E-Discovery Explosion
Can the new FRCP amendments help pick up the pieces?
By Elissa A. Santo
July/August 2006 Issue
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.
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.
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