prepare for meet & confer conferences.

Myth #4: Clients Don’t Want To Pay for ECAs

Many end clients (corporate counsel typically) have a similar litigation mindset:  i.e., the desire to avoid costs for as long as possible.  While avoiding early costs makes some sense on its face, the fact is that spending a small amount of money early on (for budgetary and case assessment purposes) will in most instances reduce the overall litigation budget.  It’s the classic, “you can pay me now, or pay me later” situation.

Counsel must understand that while some costs are incurred early in the process the benefits are crystal clear: i.e., determining customized case strategies early in the matter to decide whether to fight or settle.  Similarly, corporate clients must recognize that the benefits outweigh the costs and require their litigation counsel to include this process in every significant matter.

This illustration highlights how an initial ECA investment actually pays for itself over the life of the litigation.

Myth #5: ECAs Begin when the Complaint is Filed

Many newbie ECA practitioners may think that the timing for an ECA approach would start when the complaint is filed.  And, while this isn’t patently ridiculous, I think the better approach is to begin the clock at the time litigation becomes “reasonably likely” — versus later dates such as when the complaint is filed or when discovery is propounded.  This trigger is also the same for trigger preservation obligations and a host of interrelated activities such as ESI “identification,” which makes the matter kick-off more synchronized.

For more information about ECA, watch a recording of our recent webinar — E-Discovery MythBusters: Debunking Common Myths About Early Case Assessment.

In the post, E-Discovery 911: Reducing E-Discovery Costs in a Recession, we analyzed the question: which electronic discovery activities are the most costly today and thus have the greatest room for cost reductions? An analysis of a typical, hypothetical case demonstrated that the bulk of e-discovery costs reside in the processing and review stages. In this post, we want to look at the different ways of reducing e-discovery costs and which are likely to be the most effective, especially given processing and review costs are the largest sources of expense.

Corporations have the following options for reducing e-discovery costs. Some of these approaches are aimed at changing the overall way e-discovery is performed. And some of these are aimed at improving the results of a particular step within a typical e-discovery process. None of the options are mutually exclusive.

• Retain less data through information management: one of the methods that corporations can undertake to reduce e-discovery costs even before e-discovery has begun is to adopt a data or document retention policy. Such a policy can, for example, stipulate that the corporation deletes all documents not required for specific business, legal or compliance reasons after a fixed period of time, such as 90 days. As a result, a properly implemented document retention policy has the potential to significantly reduce the amount of data that is identified and collected during electronic discovery.

• Better assess your case and your discovery issues: another approach to reducing the overall costs of litigation including discovery is to perform an early case assessment. Pioneered by Dupont and others, the objective of this approach is to understand all the key case facts within a short period of time so that the litigation team can make better decisions quicker. Because costs always rise over time, quicker resolution of litigation reduces costs. While early case assessment was originally an overall approach to litigation, there is now an equivalent in electronic discovery. The goal is to identify all the potentially discoverable data, but only collect, process, and analyze a prioritized portion of this data in order to inform an understanding of the case AND calculate an estimate of the ultimate potential e-discovery costs.

• Bring e-discovery in-house: another holistic method for reducing electronic discovery costs is to manage all or a portion of the e-discovery process in some or all matters inside the Enterprise as opposed to outsourcing it to law firms or litigation service providers. While bringing e-discovery in-house has other benefits, such as improved security and control, the principal benefit is to convert variable service costs, typically priced on a per Gigabyte basis, into fixed software costs thus producing a return on the investment to manage e-discovery in-house.

• Preserve and collect less data: in addition to holistic approaches, e-discovery costs can be reduced at each step in the e-discovery process. One way to reduce e-discovery costs would be to preserve and collect less data. Reducing the amount of preserved and collected data not only reduces the cost of each of these steps but also reduces the cost of each downstream step. There are pros and cons to this approach which I will discuss in a later post.

• Process less data: more data is frequently preserved and collected than needs to be processed for analysis and review. This excess data can be filtered out prior to processing thus reducing processing and all other downstream costs. The techniques used to do this are often referred to as pre-filtering, pre-processing or early data analysis.

• Process differently and review native: historically, most electronic data was converted to an image format, such as TIFF, prior to review. This process is computationally intensive and expensive. In recent years, e-discovery practitioners have been processing and reviewing more documents in a native or near-native format and avoiding the cost of converting documents to an image format until later in the process.

• Review less data: data can also be reduced after processing and prior to review and production. Much has been written in the e-discovery community about this process, often called “cull-down,” and the different search and analysis techniques that can be used as part of this process, such as keyword search, concept search, de-duplication, and others. The fewer documents requiring processing and review, which as we have seen is a substantial portion of the overall costs, the lower the overall costs.

• Review data faster: in addition to reducing less data, the electronic discovery community has pioneered new methods of reviewing data faster including data clustering, near de-duplication, and other more automated review techniques. The faster documents are reviewed, the lower the attorney review costs.

While all of these approaches have the potential to reduce the costs of electronic discovery, some are going to be more effective than others. Each approach can be implemented using a multitude of techniques or practices and each of these techniques has their pros and cons. For example, some techniques may have a greater risk of raising defensibility issues from the court or opposing side than others. Other practices may be less expensive initially, but, over the course of a changing and iterative e-discovery, may prove to be more costly overall. In a series of future posts, we’ll review the different practices used as part of these approaches and analyze the pros and cons of each to understand which may be the most effective for your organization.

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.

In today’s economy, controlling electronic discovery costs has taken on a new urgency.  Because the financials of many companies have deteriorated so quickly, there is great interest in finding methods to reduce any costs in the short-term.  As  a result, anyone in a company’s IT or legal department that comes up with a plan to substantially reduce their company’s electronic discovery costs in the short-term is likely to become a hero in their company.  So, what’s the best way to reduce electronic discovery costs quickly?

A natural first step is to decide where to focus.  Which electronic discovery activities are the most costly today?  Which have the greatest room for cost reductions?  The EDRM model serves as a good guide for answering such questions by breaking electronic discovery activities into Information Management, Identification, Collection, Preservation, Processing, Analysis, Review, Production and Presentation.  One thing I have noticed when interacting with enterprises is that the IT and legal departments tend to focus on different stages within electronic discovery based on their perspective.  IT managers naturally concentrate on the information management, identification, collection and preservation activities because these are the activities in which they are most involved.  Similarly, legal managers naturally look to preservation, processing, production and review.

Given these different perspectives, it’s important to take an objective approach to calculating electronic discovery costs.  Doing so is not that easy.  Costs can vary significantly depending on each company, the nature of the case, nature of the data, which vendors/technologies that are used and a variety of other factors.  Costs also come in many different forms: direct hard dollar costs, such as spending on legal and electronic discovery fees delivered by third parties; indirect hard dollar costs, such as time spent by company employees; and soft dollar costs, such as increased risk that could lead to adverse judgments and sanctions.  Finally, electronic discovery costs are often buried across both legal operating budgets and IT budgets making it hard to separate these costs from the costs of other activities.

Undertaking an internal analysis to understand your company’s electronic discovery costs is a valuable activity if you want to better control these costs.  However, while costs do vary between companies, most companies will find that the same activities contribute the most direct hard dollar costs and that these are the costs that are easiest to control in the short-term.  To demonstrate this, let’s walk through a generic cost analysis of a typical case.  Fortunately, we don’t have to start from scratch in doing this.  Leonard Deutchman, an author of several excellent electronic discovery articles, has already done most of the work in a May 2007 article, “Get Ready for the Rules Changes, Part VIII“.  In this article, Mr. Deutchman walks the reader through a hypothetical litigation between an Investor and a Venture Capital firm.  He describes the typical electronic discovery activities and calculates the direct hard dollar costs for these activities including:

• Collection: Mr. Deutchman calculates that it costs $10k to collect 400GB from 8 hard drives and the data of 8 custodians on file and email servers using an outside vendor (doing it in-house can be less expensive).  Note that this excludes any collection from back-up tapes, which can be more costly.
• Culling & Processing: it costs $4k to reduce the 400GB to 90GB by removing non-relevant file types prior to processing.  Processing 90GB costs $90k at $1000/GB.  De-duplication and the application of search terms reduce the data to 25GB.
• Production: it costs $4k to produce the 4GB of data that is deemed responsive and not privileged to produce to the other side.

Mr. Deutchman doesn’t identify direct hard dollar costs for Information Management, Identification or Preservation.  These activities are typically not associated with direct hard dollar costs on a per matter basis.  Rather, they involve indirect hard dollar costs such as employee time and software licenses.  Mr. Deutchman also does not provide an estimate for the costs of review.  However, since review does contribute significant direct hard dollar costs for every matter, this gap needs to be filled in order to get a complete sense of the direct hard dollar costs.  The two big buckets of cost in review are: attorney review costs and review software costs.  In Mr. Deutchman’s hypothetical litigation one might imagine the following scenario for these costs:

• 25GB translates into 195,000 documents using the low end of the documents per GB email (9,000/GB) and documents per GB files (7,000/GB). Industry survey data that is available from EDRM.  This example assumes that 40% of the 25 GBs is email.
• The attorneys reviewing the data charge $75/hour and make 100 document decisions per hour.  This translates to approximately $146,000.
• The hosted review service costs $50/GB/month and, in this case, let’s assume we host it for 6 paid months.  This costs $7,500.

If we tabulate these costs and calculate the direct hard dollar cost shares for each stage, the clear take-away is that Processing and Review costs comprise the vast majority of direct hard dollar costs.  Collection and Production direct hard dollar costs are significantly smaller in comparison.

Now, it’s possible to come up with many arguments for why Mr. Deutchman or my estimates could be high including different assumptions for attorney hourly review costs, higher document decision rates, cheaper vendor pricing, etc.  Similarly, it’s possible to come up with many arguments for why the estimates could be low including the need to perform multiple review passes, slower document decision rates, more expensive vendor charges, etc.  In addition, each company will have their own unique circumstances that will change this picture.  However, this generic analysis strongly suggests that more customized analyses would come to the same conclusion: if you want to reduce electronic discovery costs quickly, then you need to focus on processing and review costs.  One can also imagine that even if you were to use some form of activity-based costing to allocate indirect hard dollar costs on a per matter basis, it would likely not change the importance of Processing and Review costs.

What does this mean for IT and legal managers in Corporations?  These kinds of analyses make it pretty clear that, even though they are more involved in the Information Management, Identification, and Collection phase of electronic discovery, IT managers need to focus more on helping the legal team optimize Processing and Review activities.  You are not going to get the biggest bang for your buck in the short-term by trying to reduce costs in Information Management, Identification, Preservation, and Collection.  Similarly, legal managers need to work more closely with IT in order to focus on how to reduce processing and review costs.

So, the obvious question coming out of such an analysis is what’s the best way to reduce Processing and Review costs?  We’ll discuss this issue in a future post.

In the meantime, tell me what you think by participating in our first e-discovery 2.0 poll.  See the sidebar here: Which Phase of Electronic Discovery Do You Think is the Most Costly?

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.

The recent announcement of $18 million in financing for PSS Systems got me thinking about preservation.  PSS is a provider of enterprise-class preservation and litigation hold management systems with solutions starting in, from what I can tell, six figures.  Nevertheless, this begs the question, why would a Fortune 500 company need such an expensive enterprise class software application to manage legal holds?

So, let’s start from the top…

With the advent of e-discovery during the last decade an entirely new class of evidence spoliation came into existence – i.e., situations where electronically stored information (ESI), particularly back-up tapes, could inadvertently become overwritten, lost, erased, etc.  In the good old days of paper-based discovery, there was certainly an opportunity for spoliation, but paper documents didn’t routinely become lost or otherwise unavailable, unless in extreme instances of intentional spoliation.  For a particularly comprehensive tome on this type of negligent spoliation, please see this excellent piece written by Judge Scheindlin (of Zubulake fame).

Accordingly, in the past several years litigators have had to learn and then re-learn the notion that the duty to preserve ESI begins once litigation is “reasonably likely.”  Unfortunately, this duty to preserve is fraught with a number of practical challenges, including:

• When is the duty triggered?  For example, the duty is in most instances certainly in place prior to a complaint being actually served.  But, as you move upstream from that crystalline moment reasonable minds certainly can differ about when litigation is “reasonably likely.”  EEOC claims, in the HR context, are a good example of potentially early trigger points.
• Then, assuming that the duty is triggered what must then be preserved?  Is it just the ubiquitous email?  Or, as is more likely, will an increasingly broad and voluminous set of ESI be implicated, such as loose files, instant messaging, blog posts (maybe this one?), mobile or PDA/handheld data, deleted but forensically recoverable files, etc.?

Those two thorny problems aren’t the only issues that counsel needs to deal with when they embark upon issuing a legal “hold” – the decree that instructs custodians of their obligation to preserve all relevant information related to the matter at hand.  But, the duty to preserve is only the start of the challenge.  This is where folks like PSS come in, meaning that they manage the potentially complex logistical tasks associated with hold notification, monitoring, and compliance.

Here’s where I start to have a problems with large scale, complex preservation efforts.  Let’s take a somewhat common example:  a multi-national enterprise is sued for misappropriation of trade secrets.  Even prior to the complaint being filed, plaintiff’s counsel issued a demand letter, which in some cases could be held as a triggering event.  But, in either case, once the complaint hits the GC’s desk the duty to preserve is clearly in force.   Let’s then say that in consultation with outside counsel they wisely embark on a set of interviews to determine the scope of departments/locations/custodians that may be reasonably implicated.  Then, following the synthesis of this information they issue a legal hold notice to 2,500 people located throughout numerous domestic and international offices.

Now, here’s where the risk comes in…   One thing is statistically certain with that number of custodians: the legal hold will not be followed to perfection.  If I were more mathematically inclined I’d say it could be reduced to a formula along these lines:

Legal hold compliance *decreases* exponentially as you multiply:

• The number of custodians
• The length of time the legal hold is in effect
• The types and volumes of potential ESI that may be relevant
• The presence of individuals who don’t want data to be preserved due to their own perceived errors/foibles/omissions

The answer, in my mind, doesn’t lie in a better mouse trap to manage the vagaries of the legal hold process.  No, the best way to take the risk out of the legal hold process is to move very rapidly from preservation to collection.

Once ESI is collected two main things start to happen:

1. Subjective notions about the universe of data (allegedly) covered by the preservation process can be changed into objective observations that the custodians really are the right ones.  For example, in the above example the 2,500 custodian list is again almost certainly not correct.  Since the decision process was made subjectively (likely without insight into the data) the custodian list is inherently either under or over-inclusive.  However, with the advent of early case assessment solutions, the preserving party can now quickly collect and assess an initial corpus of data to ensure that exactly the right folks are in the collection/preservation process.
2. Once the ESI is collected, the risk of loss, deletion, etc. will largely have been taken out of the equation meaning that the danger of spoliation is greatly reduced.

My belief is that the larger the preservation effort the more likely there will be gaps that the opposition can use as leverage.  Scaling up the preservation effort is only one way to skin the cat.  Instead, the better practice is to start small, collect quickly, and then expand collection efforts once your legal team has objective insights into the case data.

Yes, preservation is still important. But, biting off more that you can chew simply means a statistically greater chance of failure.