How to Manage Costs and Expectations for Successful E-Discovery: Best Practices

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1 How to Manage Costs and Expectations for Successful E-Discovery: Best Practices Mukesh Advani, Esq., Advisory Board Member, UBIC North America, Inc. UBIC North America, Inc. 3 Lagoon Dr., Ste. 180, Redwood City, CA / UBIC REDWOOD CITY WASHINGTON DC NEW YORK SEOUL TAIPEI TOKYO LONDON

2 Table of Contents Introduction...3 Retention and Management of Record Policies...4 One Person Should Be In-Charge of All E-Discovery...4 Limiting the Number of Documents to be Reviewed...5 Limiting Scope of E-Discovery...5 Search Technology and Platform...6 Data Collection...7 Selection of Vendor...7 Project Management...8 Conclusion...9

3 Introduction The 2006 amendments to the Federal Rules of Civil Procedure ( FRCP ) placed a substantial burden on organizations to produce electronically stored information ( ESI ) in a very limited time period. Given the fact that complying with such discovery request in each case costs in excess of a $1 million and a multinational corporation may be involved in hundreds of such lawsuits at any given time, it is easy to see the reason these organizations feel an urgency to contain the ever escalating costs of such discovery. Challenging economic conditions add additional pressure on the budgets of legal departments which, in-turn, pressure law firms and service providers to deliver higher value at lower cost, i.e., do more for less. In recent years, the amount of data created by companies which may be deemed ESI has increased exponentially and such data will continue to grow. The cost of ESI discovery (E-Discovery) is directly proportional to the volume of data to be collected, processed, reviewed and produced for litigation. The problem is compounded by the fact that many Plaintiffs lawyers deliberately request discovery in such a broad a manner so as to impose prohibitive E-Discovery costs, in the hope that many organizations will simply prefer to settle than incur such costs. Then, there is the dramatic increase in overall EDiscovery cost in situations where data needs to be collected overseas, searched, reviewed, produced in a foreign language and translated by bi-lingual attorneys and paralegals. Compliance with even the most basic E-Discovery request is expensive. However, by adhering to proper practices while using the appropriate platform and technology, organizations working with outside law firms can take a number of steps to reduce costs and stay within their budget. Indeed, many organizations have become proactive in adopting such practices in recent years. This paper examines a few such strategies and best practices. This paper is by no means a comprehensive list of measures an organization could take to reduce costs and ultimately each organization must choose measures that will work best for them, or fit the case at hand. 3

4 Retention and Management of Record Policies For many mid-size to large multinational corporations, lawsuits are a fact of life. So are the requests for E-Discovery in such lawsuits. Therefore, planning ahead and adopting certain records retention and management policies could eventually result in significant cost savings. For example, developing templates for particular types of likely cases may not only streamline the process but is also likely to save review time and minimize mistakes. A properly implemented program should include a policy for executing a litigation hold to ensure no data is lost as a result of routine data destruction and recycling. Social media sites such as LinkedIn, Twitter, Facebook and many others are presenting new challenges because of the risk of disclosure by employees of potentially confidential information. Furthermore, collection, review, and production of the information posted on such sites can substantially increase the overall costs of E-Discovery. Therefore, it is imperative for organizations to implement social media policies that balance an employee s privacy and freedom of speech rights with the protection of its confidential and proprietary information. Similar policies need to be adopted and implemented with respect to personal mobile devices which are commonly used for work purposes but that are not a part of the organization s IT infrastructure. One Person Should Be In-Charge of All E-Discovery The importance of having a single person with the skill set required to dealing with E-Discovery cannot be over emphasized. Indeed, having a person on staff for this task is critical to realizing any significant savings in the overall cost of E-Discovery. This person should be an expert in the gamut of available technologies and platforms. In addition, this person must have thorough knowledge and understanding of all applicable laws and practices of that particular jurisdiction. This person should also be an expert on the E-Discovery lifecycle and have the ability to combine cutting edge technology with knowledge and experience to attain the best results for the organization. As discussed later in this paper, not all technologies are appropriate for each E-Discovery request. Often times, organizations find it easier and more cost effective to teach an IT person the necessary components of the law rather than to teach a lawyer about enterprise IT. Some IT professionals find it advantageous to obtain a law degree and license to practice law and such a person may have the best skill set given the complexity of E-Discovery. This person should be responsible for making all E-Discovery related decisions, including the consideration of technology and platform when selecting vendors and all decisions associated with costs. 4

5 Limiting the Number of Documents to be Reviewed The most expensive component of E-Discovery is the cost associated with reviewing documents for relevance and privilege. It is estimated that the review cost could be as high as 50-80% of the overall litigation cost of complying with an E-Discovery request. Therefore, controlling review costs should be a major focus during E-Discovery. This can be accomplished in a number of ways as discussed below. Limiting Scope of E-Discovery Counsel retained to defend an organization in any litigation should proactively work to limit the scope of such E-Discovery from the moment they are retained i.e., even before the beginning of any meet-andconfer process. An early evaluation of the case working with the Client is critical to controlling the E-Discovery process and resulting costs. Counsel should speak with the organization and determine the most cost effective alternative from the organization s perspective and then work to limit the scope of such discovery accordingly. Counsel must think about carefully drawn keyword searches that lead to targeted results, which the other side may also find acceptable. Counsel must thoroughly understand not just the legal issues involved in litigation but also issues relating to records retention and management by the organization and various cost effective options before the discovery conference. Sometimes it may not be possible to access certain data without incurring an unreasonable amount of cost. Counsel should be prepared to discuss reasons as to why the searches should be limited to specific subject matter, certain search terms, a relevant time period and custodians, among other limitations. Counsel should also insist on cost-shifting, if counsel for the other side is being unreasonable. In certain instances, use of experts may be helpful in explaining to the court and the other side the reasons about why the discovery should be limited in a certain manner, which could result in significant cost savings. Counsel should be flexible and be prepared to discuss a range of options, including negotiating a so-called quick peek agreement, which allows the requesting party to conduct a preliminary review of the documents and to appropriately tailor their discovery requests. Other methods of limiting the scope of such discovery, which some courts view favorably, include the so-called proportionality theory. Under this theory, the court looks at the value of the case and how it relates to costs and importance of requested discovery and may limit it accordingly. This may be an effective strategy in certain cases although not all courts are willing to limit discovery on this basis. Another potential strategy is data sampling in which the producing party reviews a sample set of documents and extrapolates the results to the entire data universe. This is a case where one size does not fit all, so counsel must work with the organization and opposing counsel to come up with an appropriate strategy to limit the number of documents to be reviewed. 5

6 Search Technology and Platform As noted above, the overall cost of E-Discovery is directly related to the number of documents to be reviewed. The overall cost of E-Discovery can be dramatically reduced if the right technology is used to conduct automated 1st level review before a human review of such information. Certainly, it would be prohibitively expensive to have law firm associates, paralegals or an outside vendor review hundreds of thousands of documents for content. There is no longer a need for an attorney to review each document in a collection, nor has it remained humanly possible. In fact, the courts do not expect lawyers to do so. Initial review of documents for responsiveness, relevance and privilege may be done using an appropriate platform and technology which should significantly narrow the number of documents to be reviewed. However, most lawyers agree that no technology currently exists to completely eliminate the need for human review of selected documents. Many tasks require human judgment and guidance. The technology can only be used to defensibly reduce the costs and number of documents that need to be reviewed. Furthermore, the review platform must be scalable to eliminate potential problems if the scope of E-Discovery were to expand, as it often does during litigation. However, the same technology that is used to search English language documents may not be as effective to review documents that are in a foreign language, especially Asian languages. There are more than 20 different application and file systems in addition to at least 5 different character sets in Asia. The encoding schemes are different as well. Recent trends point to the fact that attorneys/law firms involved in cross-border litigations with Asian-language E-Discovery needs are realizing that Unicodecompatible technology doesn t always solve the problems associated with Asianlanguage encoding schemes. Incorrect identification and processing of documents in the Asian-languages (predominantly, Chinese, Japanese & Korean) could result in failure to reduce the volume of data to be reviewed, which increases cost of review. In addition, the time to re-do processing and filtering of documents could lead to missing the project and/or court deadlines, or risk exposing the privileged documents to opposing parties, which is one of the top concerns for every litigation attorney. 6

7 Data Collection Implementation of successful records retention policies and management practices discussed above is quite useful in defensible data collection. The risks associated with doing it incorrectly not only include sanctions against counsel and the organization, but also increased costs associated with collecting and reviewing the same data again. While it is very important that care must be taken at the time of collection, there is no need to collect every piece of data from each custodian. If too much data is collected, it will correspondingly increase all other costs associated with E-Discovery. If too little data is collected, it may be hard to defend it in response to a motion to compel and an organization may be required to go through the entire process again. Not only should an appropriate amount of data be collected but all forensically-sound steps should be taken to collect it and chain-of-custody of all data must be properly documented. Unless an organization has the in-house capability, an appropriate and experienced vendor should be used to collect data. While data collection in the US is generally not a problem, it could become an issue if collection is to take place overseas, especially given the significant language and cultural barriers in some countries. The awareness of E-Discovery requirements, particularly in organizations located in Asia, including the subsidiaries of US companies, is virtually non-existent. Often, the in-house counsel has to educate the IT and relevant custodians as to the data that must be collected and the process by which it needs to be collected. Therefore, to overcome the language and cultural barriers, it helps greatly if the collection is done by local people who are certified and experienced in the entire E-Discovery process. Selection of Vendor Vendor selection is an integral part of any litigation strategy. Choosing the right vendor with relevant experience enables the law firms or the organizations to reduce costs and significantly reduce risk. Most organizations prefer to work with as few vendors as possible but the selection of a vendor is dependent upon the needs of a given case and inhouse capabilities of the organization. If an organization has an in-house capability, (i.e. appropriate technology and tools for collection and initial defensible review of the documents for responsiveness, relevance, and privilege) it may be the most cost effective way to proceed. In that situation, the vendor may only be needed for further review, analysis and production of the data under the supervision of the outside counsel. Many organizations, however, simply do not have that capability and need to rely on an outside vendor. A number of factors should be considered in selecting an outside vendor. For example, the outside vendor should preferably be able to offer end-to-end services that are required for the entire E-Discovery life-cycle, from collection to production, and everything in between. 7

8 That will ensure consistency and accuracy and protect the organization from the need to repeat any steps in the process. Working with multiple vendors increases risk of loss or miscommunication of vital specifications, instructions and conclusions. The miscommunication can result in catastrophic consequences if the mistakes are not caught in time. The vendor should be able to completely document every step taken, including chain of custody of data collected, with the goal that the production is completely defensible. Different considerations apply in selection of vendor when some of the data to be produced is in foreign languages and located in other countries. For reasons set forth above in this paper, it is important to consider selecting a vendor with presence in that particular country with complete language and cultural familiarity. In addition, the vendor should be able to present a technology platform which is ideal for doing keyword searches in that particular language. Ideally, an organization should have a short list of vendors it may use with respect to a particular matter before litigation in such matter starts. Project Management Each E-Discovery production requires a project manager to ensure that the entire process works as intended. It can result in significant reduction in the amount of data to be reviewed, search terms refinement and establishing workflows that significantly reduce review costs. This person must be assigned at the inception of a lawsuit. This person could be the person employed by the corporation as discussed above or could be an employee of the law firm. If an outside vendor is used, care must be taken to select a vendor who is able to assign an appropriate project manager with the necessary skill set. 8

9 Conclusion The most effective way to minimize costs is the combination of appropriate technology, platform and human talent. Each must compliment the other. Computerized search tools are a highly effective way to manage and reduce the cost of conducting any document review. Different cases will require a broad range of search strategies, some of which may only be useful inside a specific legal dispute. A careful planning at the inception of litigation or even in anticipation of such litigation makes an enormous difference in how efficiently and cost effectively a review project can be run. For clients and law firms alike, that efficiency translates directly into lower cost and better review results. It may also be helpful to have a budget estimate before embarking on the path of E-Discovery production. Every effort should be made to stay within the budget even though occasionally it is difficult to accurately plan such budgets because of the vagaries of litigation that trial lawyers are so familiar with. Finally, one person, whether in-house at the organization or in the law firm, with the appropriate skill set should be responsible for managing the process and making all necessary decisions. About the Author: Mukesh Advani is a California based attorney with more than 25 years of experience in litigation and trial work in both the Federal Courts and state courts. He is Special Counsel to the law firm of Guy Kornblum and Associates. As a result of his law practice, he is intimately familiar with the E-Discovery issues that are encountered by attorneys. He is a member of the advisory board of UBIC, Pioneer in Asianlanguage E-Discovery. 9

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