Duff & Phelps: Integrating E-Discovery and Investigations Expertise

Friday, August 1, 2008 - 01:00

Editor: Would each of you tell us something about your professional experience?

Laykin: I am a Managing Director with Duff & Phelps, and co-leader - with Peggy Daley - of the Global Electronic Discovery & Investigations practice. Prior to joining Duff & Phelps, I was head of the high-tech investigations practice of an international consulting firm, after having founded and led OnlineSecurity.com in the mid-1990s.

Daley: I am a Managing Director with Duff & Phelps and lead the Global Electronic Discovery & Investigations practice with Erik. I am an attorney, a Certified Fraud Examiner and a Certified Anti-Money Laundering Specialist. I spent the early years of my career as a corporate defense lawyer and moved on to serve, successively, as in-house counsel for two global security consulting and investigatory companies. With Erik, I am at Duff & Phelps to help expand our Electronic Discovery practice with a focus on serving both law firms and corporate clients.

Kirtley: I am a Managing Director at Duff & Phelps' Chicago office and serve as head of the Legal Management Consulting practice.

Editor: You've all had considerable experience. How is that going to be utilized to benefit Duff & Phelps' clients?

Daley: I do not think there are many consulting firms that have professionals with our backgrounds leading their e-discovery practices. While we all have technical expertise, that is not the limit of our professional competence. Most practitioners in this industry have good technology backgrounds, but few have a total appreciation for the litigation process or the importance of privilege. We bring to the client professional investigative expertise that is strategic in nature, and we are not just about selling a particular software tool.

Laykin: Let me add that one of the principal differentiators of this team in the marketplace is its experience internationally. We understand the management of data in Asia and Europe. Success in litigation and in the regulatory arena today requires the ability to capture and analyze data across a very broad spectrum, together with an ability to defend that process. Each jurisdiction has its own rules and its own risks; this is a reality to which we are very sensitive. We have managed complex investigative discovery matters in a considerable number of settings, each with its own array of challenges.

Another differentiator is the philosophy of independence which we bring to the e-discovery life cycle. By this, I submit that we are not encumbered by any particular relationship, nor are we wedded to a specific technology. We are committed, however, to providing the client with a clear, objective and independent analysis of their e-discovery and litigation challenges and to bringing to bear the best of breed technology for that particular assignment.

Editor: I understand that e-discovery and investigations - two distinct practices - are to be part of the Legal Management Consulting group. Why are you integrating these two services?

Kirtley: We have created a robust practice that focuses on serving the needs of our corporate and law firm clients from end to end. We have a long history of working with both corporate general counsel and law firms on their strategy, operations and technology needs. We have combined those capabilities with our Records and Information Management practice to enable our clients to more effectively manage information. The addition of Peggy and Erik will enable us to scale up our delivery capability for our clients' proactive needs - such as litigation readiness - and to help them when the inevitable litigation or investigation occurs.

Editor: Duff & Phelps has long been known for its expertise in valuation work and management consulting. Why is the firm expanding into e-discovery?

Kirtley: Duff & Phelps has served the market for over 75 years and has a standing tradition of expanding its capabilities to meet the needs of its clients. Increasingly, our clients are facing a variety of legal, compliance and regulatory issues. E-discovery and investigation services are a natural extension of the work we already do in enabling our clients to face the challenges of an increasingly litigious environment and to meet the demands of their clients and of the regulators.

Editor: What are the greatest challenges in e-discovery facing corporations and law firms today?

Laykin: There are a number of significant challenges. Among them I would highlight the challenge of identifying and managing various data types that are potentially discoverable. Another concern is the explosive growth of electronic data within the corporate environment, which has increased both the complexity and cost of managing collections, processing and the review effort.

Another substantial challenge is in identifying the appropriate tools to use for the review of the data. There are many different tools available in the marketplace, but each has its own unique characteristics. We are in a position to provide advice on the appropriate selection and subsequent management of the vendor relationship. This often represents substantial cost containment for the client while at the same time increasing the efficiencies of review.

Daley: I would add spoliation as another major risk that companies face in the e-discovery arena. This is critical because a company that fails to properly preserve data not only runs a substantial risk of losing the case at hand, it also suffers reputational damage. And that - the perception that the company is non-compliant - invites the attention of the plaintiffs' bar. Most companies that have encountered this problem have not acted maliciously, but it is a difficult issue to address, particularly for international enterprises. The integrated services that we offer constitute a valuable resource for such companies and may permit them to reduce the risk significantly.

Editor: You've mentioned e-discovery costs. They have soared in recent years as companies continue to increase their digital assets while reducing their need for hard copy communication. How can companies address the resulting cost increase?

Laykin: Taking a proactive approach - what we call litigation readiness - is essential to the effective control of cost. The company that is prepared to collect and manage its data in anticipation of litigation is in a far better position to address the cost of e-discovery once litigation arises than one that simply reacts to a summons and complaint.

Kirtley: The greatest opportunity that clients have to reduce discovery costs is before they are served. If the company waits until litigation has commenced, or the investigation has begun, about 90 percent of the costs it must address have been predetermined. Knowing what must be retained and what can be eliminated is a valuable undertaking in and of itself, but it also serves to reduce the costs associated with the inevitable litigations or investigations when they arise.

Editor: How does globalization affect the electronic discovery landscape?

Daley: The vast majority of our clients are multinational companies. We are seeing an increase in the scope of litigation discovery requests and governmental investigations that demand production of corporate digital data outside the U.S.

The collection and processing of data consistent with the requirements of a variety of jurisdictions is a significant challenge. Duff & Phelps' international presence provides an effective means of meeting such a challenge for companies operating globally.

Editor: Speaking of Duff & Phelps' international offices, I understand that you have recently opened up several in Asia. Please tell us about the services being offered in this market.

Laykin: We will certainly be offering investigative and e-discovery services in Asia, as well as in Europe, and there is a wide array of matters requiring on the ground assistance and expertise. These are not issues that can be addressed from the U.S. by remote control.

In Asia - and Duff & Phelps now has a strong presence in both China and Japan - we are seeing significant Foreign Corrupt Practices Act matters, in addition to trade secrets and other regulatory issues.

Daley: We are also handling a significant volume of internal investigations involving fraud in Asia and other foreign locations. Very often, companies find themselves dealing with vendors or joint venture partners with whom they are not familiar in these locations, and we are called upon to handle a variety of investigations concerning these relationships.

Editor: Will the firm be suggesting e-discovery products supplied by third-party vendors to its clients or providing its own internally designed e-discovery products?

Laykin: Duff & Phelps has spent considerable time on the development of methodologies, processes and best practices for the management of electronic data. There are many tools available for the implementation of the expertise we bring to our clients, but we do not endorse any one tool or any particular technology. E-discovery products are continually evolving, and the one constant, for us, is the commitment to provide our clients with the best advice available on the products most suitable for their needs. It is for that reason that our team works with all of the traditional and emerging e-discovery service and software vendors to fully appreciate each of their strengths and weaknesses.

Editor: How does an e-discovery program complement your other services?

Kirtley : We have assisted a number of our clients for over a decade by helping them to manage legal and regulatory risks. Specifically, we have worked with clients to minimize litigation risks, helped them prepare for impending litigation, and, when necessary, assisted them in dealing with the difficulties of managing large and complex discovery and production matters. Adding Peggy and Erik to the team vastly enhances our ability to meet our clients' needs.

Editor: Do you plan to train your clients to be proactive, as opposed to reactive, in setting up their data systems?

Kirtley: Absolutely. We will work with our clients in trying to identify the mechanisms that will enable them to be proactive in managing their data and minimizing risk. With respect to our corporate clients, we have already worked with a number of legal departments in the development of a proactive culture designed to reduce risk and minimize cost. In one situation, where a large pharmaceutical house was already engaged in a large class action, we were brought in to work with general counsel and the chief financial officer and succeeded in developing a customized solution with third-party vendors that effectively brought down the company's going forward costs by over 40 percent annually.

Daley: With respect to our law firm clients, we are strong advocates of the need to train attorneys before they are required to select the software tools they are going to need in a large e-discovery project. There is a challenge here in that many lawyers have worked with a particular tool, have developed a certain comfort level with it, and are reluctant to try out something new that may in fact be more appropriate to their needs. Since many clients of the law firm leave it to the firm to select which tools to use, there is a considerable financial stake in making the right choice. We have found that our law firm clients are pleased to have undergone training in this area because it enables them to save their clients a considerable amount of money.

Editor: Will you combine all elements of an e-discovery program - collection, review and presentation, and archiving - with implementation into a client's system?

Kirtley: The short answer is, yes. We have a large team that already focuses on helping clients to map out where data resides, what form it takes and who controls it. In addition, we help our clients to come up with practical retention programs that can be implemented and thereby dramatically reduce the vast amounts of data before the client faces litigation.

Editor: Do you contemplate that the e-discovery program will capture text messaging as well as all other forms of data transmission?

Laykin: Our highly trained teams have the ability to collect electronic data in a variety of forms, including instant messaging and other emerging proprietary systems. Whether we are operating in Shanghai, London or Omaha, we've collected everything from audio on voice mail systems to data residing on antiquated backup tape systems, and from cell phones and BlackBerrys to online repositories such as ASP or SAAS systems (Application Service Provider and Software As A Service). Our experience in forensically collecting and analyzing all types of data is probably the broadest in the industry.

Please email the interviewees at peggy.daley@duffandphelps.com, robert.kirtley@duffandphelps.com or erik.laykin@duffandphelps.com with questions about this interview.