E-Discovery As Part Of The ADR Process

Monday, April 5, 2010 - 00:00

Editor: What e-discovery lesson have you learned from the trenches?

Bennett: Basically electronic discovery today is discovery in most cases. E-mail, in particular, is a regular part of business communication along with ever-increasing volume and usage of new electronic communications devices, all providing potential evidence. It is inevitable that dispute resolution will have electronic discovery as an element of the process.

Editor: What dispute resolution options should be considered before the dispute?

Bennett: If you are a litigant who routinely experiences disputes in your business, you may want to think about what experiences you have had, both with the most frequent as well as most disruptive types of disputes and what methods have worked better than others to resolve them. From your menu of options think about one or more of these that you may want to build into your contracts with customers, suppliers, and partners. Think also about these options as possibilities for agreement after a dispute arises. It is vital to tailor the options to your specific circumstance. One of the factors you may wish to design into your strategy is how you are going to handle the issue of electronic information.

Editor: How does one determine ab initio the best dispute resolution position?

Bennett: Do advance thinking. What kind of information would I need in the event of a dispute? Am I more likely to be the plaintiff or the defendant? Am I more concerned about how fast the process goes and how much it is going to cost? Am I more concerned about getting necessary information versus having to give up necessary information? In a lot of instances large institutions are concerned about cost and the prospect of invasive and intrusive burdensome discovery requests. But there are circumstances where even large institutions may find themselves more likely to be in need of gathering information for purposes of dispute resolution. For example, they may have some need for an accounting or some additional business operation details from a co-venturer.

Editor: What options do I have as arbitration alternatives if I elect arbitration?

Bennett: The key to designing dispute resolution systems is to build in a menu of options. You can write these into your contracts - everything from mandatory settlement discussions to mediation to arbitration or forum selection for litigation purposes, but in addition to those options you also have options in terms of the dispute resolution providers. Potential providers may include AAA, CPR and JAMS applying U.S. rules, ICC and LCIA applying international rules, UNCITRAL applying ad hoc rules, and self-designed arbitral tribunals. There are actually many more.

Editor: How does a litigant decide on what ADR process should be used?

Bennett: Alternative dispute resolution processes for resolving the merits of a dispute are exactly what the name implies - an alternative to conventional civil litigation. The hallmark of the alternative dispute resolution process is party autonomy, i.e., parties can choose what they consider to be most appropriate for resolution of their disputes. Often they do so by choosing an arbitration service provider and a set of rules. But they can also modify or specify in their dispute resolution clause the details of a dispute resolution procedure. They may specify how the arbitrator or mediator will be chosen - whether under the auspices of a service provider such as AAA, CPR JAMS, or under an ad hoc arrangement.

Editor: Please discuss the organization of your data management practices.Is this preparation done in advance of the first conference?

Bennett: If a party is an organization routinely subject to litigation or government investigation and regulation, and knows that it is likely to be subject to requests for documents at various times, then these sorts of processes should be followed: drawing a data map to help in locating data and developing a process for holding onto information for litigation or investigation purposes. Specifying that process, deciding on who will be responsible, having that process in advance of litigation means that there is more likely to be an organized response versus chaos.

If you do make the determination that litigation is likely, then you should know that this question of preservation of information may become an important question in the case and you have to start thinking about it fairly early. In some instances parties have sent to their adversaries, even before they file any litigation or arbitration demand, so-called litigation-hold letters stating " I represent an individual or institution that has a claim against you, and we hereby request that you hold onto all information that relates to this claim." That sort of demand requires a measured response. Even if you didn't get that litigation-hold request, in some instances parties may raise the preservation issue. In the federal system, under the federal rules, you are supposed to raise it as early as possible before the first conference, but even in the arbitration context there are circumstances where opposing parties are likely to ask about the litigation-hold early on. You want to be ahead of the thing with a rational, explainable, good faith position.

Editor: Why is it important to pay attention to selection of arbitrators?

Bennett: The United States has what is considered to be the most liberal approach to discovery on the face of the planet. If you are involved in arbitration and you have a preference for focused, relatively limited discovery or you prefer open-ended, relatively liberal discovery, then you should be looking at the characteristics of your arbitrators to get a sense of what their approach will be to the subject. Former U.S. judges generally are likely to apply liberal discovery rules.

Editor: How does one prepare for the first conference?

Bennett: Discovery is one of the issues that is likely to come up early on in the process. The character of the discovery process to a certain extent drives the timing and the cost associated with arbitration. Years ago I served as a small claims court arbitrator where there was no discovery and hearings were conducted on the spot. There were no depositions and no document exchanges. But today, if you have a matter that involves more information and a need for a process to exchange information in advance of the arbitration hearing, you need to have some discussion about what is appropriate. Inevitably there are going to be some disputes between the parties on what is necessary or reasonable in terms of discovery. At some point the arbitrator is going to have to make some decisions. My advice is be prepared to start talking about the extent of discovery as early as possible and recognize that it is a point of advocacy just as much as advocacy on the merits of the dispute. If there is a need for extensive discovery, it should be grounded in solid, factual specifics and thought through carefully.

Editor: Do you agree that the discovery factor today can be determinative of the outcome of the dispute?

Bennett: The cost of litigation in general is part of what drives parties to consider settling their disputes. There is a classic description of how settlement processes work. One of the central theories under settlement processes is called "the best alternative to no agreement." Part of the "alternative to no agreement" is that you are going to spend some money on lawyer fees and potentially other expenses. One of the major things that goes into that expense list is the cost of electronic discovery. It has an influence over the prospects for settlement and there are some circumstances where it may be of particularly great impact.

Editor: What is the next step after the initial request for documents?

Bennett: After making a request for documents, you typically get a response from the other side indicating they will be forthcoming with certain documents but not with others, often leading you to return to the neutral to get a ruling and a request to compel production of certain documents. If anything, the arbitration process places an emphasis on good faith negotiation and a reasonable effort at compromise. It is important to appear to be conciliatory in being helpful to an efficient and fair resolution of the dispute. But what happens if somebody says, "I won't give that to you"? The concept of preclusion or an adverse inference is a tool that in some instances arbitrators are more willing to invoke than sanctions in the classic sense. One of the options is to suggest to the arbitrators that the other side be precluded from providing contrary information on a given subject because they have not provided information requested in discovery.

Editor: While conventional rules of evidence do not necessarily apply in an arbitration, are some fundamental privileges still adhered to by arbitration association service providers?

Bennett: While the rules of many of the arbitration association service providers say in substance that conventional rules of evidence don't necessarily apply, there is concern for certain privileges. In theory, matters that might be hearsay or not subject to complete authentication in the conventional sense of evidence may still be admitted into evidence in arbitration. Much depends on the rules of the organization and the directions of the arbitrator. My advice to advocates, who may consider objections to be futile, is to be attentive to the real question: what is the quality of the evidence? Is there some indication that a party has only produced favorable material and has held back information that could be harmful? Is there some possibility that information has been tampered with? Is there some possibility that if you looked at the electronic signatures in the metadata and the details of how a document was created you might find some additional indication of problems with the document? If you can do that in a targeted way, being focused on specific documents or specific topics, you have some possibility of getting traction with an arbitrator. If you have that sort of issue even though conventional rules of evidence may not apply, you may still have an argument about the credibility of certain evidence.

Editor: In view of the variability of evidentiary requirements and application of e-discovery norms, is ADR still competitive?

Bennett: Absolutely. Many judges complain that parties have not taken responsibility for identifying issues early in order to have good faith negotiations with their adversaries but instead have thrown their issues to the judge to decide. Those are problems that still exist in litigation. By no means have we turned a corner in solving all the problems of handling electronic discovery in conventional litigation. On the other hand, alternative dispute resolution is a tool which is well suited for certain assignments. In settlement negotiations in most instances there is no discovery at all. In mediation in most instances parties may voluntarily agree to exchange information, but it is a voluntary process. There may be virtually no discovery costs in the context of mediation. Even when you get into arbitration, which is moving closer toward conventional litigation, most arbitration processes are more limited in terms of discovery then conventional litigation. Parties can agree to do more, but by and large the impetus and the direction of arbitration is towards more streamlined discovery.

Editor: Any final remarks?

Bennett: Many of the arbitration service organizations have been looking at electronic discovery processes and are trying to come up with appropriate procedures and protocols. I anticipate a repeat of what happened in the context of civil litigation in this electronic discovery space for more than ten years. We see an avant-garde of folks who had a familiarity with technology who are embracing technology as part of the dispute resolution process. We are today seeing an effort to educate ADR neutrals about electronic discovery issues in ADR processes.

Please email scbennett@jonesday.com with questions about this interview.