In early June, the eyebrows of the e-discovery world were raised when J-M Manufacturing Company filed a legal malpractice suit in California state court against a premier international law firm, McDermott Will & Emery. Widely dubbed as the "world's first e-discovery malpractice lawsuit," the case and its underlying facts created much commotion throughout the legal blogosphere. More importantly, however, the allegations highlighted the possible consequences of mismanaged e-discovery, especially pertaining to document review.
Many are now familiar with the facts alleged: 3,900 privileged documents, including attorney-client communica-tions, were inadvertently produced to the federal government and subsequently turned over to opposing counsel in the qui tam case. Opposing counsel then refused to return or destroy the privileged documents, alleging that J-M had waived attorney-client privilege with respect to the subject matter since multiple privilege reviews had been conducted before production to the federal government. This disclosure of privileged documents formed the basis for the legal malpractice suit against McDermott.
The fact that J-M used its first amended complaint to identify other well-known firms that played litigation support roles further emphasizes the serious thought that must go into choosing outside e-discovery vendors and outsourced document review companies. As Albert Camus once said, "Life is a sum of all your choices." Every attorney must know that the success of your case also is a sum of your choices. Those choices go beyond case strategy and increasingly include decisions made for e-discovery. This is simply an inevitable byproduct of the much-discussed proliferation of e-data and the associated growth of e-discovery costs and liabilities. The danger of monetary sanctions, adverse inference instructions, evidence preclusion sanctions, case termination and malpractice liability may pale in comparison to loss of client goodwill or a damaged reputation.
The midyear analysis of e-discovery trends and developments published by Gibson Dunn this July showed a doubling of both litigants seeking e-discovery sanctions and sanctions awarded the first six months of this year compared to the same period last year. Furthermore, courts are awarding monetary sanctions arguably in excess of the amount needed to compensate the injured party. In Green v. Blitz , a federal judge in the Eastern District of Texas imposed $250,000 in civil contempt sanctions and a $500,000 bond to coerce compliance with the court's discovery order. "Egregious conduct" in "materially altering" evidence led a federal judge in the Northern District of Illinois to impose a $1 million penalty and case termination in another e-discovery case.
It is within this atmosphere that the J-M Manufacturing v. McDermott case takes form; and such a suit for legal malpractice over e-discovery and review missteps had been long anticipated by attorneys and other observers. Regardless of which side ultimately prevails, the case represents a clear and imminent expansion of professional liability in the growing field of e-discovery.
The facts alleged by J-M illustrate the issues involved in outsourcing review work, and they call attention to the considerations that a law firm or in-house counsel must take into account when choosing outside e-discovery and document review firms. The alleged failures of McDermott to supervise its outside e-discovery provider and contract reviewers are not isolated issues facing a single law firm, but rather issues that impact the entire universe of outsourced discovery work and document review.
The merits of J-M's allegations against McDermott are not evaluated in this article, but some important lessons can be learned from this episode in e-discovery.
Technology Is Not A Panacea
J-M's amended complaint alleges that there was an overreliance on search term filters and keywords to fulfill production requirements. According to the complaint, the third-party electronic discovery vendors ran collected documents through a search term filter with keywords negotiated with the federal government and then ran the documents through a privilege filter to separate out privileged information. These filters, even combined with review by contract lawyers, still allegedly resulted in the turnover of approximately 3,900 privileged and non-responsive documents.
Technology certainly enhances the legal review of documents, but it does not replace quality attorney-based review. This is a trap of e-discovery that could easily grow as e-discovery technology progresses. Reliance on technology may theoretically ensure a defensible process, but it does not necessarily produce a defensible result. As J-M may attest, the use of search term filtering to produce 250,000 documents to the federal government in rapid time is still a botched review if thousands of privileged documents are also let out the door. At the end of the day, e-discovery technology is no different than any other. It is only as good as the user.
Document Review Is A Discipline
It is no exaggeration to say that electronically stored information is proliferating exponentially, as are the associated responsibilities in e-discovery. The sheer amount of time spent by document reviewers looking over a client's documents presents not only a challenge but an opportunity as well. A properly conducted document review goes beyond the mere categorization of documents.
Beyond the tagging of documents as responsive, non-responsive, or potentially privileged is the insight, experience, and common sense that can be provided by full-time attorneys specializing in e-discovery and document review. Experienced attorney-reviewers with the desire to learn not only the details of your case, but also the nuances of a client's internal communications, can be an invaluable asset for outside and in-house counsel.
Dedicated document review firms have years of experience and have developed the expertise necessary to address the issues that ensure thorough and accurate review. When selecting a document review vendor, outside and in-house counsel would be wise not to trust their case to anything less.
The imprecise standards for supervising outside review vendors, coupled with increasing potential for malpractice liability, seemingly dictate more hands-on management by law firms or in-house counsel than is often possible or practical. Managing a review is not something that can easily be done on the side, however, and many are discovering the value of the managed document review.
There are very few review vendors these days that do not purport to offer some form of managed review. The managed document review firm of choice must have the management and specialized expertise to serve as a seamless extension of outside counsel. The firm selected also must have a proven track record and solid references for managed review projects.
Performing the involved tasks of a legal document review on a deadline creates the opportunity for incomplete or incorrect production, whether by mistake or misconduct. Document reviews call for responsiveness to client directions but also require independent project management skills. When selecting from managed document review vendors, there is no substitute for project management by attorneys who have experience in the courtroom and understand the discovery process and how each e-discovery piece fits into the litigation puzzle.
Effective project managers also should have preexisting relationships with various e-discovery vendors and a deep knowledge of review tools and platforms. These attributes, in addition to experience with a variety of data-processing vendors, offer the ability to smoothly resolve various issues that may arise over the course of a review.
Early and ongoing collaboration among outside attorneys, in-house counsel, review platform vendor, and document review project management helps ensure the quality of the document review. Beyond the selection of e-discovery vendors and document review firms, corporate and outside counsel should remain involved in the development of review instructions and be familiar with the quality control measures that are employed at the e-discovery and review providers.
Law firms and in-house counsel need to carefully consider their approach to outsourcing e-discovery and review needs. The greater efficiency and lower cost of outside vendors represent a solution only if the work is handled properly; otherwise the supposed outsourced solution could become a costly problem - in more ways than one.
Joey Seeber is President & CEO of Level 2 Review, and Shaun Yeh is a Project Manager. Level 2 Review is a Texas-based company dedicated to e-discovery and document review, with teams of U.S.-licensed attorneys handling projects of all sizes. Level 2 Review works with corporations and major law firms in a wide variety of matters, including high-stakes commercial litigation, intellectual property disputes and governmental requests and investigations.