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Last week I had the pleasure of attending a CLE in Charlotte, NC, featuring three of the preeminent Judges in the e-discovery space as well as a deep bench of ESI practitioners in the field. Judges Facciola, Grimm and Peck spoke on the most pressing issues facing practitioners today. Using the context of a mock case (and its attendant meet and confer and Rule 16 conferences) the panel analyzed best and worst practices, and looked to the future of litigation and government investigation in a post-ESI world.
Hon. Shiva Hodges (Magistrate, NC)
Hon. David Kessler (Magistrate, WDNC)
Craig D. Cannon (Bank of America Discovery Counsel)
Ralph Losey (Partner Jackson Lewis)
… and other e-discovery specialists
Why do we, as Legal Practitioners, Need to Care About e-Discovery?
At the outset of the program, the moderator posed the question, “Why should we be concerned about this subject” to the Big Three, and they offered key insights into the view from the bench. For Grimm, the concern broke down to three major legal fictions that society and the legal community are currently laboring under: 1) that computers are secure, know they are not and know how easy they are to access, manipulate, 2) the fiction of privacy, via digital media we have greatly sacrificed privacy and 3) the myth that we can control and manage our data, we know intellectually that we cannot do this. New technologies have rapidly been adopted integrated into the way we do business.
Grimm explained that lawyers need to recognize that the disputes legal practitioners are now called upon to deal with are operating with this information and the resolution of these disputes will evolve with this technology. He went on to say that many courts are looking to reign in preservations via key word search limitation or application of cost effective search. Ultimately, the solution cannot be a 17th century concept of technology applied to current technologies.
For Facciola, the question of proportionality in this brave new world of mega volumes of ESI took ultimate significance. The effort required for e-discovery is not proportional to the scale of cases; this is interrupting the docket and taking disproportionate amount the courts of time. Increasingly mid-sized companies and the middle class are being driven out of federal courts by the growing costs to handle ESI.
Peck focused on embracing technology, saying that unless we’re prepared to abandon pretrial discovery, we must be versed in e-discovery; there is no paper anymore. Even in slip and fall matters, the defense counsel is using Facebook as a tool to disprove the claims of plaintiffs. In every sort of case need to know enough to be able to effectively represent your client. Otherwise, we will not live up to Federal Rules of Civil Procedure (FRCP) (the just, speedy, and inexpensive determination of every action and proceeding), ensuring that e-discovery is not used as blackmail to make a defendant settle the case.
Problems With the Current Practices
For all of the Judges and the practitioners represented in the mock case, a glaring concern is the adversarial “I want it all you get nothing” approach that is being taken in 26 (f) conferences and throughout the lifetime of a case.
Problem #1: The Preservation Question
There is a common law duty to preserve when litigation is reasonably anticipated. This is easy to say, but not so easy to decide. What is the trigger? Often, this means the defendant must decide what to preserve even before a preservation letter. In-house and outside counsel need to determine what is reasonable. Peck said that while we are hearing a lot about amendments, the inclination to over preserve is not reasonable; practitioners must make the decision based upon what is known and amend it as you go forward. Preservation can help establish parameters if done the right way. If it is a “save everything and a pony” request, judges may adversely infer when that becomes exhibit one.
Problem #2: Records Management Systems
There is also the question of whether the records management system is reasonable or if it needs to be disrupted. In normal operation is it sufficient to yield the docs? This assists with getting to the Sedona ideal set forth in the Cooperation Proclamation. Remember that this is at a stage without the court to be a referee; a response looking to reasonableness is the best start. Peck also suggested documenting everything you do. Cases take a long time! An associate involved at the beginning of a case may or may not be there or even remember at later stages.
It was noted that many times lawyers are like children- if there are not consequences we will not follow rules. When both sides have data there is a greater likelihood of cooperation… the problems arise when the plaintiff has less information- it is an uneven playing field. This is especially true in some 26(f) conferences and general gamesmanship throughout cases. Magistrate Judge Karla Spaulding wrote an opinion in Bray & Gillespie Mgmt. LLC v. Lexington Ins. Co., 2009 WL 546429 (M.D. Fla. Mar. 4, 2009)1 highlighting this matter. Two attorneys at a BigLaw firm are personally sanctioned for a series of blunders and unnecessary fights over metadata. The court found the plaintiff’s lawyers were to blame for stripping metadata from the native files that the client had properly collected. The attorneys refused to produce in native as requested; instead, producing 200,000 unsearchable Tiff files.
In the opinion: When attorneys have engaged in a pattern of withholding and concealing information concerning discoverable material and misrepresenting to the court and opposing counsel material facts about numerous failures to comply with discovery requests and Court orders–including falsely blaming a lack of third-party cooperation and fabricating a false story about the form in which ESI was gathered and stored–courts in this circuit have not hesitated to impose significant sanctions against the law firms that employed the attorneys responsible for this sanctionable conduct.
Judge Facciola cited the Fannie Mae securities litigation2 as another example highlighting flaws with the current system. Here, an agency within Fannie Mae got the subpoena as a third party and they spent 9%of their annual budget (six million dollars) to produce a massive amount of data, and it’s all useless. In Response to 9 motions for enlargement in scope of discovery requests, the government kept saying “we can do this”, ultimately spending an in inexcusable $9.09 per document. The agency then tried to cost shift after they had done all the expense and was completely denied. Parties need to know that without due diligence up front do not count on cost shifting. You must make the best case up front. When it comes to keywords: don’t agree to someone else’s list without doing your own due diligence.
For Judge Facciola another massive concern is that data is ever expanding. When dealing with this new breed of Big Data, limiting to 5 keywords is not a viable solution… it will diminish precision in search and veracity of recall.
Government Investigation: Do you see Parties Seeking Relief for ESI?
Craig Cannon, Discovery counsel for Bank of America noted that he has seen regulators and other agencies like the Department of Justice (DOJ) and Federal Trade Commission (FTC) are more receptive to minimizing e-discovery costs. They are not incented to squeeze a corporation for unnecessary documents; they want to get to the crux of the matter. Many in these agencies are open to using technology to reduce data sets and intelligent review.
The judges noted that recent additions to these government agencies (i.e. the DOJ’s Alison Stanton) have brought a new expertise and willingness to cooperate. It is a function of intelligence and understanding. Intelligent review technology is being used in these government investigations.
In the next post, I’ll discuss the Judges’ recommendations on action-items for e-discovery practitioners, utilizing technology solutions, and the recognition of e-discovery as a highly specialized practice area.
 Bray & Gillespie Mgmt. LLC v. Lexington Ins. Co., 2009 WL 546429 (M.D. Fla. Mar. 4, 2009) and more analysis from Ralph Losey on the matter at http://e-discoveryteam.com/interviews/interview-of-judge-shira-scheindlin-and-ralph-losey/
 Fannie Mae Securities Litigation, _ F.3d _, 2009 WL 21528 (C.A.D.C., Jan. 6, 2009). United States Court of Appeals,. District of Columbia Circuit.
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