How Corporate Counsel Deal With E-Discovery

Tuesday, September 24, 2013 - 14:03

The Editor interviews Michael J. ProunisChief Executive Officer and Co-founder of Evidence Exchange, a New York City-based electronic data discovery solutions provider.

Editor: Michael, you have been working in the e-discovery area since its inception back in the '90s and in the legal technology area since the late '70s. You have been a partner in a professional services company and have founded two successful e-discovery companies. You have seen a lot of change both in terms of the law and practice. From your perspective, how are companies and their corporate counsel doing in dealing with the ever-changing world of discovery?

Prounis: Broadly speaking, companies are gaining tremendous experience in e-discovery. By extension through relationships with fifty or so law firms, we have observed the e-discovery operations of several hundred legal departments. Many of these have outsourced some or all of their e-discovery processes because they lack the specialized internal staff needed to cope with the growing volume of matters involving ESI.

Outsourcing becomes almost a necessity in an environment where ESI volumes grow at 50 percent per year driven by new sources of ESI. Overall, we have observed that in order to cope with runaway costs, legal departments have achieved a new maturity level that justifies assembling a critical mass of in-house practitioners using rapidly improving technology.

Editor: In your opinion, how has the judiciary changed their view of e-discovery?

Prounis: Companies and industry forums are doing a good job of educating the judiciary on e-discovery burdens. As an early member and sponsor of the Sedona Conference, I have watched this process unfold. Through dialog, we see a growing sensitivity among judges to the concerns of companies regarding the economic impact of e-discovery. There is still a lot of work to be done in the preservation area and with respect to clarifying rules governing sanctions.

In the early days, you would have to wait around for months or years for judicial opinions offering guidance, whereas today there is no shortage of direction. We are now seeing as many as two or three opinions come out each week. Courts are rewarding companies that are cooperative in terms of meet and confer. They seem to be more open to notions of proportional discovery and cost-shifting.

Recent changes have introduced new efficiencies in the use of call-backs in the privilege review area. In the broader document review area, some judges have ruled favorably on predictive coding techniques.

These developments suggest to us that the courts and the law are moving in a good direction. Companies need to hire and retain counsel and advisors who can take advantage of these emerging trends. The current environment has already opened opportunities to reduce the cost of e-discovery and to simplify budgeting – which surveys suggest continue to be the primary areas of concern among corporate counsel.

Editor: What e-discovery models are corporations using today to manage this process?

Prounis: Investments by corporations in internal ESI collection have been quite successful. I frequently encounter clients who want to handle internally much of the heavy lifting in the ESI collection area. For many large companies this is just a required cost of doing business. Beyond collection of data, some companies have implemented a variety of different strategies. They range from doing everything in-house to providing some level of vendor-project manager coordination.

Some legal departments have become entirely self-sufficient, but that is still a tiny fraction of companies. This includes those that are serial litigants, such as aggressive enforcers of intellectual property rights. However, sometimes self-sufficiency is a double-edged sword.

Most companies experience peaks and valleys in their litigation and often that is not compatible with doing everything in-house. Some are still entirely passive and rely completely on their outside counsel and their e-discovery providers. Most companies now employ some form of active management where they have developed best practices and have brought in-house multiple services, including collection. They manage the outsourcing process through preferred relationships with law firms and e-discovery companies.

Seven years out from the dawn of e-discovery, companies have accumulated institutional knowledge of what works and what doesn’t work. Despite the pressure to reduce costs in many other areas, legal and IT departments continue to increase their spending on e-discovery technology. They are also negotiating better deals with their service providers and are becoming much more selective in terms of how they spend their money, enforce standards and get closer to the decisions being made. It has been a very expensive learning process, but companies are slowly developing proactive strategies to manage something that is not going to go away any time soon.

Editor: From your perspective, how are law firms changing? How are the practitioner skills improving? What skills are we talking about? What has really changed?

Prounis: What you have nowadays is senior counsel from law firms actively participating in the design of case-specific workflows, the deployment of technologies, and strategies to follow. In the past, law firms and in-house corporate legal departments would adopt best practices and involve senior counsel in that process, but they took a bit of a cookie-cutter approach to e-discovery that actually insulated senior counsel from the messy details.

The early productivity tools were largely designed for lower-level professionals – the document reviewer, supervisor, and paralegals. The new hybrid analytics technology now hitting the market, and becoming quite commonplace, requires the input of senior counsel at the early stage of a matter. The return on the investment of their time has never been better, and their involvement can literally save millions of dollars in document review costs.

The new tools provide senior counsel with new insights about a case and the evidence at various stages of a matter – whether to gauge the completeness of a collection or production task or to help with witness preparation and privilege review. The combination of new tools and the increased experience of senior counsel have moved e-discovery to a new higher level. I refer to this as e-discovery 3.0. It will, if properly managed (and that is a big if) and deployed, have a profound impact on the cost of e-discovery, notwithstanding the increase in volumes of ESI.

We recently completed a project for a company that involved about 10 million documents. Everyone agrees that we saved millions of dollars in document review through a new hybrid analytics workflow using a combination of competing analytics tools to forge a best-of- breed workflow.

It was not a cookie-cutter approach: different situations require different solutions. E-discovery needs to be nuanced. You have to have the right team, the right talent, the right tools, and most importantly the right case to be successful.

In my opinion, hybrid analytics are becoming a game-changer. With the proper project management and control, these tools can and will positively impact budgets and control costs.

Editor: What about the difficulties that global corporations might have because they are faced with documents in many languages, including Asian languages that use characters?

Prounis: When you encounter multiple languages, even if one is an Asian language using kanji characters, it is not an issue because of hybrid analytics. We’re talking about technology like concept searching that uses a mathematical algorithm to determine the similarity of documents.

So this similarity is based not on language, but on the co-location of terms within a document. Therefore, the more co-located terms you have, the stronger the concept.

The more concepts documents share, the higher the similarity between the documents.

Editor: Could you further define the term “hybrid analytics”?

Prounis: Hybrid analytics consists of tools for concept searching, clustering, categorization and email threading. Think of it as an ever-expanding toolkit of algorithms and workflows designed to solve everyday litigation problems.

We refer to it as hybrid analytics because, in our mind, it relies on multiple algorithms and workflows, each doing different things well. At Evidence Exchange, so far we use no fewer than five different analytics algorithms and fifteen workflows to provide our hybrid analytics service.

Some tools handle concept searching, some tools handle clustering, and some tools handle content visualization. The key to hybrid analytics is to stitch the unique custom fabric that makes sense for a particular matter. These hybrid analytics tools all rely on text and metadata that are the least expensive and most widely available forms of ESI processing.

Clustering involves forming clusters of documents based on the similarity of documents. This takes place without any human intervention or training. It is quite popular in early case assessment types of applications because it provides a method for targeting reviews of conceptually similar documents. Likewise, it is an invaluable way to learn about a production received from your opponent or a third party.

Categorization is also a valuable analytics tool. We are all hearing a lot about predictive coding. Senior counsel are working with sample sets of documents to train the system. They code those documents until the predictive coding system stabilizes and can weigh a document’s responsiveness. When senior counsel have finished the coding process, the system then pushes the categories to similar documents outside the sample set.

The final hybrid analytics application that we use is email threading. Like clustering and content visualization, email threading tools require no human intervention. They simply group emails with their attachments together so you can look at the whole email thread. It provides consistency when you are doing privilege reviews since it reduces the size of the review and production set.

Beyond email threading, which is fairly standard, there are no textbook solutions. This is an exciting work in progress as we devise and document solutions to practical problems encountered by litigators. This collection of solutions will increasingly become the way by which providers distinguish themselves. Companies and law firms must encourage their staff and providers to experiment. We, for instance, routinely offer new technologies to our major clients gratis for experimentation purposes. We are quite excited to be working with them to provide the next generation of solutions.

Editor: From your perspective, what does corporate counsel expect from their e-discovery providers?

Prounis: They expect excellent customer service, high-quality output and an ever-declining unit cost. Providers are more open to alternative billing arrangements. I believe they in turn expect to be rewarded with repeat business.

Cost control continues to be a huge area of concern for companies. Cost control and the ability of the provider to innovate can trump long-standing relationships. Companies are diversifying their portfolio of law firms and support companies. They expect their providers to be knowledgeable about the new opportunities – and when and when not to deploy them. They expect providers to offer alternatives and to continue to identify ways to reduce costs and prove the effectiveness of solutions. In that sense, they are really looking for partners, not simply providers.

Please email the interviewee at michael.prounis@evidenceexchange.com with questions about this article.