Do Your Bit To Control Runaway E-Discovery Costs

Monday, April 5, 2010 - 01:00

Mark Austrian is a Partner in the firm's Washington, D.C. office. He focuses his trial practice on litigation, mediation and arbitration proceedings, including matters in the intellectual property, toxic tort, products liability, customs, telecommunications, commercial and environmental law areas.

This interview focuses on the approach set forth in the Final Report of the Joint Project of the American College of Trial Lawyers (ACTL) and the Institute for the Advancement of the American Legal System (IAALS) and in the Pilot Project Rules of the IAALS.

Editor: First, tell us more about your practice as it involves e-discovery.

Austrian: I lead a firm-wide task group whose objective is to assist lawyers to develop coherent, consistent and cost-effective practices for responding to the full range of problems associated with e-discovery so that we are not constantly reinventing the wheel in each case. One of the primary problems inhibiting cost-effective e-discovery is that experienced trial lawyers need to learn more about the constantly changing technology in order to devise creative solutions and convince judges that their approach is reasonable.

My interests go beyond the practice side. The legal and technical issues surrounding e-discovery must be taught in our law schools to enable law students properly to counsel their future clients to avoid and reduce the enormous and, in many ways, unnecessary discovery costs clogging our litigation system. For this reason, I serve on the board of Georgetown Law School's E-Discovery Advisory Board, and have designed and will be teaching next fall a course in e-discovery at American University Washington College of Law in addition to the course I currently teach on Advanced Trial Advocacy in the High-Tech Courtroom during the spring.

Editor: E-discovery is becoming the largest factor in the soaring cost of litigation. Our readers would appreciate your insights into the issue of controlling legal costs.

Austrian: Managing litigation costs is one of the most important things that law firms are struggling with right now. The Association of Corporate Counsel has initiated a value challenge in an attempt to rein in these costs. In the current economic environment, law firms must focus on structuring litigation budgets to take into consideration the cost and the uncertainty of the e-discovery process. There is no simple solution. Law firms need to develop the same types of business and process models that corporations use all the time to reduce costs and set up procedures that are repeatable and can be analyzed within their own firms. I think that we are going to see many more companies insisting that firms use these steps in the future. Unfortunately project management skills are not taught in law schools.

Editor: Do judges also need to be better informed about e-discovery?

Austrian: Yes. Complex cases often involve corporations with unique computer systems. Where counsel cannot agree, judges must become sufficiently involved in the case to learn enough about the systems and then blend that education, if you will, to the facts. Most judges appreciate how important it is to resolve these disputes properly, but since this has traditionally not been part of their own legal background and education, it is not something they really want to spend a considerable amount of time and effort to understand.

The reality is that judges can't avoid becoming involved and lawyers must take responsibility for educating them. Judges operate in a wide variety of areas which means they have to learn lots and lots of things that they may not be interested in. E-discovery is an essential part of the exchange of information. Electronically stored information has almost completely replaced paper documents in business - so gathering ESI is an essential part of the litigation process.

Editor: What advice do you have for lawyers starting out on a case?

Austrian: You have to think about e-discovery from the end of the case looking backwards. Most good litigators think about the opening and closing statements that they will give at trial and then go backwards to consider how they will get the facts to support the positions they wish to take.

The issues in e-discovery impact how you are going to process the information up until the time that you are going to trial. For example, the way in which information has been obtained from the client and third parties directly impacts how you organize it once you get it into your law firm. This also involves considering right at the outset how to present those facts to a judge though the various types of litigation presentation software.

Editor: How does fact-based pleading fit into the picture you just described?

Austrian: We have really gone down part of that road with the Supreme Court's decisions in Bell Atlantic and Ashcroft. You may recall that in Twombly the U.S. Supreme Court actually said that there must be enough facts to state a claim for relief that is plausible on its face. One of the reasons it said that was because of concerns related to the skyrocketing costs of e-discovery.

There are a number of surveys going on, and we will have to see what impact these decisions have on controlling e-discovery costs. On the downside, over the last few years there reportedly have been over 5,000 Twombly motions filed. Judges generally dislike these motions because it puts them into a line-drawing process very early in the case before they really have a good understanding of what is going on.

I had a patent case where we had multiple defendants including the particular corporations involved as well as their officers, and the allegations against the officers were very sketchy. We moved under the Twombly and Ashcroft cases to dismiss, which the judge granted. The downside is that after you have filed briefs and argued these motions, the plaintiff will request and be granted leave to amend the complaint and the process starts all over again. Unless a stay has been entered, with expedited discovery the parties are already involved in e-discovery and there may be no overall savings.

Editor: Does the pre-complaint limited discovery provided for in the ACTL and IAALS approach coupled with its requirement that each party come forward initially with all the facts that they are aware of save costs by making e-discovery more focused?

Austrian: I certainly agree with that. The problem that we now have is that the Rule 26(f) conference has failed in its role as the watershed moment where counsel either at the conference or before would sit down seriously and talk about these things. I do think the ACTL and IAALS approach of having the judge there would be useful to the extent that it provides the judge with the opportunity to learn about some of the technical issues involved, and it would require more lawyers to properly prepare for the conference. What I am really hoping is that eventually you won't need the judges and magistrates present because the lawyers themselves will have changed their ways. We are seeing that many courts are adopting the Sedona Conference principles along the lines embodied in its Cooperation Proclamation.

Editor: Are there a growing number of cases where extensive e-discovery was threatened, but which are settled without regard to the merits in order to avoid discovery costs?

Austrian: Significantly fewer cases are being tried and e-discovery costs are driving that. This is destroying the system whereby litigants can go into court to get their disputes resolved within that forum. One way to stop that is to limit discovery and focus on the facts of the case as is done in the ACTL and IAALS approach and that of the Seventh Circuit.

Editor: Isn't there also a concern that patent trolls and some plaintiffs' counsel can game the current system and achieve settlements by threatening extensive e-discovery?

Austrian: Of course. What many plaintiffs would like to do is to shift the focus of the case away from the merits of the dispute into an in-depth examination of the processes by which the information that they've asked for is presented to them. This tactic prevents the case from ever getting to trial because the e-discovery motion practice has taken over everything. In Judge Scheindlin's recent opinion in Zubulake Revisited, she said she spent 300 hours on those discovery motions. We can only guess at the enormous amount of time and money the clients have had to spend. Editor: What is your reaction to the emphasis on proportionality in the IAALS pilot program rules.

Austrian: The emphasis is very appropriate . The question is how do the parties bring that issue to the attention of the judge? I think that every judge would agree that we cannot devote the same resources to a $50,000 dispute that we might feel are justified where the dispute is $15 million. Rule Eight of the IAALS pilot project rules gives the judge some useful guidance. It lists numerous types of limitations that might be considered . However, since the usefulness of the IAALS list will be tested in the pilot programs, I will be interested in seeing from the data how it has worked in practice.

Editor: How do you feel about the ACTL and IAALS proposal to limit sanctions for destroying evidence to situations where there is a showing of intent to destroy evidence or recklessness?

Austrian: I think Judge Scheindlin's analysis in the recent decision in the Pension Committee case is extremely useful. There are two types of situations. If the evidence that should have been preserved and produced might have materially affected the case and where the other party is disadvantaged, it seems unfair to limit the sanctions, such as an adverse inference, to where the affected party must prove intent or recklessness. I am not sure this is what the ACTL and IAALS are proposing.

On the other hand, parties often seek sanctions to punish the offending client or counsel through monetary sanctions or default judgments and this diverts significant time and expense away from deciding the merits of the case. Based on my experience, for example, litigation holds in larger companies can never be 100 percent effective and, with 20-20 hindsight there are always ways to do it better. This is not sanctionable conduct. Therefore, a good argument can be made for limiting the sanctions as proposed by ACTL and IAALS.

Editor: Do you believe it is important for corporate counsel to furnish hard data about the cost of e-discovery to the Lawyers for Civil Justice for presentation at the Federal Rules Advisory Committee Conference at Duke in May?

Austrian: It is important for such information to be furnished to the Conference since it will point up the need for reform and, hopefully, provide empirical data on the scope of the problem. However, any resulting white paper should be a work-in-progress since reforming the rules and educating lawyers and their clients is a long process and the technology is changing constantly. If the Federal Rules Advisory Committee decides that reforms should be made, many decisions must be made along the way. Also, the information developed will be of use in connection with the consideration by the states of the need for reform.

Please email the interviewee at maustrian@kelleydrye.com with questions about this interview.