E-Discovery Research Roundtable: Buyers Perspectives on Challenges and Solutions

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1 E-Discovery Research Roundtable: Buyers Perspectives on Challenges and Solutions

2 TABLE OF CONTENTS Buyers Perspectives on Challenges and Solutions... 3 Introduction... 3 Summary and Overview... 3 Current Challenges... 3 Improving Cost Efficiency through Proactive Risk Management... 4 Future Challenges... 7 Technological Shifts... 7 Legal Landscape Shifts... 8 Final Thoughts... 9 About Integreon... 9 E-Discovery Research Roundtable 2

3 Buyers Perspectives on Challenges and Solutions Introduction Cost containment for electronic discovery is a priority for most organizations today, even to the extent that some quantified and managed risk is now deemed acceptable. This is the assessment from a research roundtable conducted by Integreon at a recent legal industry conference. During the event, Integreon brought together more than thirty participants from top corporations and law firms. These individuals represented a cross section of industry roles, including lawyers and litigation support professionals, IT managers, and compliance and records management experts. This report summarizes the key e- discovery challenges organizations are currently facing (or expect to face in the future) and the initiatives they are undertaking to address them. Summary and Overview Containing the cost of discovery is the greatest challenge for most organizations, with the cost and volume of data for discovery being clearly linked. Reducing the volume of data is the best way to reduce costs, facilitate greater cost predictability, and subsequently to expedite the process for assessing data. Approaches for reducing volumes identified by participants include targeted collections, early case assessment, data analytics, and post-review archiving. Participants also spoke about taking a more proactive approach to risk management in order to control costs. They specifically cited active information governance, including establishing and enforcing policies for records retention, litigation holds, and employee use of social media and personal mobile devices. Many organizations are also currently weighing the various pros and cons of insourcing and outsourcing for their e-discovery solutions, but absent information governance, investment in these types of solutions could be a moot point. Improving education and applying best practices for project management were mentioned as additional ways to facilitate greater understanding of the risks and thus better handling of the processes and technologies needed to address e-discovery requests in an efficient, defensible manner. Beyond the continued struggle to manage data volumes, shifts in the legal and international business landscape were identified as likely future challenges. Participants anticipate possible amendments to the US Federal Rules of Civil Procedure and continued growth in cross-border discovery matters. New types of discovery solutions, such as software-as-a-service and automated document review, are expected to help address these challenges, although most agreed that successfully addressing future challenges will also require comprehensive, yet flexible policies and procedures. The general assessment was that organizations which proactively address today s e-discovery issues are likely to be the ones best equipped to overcome future challenges. Current Challenges Reducing Cost by Reducing the Volume of Data Not surprisingly, our research roundtable highlighted cost containment as today s most important e-discovery challenge. Participants noted that cost containment implied both reducing costs and making costs more predictable. This is a priority for corporations as data volumes continue to rise and challenging economic conditions continue to apply intense pressure to legal department budgets. Law firms also feel the pressure as their clients demand more for less. Outside counsel are being asked to rein in costs, provide more visibility into costs throughout the entire discovery process, and deliver higher value. One corporate participant noted, Corporations are willing to live with some degree of quantified and managed risk in order to reduce the cost of e-discovery. This does not necessarily mean that cost simply trumps risk, but rather that a reasonably balanced approach between the two is needed. General consensus is that the best way to reduce costs is to reduce the volume of data that goes into discovery. To accomplish this, organizations are using approaches such as targeted collections, early case assessment, data analytics and post-review archiving. Targeted Collections One approach highlighted for volume reduction was targeted collections. Merely collecting everything can result in a dramatic increase in the cost for discovery, especially if all the collected data makes it into document review, often the most expensive phase of discovery. A more efficient approach is to limit data collection to what is most relevant, ideally through a process that narrows the scope of discovery in a defensible manner. This could include, for example, limiting the date range or number of custodians. As one law firm participant said, E-Discovery Research Roundtable 3

4 Clients are willing to assume some risk on the collections as long as they can achieve a high percentage of what is relevant to the matter. This does not suggest an under-inclusive collection, but rather a properly focused collection, guided by a defensible process like early case assessment. Regardless of cost, perfection is hard to assure, so many favored a balanced approach based on a standard of reasonableness. Early Case Assessment Early case assessment (ECA) is viewed as one possible approach for being more targeted with data collection. The ECA process includes the creation and review of data maps that identify data sources and locations. It may also involve conducting custodian interviews and looking at sample data to help focus collections on what is most relevant. There are tools that can help, but the core of ECA is a managed process of litigation research. 1 With the understanding that there is ongoing industry debate on the exact definition of ECA, most agreed that ECA can facilitate cost savings. A generally accepted goal of ECA is to make an informed decision either to pursue a case and incur the necessary discovery cost or to settle before incurring significant discovery costs. Ideally, ECA also sets the stage for a more efficient discovery process by limiting the volume of data early on. Data Analytics Participants noted that data volume can be reduced even further with data analytics, which uses search methodologies (including related clustering, querying, filtering, etc.) to reduce the amount of data after collection, with a focus on facilitating an efficient document review. When data analytics is performed by someone with real expertise in the use of search methods, the data set can be reduced by as much as 80 percent. This does not depend on any one technology and can range from sophisticated Boolean searches to advanced semantics techniques. The use of data analytics can translate into huge savings on the cost of document review because there will be far fewer documents that require an attorney s attention. A corporate participant more succinctly put it this way, Data minimization is really the only thing that matters. Regardless of the specific approach, the overarching goal is the same: to reduce costs by reducing the volume of data going into the discovery process. Post-Review Archiving Another cost-saving measure discussed was post-review archiving of tagged (coded) documents for future use. This could be a cross-matter repository which allows the discovery output to be reused from one matter to the next. This type of solution is of interest for serial or multi-district litigants who need to use the same data multiple times, ideally without having to bear the cost of fully re-processing or re-reviewing those same documents. Improving Cost Efficiency through Proactive Risk Management Even for the occasional litigant, a number of useful steps were identified as helping to ensure discovery and litigation readiness. Basic preparation can reduce confusion and unexpected delays, minimizing potential added costs and easily avoidable mistakes. For example, participants noted that having a data map can save time locating data sources and ensure relevant information is not inadvertently missed. Other steps mentioned include establishing a discovery response plan and employing a proactive approach to information management, including policies and infrastructure investments as needed to support monitoring and enforcement. Information Governance Information governance (all policies, procedures, and controls for information management) is thought to be critical for litigation readiness. One example is a well-defined and communicated policy for executing a litigation hold to ensure timely suspension of routine data destruction and media recycling programs. Not having such a policy in place can give rise to claims of spoliation and undermine a party s position. Participants believe that good planning should take into account records retention and other data policies that can help avoid making what can often be simple, yet costly mistakes. They also noted that, an ounce of prevention is worth a pound of cure, and that the effort an organization expends today in preparing for discovery can save it from an exponentially greater cost tomorrow in addressing a failed discovery response. 1 Early Case Assessment - The Emperor Has No Clothes, by Babs Deacon, Integreon Blog, June 3, E-Discovery Research Roundtable 4

5 Coping with new technologies is one area where information governance can have a very positive impact, as social media, mobile devices and cloud computing were identified as presenting significant current and future challenges. Social Media Top of the list of the technological challenges is social media, or social networking, such as Facebook and Twitter. Social media is not just a hypothetical problem but rather a very real and valid concern. Some recent cases have required data to be collected from employee Facebook pages and other social media sites. Not surprisingly, many educational sessions at industry conferences are now placing an emphasis on this topic. Corporations are concerned about social media because of the risk of implication from disclosures by an employee, including potential leaks of confidential information. Also of concern is where to draw the line between an employee s privacy rights and a company s requirement to retain and produce data or comply with local laws. Establishing and enforcing social media policies is viewed as the right first step to ensuring that both the corporation and its employees understand and can reasonably meet their obligations around information disclosures and data management. Mobile Devices The proliferation of personal mobile devices, notably smart phones, which are outside of an organization s centralized IT infrastructure, is another technology challenge. Organizations will not likely be able to escape the need to preserve and collect data that resides on employee mobile devices ( s, text messages, instant messaging, photos, website visits, social media interactions, etc.). Many employees are increasingly using personal devices during work hours and not uncommonly for work purposes. Thus the data stored on these devices can be relevant, especially if an employee is identified as a custodian in a discovery matter. The challenge is that employers don t always account for personal devices in discovery responses, even though the organization may have been aware of, or should have anticipated, work-related usage by employees. Adding to the complication, employees may view data stored on personal devices as private. Just like with social media, establishing and enforcing policies is viewed as the best way to ease the navigation of these potentially choppy e-discovery waters. Cloud Computing Last but not least, there is the move to cloud computing, which raises some tough e-discovery issues. Participants still have many unanswered questions about the various e-discovery and privacy implications of storing data in the cloud. For example, data owners may not know the physical location of their data. Companies that operate in the European Union are especially concerned about this due to the EU s stringent data protection and privacy laws. No one doubts the cost savings potential of cloud computing, but there are valid concerns about who owns the data and the potential that a third party cloud provider could be compelled to produce customer data stored in their cloud as a result of a discovery process. Ensuring adequate service level and confidentiality agreements is viewed as one step that organizations should take when moving into the cloud. Such agreements can help to limit the potential risk from data disclosures by third parties. As organizations look to control their discovery costs, having information governance policies in place that also include provisions for social media, mobile devices, and cloud computing can serve as the foundation for a more efficient e- discovery process. Insourcing Another way organizations are proactively reducing costs is by insourcing e-discovery, often with investments in personnel and technology. By insourcing, corporations can take even greater control over the discovery process, especially for managing cost. However, there is concern that some companies insource discovery without the proper standards, expertise, or infrastructure in place, and overlook challenges around keeping such resources up-to-date. For instance, many organizations do not have an enterprise records management system or records management policy in place and some systems that are in place lack important security features like encryption, which can impact defensibility. Other technology issues associated with insourcing include systems integration into existing data centers and management of upgrades. Because the industry is changing so rapidly, some participants argued that it is better to outsource discovery rather than risk getting stuck with outmoded technology. With costs falling for high-speed outsourced processing, some participants cautioned that corporations should carefully consider the level of investment they make internally, and also when it may make more sense to outsource (such as for large volume projects). The trend for insourcing seems to mirror the growing adoption of enterprise content management (ECM), which can expedite the preservation and collection of data by actively supporting information governance policies. According to a E-Discovery Research Roundtable 5

6 recent report from Gartner Research, the insourcing trend has been primarily affecting the left side of the Electronic Discovery Reference Model (EDRM). 2 A law firm participant cautioned however, Some recent court rulings have deemed self-collection of data by clients as unacceptable without clear supervision of an outside attorney. There is a similar trend for some law firms to insource e-discovery too. Views on this vary; one law firm participant was adamantly against it, saying, EDD is not the best use for law firms and should be handled by vendors or in-house [by corporate clients]. This is not to say that law firms shouldn t have e-discovery expertise on staff, along with tools to aid case assessment and project management, but that large investments in e-discovery technology and services could represent a detour from a firm s core business focus of providing legal advice. 3 Regardless of how much of the discovery process is insourced or outsourced, participants noted that it does make sense to put into place all the policies, procedures, processes, and enforcement mechanisms needed to be prepared. (Refer back to Information Governance section of this report.) Project Management Having policies and solutions in place in advance are important steps for preparation, but participants noted that they don t necessarily guarantee good execution during a discovery response. Strong project management is believed to be critical to ensuring discovery efforts not only stay on track, but that they also get off on the right foot. All too often, the merits of a case cannot even be argued because of missteps during the discovery process that result, for example, in an adverse inference or summary judgment against the producing party. Experienced project managers are skilled at quickly and efficiently setting up projects and then keeping them on time, on budget, and in line with industry-recognized best practices and standards. They understand the importance of ensuring consistency and defensibility as work products move through the e-discovery process. They are masters of team management too, knowing how to establish and maintain collaborative working relationships among multiple workgroups, including well-defined roles and workflow processes between internal and external teams which are important to the success of the effort. This expertise can also assist the organization in building a comprehensive discovery response plan ahead of time, to serve as a kind of step-by-step roadmap for the overall discovery process. While ensuring strong project management for discovery efforts helps minimize risk and control costs, participants noted that there is the limited pool of highly capable project managers. Identifying, attracting and retaining these talented individuals continues to be an issue for organizations. Addressing the talent shortage should be a priority for the industry and its educational bodies. Education Despite the obvious need for e-discovery expertise, few law schools actually teach it and there are even fewer that have certification programs available. By one estimate, there are at most a few hundred lawyers in the United States that fully understand electronic discovery. 4 Based on this, it is not surprising that many participants cited the need for better education to both improve and expand upon the pool of available e-discovery experts. The need for education is thought to be especially critical with regard to e-discovery technologies and methods. In response to this need, organizations and initiatives that bring training and certification to the e-discovery market are emerging for instance, The Organization of Legal Professionals. But these efforts have only recently begun to gain traction and their market impact is not yet certain. Legal service providers (broadly including contract attorneys, temporary staffing agencies and LPOs) are also helping to address the talent shortage and educational need by providing access to experts through service contracts and through their own internal training programs that help build the skills and expertise of their staff. 2 E-Discovery SaaS and On-Premises Software Converge at Vendors as They Mature, by Whit Andrews, Debra Logan, John Bace, and Sheila Childs, Gartner Research, July 29, To Insource or To Outsource, by George Rudoy, Georgetown Law E-Discovery Law Blog, December 1, Socha-Gelbmann Electronic Discovery Report, by George Socha and Tom Gelbmann, December E-Discovery Research Roundtable 6

7 Future Challenges Two broad categories of future challenges were also discussed. First, was the emergence of new technologies, including continuing challenges around social media, mobile devices, and cloud computing. Along with this challenge, participants also expect there will be emerging technology solutions notably software-as-a-service and automated document review. The implications associated with these technology trends, which are just beginning to impact litigation practices today, are expected to become mainstream over the next several years. A second category of future challenges will be shifts in the legal landscape, including possible amendments to the US Federal Rules of Civil Procedure (FRCP). Growth in international (cross-border) discovery requirements is also expected to be an important development in the legal landscape. The impact of these challenges is still very much to be determined, and there is both hope and fear around what is to come for corporations and their outside counsel. Technological Shifts The challenges posed today by social media, mobile devices, and cloud computing are expected to continue, and perhaps even escalate in the coming years. The best way for organizations to address this is believed to be through active information governance. Additionally, two emerging technology solutions, software-as-a-service and automated review, are also expected to become important for e-discovery in the next five years. Software-As-A-Service Despite that cloud computing was identified as a challenge, many view it as a future solution as well. Software-as-a-service (SaaS), which is based on cloud architecture, seems to be gaining traction in an e-discovery market where hosted solutions are seeing strong demand. The trend is also visible as distinctions become increasingly blurred between the software and services segments of the e-discovery market. 5 While SaaS only represents a small portion of the market for e-discovery solutions today, the market will increasingly shift to SaaS over the next several years because the solutions provide a significant return-on-investment (ROI). Following the insourcing trend, SaaS will increasingly be viewed as an attractive technology option that avoids some of the key challenges associated with traditional behind the firewall software, such as issues with integration, licensing, and maintenance. Automated Review Within five years participants expect to finally see automated review, i.e. predictive coding, become a reality (meaning true market acceptance of the technology and not just marketing hype of the latest technological bells and whistles ). At first this may just be for automated first pass review aimed at taking out as much of the human element as possible from the initial stages of the review process. Interest is largely being driven by the need to cost effectively manage the exponential growth in data volumes required for discovery. One potential obstacle noted, however, is that lawyers have typically had a hard time embracing some technologies, most recently in trusting concept analytics and bulk tagging of documents. Automated review aims to take these ideas even further. General acceptance of the technology is expected to largely depend on whether it will be possible to validate these automated approaches. The answer will likely hinge on what will be required to achieve judicial buy-in for the use of the technology. Some suggest it may be possible to achieve judicial acceptance by comparing the consistency of human review to computer review, for which limited attempts have already been made. 6 Should the courts come to accept automated review, as many expect will happen, lawyers will still need to participate actively in the document review process to ensure that the automated review systems capture and reflect their judgments accurately Socha-Gelbmann Electronic Discovery Report, by George Socha and Tom Gelbmann, December The Future of Automated Document Review, by Foster Gibbons, Integreon Blog, July 14, E-Discovery Research Roundtable 7

8 Legal Landscape Shifts Evolving Legal Requirements and Case Law Precedents Over the next five years expectations are that there will continue to be updates to the existing framework of legal and compliance requirements, including data protection and privacy laws around the retention, use, and production of electronically stored information. As new judicial precedents are set, there will also be increasing sophistication with respect to clawbacks and other legal procedures. Some expect that there will be a change in the Federal Rules of Civil Procedure (FRCP) to address the problem of data volumes that are continuing to rise at an alarming rate. Absent changes to FRCP, the issue of data volumes could become a barrier to justice. Currently the FRCP is rather vague about the volume of data that can be considered reasonable, which has led to many broad (and arguably burdensome) discovery requests in the last several years. Participants noted that a key to preventing many corporate litigation cases, however, involves preventing people from walking out the door with confidential information, especially IP data. Information governance is expected to evolve significantly to close the gaps. International Discovery As globalization continues, there are more corporations and more employees communicating and collaborating with more colleagues in more parts of the world where English is not the only business language. This is especially true for areas like China and it is expected to result in a significant increase in the number of international discovery and multi-language review projects. With increasing electronic communications across borders, there will be growth in the international requirements regarding the handling of that information for legal and compliance matters. This is expected to require new skills, new technologies and unfortunately even more budget and thus a greater need for cost control measures. E-Discovery Research Roundtable 8

9 Final Thoughts To contain mounting discovery costs and better manage risk, roundtable participants noted that organizations need to start taking steps now to both (1) establish and enforce information governance policies and (2) put into place the necessary procedures and tools for reducing the volume of data whenever litigation matters arise. Staying on top of emerging challenges, such as social media and mobile devices, and maintaining awareness of the international legal landscape were also viewed as important measures for organizations to take. Most believe that organizations that choose to invest the time and effort to proactively prepare will ultimately be well positioned to make the best possible business decisions when it comes to managing the cost and risk of complex litigation and compliance About Integreon More top global law firms and Global 500 companies trust Integreon for e-discovery, legal, research and business support solutions than any other provider. As a Tier 1 e-discovery solutions provider, Integreon has expertise in all aspects of the e- discovery process, from data collection through managed document review and production. By engaging Integreon, clients gain access to a greater range and better quality of service, increase profitability, mitigate risk and ultimately transform their business. To learn more about Integreon s discovery solutions, visit E-Discovery Research Roundtable 9

10 For more information contact: Copyright 2013 by Integreon No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without the permission of Integreon. COMPANY CONFIDENTIAL

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