THE E-DISCOVERY PLAYBOOK: A PROACTIVE TOOL FOR WINNING LITIGATION

Transcription

1 WHITE PAPER THE E-DISCOVERY PLAYBOOK: A PROACTIVE TOOL FOR WINNING LITIGATION By Ashley Watson FTI Technology is a business of FTI Consulting, Inc. All rights reserved.

2 1. INTRODUCTION So much has been written about the burdens, costs, and risks of e-discovery, but very little has focused on how to make it a proactive part of legal strategy. Indeed, e-discovery has come to represent all that is wrong with our system. It has been accused of encouraging frivolous suits and coercing unwarranted settlements because of the inordinate costs and risks surrounding it. How much do people hate e-discovery? In a recent survey of IT directors, fifty-one percent said they would rather get a cavity filled than handle a discovery request. 1 Unfortunately, all of this negativity is not simply shouting at the wind. Corporations face the daunting task of controlling and harnessing millions and millions of s, hundreds if not thousands of databases, countless backup tapes, and what seems like an endless number of PCs, laptops, handheld devices, flash drives, and servers. Quite simply, the volume is overwhelming. To date, most corporations have played defense when it comes to e-discovery for litigation, investigations, or regulatory requests. In fact, when considering the possible pitfalls within the process from preservation, collection, and production combined with the high cost of e-discovery, many corporations choose to forfeit the game, or settle, before even taking the field. E-discovery has raised the costs and risks of litigation to a new level. So where is the positive? Corporations do not have to accept the current state. Like any competition, with the right players, the proper preparation, and the right playbook, corporations can reign in the costs, control the risks, and, in fact, use e-discovery as an offensive weapon. They may also find that by taking control of their data, they can reduce costs and risks elsewhere in the company. This paper outlines how to put together the right team, develop a process, and choose the right plays for winning the case. Every matter requires strategic and tactical decisions along the way. E-discovery is part of that decision making on both the defensive and the offensive side. 2. PREPARE IN THE OFF-SEASON FIELDING A WINNING TEAM It is not necessary to have the budget of a big-name franchise to put together a strong team. Corporations can start by building an internal e-discovery team that includes representatives from legal, IT, compliance, and records management. In-house lawyers are in the best position to drive an efficient e-discovery process, and they can no longer rely solely on outside counsel on a case-by-case basis. To meet legal requirements, including judicial expectations, and to do it efficiently, it is beneficial to have an internal team that is responsible for the process. That is not to say that outside counsel or other outside experts have no role to play. In fact, adding external resources is often a good idea for several reasons. For instance, most corporations do not have the internal resources to effectively handle all of the necessary elements. Often an external resource can provide a level of objectivity and expertise that significantly improves the process. That additional expertise can also give a level of credibility and certification with the court or opposing counsel that can be helpful. Finally, involving outside counsel and service providers on the team is important to ensure their buy-in and coordination with their systems and processes. 1

3 Most corporations use multiple law firms to handle litigation, and while they may not necessarily need to select a discovery firm, more and more firms are offering this service. When developing a plan, corporate legal teams at the very least should consult with at least one of their primary firms that have a good understanding of the business and appropriate systems. E-discovery service providers or consultants should be considered at the outset. The selection of which service providers to use in the process, however, does not need to happen until after deciding which resources are needed and how they will be used. GET IN SHAPE ESTABLISH A REPEATABLE PROCESS. Once an internal team is created, the first priority is to determine the best processes for preservation, collection, processing, review, and production based on the company s systems, resources, culture, and needs. Build a preservation plan. The plan for preservation is an integral part of a successful process. Without proper preservation, the risk of a spoliation claim increases dramatically. On the other hand, preserving too much can lead to higher costs throughout the process. Corporations must be mindful of ways to control the volume at every stage, and thus control the costs. Creating a Repeatable Process Build a preservation plan. Take control of . Implement a preservation policy for backup tapes. Do not forget OLDIISS. Make new systems and technology more litigation friendly. Plans for preservation need to include the following: Communicate a litigation hold to individual employees. Most companies create a standard form that includes the name of the matter, what it is about, and the types of documents that need to be held. Employees should be required to respond and confirm whether or not they have responsive documents and whether they are holding those documents. The employees should also be given training and instruction on why Communication is key: in a recent survey, 40 percent of IT managers claimed they received no guidance from the legal department on discovery procedures. 2 legal holds are important, the consequences to them and the company for noncompliance, and how and where to hold documents. The legal department should issue the hold, but based on the size of the organization, help may be needed from the business units to distribute the notices to the appropriate individuals and collect their responses. Working with IT, compliance, and records management allows corporations to integrate the legal hold process into other compliance and records management processes. Identify data and custodians. One of the biggest problems with preservation is the unknown. One of the reasons that in-house lawyers should lead the preservation process is the fact that they know a lot more about who and what should be subject to a legal hold than an outside lawyer or consultant could possibly know. But in many organizations, the in-house lawyers still cannot know all the custodians and systems that might be relevant to a particular matter. As such, corporations should have a preservation process that includes immediate meetings with IT and a few key people who have knowledge about the facts of the case to discuss what should be preserved. Also, consider using tools to identify relevant data. There is software, such as Attenex Patterns, that allows corporations to quickly review the data of some key witnesses, see who else was involved in a particular project, and identify what systems came into play. The additional benefits of searching data to help make preservation and collection decisions are discussed below. The team should also identify the key systems and databases that are likely to come up regularly in litigation and discuss specific ways for preserving that data. and backup tapes are obvious concerns and are discussed separately below. 2

4 Communicate with IT. The IT team plays a key role in preserving much of the data needed for a case. A clear process is required for requesting a hold of particular data, including who is authorized to make the request and who should receive it, a time frame in which IT will respond, and a method for IT to confirm compliance. IT also needs to ensure that the data cannot be accidentally deleted, and there should be a clear process for lifting the hold. Because preservation often comes at some cost, such as in additional server space, extra backup tapes, etc., corporations should also determine which budget will cover the costs. Document the process. When a matter comes in, teams will need to document the decisions and steps it took to ensure proper preservation. In case the process is questioned, a protocol should be put into place to ensure that the documentation is kept in one place so it can be quickly converted into an affidavit. An in-house paralegal or litigation support manager is usually a good person to lead the preservation effort and document the steps. Teams should make sure that the thoroughness and reasonableness of the process are documented in case something is missing at some point. Issue preservation reminders. The process should also include a way to issue periodic reminders to custodians and IT about the legal hold. Reminders that come too often lose their effectiveness, but every six months to a year is a good guideline. Deciding whether to send specific reminders to individuals or general reminders to all employees will depend on the cases and the company culture. Take control of . is the big kahuna, the bugaboo, the black hole. Everyone has too much and has it in too many places. A team has to come up with a solution that works for its business, culture, and litigation. Regardless, teams must have measures in place to quickly preserve the boxes of individual custodians in case they get notice of a claim or investigation. This should be one of the first things discussed with the IT representative on the e-discovery planning team. Taking control of , however, often leads to other questions about how and where to keep it, and for how long. Many companies maintain on a company server for 60 to 120 days. If an employee wants to keep an longer than that, he or she must save it elsewhere, often to a PC hard drive and sometimes to a shared drive. Other companies have decided they do not want their employees managing and have adopted archiving systems that keep all until an appropriate legal or records management contact determines what can be deleted. There is a growing belief that individuals cannot be trusted to manage their own documents. That is up to individual teams to decide, but as with any compliance program, employees need leadership, training, and motivation. Implement a preservation policy for backup tapes. Backup tapes probably represent the most difficult preservation decision in any matter. Before deciding how to handle it, e-discovery teams need a process in place that ensures the quick preservation of tapes. As an initial matter, a clear policy is needed to establish that backup tapes will only be used for disaster recovery. As part of enforcing that policy, tapes should be rotated at reasonable intervals (15 to 45 days is customary) and should not be restored unless doing so is necessary for disaster recovery. By using tapes to find information, corporations run the risk of a court deciding they are utilizing an archive system deemed reasonably accessible under the new federal rules. Teams should work with IT to make sure tape retention policies are enforced and that proper storage of backup tapes is in place. The stories about unmarked backup tapes in closets or under floorboards are real (just ask Morgan Stanley). Before backup tapes can be taken out of rotation, approval should be required from a specially selected legal team member. IT and legal should keep an inventory of what tapes are subject to a legal hold and why, and a very detailed description of the tape content should be included in the inventory. 3

5 The stories about unmarked backup tapes in closets or under floorboards are real (just ask Morgan Stanley). Preserving backup tapes over the life of a case can be quite expensive, particularly for corporations that have many tapes and many lawsuits. This struggle is one of the reasons companies have gone to archiving. They know that will be an issue for years so they might as well keep it all in a place and format that they can control. In making the decision, think hard about whether the backup tapes are likely to have relevant data that cannot be retrieved elsewhere. Determine if the hold can be limited to just a few tapes: for instance, in the Zubulake case, the court stated that the backup tapes holding the of the few key witnesses should have been kept. Do not forget OLDIIS. While developing an e-discovery plan, huddle up to identify the company s OLDIIS, which is a set of systems or data that is either not being used or has never been identified. From the legacy system used at a company acquired years ago, to the abandoned laptops found in a closet, OLDIISS cannot be ignored once a lawsuit hits. OLDIIS: orphaned, legacy, and/or dormant inactive information stores When identifying OLDIISS, teams should follow a two-pronged decision process, one for when the data is known and another for when the data is unknown. When the data is known, the question is simple: does it need to be retained for litigation or other regulatory requirements? If it does, teams need to determine how the data will be maintained as well as destroyed, once the hold lifts or the retention period expires. If data does not need to be retained, it should be deleted immediately. When the data is unknown, the issue gets more complicated. The first step is figuring out how complicated and expensive it will be to identify. If the identification process is uncomplicated and inexpensive, teams should seriously consider identifying the data. If the process is difficult, teams should determine whether to continue holding the data and risk having to pay to restore it, or deleting the data and risk a spoliation claim. Weighing these risks will depend on the costs of restoring data as well as the nature of cases pending. Regardless of the action taken, teams should clearly document their decision so it can be defended in court. If the data is kept, teams need to be well armed to argue that the data is inaccessible and the burden is unreasonable. If the data is destroyed, teams need to show that they made a reasoned, good-faith decision. Make new systems and technology more litigation friendly. The e-discovery team should also talk about how to make new systems and technology more litigation friendly. The IT department needs to be able to preserve all of its systems, several of which are emerging in today s corporate landscape. For example, many companies now have instant messaging, but there is great disparity in how it is saved or whether it is saved at all. Instant messages are documents, and teams must have a reasoned plan for dealing with them when litigation hits. GET THE RIGHT EQUIPMENT. With a solid process in place, teams also need to decide what technical resources are needed. These include hardware, software, and personnel. Preservation, collection, processing, review, and production all require these resources, and investing in them early can dramatically reduce the cost and risk of discovery requests. Preservation is generally best done in-house, while collection can be in-sourced or outsourced. Processing, production, and review are usually outsourced, although having some ability to review in-house serves as a great benefit to most companies. 4

6 Preservation Accurate records need to be kept of what has been preserved, how it has been communicated, the responses that were received, and the reminders that were provided. Companies can either utilize specialized software to assist in the preservation process or develop their own ways of recording processes through a spreadsheet or database. Decisions about archiving and hardware backup that might be needed for preservation also fall into this category. How expensive is e-discovery? Recent estimates show that the cost to handle a single , from collection through to review and production, ranges from $2.70 to more than $4. 3 Collection Collection is another key stage to reducing volume and saving on costs. If the number of custodians and the amount of data collected from each custodian can be limited, the team will be better off. More details about collection are discussed below. At the planning stage, consider what resources will be needed for collection. There are several enterprise solutions that allow for remote data collection from servers, desktops, and laptops. These solutions can be used for litigation as well as internal investigations and security reviews. However, they all have limitations, and manual collection will probably be necessary. The need for an enterprise solution will also depend on the frequency and volume of collection. As with data identification, corporations need to work with the IT team to determine what resources can be brought in-house and what makes sense to outsource. If the company plans to outsource a portion of the process, it is better to select a service provider or service providers who will be ready when the need arises. Regardless of how collections are handled, corporations need a process for documenting the collections and ensuring that the metadata has been preserved and the data is authentic. Processing and review By far the most significant cost in the e-discovery process comes from review, the stage in which lawyers (billing at an hourly rate) examine the company s collected documents to determine if they are relevant to the matter, privileged, etc. For the Fortune 1000 companies that are handling hundreds of legal matters a year, it is not uncommon for them to spend millions of dollars on each case, and review is often a big component of that cost. Not only is review the most expensive stage of e-discovery, it is also the most important since review enables the legal team to get into the heart of the matter, find smoking gun s, and develop case strategy. The cost of review correlates to the volume of data and the speed in which the data can be reviewed, so, to effectively reduce these costs, think about processing and review together. Processing refers to the technical steps necessary to put data in a reviewable format. Processing is also where duplicates are removed and techniques such as neardeduplication and other culling take place. By far the most significant cost in the e-discovery process comes from review, but to effectively reduce these costs, think about processing and review together. Effective processing can significantly reduce the amount of data that needs to be reviewed (typical numbers range from 50 to 80 percent reduction). Good processing requires technical ability, problem-solving skills, and excellent customer service. These are some of the traits that companies should look for when selecting a service provider. Even with effective processing, a high-quality review tool is needed to cut the huge costs and time required for review. But more importantly, the review tool is needed to make sure the important documents are found quickly. As discussed more fully below, using technology to make an accurate early case assessment can be a 5

7 huge advantage. Software like Attenex Patterns has been shown to reduce attorney review costs by four times or more, and its concept clustering features allow reviewers to see what is important more quickly. Different review tools require different data formats. It will be important to assess the costs and efficiencies that flow from using a tool that keeps the data in native format for review or one that requires the documents to be in TIFF format. How various tools handle paper is also important because most companies still work with hard copy documents. Production Production is the final step in the e-discovery process. Some choose to use the same tool for review and production, while others use specialized tools. Concordance and Summation, for example, have been around a long time, and many lawyers, especially law firms, are comfortable using these tools to build the witness files and hot document notebooks following production. Different tools may be appropriate for different cases and different companies. However, when evaluating processing and review tools, teams need to also consider how they plan to produce and work with these documents. Production format is something that will be discussed with opposing counsel early in cases, so corporations should be prepared with a preferred approach. SHARE THE VISION. For any team to be successful, all the stakeholders in the team need to share the same vision, effectively buying into an agreed-upon game plan. An effective e-discovery process cannot simply be supported by a small minority who understands it. Indeed, to field a strong team, buy-in and support are needed from IT, compliance, and records management. To effectively preserve and collect, the entire company needs to understand why the process is necessary and important. As such, the vision must be shared with business leaders who must then support the investment and training that go with it. The game plan should include training for employees on how the preservation process works and how proper records management is implemented. Most business leaders are aware that there are risks inherent in legal matters and electronic data. However, they need to fully understand the legal requirements, the compliance issues, and the public relations concerns, as well as the costs and potential business disruption. More importantly, business leaders need to understand why a good process reduces risks and costs, and increases the chances for better results. Although listed last in the off-season planning process, this step may need to be the first taken by corporations, depending on how much education their leaders need. An effective e-discovery process cannot simply be supported by a small minority who understands it. Indeed, to field a strong team, buy-in and support are needed from IT, compliance, and records management. 3. PLAY BALL: EXECUTING ON A WINNING STRATEGY. Now that the right team is in place and they have assembled the best processes and equipment for handling electronically stored information (ESI), it is time to use that information to the company s advantage. In many lawsuits, particularly class actions, the defendant possesses the key information in the case. This should be a great advantage, except that there is a big difference between possessing and knowing information. Knowledge is power, and ESI, unlike paper, can be quickly and easily searched. The company now has the ability to know the key 6

8 facts and issues well before the opponent knows them. With that advantage, corporations have the power to steer the case and get better, less costly results. GO ON THE OFFENSIVE WITH AN EARLY CASE ASSESSMENT. Litigation is the perfect example of the old time is money adage. The simple fact is that the longer a matter remains active, the more it costs. However, the duration of a case does not necessarily correlate with the likelihood of success. It is quite common, in fact, for corporations to pay out at the end of months or years of litigation the same settlement that could have been attained much earlier. Corporations that evaluate the merits of a case at the outset could save themselves substantial legal fees as well as internal resources and anxiety. This cannot be done without knowing what the data contains or conducting an early case assessment. Begin the process by identifying and interviewing up to ten key witnesses. Ten is a realistic and manageable number to handle in one to two weeks. Those initial interviewees will identify other individuals with knowledge, as well as the key data sources and data maintenance concerns. These initial conversations will provide the basis for the data preservation process. Along with the interviews, legal teams should gather data from these key witnesses and analyze it. Content analytics programs, like Attenex Patterns, can quickly identify key documents, other important players, and data sources and categorize significant information to provide useful samples for evaluation and keyword searches. The sampling process should evolve into a rolling progression in which the reviewers gain insight that prompts subsequent conversations with witnesses and possibly supplemental preservation notifications. At some point within the first month, the legal team can make certain preliminary conclusions about the matter. Based on those conclusions, and with an understanding of the volume of potential discovery and the story it tells, one can begin developing a defense strategy. An outside service provider can then estimate the cost of managing the information through various stages of the process (e.g., meet and confer, pretrial motions, trial). Internally, the total costs and risks can be evaluated, including the following broader business factors: Potential liability and exposure Costs of litigation, including e-discovery service providers, testifying experts, etc. Court and venue different judges and jury pools present varying costs and risks Skill and reputation of opposing counsel Operational interruption CEO and other high-level depositions Impact on morale Public relations and company brand Other business needs such as mergers, product releases, client relations, etc. By combining a thorough analysis of these factors, as well as the items obtained in the preliminary evaluation, the team can develop a series of strategic steps toward achievement of a specified goal using negotiation, motion, settlement, or otherwise. 7

9 DICTATE PLAY AT THE MEET AND CONFER. The meet and confer is the first opportunity to show the opponent that the case will be about the merits, not failures, in the process. This is where the legal team can set the tone that it will not be intimidated by the opponent s discovery tactics and, instead, will take a key role in actively shaping the proceedings. The meet and confer is the first opportunity to show the opponent that the case will be about the merits, not failures, in the process. First and foremost, legal teams need to have confidence in their preservation efforts. This is where dedication and preparation in the preseason pays off: teams should be confident that they have spoken to and collected data from the key witnesses, that the interviews have helped to identify other witnesses and sources of data, and that all of the correct processes have been established. Legal teams are not required to share every step of their preservation process at the meet and confer; indeed, the legal hold notice and other documentation should be treated as privileged. However, teams should be ready to discuss and defend chosen processes and efforts from a high level, effectively presenting a confident position to argue undue burden and cost shifting. Additionally, if sound data decisions have been made, it puts the legal team in a strong position to knowledgeably suggest a discovery plan because it has already analyzed data from key witnesses and has some sense of the volume at play. Further, the team is enabled to proactively suggest parameters, such as keyword search terms or the number of custodians, that can keep the discovery process focused on the relevant data. Other matters at the meet and confer will include privilege issues, such as clawback provisions, form of production, and 30(b)(6) depositions. If legal teams go to the meeting with confidence in their process, they will be in a position of strength on these issues as well. If the legal team cannot reach agreement with opposing counsel, it is also in a strong position to defend its position at the Rule 16 scheduling conference. TAKE AWAY THE OPPONENT S LEVERAGE. Step 1: Control Volume at Collection. Discovery is a process of whittling down information so that legal teams are left with the key documents that are actually used in depositions, summary judgment, and trial. As the volume of data decreases at each stage, the expenses and amount of time needed to review the documents also decrease. One key decision to be made is whether to collect data as a means of preservation. Litigation is difficult because, among other things, the issues change and evolve; what appears to be relevant at a case s outset may become moot after several months of discovery. In turn, seemingly irrelevant information may become the true heart of a case. As such, it is tempting to collect everything from a custodian s computer, archive all , or copy an entire server so that the data is available if needed. However, it must be kept in mind that if data is collected, it will likely have to be reviewed. It is important, then, to note that every case does not require the same collection decisions, and teams should determine what makes sense in each case. It is also important to decide whether custodians will be allowed to self-produce, meaning they select what is relevant and send it to the legal team. Generally speaking, self-production should be avoided unless it is the only reasonable option, and even then, the legal team should provide significant input into how the data is transferred to ensure the metadata is not altered. Legal teams should give plenty of guidance to ensure that the custodian 8

10 understands what is relevant and has looked everywhere for relevant information. Regardless of how the data is collected, it is important to stay mindful of chain of custody and authentication issues. If faced with excessive volume, especially of OLDIIS data, legal teams should consider sampling some of the data. Keyword searching can also be used throughout the collection process. There are sophisticated ways to do sampling and to identify appropriate keywords that can significantly reduce what is collected. Besides reducing the time and cost of review, using such processes enhances the defensibility of production and reduces the risk of producing confidential or privileged information. Step 2: Process and Review Efficiently. As mentioned above, by far the most costly expense in discovery is the cost of review. If legal teams are able to do nothing else, they should identify ways to reduce the cost of review. There are two questions to answer: who is responsible for performing the review, and how will they do it? Who should do the review? The days of having law firm associates review documents at hourly rates in excess of $200 should be gone. There are qualified lawyers doing document review on a contract basis for substantially less. Contract attorneys can be hired directly by a corporation, or the corporation can require its law firm to do so. There are also firms and companies that specialize in large document reviews, which should be kept under consideration if a company faces large-scale litigation. Corporations that still use associates for review can make these modest changes and immediately realize substantial savings. How should the review be handled? Companies should consider using sophisticated review tools such as content analytics software to significantly speed up the review time. These review tools allow users to find relevant documents faster, which enables them to better prepare for the case earlier in the process. For the same reason, content analytics make sense for an early case assessment. If legal teams are able to do nothing else, they should identify ways to reduce the cost of review. The processing stage may also be where the data is further culled through the use of time limitations or keyword searches. If the legal team is unable to get agreement from the opposing party on these parameters at the preservation or collection stages, it should continue to push for agreement at the review stage. And, if an agreement cannot be reached at that point, the legal team should consider going to the court if reviewing the data without reasonable parameters is cost prohibitive. Again, early case assessment (or continuing case assessment) can be very useful here. By analyzing the data of the key witnesses, key words and phrases used in their documents can be identified while showing the time frame for the relevant documents. Using the key witnesses as a guideline to place reasonable limits on other less important witnesses or data can be persuasive. 4. POSTGAME REVIEW After every case, the e-discovery team should review how the process worked and how it could be improved, just as the team might review the substantive results of a case with the business leaders involved. The team should also consider how the data relates to other existing or potential litigation. 9

11 It is also important for the legal team to demonstrate and evangelize the positive results of developing this e-discovery process. To ensure executive buy-in, the legal team likely had to make promises that e-discovery processes would save the company money and improve results of the cases, so it is smart to follow up and provide any captured metrics for continued support of the process. More and more, lawyers have to justify their work in terms of business measurements, and the legal team should plan how it will measure and demonstrate success with e-discovery. After all, showing significant savings, reduced risk, and improved results is beneficial for a company, and it bolsters the team s reputation, who certainly deserve the credit. BUILD UP A GAME-WINNING STRATEGY. Prepare in the off-season. Build the right team. Get in shape establish a repeatable process. Get the right equipment. Share the vision. Play ball: executing on a winning strategy. Go on the offensive with an early case assessment. Dictate play at the meet and confer. Take away the opponent s leverage. Control volume at collection. Process and review efficiently. 10

12 ABOUT THE AUTHOR Ashley B. Watson is a recognized industry expert and speaker on corporate e-discovery deployments. Ashley joined Attenex in March 2007 after six years as senior litigation counsel in BellSouth s Complex Litigation Group, where she served as lead counsel on the company s most significant litigation and also developed BellSouth s process for preserving documents and handling electronic discovery. Prior to BellSouth, Ashley worked in private practice at several AMLAW 100 law firms, focusing on complex commercial litigation and employment matters. Ashley obtained her undergraduate degree from the University of North Carolina at Chapel Hill and her law degree, magna cum laude, from the University of Georgia. 1 LiveOffice Managed Messaging Services survey conducted by Osterman Research, June Countural survey conducted by Osterman Research, July Control Costs of Electronic Discovery by Stephanie Mendelsohn and Liz Bachman-Grechi, both of Reed Smith, as published in E-Discovery Advisor Magazine, Issue 5, page 12,