Electronic Discovery: The Effect of The Proposed Amendments

Thursday, December 1, 2005 - 01:00

The Editor interviews Mary Mack, Technology Counsel,
Fios Inc.

Editor: Our readers recognize that Fios cannot be expected to provide
legal advice. However, its experience may put it in a good position to judge the
seriousness of the issues addressed by the proposed amendments. While it cannot
provide legal advice with respect to the effectiveness of the remedies proposed
by the amendments, it can evaluate the practical considerations involved in
resorting to those remedies.

Mack: Correct. Fios does not practice law. Corporate counsel needs
outside counsel for legal advice. Fios does, however, assess the practical
implications of a legal strategy or brainstorm around strategies for particular
technical situations.

Editor: How important is the proposed amendment to Rule 26(f) that
requires the parties to sit down together before discovery begins to discuss
e-discovery and to agree on some form of procedure or protocol to govern
discovery of electronic documentation?

Mack: This rule encourages uniformity and provides a structure for
earlier and more predictable motion practice around electronic discovery.
Current e-discovery motion practice usually ensues after requests for production
are received. Many cases are dismissed, narrowed or settled by that time. There
will now need to be an early conscious agreement to "bypass" electronic
discovery rather than unconsciously ignoring it until the discovery cutoff date
occurs. This discussion of electronically stored information and agreement on
preservation and production, so early in a case, will require a big change in
behavior. As the Note to the Amendments warns: "It may be important for the
parties to discuss those systems and accordingly important for counsel to become
familiar with those systems before the conference. With that information, the
parties can develop a discovery plan that takes into account the capabilities of
their computer systems." Currently, this discussion and planning taking into
account what is "real" as opposed to what is "imagined" is excellent practice as
opposed to "best practice."

Editor: The Rule provides that the court will then enter an order
requiring that agreement to be followed. Are these kinds of agreements currently
used in some courts by some litigants and how successful have they been?

Mack: Yes. Some, where the parties' attorneys understand the
implications of what they are promising to do, are very successful. Others are
traps for the unwary. With the new rules, there's no making up how fast
computers work, or that anything can be searched anywhere for anything, or that
anything can be produced in a particular way. It's imperative to ask for and get
service-level commitments from your CIO's team, from your outside counsel who
will review material, and from the service provider(s) who will assist in the
collection, processing, review and production of such material. This will be
exceptionally important if your discovery plan becomes part of a court order.
This should include a section on rescheduling as part of any order because there
are often surprises in the data. The responding party will bear the brunt of
missing schedules. A time limit should also be set for requesting search terms
and the number of times search terms can be proposed as part of an early
agreement. Most data reduction takes place on a custodian, date or search term
basis. Custodians and dates are clean divisions of data. Search terms are
generally run against the entire data population. We've seen how limiting the
number of dips into the entire data population can reduce costs dramatically.

Editor: Will the proposed amendments reduce the costs of e-discovery by
making discovery a more focused process?

Mack: I do not think so. On the one hand, there is an opportunity to
narrow the types and amounts of data early in the case. On the other hand, most
parties now do not follow the current rules on voluntary disclosures. The
requirement that parties disclose prior to the meeting and confer, and for the
requesting party to be very specific in what they ask for, means that a large
amount of active data (data on live servers, email archives and document
management systems) will be requested. These documents will need to be reviewed
and produced (see my reservations about the "quick peek"/"clawback" strategy).

The main upfront expense will be defining the universe of data responsive to
the initial complaint. Usually, a complaint is pretty broad. Current practice
for most cases is to wait for requests for production before doing that work. In
practical terms, in many cases that means after the motion to dismiss, after
summary judgment.

Of course, best practice, especially after Zubulake, is to define the
data universe at the complaint stage to design and deploy the preservation
letter and monitoring system. In real terms, however, enterprises are just
beginning to come to terms with the heightened responsibility for preservation.

Editor: How big a problem is inadvertent waiver of the privilege?

Mack: In my opinion, it is a huge problem. With the erosion of
privilege in governmental investigations, it's not at all clear to me that
privileged material produced as part of a "quick peek" will have a modicum of
protection. Also, legal strategy documents might be precluded from evidence, but
the strategy will still be known by the requesting party.

Editor: Will the proposed amendment to Rule 26(b)(5) that permits
inadvertently disclosed privileged information to be retrieved reduce the costs
of pre-disclosure review?

Mack: Yes, it is possible it will reduce the costs of pre-disclosure
review, especially for low risk data stores, like some marketing and finance
material. Only the items chosen as responsive will need to be reviewed for
privilege. However, it is important to consider issues other than privilege when
turning over material from a corporation, like trade secrets and other IP. A
parallel situation is employment attorneys who forensically analyze the hard
drives of departing employees. The hard drives belong to the corporation and
thus are not reviewed by the employee's counsel. There is a current practice to
use unrelated non-privileged material coupled with a targeted deposition as
impeachment fodder. I am very concerned about handing email over without a
review. Who among us would want our entire email box in the hands of a hostile
party?

Editor: What other beneficial effects might it have?

Mack: The main beneficial effect would be to accelerate settlements.
Both sides can see each others' hand earlier in the process. The other is to
remove motion practice around the inadvertent production of privileged material.
Collaboration and trust around privileged documents might raise up the
profession in unexpected ways.

Suggestions to reduce the negative impact of quick peeks and clawbacks: make
as part of the 26 (f) order a very strong protective order with teeth. This
would include:


  • Attorneys' eyes only on the produced material,

  • No waiver of trade secret protection,

  • Penalties for distributing the material, extending the order to
    e-discovery providers who might assist the requesting party in the
    review,

  • Providing for certified and validated destruction of data not used
    or privileged data.
  • My prediction is that inexperienced litigants will simply hand over a hard
    drive full of corporate documents hoping to push the cost of processing and
    review on the requesting party. This presents several technical/legal issues:


  • The files would not be numbered for clear
    identification.

  • The files would not be authenticated by the producing party (hashed)
    to be sure they are not altered if introduced into evidence by the requesting
    party.

  • The requesting party would know more about the corporation's data
    than the producing party.
  • There are protocols we've used with litigants using clawbacks.

    Editor: The proposed amendment to Rule 26(b)(2) requires a court order for
    e-discovery of information that is not reasonably accessible because of undue
    burden or cost. The responding party must identify by category and type the
    sources of potentially responsive information that it has not searched or
    produced because of the costs and burdens of production. The requesting party
    may move for the production of such information and the responding party then
    has the burden of showing that such information is not reasonably accessible.
    However, the court may order discovery for good cause and specify the conditions
    for such discovery, which may include requiring the requesting party to bear
    part of the cost. Please compare this approach with existing practice and offer
    your thoughts on how important it may be in reducing the excessive costs of
    providing information not reasonably accessible.

    Mack: This section generally applies to backup tapes. This will
    require more work for all but the most beleaguered litigants. The current usual
    practice is to list the number and type of backups (software used, full or
    incremental, compressed, etc.) to the extent that the information is known from
    the tape label or from a tape log, but not enough to illuminate "the likelihood
    of finding responsive information on the identified stores." The impact will be
    to increase tape cataloging (the process of identifying what files are on a tape
    and when the backup was completed). This usually costs less than 20% of a full
    restore, and certainly dramatically less than searching, reviewing and
    de-duplicating all of the tapes. The cost of review can be considered as a
    factor. By itself, that should increase the burden argument.

    Editor: Based upon your experience with difficulties encountered by your
    clients, how helpful is the ban on sanctions (absent exceptional circumstances)
    proposed in Rule 37(j) when electronic information is lost due to the routine,
    good faith operation of an electronic information system?

    Mack: I think this section will lull more people to sleep easier. But
    alarm bells should be ringing. Clearly, the intent of this section was to
    assuage the fears that something would be overwritten or lost without intent to
    destroy and subject the enterprise to huge sanctions. This has codified
    Zubulake
    and puts the GC on notice to design, deploy and validate a data
    retention policy which includes a legal hold process as regards to electronic
    information. This is no small task, even for enterprises without proprietary
    transactional databases or enterprises made up of many different companies with
    different technical platforms, personnel and procedures. Just getting retention
    in place for email, network shares and laptops can be a challenge.

    Editor: So what is the bottom line?

    Mack: It's all about good faith and reasonableness. Start where you
    are. Take an assessment of where your organization falls in terms of litigation
    readiness. Assemble your team. Get an enterprise-wide view of the reality of
    your retention/legal hold policies and practices. Document your approach to
    solving this problem. Understand what your outside counsel and supporting
    electronic discovery partners can provide and on what schedule. There are more
    than hourly rates and unit costs at
    stake.

    Please email the interviewee at mmack@fiosinc.com with
    questions about this
    interview.