Roundtable: How Legal Trends Of 2007 Will Affect Your Future Technological Decisions And Solutions

Saturday, December 1, 2007 - 01:00

The Editor interviews Afshin Behnia , President & CEO, Mitratech; Tom Klaff , CEO, Surety LLC; Dan Lucky , Vice President-Data Management Solutions and David Gaines , Vice President- Security, Microstrategies, Inc.; Bettina Tweardy Riveros , Associate General Counsel and Director of Product Development, Corporation Service Company (CSC); Karen Schuler , Vice President of Consulting, ONSITE 3 ; Debra E. Weaver, Vice President-Marketing & Sales, TrialNet, Inc.

Editor: What legal trends in 2007 had the greatest impact on law departments' technology solutions?

Behnia : On December 1, 2006 amendments to the Federal Rules of Civil Procedure (FRCP) took effect, requiring US organizations to address issues regarding electronically stored evidence at the outset of litigation. Rule 37(f) grants organizations a safe harbor for data destruction when it is due to routine operations and done in good faith - but this rule also requires that, at a minimum, organizations integrate legal hold procedures into their systematized frameworks.

While a variety of technologies can be used to apply litigation holds, a multidisciplinary approach is required. Anyone who thinks that IT can implement a hold assumes that the problem is exclusively a technical one. It is not. Legal, HR, and records management professionals all have important roles to play in the process.

We have seen companies respond in one of three ways: Reactionary - purchasing a litigation-hold point solution outside of their matter management technology which results in inefficiencies and high ownership costs; Elusively - deferring the problem to IT by pigeonholing it into a larger Records Management project which ends up costing more time and money than estimated while falling short on the functionality to meet the FRCP rules, and S trategically - by building their litigation hold processes into their existing matter management system for an integrated solution.

Klaff: Without question, the e-discovery amendments to the Federal Rules of Civil Procedure had the most significant impact on legal technology and that impact will resonate for the next several years.

Lucky and Gaines: The new e-discovery rules in the Federal Rules of Civil Procedure. They are being widely adopted by the state court systems.

Riveros: Corporate legal departments are increasingly faced with managing a broader array of risk across their organization to protect their board and shareholders, while faced with the need for increased productivity and budget compression. Effective risk management requires the aggregation of disparate data, knowledge, and documents across multiple systems and a dispersed organizational structure. Examples include internal management and reporting obligations in the litigation and compliance arenas as well as external legal hold preservation obligations in the e-discovery arena. Broad-based and flexible matter and document management solutions are critical to success.

Schuler: Beyond the amended Federal Rules of Civil Procedure which took effect just prior to 2007, discovery preparedness is perhaps the single most significant trend of the year in terms of how law departments are approaching technology solutions. As opposed to taking a reactive approach to e-discovery, discovery preparedness promotes a proactive approach, such as creating litigation hold communication policies, implementing e-discovery teams, cataloging and mapping locations and types of data across the organization and assessing the need to address structured data. There were also other legal trends influencing law departments, including (1) engagement of technologists internally to assist corporations in creating e-discovery task forces; (2) emergence of document review tools to enable corporate administration and oversight for driving productivity of review projects; (3) increasing availability of educational resources for legal teams, and (4) Safe Harbor certification for U.S.-based e-discovery providers to allow handling of data from the European Union, thus resolving data privacy concerns.

Weaver: One of the greatest trends in 2007 was the increased pressure for in-house law departments across the country to cut costs on outside legal spend. As a result, they began to review law firm invoices more in depth and found that rates for new associates drastically increased from the previous year, which in turn increased rates for seasoned associates and partners across the board. They also realized that manually reviewing invoices to determine where their dollars are being spent was taking a lot of internal staff time with fuzzy end results.

Law firms have been driving the rates and legal workflow for many years. Corporate legal departments were reluctant to impose too many rules on their outside counsel for fear of jeopardizing the relationship.

As more pressure is being placed on in-house legal departments to cut costs, and with there being more outside law firm competition, corporate legal departments have become more aggressive with their law firms, thereby now sitting in the driver's seat.

Electronic Billing technology helped pave the way for legal departments to determine how their law firms stack up to each other and allowed them to disseminate pertinent invoice data to determine where they can cut costs.

Editor: How will these trends impact the selection of technology solutions in the coming year?

Behnia: The FRCP rules are one of many drivers fueling the explosive growth of the Governance Risk and Compliance (GRC) solution market. We will begin to see matter management solutions, vendor collaboration and legal-hold solutions integrated as a single offering under the GRC umbrella. Managing legal holds is just one of the rules that need to be managed and complied with in a sustainable, auditable, and defendable manner. Treating this as a one off problem is not the answer; organizations need to address this as part of their overall compliance initiatives.

Klaff: Put simply, the changes to the FRCP mean that all discovery is now e-discovery. That requires legal departments to handle electronic records in the same manner as all potential hard-copy evidence is handled. In addition to proper archiving and searching, counsel must institute proper measures to prove the authenticity of electronic records that may be called into question in court. Whereas forgeries and alterations are easy to detect on hard copies, electronic evidence can easily be tampered or fabricated without any obvious signs of wrongdoing.

The alarming simplicity and frequency of e-records alteration has rightfully caused judges across the country to express concern regarding the authenticity and resulting admissibility of these records. In the U.S. District Court case Lorraine v. Markel, Judge Paul W. Grimm refused to allow email records from both parties to be admitted into evidence because the parties had failed to lay the proper evidentiary foundation for admittance. Noting the marked increase in the amount of critical business records stored in electronic-only form, Grimm stated "counsel must be prepared to recognize and appropriately deal with the evidentiary issues associated with the admissibility of electronically generated and stored evidence."

In addition to authentication concerns, the new focus on e-discovery means that law departments need to take appropriate measures to ensure a tight chain of custody. While the handling of physical evidence requires an adequate paper trail to determine who was in possession of evidence, electronic evidence presents a new host of concerns over who accessed or even changed records. Solutions such as Surety's Absolute-Proof address these critical evidentiary concerns by providing irrefutable, long-lasting proof of an electronic record's authenticity.

Lucky and Gaines: Forrester Research predicts that e-discovery technology spending will exceed $4.8 billion by 2011.

Civil cases filed in Federal and many state courts after December 1, 2006 will be affected by the FRCP e-discovery rules. Litigants, who are not prepared for e-discovery when a motion is filed, are disadvantaged when going against a prepared adversary, and could be subject to court sanctions up to and including the case being awarded to the adversary and a finding of spoliation of Electronically Stored Information (ESI).

The problem starts during the Planning Conference when the litigants are unaware of the ESI in their possession, which ESI is privileged or private, who the ESI custodians are, ESI storage format, and where the ESI is stored. The lack of ESI information can lead to an unnecessarily broad and deep discovery order greatly increasing the cost of ESI delivery. Not having the ability to find information for discovery orders can lead to a spoliation finding by the court. Delivering unnecessary ESI can lose the case. Statistics show that 70 percent of all cases are lost based on discovered information that the litigants were not required to retain.

Being able to capture, preserve, store, destroy, find, hold for litigation, and deliver ESI requires significant IT technology, such as email archiving, records management, network crawlers, and secure storage. The vast majority of IT departments are deficient in one or more of these necessary IT technologies.

In a litigious society with an ever expanding volume of ESI, companies need to address ESI strategy, and be prepared for inevitable civil litigation. If you are not ready when the motion is filed, it is probably too late.

Riveros: The need to manage risk at an enterprise level is a task that can become Herculean as corporate counsel struggle to identify those key areas of risk where they should focus their limited budgets. Some companies have chosen to launch Enterprise Risk Management programs to look at risk across their organizations and apply standards to identify, reduce, assess, and monitor those risks. One technique is to build a heat map of risk, graphing each risk against probability and impact axes to determine the global prioritization of inherent risks and the best return on legal spend.

An ideal technology solution for the corporate legal department is an integrated platform that takes advantage of existing corporate data and presents it in a dashboard view to: 1) provide a one-screen source to alert the Corporate Legal Department of specific areas of risk that need action, such as a key compliance event, contract expiration, or litigation deadline, and 2) utilizes analytics to identify trends that present new or increased risks to the organization. The latter example may include litigation trends in specific areas that indicate a mitigation strategy is needed, such as training, re-tooling, redesign or other changes within the organization. Technology solutions that work across the corporate legal department and take advantage of existing corporate compliance and litigation data will prove to be the most cost-effective for any organization.

Schuler: By better understanding best practices, corporate legal departments and law firms will increasingly integrate the selection process for e-discovery providers into their standard practices. As the size of electronically stored information (ESI) continues to increase, it will become more important for e-discovery providers to understand the best practices for sampling techniques. Due to the need to move quickly into the document review phase, legal teams will also demand that e-discovery providers have automated systems for faster, more consistent processing of ESI. Such providers can shift gears into the review phase much faster and can offer improved pricing models, based on elimination of manual processes. Furthermore, as companies house more employees in the U.S. and in Europe, the need for Safe Harbor certified providers that can process data from both regions will be in demand, in order to minimize the complexity and risk associated with international projects.

Weaver: In-house legal departments will want more documents/data processed electronically and retained in an ASP environment for several reasons: 1) Reduce the amount of paper received internally; 2) Retain pertinent data on-line that affords clients with the ability to search, review and communicate better regarding case information; 3) Generate reports on retained invoice data to determine how to better manage case load and outside law firm billings.

As in-house legal departments continue to be pressured to cut legal spend, they will find more ways to maximize the use of their Electronic Billing systems by utilizing more customized reports that allow them to determine, for instance, how much time a lawyer in one firm spends on a particular task vs another lawyer at another firm on the same task.This data is easily attainable if invoices are processed electronically.Clients are also going to be more selective about the firms they choose, taking into consideration the technology these firms are using internally toalso assist with better streamlining their own workflow process.