Like an unstoppable force meeting an immovable object, the rapid pace of technology and the staunchly conservative nature of the law could hardly be in greater conflict.
As the two forces continue to clash, the fallout can be seen in attorneys – doing what they believe is best – battling relentlessly while costs continue to soar. Caught in the middle of it all are the clients and courts, desperately searching for a resolution to the madness. In the midst of this chaos, two familiar concepts have emerged in an attempt to restore order – cooperation and proportionality.
Love it or hate it, electronic discovery is here to stay and parties must work together to curb the exorbitant (and increasing) costs involved in locating, reviewing and producing data in a lawsuit or regulatory matter. U.S. courts’ strong appetite for liberal discovery is tempered by the concept of proportionality, which recognizes that at some point ongoing discovery results in diminishing returns. Aside from its common law roots, proportionality is embodied in Federal Rule of Civil Procedure 1, stating that the rules should be “construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding,” as well as Rule 26, which permits courts to limit discovery if they determine the burden outweighs the benefit. As for proportionality’s counterpart, cooperation, its spirit can be found throughout legal opinions, scholarly commentary and model codes such as the American Bar Association’s Model Rules of Professional Conduct – particularly in Rules 3.2 and 3.4.1
With both of these concepts’ illustrious presence and history in litigation, one would think their application in ediscovery should be fairly straightforward. Yet court-ordered sanctions and costs related to ediscovery continue to rise at a startling pace.2 It is evident that although the basic framework to support proportionality and cooperation is in place, we still need to fill in the gaps. Thankfully, commentators and scholars from both the bench and bar, along with industry experts, have provided the missing pieces – we just need to put them together.3
Fear of the Unknown
In the ediscovery context, knowledge is power and ignorance is disabling. Unfortunately, the latter is far more common. No matter your professional background, the e-discovery process can be complex and daunting. Litigators who do not fully understand the process and intricacies are far more likely to make mistakes that can significantly prolong litigation and increase costs. Fear of the unknown and resulting defensiveness can be as (or more) problematic than being uneducated in this space. All attorneys naturally fear the fatal mistake of disclosing the proverbial “smoking gun” that sinks their client’s case.4 However, when discovery involves millions of pages of documents – as e-discovery commonly does – it is no wonder why costly production and spoliation disputes dominate e-discovery jurisprudence.
Thankfully, the solution is relatively simple and something attorneys are no stranger to – education. In the past few years, many organizations have been formed to encourage and help attorneys, clients and the judiciary to work together and better understand the nuts and bolts of ediscovery. For example, the Seventh Circuit’s Electronic Discovery Pilot Program’s Principles Relating to the Discovery of Electronically Stored Information has recognized the need for cooperation, proportionality and education “to reduce the rising burden and cost of discovery . . . brought on primarily by the use of electronically stored information (ESI) in today’s electronic world.”5 Important concepts from this effort include Principle 1.02, which states “[a]n attorney’s zealous representation of a client is not [emphasis added] compromised by conducting discovery in a cooperative matter” and also acknowledges that the “failure of counsel . . . to cooperate in facilitating and reasonably limiting discovery requests and responses raises litigation costs.” In addition, Principle 1.03 instructs that the application of the proportionality standard in discovery will be furthered by crafting discovery requests and responses that are “reasonably targeted, clear, and as specific as practicable.” Further, Principle 3.01 stresses the pressing need for education by calling for judges, attorneys and parties to “become familiar with the fundamentals of discovery of ESI,” and Principle 3.02 establishes a duty to pursue continuing education in this regard. According to the Phase One report from May 2010, “92 percent of the judges agreed that the Principles [set forth in the program] had a positive effect on counsels’ ability to resolve discovery disputes before requesting court involvement.” Also according to this report, Principle 1.02 was often viewed as incredibly useful and allowed counsel to cooperate with each other while fulfilling their obligation to zealously advocate on behalf of their clients.6
It is no secret that a lack of knowledge is at the root of many ediscovery failures and is a necessary precondition to effective cooperation, yet the calls for increased education have focused on short-term solutions. Familiarity with rules and best practices is not enough to solve a systemic problem. A long-term solution in the form of more in-depth, formalized education is necessary. Law schools must educate future attorneys on ediscovery principles, and knowledgeable practitioners must share their ediscovery expertise with their colleagues through continuing legal education (CLE) courses.
Building a Solid Foundation
While education may help foster cooperation, it is only one piece of the puzzle. In the meantime, courts still need practical tools to address the current lack of cooperation and skyrocketing discovery costs.
One of the more novel approaches has been the use of phased discovery. In a recent discovery order from the Northern District of Illinois, Magistrate Judge Nan R. Nolan (chair of the Seventh Circuit Pilot Program, discussed earlier) ordered the parties to engage in a “phased discovery schedule.”7 After familiarizing themselves with ediscovery principles including cooperation, the parties were ordered to engage in “cooperative discussions to facilitate a logical discovery flow.” Consistent with principles of proportionality and the Federal Rules of Civil Procedure, this flow was to begin with completing Rule 26(a) initial disclosures, followed by a narrowing of the discovery scope to “claims most likely to go forward” and, finally, prioritizing discovery efforts according to sources that are least “expensive and burdensome.”8 Last, and arguably most important, Judge Nolan dictated that “nothing in this Order shall prejudice the parties from conducting all forms of discovery” if necessary in the future, making clear that phased discovery does not mean limited discovery.
The concept of proportionality in the context of document production is well-suited to address many of the cost problems. Although relatively few courts have expressly ordered it, there is little conflict over its value. In the production context, proportionality is logical, cost-effective and in harmony with the underlying principle of liberal discovery.9 Unfortunately, production is only one part of the ediscovery process.
Preservation is no less important to the ediscovery process than production; however, its relationship with proportionality may be slightly more dubious. In Orbit One Communications v. Numerex Corp., the Southern District of New York rejected the standard of “reasonableness and proportionality” advocated in Victor Stanley II and Rimkus Consulting Group as “too amorphous to provide much comfort to a party deciding” what information to retain. Instead, the court favored the Zubulake IV standard of retaining “all relevant documents . . . in existence at the time the duty to preserve attaches.”10 Courts are understandably reluctant to grant too much leeway to parties to determine what information is worth saving on the reasonableness and proportionality criteria dictated throughout case law and the rules. Proportionality and “phasing” have become critical because litigants have been unable to effectively manage their growing masses of ESI. Data proliferation has shown no sign of slowing down, so there is little reason to believe that proportionality and phased approaches to ediscovery can be a viable long-term solution when neither addresses the underlying issue – proper ESI management.
Technology is designed to make difficult tasks easier. Many corporations are in a quandary, however, because they have adopted technology to create information more efficiently without also implementing technology to manage it more efficiently. In regard to ESI preservation, enterprise archiving technology that can manage vast stores of data with remarkable efficiency is readily available. In addition, hosted discovery repositories provide a cost-effective and secure location to preserve, filter and search large volumes of ESI that are, or may likely become, relevant to litigation and investigations. On the other end of the ediscovery process, technology-aided document review tools are poised to revolutionize this part of the process, which is typically the most expensive and time-consuming. Historically, there simply may not have been a strong enough countervailing incentive to manage the growing stores of information, but it is a safe bet that the interests of justice will soon fill that void and litigants will be expected to responsibly manage their information throughout its life cycle.
No doubt cooperation is imperative to managing an effective ediscovery process, but court orders and sanctions only go so far. Fostering cooperation in the long term will require a paradigm shift in the way litigators approach the ediscovery process. A key piece of this lies in ensuring that jurists and litigants understand this complicated process. As for proportionality, novel approaches such as phased discovery may be sufficient to stave off the tradition of liberal discovery for now, but there is a demonstrated need to revolutionize the process in terms of technology and efforts used to manage data more cost-effectively and efficiently. While the best answer may be unclear, what is perfectly evident is that we already have all the pieces to solve the puzzle – we just need to put them all together.
1 See American Bar Association Model Rules of Professional Conduct, Rules 1.1, 3.2 and 3.4, available at: www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/model_rules_of_professional_conduct_table_of_contents.html.
2 See Kroll Ontrack, Fourth Annual ESI Trends Report (2010) (Finding 13: On average, companies spend $1.25 million per year on discovery); also The Kroll Ontrack Year in Review 2010, available at: www.krollontrack.com/company/news-releases/?getPressRelease=61500.
3 The Sedona Conference® has provided numerous commentaries on proportionality and cooperation that practitioners should read. See The Sedona Conference® Cooperation Proclamation; also The Sedona Conference® Commentary on Proportionality in Electronic Discovery, available at: www.thesedonaconference.org.
4 See Mt. Hawley Ins. Co. v. Felman Prod., Inc., 2010 WL 1990555 (S.D.W.Va. May 18, 2010) (Plaintiff’s failure to perform critical quality-control sampling and other discovery failures resulted in the inadvertent production of an alleged “smoking gun” e-mail).
5 Available at: www.ilcd.uscourts.gov/Statement%20-%20Phase%20One.pdf.
6 Seventh Circuit Electronic Discovery Pilot Program Phase One Report available at www.7thcircuitbar.org/associations/1507/files/05-2010%20Phase%20One%20Report%20and%20Appendix%20with%20Bookmarks.pdf.
7 Tamburo v. Dworkin, 2010 WL 4867346 (N.D. Ill. Nov. 17, 2010).
8 Id. at 3.
9 Fed.R.Civ.P. 26(b)(1) (“Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense”).
10 2010 WL 4615547 (S.D.N.Y. Oct. 26, 2010).
Note: The above post appeared in the May 2011 issue of the free, monthly e-newsletter, Case Law Update & Trends published by Kroll Ontrack. This newsletter is designed to help busy legal professionals keep pace with case law and information pertaining to electronic evidence. Subscribe and gain valuable and timely information on new ESI court decisions, as well as informative articles and tips for both the corporate and law firm audience.