A Paralegal’s Guide to Understanding E-Discovery

Can the new FRCP amendments help pick up the pieces?

By Elissa A. Santo

(Originally appeared in print as "E-Discovery Explosion")

July/August 2006 Table of Contents

Electronic discovery is one of the most prominent issues confronting the legal industry today, yet many paralegals and other legal professionals remain unprepared to thoroughly manage it. E-discovery is the buzzword in litigation, and it certainly has earned this status, but its notoriety can at times belie the legal community’s tender grasp of its many complexities. Given the explosion of this dimension of the legal industry, this is a justifiable condition.

The increasing trends of storing electronic data and using software applications that maintain potentially discoverable information have rendered the process of obtaining and producing discovery a monumental task. As a result, litigants have sought guidance through the courts, and various legal organizations have developed standards, such as the Sedona Guidelines on the Management of Electronic Information. The Sedona Guidelines come from the Sedona Conference (www.thesedonaconference.org), which is an institute dedicated to the advancement of law and policy in the areas of antitrust law, complex litigation and intellectual property rights. Its goal is to bring together experts in a think-tank setting to create practical solutions to and recommendations for difficult legal issues. Its guidelines may help paralegals stream line the daunting tasks affiliated with e-discovery.

In an attempt to establish additional parameters for e-discovery, amendments have been proposed to the Federal Rules of Civil Procedure relating to electronically stored information (ESI), and unless Congress intervenes, which is not anticipated, the amendments will be adopted on Dec. 1. Many experts say these amendments, which have been in the pipeline for more than five years, will have revolutionary repercussions on the legal landscape.

The amendments, which affect Rules 16, 26, 33, 34, 37 and 45, essentially pare down into the five categories covered below.

“Reasonably Inaccessible” Data Doesn’t Have to Be Produced

Rule 26(b)(2): To address the issue of electronic information that is regarded as too burdensome to produce, this amendment specifies that a responding party need not produce ESI that it identifies as “reasonably inaccessible because of undue burden or cost.” The requesting party can dispute this assertion through a motion to compel production, and the responding party can seek a protective order prohibiting production, but only after the parties confer on the issue. In either case, the burden falls on the responding party to prove that the information is reasonably inaccessible. Even if that showing is made, if the requesting party demonstrates good cause, the court still might order production. As the factors comprising reasonable accessibility all seem to amount to how difficult or expensive it would be to obtain the information, the phrase “undue burden and cost” has been included to provide context in defining the phrase “reasonable inaccessibility.”

The responding party must disclose sources of potentially responsive information that isn’t being searched or produced and provide detail about these sources. This enables the requesting party to evaluate burdens, determine the likelihood of finding responsive information and decide whether to challenge the designation. Identifying sources of ESI as reasonably inaccess­ ible doesn’t relieve the party of its duty to preserve evidence.

This rule essentially constructs two tiers of discovery: accessible and inaccessible data. It’s important for in-house attorneys and outside counsel to possess a strong understanding of these types of data to effectively argue that a client’s records are inaccessible or that an adversary’s records are not.

Many legal professionals are concerned that this will permit companies to retain discoverable information under the guise of inaccessibility. But Jim Michalowicz, a senior consultant for Altman Weil Inc., a litigation consulting company based in Newtown Square, Penn., disagreed. “A company can’t simply issue a blanket response saying it’s electronic, therefore it’s inaccessible,” he said. “Certain forms of electronic information will not be considered inaccessible. A company must really know and be able to identify its electronic information landscape.”

Claims of Privilege Can Be Asserted After Inadvertent Production

Rule 26(b)(5): The amendment to this rule adds a new section regarding the inadvertent production of privileged information in light of the sheer volume of data being produced in large litigations, which exponentially increases this risk. (The rule doesn’t limit this information to electronic data.) If information is produced that is subject to a claim of privilege or work product protection, the producing party can notify the receiving party of this fact, along with the basis for the claim. After being notified, the receiving party must promptly return, sequester or destroy the information and can’t disclose the information until the claim is resolved. If the receiving party already disclosed the information prior to being notified, it must take reasonable steps to retrieve it. The producing party must preserve the information until the claim is resolved.

Of course, the receiving party might disagree with the claim. If that is the case, the receiving party has the option to submit the information to the court under seal for a determination of whether the information is privileged or protected, and if so, whether a waiver has occurred. It’s important to note that the proposed amendment doesn’t address the substantive question of whether privilege or protection has been waived. The amendment sets up a procedural device to allow the producing party to assert the claim; however, the claim must be resolved by other methods, such as through the courts or by an agreement negotiated between the parties.

The courts have developed principles to determine whether waiver results from inadvertent production of privileged or protected information. For example, the producing party must act responsibly in attempting to avoid inadvertent production of privileged or protected materials. In addition, the claim must be asserted within a “reasonable time” after inadvertent production. These factors can be important in assessing whether a forfeiture of privilege has occurred.

This rule operates in tandem with Rule 26(f), which directs the parties to discuss issues of privilege when preparing their discovery plan, as well as Rule 16(b), which encourages the parties to include an agreement regarding issues of privilege in their scheduling order. Such agreements, often referred to as “clawback agreements,” generally control whether the parties adopt procedures that differ from the FRCP.

Mandatory Meet-and-Confer Sessions Must Address E-Discovery

Rule 26(f): This rule is referred to as the “meet-and-confer” rule as it requires the parties to meet very early during the litigation and discuss a number of discovery-related issues. A report must then be issued to the court, at which time the judge will consider this information and enter a scheduling order.

The rule has been supplemented so any issues relating to preserving discoverable information, as well as disclosure or discovery of ESI (including the form or forms in which it should be produced), must be discussed. Any issues relating to claims of privilege or protection also should be discussed and preferably memorialized in an agreement, which the parties can request the court to include in a scheduling order. The goal is to encourage the parties to resolve as many discovery issues as possible at the beginning of the litigation.

According to the Judicial Conference Rules Advisory Committee notes (www.uscourts.gov/rules/ newrules6.html#cv0804), “the parties’ discussion should pay particular attention to the balance between the competing needs to preserve relevant evidence and to continue routine operations critical to ongoing activities.” Attorneys often bring a technology-savvy person to the meet-and-confer session to assist in understanding and achieving this balance. Technologically oriented legal assistants, in-house records managers or e-discovery service providers can be a valuable asset in such a setting.

George Paul, a partner at Lewis and Roca in Phoenix, and co-author of “The Discovery Revolution: E-Discovery Amendments to the Federal Rules of Civil Procedure,” said he thinks there is a significant premium on prediscovery conferences. “At every avenue, you are encouraged to think about issues, do your homework, involve the technical people, get to know your client, get to know your client’s information systems and then go to the other side and exchange information,” he said. “Unless people take a kind of cooperative or collaborative stance, the whole thing is just going to explode.”

In addition, Rule 16(b) presently calls for the judge to enter a schedule order addressing various pretrial issues after receiving a report from the parties per Rule 26(f). It has been amended to include provisions for the disclosure of ESI and agreements reached by the parties relating to the assertion of privilege or protection claims.

Safe Harbor for Parties That Destroy Information in Good Faith

Rule 37(f): This somewhat controversial rule is entirely new, and according to the Committee notes, “provides limited protection against sanctions for a party’s inability to provide electronically stored information in discovery when that information has been lost as a result of the routine operation of an electronic information system, as long as that operation is in good faith.”

This rule intends to address a unique component of ESI: the routine modification and deletion of data that occurs during the ordinary course of business (e.g., e-mails being deleted to create additional space, storage media being recycled on a scheduled basis, etc.). Many from the plaintiffs’ bar worry that corporations will be entitled to delete relevant, discoverable data without fear of being sanctioned.

But Michalowicz, who also is a contributing editor for the Sedona Guidelines, said the amendment doesn’t advocate this. “This rule really just addresses the loss of electronic information through routine operations,” he said. “This is in some ways an answer to cases that focus on electronic information destruction. Record destruction and spoliation are not synonymous. It’s really important to make that distinction.”

The Committee noted that defining the culpability standard for deliberate destruction was a challenging endeavor. The intent was to prevent the sanctioning of an innocent party for the loss of potentially discoverable information. The rule specifically states that, “absent exceptional circumstances, a court may not impose sanctions C9 as a result of the routine, good-faith operation of an electronic information system.”

Two key phrases in this rule are “routine” and “good faith.” The information must be destroyed as part of a routine procedure, as opposed to a party circumventing procedure to delete data. However, even routine procedures are scrutinized. A party isn’t permitted to exploit routine operations by allowing procedures to continue that might destroy discoverable data in an effort to thwart discovery obligations. Good faith might require a party to intervene and suspend certain aspects of routine operations to prevent loss of information subject to preservation obligations. An example of this would be the institution of a litigation hold, which is a directive for corporate employees to preserve records and data that might be relevant to litigation. Compliance with agreements put in place after the meet-and-confer session also play a large role in good faith efforts.

Additional concerns about this rule are that it might insulate routine destruction of information on sources a party identifies as not reasonably accessible, pursuant to Rule 26(b)(2). In an attempt to allay these concerns, the Committee notes state: “whether good faith would call for steps to prevent the loss of information on sources that the party believes are not reasonably accessible under Rule 26(b)(2) depends on the circumstances of each case.” Accordingly, good faith might require a party to preserve information it believes isn’t reasonably accessible under Rule 26(b)(2).

This calls attention to the need for creating prudent records retention policies, and more importantly, proper implementation of them. “It’s not just having a policy and practices in place,” Michalowicz said. “It has to be about processes, and just as important are the process owners — the people who are responsible for the programs.”

Creating a Separate Category of ESI and Specifying Form of Production

Rules 26(a), 33, 34 and 45 also contain relevant amendments. Among the most notable is that ESI has been added as a separate category of information to be disclosed. This removes all ambiguity as to whether information stored in a particular form constitutes a “document.”

“Now electronically stored information is fair game for discovery in every federal case and is probably going to be in the state cases too,” Paul said. “Before, [ESI] was sort of a second-class citizen. You could ask for it, but there was not necessarily a full concrete right to get it. Now, you have an absolute duty to produce it.”

In addition, these amendments permit (but don’t require) the requesting party to specify the form or forms in which ESI is to be produced by both parties and nonparties. The responding party can object to the form of requested production, but the parties must meet and confer in an effort to resolve the matter before the requesting party can file a motion to compel. If the parties can’t reach an agreement, the court might order the form of production.

Preparing for the Amendments

While being cognizant of these amendments is important, understanding certain technology and implementing procedures that lend themselves to these changes is going to define the course of many legal actions and possibly even legal careers. In-house attorneys must be aware of their systems and determine whether effective procedures are in place.

Mary Mack, technology counsel for e-discovery service provider Fios Inc. based in Portland, Ore., said corporations should perform an internal evaluation. “The main thing is to assess the organization’s e-discovery process and see where the gaps exist,” she said. “Then, use this assessment to fill the gaps, or at the very least, know [the gaps] are there so that when outside counsel comes in and starts asking questions for the meet and confer, the client is in a position to answer them.”

Paul suggests two important steps corporations can take to begin their assessment. “There are two things that in-house counsel can really focus on. One is to develop what some might call a Litigation Preparedness Plan. Rather than scrambling when you get an ESI request, you are prepared in advance for that,” he said. “Second, everybody has to learn how to properly put a litigation hold into place. It’s a real challenge for in-house counsel, and there is an art to putting in a litigation hold and then knowing how to implement it.”

From the outside counsel perspective, attorneys must become familiar with certain technology in general as well as their client’s specific network architecture. “If the lead attorney doesn’t have the technological knowledge, [he or she] will need somebody on staff who does because there will be issues that require them to make legal decisions and strategy that involve technology,” Mack said. “Having an understanding of the technical challenges will help the attorney compose arguments either to reduce the amount of material that needs to be produced or to get additional materials produced.”

The meet-and-confer sessions place higher levels of responsibility on outside counsel for records management knowledge. Arthur Saiewitz, immediate past president of the New Jersey Corporate Counsel Association, acknowledged this accountability. “The new rules place a burden on outside counsel to be able to present this information and advise clients on their needs. Most corporate law departments are highly reliant on outside counsel for guidance through the rules,” he said. “It’s going to be critical for lawyers to be familiar with these issues.”

If commercial litigation attorneys want to compete, they must understand  technology or surround themselves with people who do. “Information has changed into something unbelievably more complex than it was, so lawyers are having to deal with information complexity,” Paul said. “Lawyers specialize in retrieving trusted information and in using it as a sword and a shield. So if lawyers want to keep their special role in society, they are going to have to learn how information has morphed and learn how to deal with it.”

Legal assistants can be a vital component in facilitating these transitions, as demonstrated by job descriptions with references to e-discovery skills, as well as specific positions created for this purpose. Companies are seeking employees with a combination of legal and technology skills. Embracing this skill set allows paralegals to perform their jobs more effectively and capitalize on new and stimulating opportunities.

Michael Jagiello, a senior legal manager at a large telecommunications company in the New York metropolitan area, understands the need for these skills first hand. “As the business environment began to change from primarily paper records to electronic, we needed to adapt to that environment and restructure our procedures for fact finding and records gathering. I was fortunate to be involved in this evolutionary process,” he said. “Because of reductions in workforce and resources, and the realization that I could save the company money, I saw there was an opportunity and took advantage of it by learning about the e-discovery issues through newsletters, articles, seminars and conferences on the subject. This has opened up a whole new door for me.”

Michalowicz also recognizes the need for a blend of disciplines. “I truly believe that there is a need for a multilinguist — someone who can speak the language of an Information Technology person, a lawyer, a business person and a records manager,” he said. “There is more of an emergence of this position called a discovery manager. We have found that paralegals are perfectly positioned for that.”

Legal assistants aspiring to work in this capacity would benefit from proactively seeking e-discovery education. “In our experience, some paralegals are taking those positions. They do e-policy, e-discovery coordination or e-discovery management. This is a step up for the legal assistant,” Mack said. “Legal assistants who continue their education, whether be it self-taught or taking technology courses, can use this education as a career path enhancer.”

The Effects of the Amendments

The amendments can’t pose certain restrictions, such as specific software for all companies to use or absolute definitions of which records are or are not accessible. For this reason, the new rules incorporate some ambiguous terms, such as “reasonably access­ ible” or “good cause,” and place importance on the meet-and-confer sessions. The rules mandate that certain issues be discussed, resolved and ordered in a preemptive effort to lessen discovery conflicts during the litigation. In addition to open communication, the amount of fruit these meetings will bear depends on the parties’ technological knowledge and willingness to work together to resolve issues up front.

Blanket requests for all data only hinder the process. “If there is gamesmanship, such as asking for huge amounts of information, it’s not going to work because the information systems are too complex and there is just too much information,” Paul said. future really lies in the hands of the individual lawyers, and with the profession and how it deals with what really can be an additional cost or burden of dealing with information.”

The resounding theme among industry experts is that communication is critical. This includes communication between the legal department and the IT department, counsel and client, plaintiffs and defendants — most notably during the meet-and-confer sessions. Technological knowledge also is paramount. In-house attorneys and outside counsel must have an understanding of relevant technologies to effectively communicate and argue their cases. Cooperation is another significant element, as the lack of it can undermine much of what the amendments are attempting to achieve.

E-discovery has officially exploded on the scene, and ultimately, the effectiveness of the new rules will depend on many factors, including to what degree legal professionals keep abreast of advancing technologies, and the level of communication between all parties as they work to piece together effective discovery plans.

Elissa A. Santo is a litigation paralegal with Norris, McLaughlin & Marcus in Bridgewater, N.J. During her 15 years in the legal field, she has worked in many types of litigation, including employment, insurance, product liability and patent infringement. She has conducted seminars and written articles for various publications, including New Jersey Lawyer Magazine.