Information Governance: Solving The Problem Of Over-Preservation

Wednesday, March 19, 2014 - 09:31

The Editor interviews Mary Mack, Enterprise Technology Counsel, ZyLAB.

Editor: Mary, what is the link between information governance and the proposed new Rules to be added to the Federal Rules of Civil Procedure?

Mack: The proposed Rules are intended to address some of the unintended consequences of the 2006 amendments that expanded the volume of electronic discovery. One of the two most important Rules amendments includes a revision to Rule 26(b)(1) that redefines the scope of discovery to limit discovery to “any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.”

The other important Rule amendment is a rewrite of Rule 37(e) to provide for the first time a rules-based standard for imposing sanctions for failure to preserve discoverable information.

The proposed Rules would begin to establish a much-needed uniform federal standard that would curtail costly over-preservation and ancillary litigation over allegations of spoliation. The proposed Rules include a willful standard for applying sanctions and a showing of prejudice as a result of information being lost.

In addition, Federal Rule of Evidence 502 provides almost blanket privilege protection in case of inadvertent production. When huge mountains of electronic data are reviewed, it is almost inevitable that some key privileged documents will leak through. Rule 502 is called out as a Scheduling Conference item, making it more likely to be employed.

Editor: Tell us about the origin of the proposed Rules.

Mack: The Amendments were spurred by concern over costly over-preservation of electronically stored information by corporations as the result of fears triggered by court cases in which adverse inference and terminating sanctions were applied. At a conference at Duke University, the Rules Advisory Committee asked for input – and they sure got input! Over the last few years, thousands of comments have been considered.

In the second week of April, the Rules Advisory Committee will meet in Portland. They may or may not decide to change some of the Rules as proposed. The Amendments seem to have pretty much completed the process, although some of the provisions – like number of depositions, which reduces a presumptive limit – may not survive. The Rules Advisory Committee will make the changes that they feel they need to make after the last public session in Portland.

The Portland session will be public (and input can be given as well), and then the proposed Rules will be transmitted to the Standing Committee. The Standing Committee will accept, modify or reject (send back) them. If accepted, the Rules will proceed to the Judicial Conference, then the Supreme Court, and then Congress. While the Committees and the Court need to affirmatively endorse the Rule changes, Congress needs only to do nothing. A very likely scenario is that the amended Rules could go into effect as early as December 2015.

Editor: Do the proposed Rules have substantial corporate support?

Mack: Yes, there were hundreds of favorable comments. The Metropolitan Corporate Counsel took the lead in asking its readers and Internet viewers to comment favorably on the proposed Rules. Also, Professor Hubbard collected very important hard data about the costs of over-preservation, which was submitted to the Rules Advisory Committee.

Editor: What does ZyLAB add?

Mack: Professor Hubbard’s study delivered to the Rules Advisory Committee provided that Committee with information about the great cost to U.S. corporations of over-preservation – a burden that is not faced by their foreign competitors. If the proposed Rules are adopted, this burden could be lifted. When that happens, companies should be prepared to implement defensible disposition or, as some call it, “certified Section 37(e) destruction.” This enables companies to dispose of the frequently immense amount of material that it will no longer be required to retain.

The ZyLAB system enables an organization to search through its data to find data that is not under legal hold or subject to some regulatory or other obligation. Of course, this process should take place in close coordination with the corporation’s counsel.

ZyLAB’s search is particularly good at finding things that may not necessarily be searchable in an ESI format – for example, schematics that might support a patent claim. You are not going to find those things in a nice, neat folder structure or a database. They may be in a very large pile of unmanaged or ungoverned data, or it may be a physical object.

Having policies and procedures and a defensible methodology to determine what documents or objects can be safely destroyed or should be retained is very important. It requires a lot of cooperation between the office of general counsel and the CIO and perhaps trusted outside counsel to make sure all the i’s are dotted and t’s are crossed because this is a new area.

It is also important to have organized legal holds, so counsel knows the right communications were timely made, and also which cases still have preservation obligations. ZyLAB’s system has a built-in legal hold manager to assist with this triage. Our system allows an organization to sift through all the types of things that may be critical to winning an important case.

It’s important to have a belt with suspenders for defensible disposition, especially for organizations that have a lot of very high-impact litigation. ZyLAB is able to search very large documents, for example, construction documents, maps or things of that nature. We are able to index those – even sideways or upside-down, which many technologies can’t do. That allows those documents that should be kept to surface for examination by whoever is deciding what to keep and what to dispose of. We also search through voicemails without transcribing them so the expense of searching through them is much lower.

Editors: That’s something that’s pretty much unique to ZyLAB, as I understand it.

Mack: There are a couple of organizations that do have the audio search, but there are not many that have integrated it within one platform. Usually it’s a separate tool or a separate process, and we’re able to do this in English and many other languages for our global clients.

Editor: Does that include Chinese, Japanese and Korean characters?

Mack: Yes. In the audio, it’s the spoken language that is searched as opposed to transcribing the spoken language into characters. We can handle, in addition to European and other written and spoken languages, Chinese, Japanese and Korean, as well as Middle Eastern languages.

Editor: You mentioned that e-discovery will be discussed even earlier than after the 2006 Amendments.

Mack: Yes, the Scheduling Conference is moved up 30 days (from 120 days to 90 days), and requests for production can be delivered before the meet and confer. They will be considered served at the meet and confer, which accelerates production.

Editor: Do you think the change in when proportionality is considered will have an impact on corporate counsel?

Mack: Yes, I do. Proportionality will be considered very early in the case, rather than later, when facts are more plentiful. The organization that is able to surface key documents, assess the costs and exposure, address the importance of the issues, balance the asymmetry and resource availability of the parties will be in the best position to be persuasive on proportionality.

Editor: What are the benefits of being persuasive on proportionality for corporate counsel?

Mack: Favorable proportionality wins will allow reduced time to trial/settlement, cost and risk. Everything from the scope of discovery (custodians, data sources, time periods) to what needs to be preserved can be defined and limited.

Editor: How does ZyLAB help in demonstrating proportionality?

Mack: Because ZyLAB is a perpetual license and is not a per GB/volume charge, an organization does not have a self-imposed cost penalty to do a full early case assessment of the electronic evidence to document redundant sources, and sources not applicable to the claims and defenses. From the results of ZyLAB sampling application, counsel’s intuitive or experience-based knowledge of what is “too much” can be demonstrated with quantitative evidence. This can be persuasive to a knowledgeable opponent, and to the court in a more asymmetric situation.

Editor: Can ZyLAB help with detecting violations of the FCPA and other regulations?

Mack: Yes. We can assist in detecting FCPA and other regulatory violations as well as fraud. Our text-mining capability can surface key documents very quickly – the-who-did-what-to-whom kind of documents. Such documents help counsel decide very early how strong a case is. We are going to continue to innovate in this area.

Editor: Does ZyLAB offer any services in the way of monitoring communications?

Mack: We have what’s called a Fraud Triangle Library, and we are also members of the Association of Certified Fraud Examiners. Where appropriate and legal, we screen communications and provide the organizations that retain us with visual representations of actors in an organization who have the particular characteristics that the organization wishes to pinpoint.

We are able to geolocate communications so that you can find out if somebody’s working in a hot spot, say in Nigeria, and then target those communications just by location, or you can take a look at the content of them to see if they trigger any of the elements of the fraud triangle. By using systems like this, companies can demonstrate that their corporate culture takes the FCPA very seriously. The kind of monitoring we provide goes a long way to showing the organization’s good faith and that any violations were attributable to individual actors rather than the corporate culture.

Editor: Can ZyLAB help a company use its data flow to drive revenue?

Mack: Information governance is not only a great risk management tool, but ZyLAB also surfaces documents with business value. It is easy to see how intellectual property protection depends on maintaining time-appropriate documentation. Less obviously, mining successful salespeople’s documents can surface best practices for the sales team. Mining customer complaints can provide the seed for the next product rollout.

Once e-discovery and defensible disposition are addressed, the platforms employed can be used to create business value.

Please email the interviewee at mary.mack@zylab.com with questions about this interview.


 
ZyLAB / ACEDS webinar

On March 25, ZyLAB will be presenting a webcast with Mary Mack and Tom Allman that is a walk-through of the proposed amendments. These two outstanding experts on e-discovery will discuss which amendments are most controversial and which are likely to come through the process intact, and how corporate counsel can prepare.

Specific areas of discussion will include the enhanced role of “proportionality” in regard to preservation and production of discoverable information; the possible increase in requests for “cost allocations” and the impact of the “factors” on preservation obligations, and the articulation - for the first time - of a series of uniform requirements for spoliation sanctions and curative measures.

Registration link: http://www.aceds.org/changes-to-the-federal-rules-of-civil-procedure-at-final-stages