e-discovery 2.0

In the eDiscovery universe, hot trends and evolving technologies tend to capture the attention of the legal community.  Discoverable data sources have been the focus in the courtroom for quite some time, and just like the “popular kids” from high school, email has held the crown of eDiscovery darling.  Not surprisingly, the more time end-users spend in a specific medium (on Facebook, for example), the more likely data will be created – and as that data multiplies, it has the potential to become compelling in discovery.  It seems that many U.S. organizations are electing to allow social media use at work and for work, rather than blocking access.  For obvious reasons, granting this access is culturally desirable, but from an eDiscovery perspective social media use introduces new complications.  However, don’t be mystified.  There is nothing that new here.

Recently, Symantec issued the findings of its second annual Information Retention and eDiscovery Survey, which examined how enterprises are coping with the tsunami of electronically stored information.  Having lost some popularity, email came in third place (58%) to files/documents (67%) and database/application data (61%) when respondents were asked what type of documents were most commonly part of an eDiscovery request.  The new kid on the block for data sources is social media, reported by 41% of those surveyed.  Social media is in essence no different than any other data type in the eDiscovery process, it’s just the newest.  Said another way; social media is the new email.

Of course, it’s no longer news to proclaim that communications from social networking sites are discoverable.  What is newsworthy is the question of how to effectively store, manage and discover these communications which come in such varying forms, making the logistics of doing so for social media different than for traditional mediums.  Like email, social media is used by everyone (ubiquitous), is viral (fast), has mixed uses (professional and personal) and there is a lot of it (high volume).  Unlike email, social media comes in many different forms (Facebook, LinkedIn, Twitter, etc.), is not controlled within an organization’s firewalls (custody, possession and control issues), and has more complex requirements within the information governance lifecycle (technology is needed to ingest social media into an archive).

The two main areas to examine in relation to social media use and an organization’s policies are: 1) the legal issues that apply specifically to the organization, and 2) the logistical and technical requirements for preservation and collection.  Essentially, what is the organization’s policy surrounding social media use, and how can the information be accessed if need be? Luckily, technology exists that is nimble enough to be able to ingest social media and archive it in accordance with an organization’s policy, should one exist.  Organizations that have recognized social media as the newest kid on the block have, ideally: developed a social media policy, purchased (or deployed) collection and retention technology, and instituted training for their employees.  They have also integrated social media into their information governance strategy and document retention policy. Remember, not all organizations will have to archive social media, but all should address social media with a policy and training.

Other organizations have not accepted social media as part of the evolutionary process of eDiscovery.  They proceed at their own peril – as did the organizations that did not control their email some ten years ago!

These organizations will be in crisis when they need to collect social media for litigation and will most likely have a large lesson in damage control, as well as an equally large bill.  They will be uneducated, ill-prepared and overwhelmed about how to discover social media.  Without a policy, they will have to over collect by default, which will drive up the costs for collection and possibly for downstream review.  Given that the aforementioned survey found nearly half of the respondents did not have an information retention policy in place, and of this group, only 30% were discussing how to do so, it is likely that many of these organizations do not yet have a social media policy either.

With this background in mind, organizations should evaluate which laws and regulations apply to their organization, develop a policy and train their employees on that policy.  Plus ça change, plus c’est la même chose.

For more information about how IT and Legal can manage the impact of social media on their organization and to learn how archiving social media can be accomplished, please join this webcast from Symantec.

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

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

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

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

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

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

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

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

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

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

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

We’ve all heard the phrase that “everything is bigger in Texas” and the little “mini-conference” held in Dallas, TX last Friday was no exception.  The Discovery Subcommittee held a small, one-day conference to tackle some big issues related to preservation and sanctions that could ultimately lead to amendments to the Federal Rules of Civil Procedure (Rules).

The Subcommittee’s primary purpose was to discuss “preservation and sanctions issues” by using the following topics as guidelines:

• The nature and scope of the current “problem”
• The role of technology
• Possible solutions to the problem

Counsel from large companies like Google, General Electric, and Exxon Mobil participated side by side with outside counsel from both plaintiffs’ and defense bar to discuss what some characterized as a lack of clear direction in the current Rules.  Government lawyers, academics, and federal judges including Judges David Campbell (D. Az.), Shira Scheindlin (S.D.N.Y.), Paul Grimm (D. Md.), John Facciola (D.D.C.), Lee Rosenthal (S.D. Tx.), Michael Mosman (D. Ore.), and Nan Nolan (N. D. Ill.) helped round out the field to make for a lively discussion with multiple perspectives represented.  The following summary highlights some of the key viewpoints and areas of contention debated throughout the day.[1]

The nature and scope of the problem

An underlying theme throughout the day was whether or not preservation and sanctions challenges warrant amending the Rules.  Not surprisingly, counsel for large organizations that commonly bear the brunt of large and frequent document requests lobbied for rule amendments that provide more certainty around when the duty to preserve evidence is triggered, the scope of that duty, and how sanctions are applied.

In support of this position, some corporate attorneys argued that the lack of certainty in the current Rules unfairly requires organizations to err on the side of preserving evidence early and broadly to avoid the risk of sanctions.  Since preserving evidence can be extremely expensive and the duty may be triggered before litigation even begins, they argue that changes to the Rules are necessary.  One corporate attorney framed the issue by providing specific details about costs associated with preserving data for different cases.  He explained that in one situation, his organization has spent more than $5 million to locate, collect, preserve, and maintain data for an ongoing matter even though a complaint has never been filed.  He went on to explain the dilemma by stating: “not preserving asks us to take a chance with our reputation.”

In response, a few attendees questioned how preservation related expenses could spiral so high even before attorney review.  Others pointed out that if the current Rules were better utilized, specifically the meet-and-confer provisions of Rule 26(f), then many preservation challenges could be minimized.  Supporters of better Rule 26(f) engagement complained that counsel for large organizations often refuse to discuss preservation related issues and thereby fuel problems related to the scope of preservation themselves.   Others suggested that if organizations enforced better information management policies instead of keeping “everything forever”, then the magnitude of the problem could be reduced.

Technology

The Subcommittee members generally agreed that the evolution of technology has led to massive data growth which creates new electronic data challenges.  Electronically stored information (ESI) is often duplicative, typically resides in many different technology systems, and can be difficult to locate on a case by case basis.  There was some thoughtful discussion about how data archiving and cloud computing technology are important tools for helping organizations manage these information problems more effectively.  Another commentator acknowledged that although “predictive coding” may be helpful for “reviewing” data, it requires significant human involvement and simply does not solve the problem at hand.

Surprisingly, aside from the comments above, the technology discussion focused mainly on the issue of what constitutes “possession, custody or control” under Rule 34 in today’s environment of social media, cloud computing, and mobile devices.  Unfortunately, there was no discussion of either the role legal technology solutions play in minimizing risk and cost or of the impact the current Rules have on public policy.  For example, the Subcommittee did not address whether organizations that invest in technology in order to automate their internal data management and electronic discovery process should be afforded more protection under Rule 26(b)(2)(B) (“not reasonably accessible because of undue burden or cost”) than organizations that choose not to invest in technology.  If an organization’s technology investment (or lack thereof) is not a factor, does Rule 26(b)(2)(B) have the unintended effect of stifling meaningful legal technology investment by some organizations?  Similarly, do advancements in legal technology diminish the need for a Rule amendment that, at its core, is geared toward reducing costs?  In my opinion, the manner in which organizations are using technology today is an important factor that warrants deeper discussion and a subject I intend to address in a future publication soon.  Stay tuned.

Possible solutions

Discussion about possible solutions to the problem revealed more about the contrasting viewpoints in the room.  Notably, the Department of Justice representatives and those typically aligned with the plaintiffs’ bar tended to lobby for better adherence to the framework contained in the existing Rules in lieu of drafting new Rules.  These folks generally appeared to fall into the “No New Rule” or “Not Yet” camp, and cited the relative newness of the 2006 Rule Amendments and the fact that only about one percent of federal cases involve sanctions in support of their position that Rule amendments are premature or not needed.  Along the same lines, many called for further study and evaluation of the issues through organizations such as The Sedona Conference and the 7th Circuit Electronic Discovery Pilot Program.  Others referenced the importance of looking to evolving case law for more guidance before moving forward with Rule amendments.

In stark contrast, those on the other side of the aisle that typically represent large organizations, lobbied for bright line rules or at least “guideposts” to provide more certainty regarding preservation.  For example, one participant suggested that the duty to preserve evidence should begin when a complaint is served.  Another suggested that the duty should be triggered when a potential litigant is “reasonably certain to be a party to litigation” – a standard that is arguably narrower than the commonly applied “reasonably anticipates litigation” standard articulated in Judge Scheindlin’s frequently cited Zubulake v. UBS Warburg line of decisions.

Those calling for more certainty regarding triggering events also provided recommendations for addressing the scope of the preservation duty and the application of sanctions.  A suggestion to incorporate language that presumptively limits the number of custodians (10) and documents (by age) met resistance on the grounds that trying to apply a one-size-fits-all rule fails to acknowledge that the facts and circumstances of every case are different and so too are the litigants.  Similarly, recommendations to limit sanctions for evidence spoliation to situations where a litigant’s conduct is “intentional” or “willful” were met with a chilly reception by those favoring better adherence to the current Rules.

Conclusion

Time did not permit comprehensive discussion and analysis of every perspective, but the mini-conference highlighted the complexity surrounding preservation and sanctions issues and revealed some polarized viewpoints about how to solve those issues.  Perhaps one glimmer of consensus was the acknowledgement that “pre-litigation” obligations to preserve evidence before service of a complaint is often challenging for large organizations.  However, whether this and other issues should be addressed through better education, more stringent enforcement of existing rules, or by modifying the existing rules to include more “guideposts” remains unsettled.

What do you think?  Please respond to the poll, above right, to let us know whether you think amending the Federal Rules of Civil Procedure (FRCP) is necessary to address some of the preservation and sanctions issues discussed above.

To join the conversation and receive automatic updates when new information is posted to this blog, please subscribe to e-discovery 2.0.

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[1] A more exhaustive list of participants and sample questions was incorporated into the Federal Rules Advisory Committee’s June 29, 2011 memorandum announcing the mini-conference.  Similarly, the events leading up to the mini-conference are described in more detail as part of my previous postings on the same subject.

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

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

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

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

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

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

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

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

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

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

(Editor’s note: This special guest post was written by Chitrang Shah, Clearwell Principal Product Manager. He is an RIT alum and avid hiker who works with our engineering team and lead customers to optimize the product for large-scale review. – Kurt)

As we’ve previously shared, our product strategy throughout 2009 and 2010 was to expand the product footprint across the EDRM as customers were demanding a single, end-to-end eDiscovery product. During this period we successfully expanded from our roots in processing, search and analysis to review and production (August 2009), identification and collection (September 2010) and legal hold workflow (March 2011). Over the last several months, our focus has been to go deep in each of these modules and provide features that deliver even greater return on investment to our customers.

Today, I am excited to announce significant new features and feature enhancements to the Clearwell Review and Production Module and say a few words about what motivated us to build these features and how they enable our customers to further streamline their legal review workflow.

There are several exciting features in this release, but I would to like to highlight three in particular:

1. Ability to seamlessly import production load files

Most matters require reviewing relevant documents alongside the documents received from third parties, opposing parties, and even previous litigations. With the new load file import feature, users can now streamline the process of importing load files with three simple steps.

In Step 1, a step-by-step wizard-like interface guides users though the selection of formatting information such as field delimiters and nested value delimiters, metadata information such as bates numbers, family relationships, tags, folders and any number of custom attributes, and content information such as images, extracted text and native files. When the load file has both extracted texts and native files, the wizard gives users an option to specify which content should be used for searching.

In Step 2, the system performs a deep validation of the load file and generates a report documenting any inconsistencies such as missing bates numbers or missing values for required fields found in the load file. As a result, customers have the ability to quickly find and fix any issues with the load file before the import begins.

In Step 3, the system imports the documents and builds analytics. Once this step completes, the imported documents, including all metadata and content, are available for viewing and searching.

All the analytics capabilities customers are familiar with, such as discussion threads and concept search, are also available for documents imported from load files. This allows users to quickly discover documents in the load file that are conceptually similar to natively processed documents, for example.

2. Support for large scale reviews and productions

As the volume of electronically stored information (ESI) continues to grow, our customers find themselves reviewing and exporting more and more documents, and they need a solution that can cope with the massive growth in data. At the same time, they don’t want to spend large sums of money building a server farm in anticipation of the growth. They want the flexibility to add capacity when needed and remove it when not needed.

Clearwell’s scale-out architecture enables administrators to easily add appliances and allocate them to a particular matter and to a specific task using a point-and-click interface.

For example, if an administrator needs to increase the number of reviewers from 200 to 400 in order to meet a tight deadline, he or she can easily add 2 appliances to the cluster and assign them for review. Once the review completes, the administrator can now easily re-assign these appliances for production, allowing users to easily meet deadlines while reducing their overall hardware costs.

This flexibility allows our customers to maximize the use of their hardware resources while providing infinite review, export and production scalability.

3. Streamlined management of exports and productions

Clearwell provides powerful export options, and while our customers use them extensively for creating a variety of different production formats, they typically standardize on a few. Clearwell’s new case export and production templates provide a quick and easy way for case administrators to define the export format once and use it across multiple cases. When exporting documents, users can simply select a template from the list of visible templates in that case. This capability significantly reduces the overhead associated with managing export formats and allows our customers to produce documents in a consistent format across multiple matters.

Additionally, new production pre-mediation reports automatically identify problem documents and group them by issue type for quick resolution. This enables users to preemptively identify and resolve document production issues without delaying entire productions.

Says Wendy Butler Curtis, chair of Orrick, Herrington & Sutcliffe’s eDiscovery Working Group, “Legal review is one of the most challenging phases of the eDiscovery process. As electronic data volumes continue to grow, it is increasingly important to leverage technologies that can streamline and improve legal review, ensure defensibility and reduce costs. Solutions like the Clearwell eDiscovery Platform enable legal teams to create an iterative eDiscovery workflow that allows for more efficient and effective large-scale review.”

We will be showcasing the new features at ILTA (Booth 816) this week in Nashville, so come see us and let us know what you think.

(Chitrang Shah is a Principal Product Manager at Clearwell Systems, now a part of Symantec, and the lead Product Manager for Clearwell’s Processing & Analysis and Review & Production Modules)

In past years we’ve covered Gibson Dunn’s Mid-Year E-Discovery Report which is always a good read, chock full of take-aways about the eDiscovery market.  In my mind, they do an excellent job of synthesizing the ever-expanding volume of case law and comparing those trends with historical averages.  This year’s report is no exception, and for those who don’t get to read all the cases, this is a stellar way to keep up on eDiscovery trends.  Without trying to summarize the entire 23 page document, there were a number of findings that stood out and should be perused by anyone with even a passing interest in the space.

Legal Holds/Preservation. As we all know, eDiscovery sanctions (at least here in the US) are critical business/legal drivers, particularly with regard to the legal hold area (which is the riskiest part of the EDRM).  As the Gibson report points out, the actual award of sanctions has remained relatively flat (56% in the first half of 2011 versus 55% for the full year in 2010) –  but, more important than this relatively stable metric, it’s very clear that the plaintiff’s bar has caught on to the ability to win cases by revealing shoddy (or just undocumented) legal hold procedures, even in some instances where data isn’t lost.  This is why the report notes a dramatic increase in the seeking of eDiscovery sanctions – 68 at mid-year 2011 versus 31 at mid-year 2010.  This doubling of attempts to pierce an entity’s legal hold regime should be a wake-up call to in-house practitioners and chief legal officers, since the attempt and success rates will likely only increase over time.

While there is still some considerable debate, at least for those following Judge Scheindlin’s Pension Committee logic, anything less than a formal, written legal hold policy is per se negligent.  Although it’s conceivable that  a reviewing court won’t use this rigorous standard, anything less formal will strike most organizations as simply too risky.  Ongoing compliance with the legal hold process is also another difficult task for many organizations, one which is considerably easier with an automated solution that is able to track acknowledgements and send reminders over time.  It’s all too easy for companies to think that once they’ve discharged their initial legal hold duty they’re in the clear – but as these obligations morph (with more custodians/data types) and elongate (from months to years) over time, keeping on top of the legal hold processes becomes that much more important.

Sanctions. The Gibson report also importantly points out that there’s currently a split in jurisdictions where some courts can levy sanctions for bad faith, while others can merely require proof of negligence.  Here, the important take-away is that a defendant entity doesn’t typically get to forum shop and therefore they can’t really tell which type of jurisdiction they’ll end up in as a litigant.  So, they need to build their eDiscovery processes to meet the high water (i.e., most rigorous) standard.  In most cases, it’s therefore prudent to be prepared to be sanctioned for merely negligent conduct – anything less can potentially be safe but that risk calculation needs to be considered carefully.

The other perilous part of the equation is that once sanctions are deemed warranted, the court has almost unlimited discretion to levy whatever blend of sanctions it thinks is appropriate.  In Green v. Blitz, for example, the court ordered a laundry list of sanctions, some of which were pretty unfathomable:

1. Defendant had to pay plaintiff $250,000

2. Defendant had to provide a copy of the court’s order to plaintiffs “in every lawsuit proceeding against it” for the past two years

3. Defendant had to file the court’s order in every case that it is involved in for the next 5 years

The bottom line is that sanctions, despite the fear factor, can be used to drive positive proactive conduct – namely in the shape of eDiscovery best practices.

Outside Counsel Duties. Here, the Gibson report notes that outside counsel’s Zubulake duties continue to increase over time, with a number of cases continuing the trend of holding attorneys responsible for ensuring that their clients properly implement legal holds, institute sound sampling protocols and conduct sufficient quality control steps.  This line of discussion can be useful when talking to outside counsel where we’re starting to see how their increasing responsibilities can lead to malpractice exposure, as seen in the recent McDermott case.

Search/Analysis. Lately there’s been a ton of buzz about predictive coding, but (despite the hype) it still doesn’t appear ready for prime time yet.  The Gibson report noted that there were no reported cases that addressed the use of predictive coding or other advanced search technologies.  My sense is that without some semblance of judicial approval or strong client backing, outside counsel (who are concerned about their malpractice exposure, per above) aren’t quickly going to be the first ones into the pool.  Unless an enterprise client demands that they use this type of technology, most will wait for judicial approval and that’s probably still a way off.  While next generation search technologies are more promise than reality right now, there is still a mandate to implement a defensible search methodology.  These are needed initially to demonstrate transparency in the eDiscovery process and to then withstand the challenges levied by counsel in the case of an inadvertent production.

In sum, the Gibson report shows the ongoing maturation of the eDiscovery space.  But, any niche market led by case law and/or attorneys deciding to adopt new technologies won’t be quick to change.  In many instances, therefore, the best practices will be decided a combination of standards bodies and vendors who are being pushed by their more forward thinking clients to get and stay on the cutting edge.

At Clearwell, we’re constantly ruminating on innovative ways to help make our customers’ e-discovery process more efficient. Given the astronomical growth of social gaming, we began asking ourselves, “How can we harness the power and passion of millions of social gamers for the greater good?”

Questions like this really get our engineers cooking, and what they came back with is, to steal a word from one of our most popular product launches a year ago, simply “magical”.

Starting today, Clearwell’s eDiscovery World leverages the red-hot consumer social gaming trend to provide dramatic and previously unattainable increases in e-discovery technology training and productivity. In fact, the promise of eDiscovery World is so great that we have added social gaming as a core part of our product architecture across all Clearwell modules, from legal hold through production.

And we’re not stopping there. We believe that strategic social gaming delivers such powerful benefits to a best practices e-discovery process, that we’ve proposed modifying the EDRM diagram to account for this critical new requirement for truly end-to-end discovery.

Prior to today, unstructured obsession with social gaming has actually been an obstacle keeping end-to-end e-discovery from becoming a reality in many organizations. Interviews conducted across law firms, service providers, and every major enterprise vertical indicate that the time spent protecting crops from withering and urban blight from descending upon virtual cities has left insufficient hours with which to implement next-generation electronic discovery technology. As a result, legal costs have continued to rise and the risk of sanctions has grown substantially. One Director of E-Discovery at a Fortune 100 company, when grilled about his organization’s failure to implement a robust legal hold process, pleaded, “Can you spare some Facebook credits so I can buy a chicken?”

Now, Clearwell has turned this challenge into a tremendous opportunity. In eDiscovery World, we provide an alternative to traditional social gaming that allows users to perform end-to-end e-discovery in a virtual environment – first in training mode to gain e-discovery process knowledge and experience, and then working with live documents and high-stakes cases. All stages of the e-discovery process are functional in the eDiscovery World environment, which is backed by a robust cloud computing platform able to support the largest and most complex cases. Best of all, in addition to the substantial productivity gains our beta customers have already achieved, many have even found their employees clamoring to forego significant portions of their salaries in order to earn precious Facebook credits, thus delivering dramatic cost savings for the organization.

eDiscovery World is truly a win-win, and we couldn’t be more excited about it. Enjoy!

Ordering a “company-wide” search is not enough to shield outside counsel and client from a potentially embarrassing electronic discovery sanction allocation hearing in the Southern District of New York.

In In re A & M FLORIDA PROPERTIES II, the parties disputed the terms and obligations relevant to a purchase and sale agreement for property.  The plaintiff claimed the defendant failed to disclose information that would ultimately have the effect of increasing plaintiff’s purchase price. The defendant claimed that the plaintiff was fully informed of the transaction details and requested emails and other documents from plaintiff to prove plaintiff had knowledge of the details. During e-discovery, the plaintiff’s counsel made the following two costly errors that led to a potentially embarrassing sanction show down with his client:

1. Issuing a broad instruction to perform a “company-wide” search without more detailed instructions
2. Failure to communicate with key IT personnel and employees to understand the client’s retention policies and data systems

The plaintiff’s early productions raised red flags for the defendant because they did not include any internal emails or an email that had previously been exchanged between the parties.  In response, the plaintiff’s outside counsel ordered his client to conduct a “company-wide” search to straighten out the email production issues. The plaintiff’s Chief Technology Officer (CTO) was tasked with overseeing the search, but the search was limited to email in the “live” system and did not include employee archives that the CTO knew existed.  The plaintiff’s counsel later admitted that he did not know the difference between archives and live inboxes and the CTO claimed access to the archives would have been provided to the defendant if only she had been asked. Following multiple searches by a forensic examiner and months of delay, over 9,500 additional emails were eventually produced from the archives that were initially overlooked.

Judge Gonzalez refused to order dismissal or an adverse instruction since the evidence was eventually produced and there was no evidence of bad faith.  However, Judge Gonzalez showed little sympathy for counsel’s failure to “understand the technical depths to which electronic discovery can sometimes go” or to “gain a better understanding of GFI’s [defendant’s] computer system” and issued monetary sanctions to cover the cost of defendant’s attorney fees and forensic examiner.  To make matters worse, the judge also ordered a future hearing to determine how to allocate the cost of sanction between the plaintiff and their lawyers.

Can You Say Embarrassing?

This type of hearing tends to uncomfortably pit client and counsel against each other in a game of he said, she said.  This isn’t Qualcomm revisited where sanctions were in the millions and attorneys from top law firms were scrapping to keep their licenses to practice law.  Nonetheless, the stakes are always high when you’re dealing with sanctions.  I can hear the arguments now:

Outside Counsel:  “When I said ‘company-wide’ search I meant a ‘company-wide’ search!”

Client:  “Well, if you would have been more specific, I would have known to search the archives.  You’re the lawyer after all.  Haven’t you done this before?”

Only a few know the details of what actually transpired and getting into the blame game with your client is something most attorneys want to avoid.

Lessons Learned

The lessons learned in this case are many, but here are a few key points to consider for both law firms and the clients they represent:

• Counsel and corporate IT must over-communicate: at the onset of litigation lawyers and IT should caucus to discuss critical e-discovery items and communicate with each other throughout the entire e-discovery process to ensure risk items related to technology (or anything else) are identified and minimized.
• Senior corporate executives need to take e-discovery seriously: the risk of poorly executed e-discovery isn’t just an issue for the GC. These issues can expose other senior executives (the CTO in this case) to embarrassment and their companies to monetary sanctions.
• The duty to preserve ESI is broad and organizations should utilize the right technology solutions to minimize the risk of error: searching email servers and ignoring other sources where relevant files may exist can harm the business as well as the personal reputations.  Companies should leverage technology solutions that allow for automated and repeatable data collections from multiple data sources like servers and laptops/desktops simultaneously to reduce the risk of human error and sanctions.

Conclusion

In Re Florida A&M Properties II serves as yet another reminder that the bench in the Southern District of New York has little tolerance when practitioners fail to understand the intersection between law and technology.  Since other jurisdictions often look to decisions from the Southern District of New York as persuasive authority, lawyers in other jurisdictions should take note.

On April 1^st, we had some fun by revealing the magical properties of “Clearwell for the iPad.” In truth though, we were only half joking because, at the time, we actually had an application for the iPhone and the iPad in development.

As Clearwell’s user base grew, and we became a mission-critical application to so many people, we learned that our users want access to the product from anywhere, not just when at their desks. In particular, for Clearwell administrators, it’s a lot more convenient logging into cases or checking the status of processing on an iPhone than it is being tied to a computer. So we created this companion application for the iPhone and iPad so they could do just that, as well as view job details, email logs, and generally manage their Clearwell appliances while on the go.

The driving force behind this new application, which we call “iClearwell”, is one of our developers, Gim, who drove its development. Gim also created a video to explain exactly what iClearwell does, which you can see below (yes, it really is his voice – and his pulsating finger).

iClearwell is available for free at Apple’s App Store. I have it on my iPad, and it rocks!

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Almost two years ago I wrote one of my first blog posts entitled “Review-less E-Discovery Review.”  Despite the tongue twister of a title, the post posited that “there is a very real possibility that we’re on the cusp of computers taking over a significant e-discovery task for attorneys.” I’d like to take a look and see how much (if at all) my prognostications have materialized.

A cynic might think that this is the moment where E-Discovery 2.0 jumps the shark.  But no, this isn’t one of those sitcom episodes where they flashback to previous shows as an easy way to recycle content.  Instead, it seems useful to see how the legal market has evolved from a litigation workflow perspective, particularly with some vendors touting the benefits of review-less technologies like predictive coding.

In the original blog, I noted that there was a “scenario where a non-manual review methodology may make sense” (while importantly noting that “this approach is not without risk”).  Since my last post there has been the successful adoption of Evidence Rule 502,which makes this methodology (at least conceptually) safer.

But again (imagine dreamy flashback mode), here were the guidelines I previously proffered:

1. Large data set.  This may sound a bit obvious, but a non-manual approach is best suited for large, unwieldy data sets.  The corpus doesn’t need to be in the terabytes, but the data set should be evaluated in term of discovery processing costs and attorney review estimates.
2. Short Production Timelines.  Once the above calculations are conducted, the next step is to determine if a human based review could even conceivably be conducted in the given time frame.  In many instances, an eyes-on review process just won’t be feasible since there won’t be enough bodies to throw at the problem.
3. Next Gen “PAR” Tools.  In order to pull this “review-less” review process off, both safely and quickly, the responding party needs to have access to fast, robust processing, analysis and review (“PAR”) tools.  Certainly, it’s possible to have this scenario work with an e-discovery service provider, if they have the capability.
4. Relatively Small Amount in Controversy.  For the time being, this approach should not be considered for any “bet the company” litigation, nor anything with significant downside risk (governmental inquiries, punitive damages, class actions, 2nd requests, etc.).  Yet, for many standard commercial lawsuits, corporate investigations, HR claims, etc. this review-less approach may be worth considering.
5. Ability to Use a Clawback Provision.  Entering into a clawback provision with the opposition is mandatory in this methodology since the chances of an inadvertent production are statistically ever-present.  Yet, until Evidence Rule 502 is resolved, there will always be a risk that the clawback won’t be enforceable against 3rd parties.
6. Non-governmental Production.  Most information in governmental productions becomes part of the public record, meaning that a clawback isn’t going to be feasible.  Here, trade secret information, personally identifiably data and the like would be disastrous if pushed out into the public domain.

The goal of this post is to see if this dog is any more ready to hunt than it was two years ago.  The short answer (right now) appears to be: No.

We all know that litigators are both risk adverse and generally slow to adopt new technology approaches.  This is particularly true when there’s a perception that they won’t have insight into the technological black box behind automated coding/tagging decisions.  Litigators are understandably sensitive about the ability to prove up the reasonability of their search and review processes.  This “reasonableness” requirement lines up both with the Victor Stanley requirements and FRE 50(b), which eliminates the chance of a waiver only “if the holder of the privilege or work product protection took reasonable precautions to prevent disclosure.”

Given this ongoing hesitancy, the question remains shouldn’t we be seeing more movement in automated review than the glacial progress that’s been achieved to date, particularly with the known shortcomings of the eyes-on review process?  Most are familiar with the 1985 STAIRS study by Blair and Marion where the percentage of relevant documents lawyers thought they had found using Boolean Keyword searches was 75% – when the percentage they actually found was 20%.

But, despite the known deficiencies of eyes-on review it follows into the “go with the devil you know” mindset that often makes sense when dealing with judges and juries who aren’t likely to grok newer-fangled approaches.

In addition to these high-level, almost dogmatic challenges, there is one other tactical element I’d add to my previous list (of 6 factors).

7. All documents processed up-front (no rolling collection). I’ve heard some in the trenches e-discovery experts claim that they’ve never had a case that didn’t involve at least some level of incremental data collections.  Whether this is an overstatement is immaterial.  The fact is that a large number of e-discovery projects involve ESI that is collected (and then processed) in dribs and drabs.  This if often a good thing, largely attributable to the incremental (start slowly) nature of a well thought out e-discovery project where a smaller number of initial custodians are processed, then ECA is conducted and only then is the additional ESI added to the corpus.  This common methodology causes some significant heartburn for a review-less methodology since the ever changing nature of the corpus makes it difficult/impossible for a sample to be truly extensible to what will eventually be the entire data set.  For this reason, the review-less approach should be limited to where the entire corpus is collected and processed at once.

In sum, the seven foregoing factors appear to still be largely valid and create an environment where an automated, review-less methodology will only make sense in a relatively rare set of circumstances.  This may change in the future, but given the risk adverse DNA of most litigators I can’t imagine this tipping point happening any time soon.

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