Problems and Solutions in Electronic Discovery

Electronic Discovery Problems

If you are reading this, you probably know that discovery has become very expensive. Some estimate every e-mail produced in litigation costs approximately three dollars. ¹Ann G. Fort, Rising Costs of E-Discovery Requirements Impacting Litigants (March 20, 2007), http://www.law.com/jsp/article.jsp?id=1174307784199.

Unpredictable and Uncontrolled Costs.

With all of the e-mail and other electronically stored information (ESI) that must be collected, processed, and reviewed just to get to the production stage in a large litigation or investigation, it is little wonder that litigants spend billions of dollars on discovery each year. ²Id. Some estimate 93 percent of all corporate data is comprised of electronic information. See A Comprehensive Approach to Discovery Response Planning, Fios Discovery Management Services (2008),
http://www.fiosinc.com/resources/whitepapers/whitepaper_registration.asp?id=WhitePaper_LRA. These ballooning costs can be traced to two factors primarily: the relative ease with which organizations routinely generate and store massive amounts of electronic data, and the emphasis on e-discovery generated by the 2006 amendments to the Federal Rules of Civil Procedure. ³In 1990 it cost $20,000 to store one gigabyte of data, while today it costs only one dollar to store one gigabyte. See The Sedona Conference Best Practices Commentary on the Use of Search & Information Retrieval Methods in E-Discovery, 8 Sedona Conf. J. 191, 192 (2007), available at
http://www.thesedonaconference.org/content/miscFiles/Best_Practices_Retrieval_Methods___revised_cover_and_preface.pdf. See generally Fed. R. Civ. P. 26, 33, 34, 37, and 45.

Yet for all of the money spent on compliance with the amended Federal Rules, organizations still often fail to produce relevant documents, incurring judicial sanctions and adverse publicity, and often must spend additional time and resources on satellite litigation, or on discovery about what they did to comply with discovery.

Likewise, organizations continue to face battles to prevent a waiver of the attorney-client privilege after inadvertently producing privileged documents as part of large document productions.

It is clear that just because an organization spends more money does not mean that it will meet its discovery obligations in a large litigation or investigation. To meet those obligations, organizations should move away from a reactive and ad hoc approach to discovery and implement proactive solutions to help address the problem of discovery costs and errors. The solutions discussed later in the article provide a road map to organizations that wish to do this.

Errors in the Preservation, Collection, Processing, Review and Production Process.

To understand the problems associated with modern discovery, it helps to break the information production process into stages. These include:

• preservation and collection,
• processing,
• search and review,
• production, and
• validation and defense.

Given the complexities of modern information systems, the number of hands that might touch potentially responsive data from preservation through production, lack of training and education for staff involved in discovery, and the overall ad hoc and reactive approach that many litigants take to discovery, it is not really all that surprising that errors happen at all stages of the process. The examples below will help illustrate the types of errors that occur and result in sanctions or other adverse consequences to litigants and counsel.

Preservation and Collection Stage Errors.

Errors at the preservation and collection stage are some of the most common errors in the e-discovery process. The failure to preserve or collect potentially relevant information can result in relevant data being discarded, and opposing counsel will often ask for monetary sanctions and an adverse inference instruction, based on claims of spoliation. For example, in Doe v. Norwalk Community College, after the duty to preserve attached following a sexual assault that took place on campus, the college mistakenly “wiped” the hard drives of several key persons, which resulted in an adverse jury instruction and monetary sanctions against the college for failure to implement and adhere to a litigation hold. ⁴2007 U.S. Dist. LEXIS 51084 (D. Conn. Jul. 16, 2007).

Data Processing Errors.

Processing problems are not often the subject of judicial opinions, but anyone who has ever been a paralegal or junior associate responsible for a major document production knows that they take place and can be painfully difficult to correct. Processing errors usually result from poor planning to meet court imposed deadlines, lack of quality controls, or the mishandling of data.

In In re Payment Card Interchange Fee & Merchant Discount Antitrust Litigation, rather than extract electronic files directly from the source, a party printed hard copies, which were then scanned into a .tif format. The result was that all of the discoverable metadata associated with the files was not produced. ⁵2007 U.S. Dist. LEXIS 2650 (E.D.N.Y. Jan 12, 2007). Such errors can lead to spoliation claims, and result in sanctions.

Search and Review Errors.

At the search and review stage, litigants take the potentially relevant data that has been preserved, collected, and processed and determine whether it is relevant. If relevant, the litigant then determines whether the information is privileged and can be withheld from production. Errors at this stage often occur due to unclear criteria to determine what information is relevant or privileged, unmanaged, insufficiently trained and/or inexperienced attorneys conducting reviews, lack of quality controls in the review process, and not enough time to complete the search and review.

In Diabetes Centers of America, Inc. v. HealthPia America Inc., the court, though declining to issue sanctions, recognized that a party had been “remiss” by entrusting the search for responsive e-mails to a junior associate who was not provided the direction and instruction necessary to craft an appropriate keyword search. ⁶2008 U.S. Dist. LEXIS 8362 (S.D. Tex. Feb. 5, 2008).

In Victor Stanley v. Creative Pipe, the failure to appropriately conduct a search and review resulted in the production of 165 privileged documents. ⁷Victor Stanley v. Creative Pipe, 2008 U.S. Dist. LEXIS 42025, at *19 (D. Md. May 29, 2008). Some of the responsive data was text searched using 70 keywords selected by the Creative Pipe and its attorneys. ⁸Id. at *12-*13. Documents not identified as potentially privileged through the keyword search were produced without any confirmation that they, in fact, did not contain privileged information. ⁹Id. at *13-*16. The remaining responsive data was to be manually reviewed (because Creative Pipe claimed it could not be text searched). ¹⁰Id. at *13. But citing time constraints, Creative Pipe reviewed only the document titles to determine whether the contents contained potentially privileged information. ¹¹Id. at *13. Importantly, Creative Pipe could not identify from which group, the text searchable or non-text searchable, the 165 privileged documents were ultimately produced. ¹²Id. at *14.

Using a “reasonable care” test, the court held Creative Pipe waived the attorney-client privilege. ¹³Id. at *44. In rendering its decision, the court cited a lack of evidence that the search and review methodology was reasonable. ¹⁴Id. at *40. Lack of evidence to show reasonable efforts is an often overlooked error in the discovery process, and is further explored below.

Production Errors.

Many have heard the stories in cases like Gail v. New England Gas Co., and Marrer Hernandex v. Esso Standard Oil Company, where privileged information ended up on a CD-ROM slated for production, which was produced and ultimately resulted in a waiver of the attorney-client privilege. ¹⁵243 F.R.D. 28 (D. R.I. June 27, 2007); 2006 WL 196734 (D. P.R. July 11, 2006). These types of errors occur too frequently, are often clerical, and are preventable through appropriate procedures and quality controls.

Failure to Validate and Document Efforts to Comply with Discovery Requirements.

The reactive and ad hoc approach to modern discovery often results in counsel and clients moving from crisis to crisis, and failing to sufficiently document the steps taken to comply in discovery. Then, months or even years later, there is no sufficient basis on which to articulate to the court why the relevant information was not initially produced, why information was reviewed in the manner that it was, or why certain information was not preserved in a particular format.

For example, in Victor Stanley, the court noted the lack of information provided from which it could conclude that Creative Pipe’s search efforts were reasonable. It explained that deciding whether the attorney-client privilege has been waived involves “fact determinations, and ipse dixit pronouncements from lawyers unsupported by an affidavit or other showing that the search methodology was effective for its intended purpose are of little value to a trial judge who must decide a discovery motion. …” ¹⁶Victor Stanley, 2008 U.S. Dist. LEXIS 42025 at *31 n10. “[P]arties [must] be prepared to back-up their positions … with reliable information from someone with the qualifications to provide helpful opinions, not conclusory argument by counsel.” ¹⁷Id. at *34 n10.

The court said that Creative Pipe should have provided explanations for “how [key words] were developed, how the search was conducted, and what quality controls were employed to assess their reliability and accuracy … [and the] qualifications for designing a search and information retrieval strategy that could be expected to produce an effective and reliable privilege review.” ¹⁸ Id. at *15.

Solutions to E-Discovery Problems

The problems of e-discovery described above are best solved through an integrated and coordinated approach by clients and counsel that is visible, transparent, well managed, and encompasses all stages of the e-discovery process, including preservation, collection, data processing, review, and production. This can be achieved through the creation of a team to manage discovery in all litigation and investigations involving the organization, creation of an e-discovery program that includes standard operating procedures and policies to help ensure discovery efforts are made in a consistent and appropriate manner in every matter, integration of as many discovery functions as feasible into one group or vendor’s control, and comprehensive documentation of the process so the organization’s efforts can be defended before a court or regulator.

It is important to note, preliminarily, that appropriately implementing the solutions described below will require that all stake holders and participants in the discovery process communicate and collaborate to make their efforts successful. Even the best policies and procedures are, out of necessity, broad, given the reality that modern organizations are complex and ever-changing, and specific litigations and investigations may require unique approaches in discovery.

Create a Discovery Management Team.

To oversee the discovery process, an organization should create a permanent discovery team consisting of counsel and a core group of individuals experienced in relevant disciplines and areas, both within and outside an organization. This permanent discovery team should set the requirements for, and from a high level, manage the discovery process in all of the organization’s litigation and regulatory matters, in coordination with the counsel responsible for those matters.

Upon notice of a particular investigation or litigation, a temporary discovery team can be created for that matter, which would include, as necessary, in-house counsel and outside counsel, IT personnel, records management employees, human resource representatives, e-discovery and document review vendors, and individuals knowledgeable about what information will be relevant in the matter.

The temporary discovery team’s goal is a collaborative and controlled approach to the entire discovery process. The team should be responsible for creating a project plan to timely and accurately complete discovery. The plan should include the tasks that must be completed, an assignment of responsibilities, timelines, and resources required. ¹⁹See Ashish Prasad, Effective Project Management in Discovery, The Practical Litigator (2009).

The entire process should be documented so that the organization’s efforts can be accurately described to a court or regulator, if necessary. The documentation could include details about the preservation notice (e.g., to whom it was issued and why, efforts to confirm that relevant information was preserved, and the prevention of data destruction through suspension of auto-delete functions). It could also include summaries of interviews with data custodians and records management personnel about responsive information.

The documentation could detail the methods used to collect and process the data, and provide information about quality controls and chain-of-custody procedures. It could also memorialize the document review process, including the qualifications and training of the review staff, the selected review platform, a description of any search terms used, the reason such terms were selected, the qualifications of those selecting the search terms, quality controls in the search and review process, and pre-production validation.

Finally, it could tally the costs and burdens involved in the process, and provide the money and time spent to comply with discovery obligations in that particular case.

While the role of the temporary discovery team is to oversee, manage, and document the efforts to comply with discovery in particular cases or investigations, the permanent discovery team should be responsible for implementing a comprehensive e-discovery program, which is further detailed below. The e-discovery program creates a road map that the organization can follow, and when utilized by company employees, allows a consistent and streamlined implementation of discovery procedures and reduces the time and money spent on discovery compliance.

The E-Discovery Program.

Creating a comprehensive e-discovery manual, to proactively manage discovery, and training personnel on proper application of the procedures in the manual, is the cornerstone of a global and viable solution to the problems of e-discovery.

An e-discovery manual enables temporary discovery teams to consistently and accurately design discovery plans in particular matters. It can also identify and delegate discovery related roles and responsibilities to establish process flows in the stages of discovery and include reference information that will permit discovery to occur more smoothly.

The e-discovery manual should contain standard operating procedures that help ensure consistent use of sound practices for:

• the preservation and collection of data, external media, mobile devices, and home and group share drives;
• searching e-mail; and
• maintaining a chain-of-custody.

It might also contain protocols for how searches for potentially relevant data are to be conducted, how information will be provided to counsel for review, procedures for the engagement of vendors, and procedures for outside counsel to follow in working with the organization on discovery matters.

The contents of the e-discovery manual might also contain interview outlines for key persons, witness outlines for Fed. R. Civ. P. 30(b)(6) testimony, sample data preservation and collection notices, and accompanying certification forms for employees.

Likewise, the e-discovery manual can provide standardized responses to Rule 26 disclosures, Rule 33 interrogatories, and Rule 34 document requests related to e-discovery, so that the organization takes a consistent position on common e-discovery issues in all litigation with which it is involved.

In connection with the manual, it could also be useful for clients to implement a litigation hold management tool, to assist the organization in complying with its preservation obligations.

It is critical, as described above, that the participants in the discovery process be trained in the proper application of the procedures in the manual. It is also important that the manual be updated annually based on the experience of participants in matters.

Data Source Catalog.

Through oversight by the discovery team, the organization should create a data source catalog, which identifies:

• the data sources within an organization likely to be the target of discovery,
• the individual or department responsible for maintaining that data source,
• what purpose the data source serves and a summary of the data contained within, its active use dates, how often data is backed up and purged, and
• appropriate procedures to search and produce data from the source.

Such a catalog can save time and reduce costs because counsel can review the catalog to begin to determine sources of relevant information in a particular matter, rather than start from scratch and attempt to identify relevant sources on an ad hoc basis. It would be the role of the discovery team, along with IT personnel, to monitor and update the catalog on a regular basis.

Engage in Legacy Data Management and Remediation.

A legacy data management and remediation program evaluates the risks and costs associated with the continued retention of legacy data, and determines what steps can be taken to mitigate those risks and costs (e.g., migration to different storage platforms, migration to disclosure, development and documentation of arguments that the data is not reasonably accessible, establishment of criteria for eventual disposal).

As it relates to remediation of legacy data, a legacy data management and remediation program analyzes records retention policies and schedules, the scope of litigation hold requirements, and analyzes whether the information can be obtained in discovery from a more reasonably accessible source. Data that can be obtained from a more reasonably accessible source, or data that is not covered by any litigation hold or records retention policy or schedule, can potentially be discarded.

Implementing a legacy data management and remediation program helps the discovery team to understand sources of data within the organization, has the potential to achieve substantial cost savings (given the high costs of storage of certain types of legacy information), and if properly documented, is further evidence of a defensible and reasonable decision making process regarding disclosure of electronic information that shows compliance with the amended Federal Rules of Civil Procedure.

Integrate the Organization’s Discovery Response Process.

In the discovery process, even when there is a core discovery management team, when too many entities are involved at different stages of the process, the risk of errors increases—the discovery may not be completed on time and it may not be as accurate as it could otherwise have been. In addition to centralizing the management of discovery and implementing an e-discovery program, an organization should select an e-discovery vendor that can provide all necessary discovery services, from preservation through production.

Vendors that can provide these services typically have a wide range of experience in the e-discovery industry, financial stability, knowledgeable and experienced technical personnel, advanced technology that allows shorter processing times and the capacity to speed-up the process when necessary, reliable security procedures, and disaster recovery plans. Selecting the appropriate vendor should be done like any other legal endeavor, with due diligence.

The vendor selection process should involve:

• compilation of a short list of vendors to evaluate and a request for information process where the candidates submit to the organization details about their service offerings;
• meetings with the vendors;
• discussions with references; and
• evaluation of the vendor’s tools, processing platform, facilities, and security procedures.

It is particularly important to consider the vendor’s document review capabilities by evaluating whether it follows best practices in the document review process. ²⁰See Ashish Prasad, Kim Leffert, and Shauna Fulbright, “Cutting to the Document Review Chase: Best Practices for Managing Document Review in Litigation and Government Investigations,” Business Law Today (2008), for a discussion of best practices in document review.

For example, focus should be placed on the vendor’s processes for hiring and retaining staff, its training methods, whether it offers quality control and validation, online review capabilities, concept clustering, the ability to redact documents online, bulk tagging, automatic bates labeling, and generation of a legally sufficient privilege log. It is seldom that an organization will have the necessary resources to complete these functions in-house, but so long as the organization can do so without sacrificing quality and sound practices, it is not a requirement that these functions be outsourced.

It is usually a sound practice to enter into a preferred provider relationship with the selected vendor. This is beneficial because through experience the vendor can gain an understanding and working relationship with those that it must interface with at the organization.This eventually allows employees to spend less time acting as an intermediary and facilitating the process. This is also an opportunity to both reduce and create predictable costs, since providers that offer this full spectrum of services often offer flat fee pricing models which can be attractive.

Rely on Documentation to Defend the Organization’s Actions.

After assembling a discovery team and managing the discovery process in a particular matter, it may be necessary to defend the organization’s efforts from attacks by opposing counsel. This is when all of the proactive efforts and investment described above can pay substantial dividends.

The information provided by the discovery team and the documentation created throughout the process will enable counsel to describe with accuracy the actions that were taken, and e-discovery experts can execute declarations that validate the process. This provides an excellent opportunity for the organization to demonstrate its good faith and reasonable efforts to comply with discovery, which will mitigate the risk of sanctions.

Conclusion

Litigants can solve the problems associated with e-discovery through an integrated and coordinated approach that is visible, transparent, well managed, documented, and encompasses all stages of the e-discovery process. Proactive development of a coordinated and collaborative approach can reduce the costs and risk of errors associated with discovery.

Organizations that take steps toward centralizing the discovery function, developing an e-discovery program, and managing and remediating legacy data, and training employees and preferred vendors to execute policies and procedures correctly will achieve the benefits.