E-Discovery Law and In-House Counsel:
There are plenty of bad things that can happen to in-house lawyers. Among the worst is getting involved with civil litigation (i.e., non-criminal litigation). Unfortunately, if you practice long enough in-house you will have to deal with it, either from the position of the plaintiff (the party bringing the claim) or the defendant (the party the claim is against).
While being a defendant is generally “worse,” the cost in time and treasure, the uncertainty, and the generally corrosive nature of litigation in the United States, make it something most in-house lawyers avoid regardless. But, it does happen and when litigation arises a key part is the discovery process and most of the action in the discovery process occurs with electronic discovery, also known as e-Discovery. Below I discuss some of the basics of e-Discovery, including the most important rules and case law:
What is e-Discovery?
Once you get through the filing of the complaint and the defendant’s answer (or initial motions to dismiss), the next stage of the litigation process involves discovery. In short, discovery is simply the mandated exchange of information relevant to the claims and defenses in the litigation. It takes several forms, including written requests for admissions, written interrogatories (questions), depositions (pre-trial testimony taken under oath), and the exchange of documents and company records, such as emails, spreadsheets, and presentations. In the good old days, all documents were paper, and discovery involved reviewing boxes and boxes of paper documents. Today, most documents are electronic, in the form of, among other things, spreadsheets, presentations, word processing documents, audio, text messages, and, of course, email. E-Discovery is the process involving the identification, processing, review, and production of this electronically stored information (“ESI”). Because it is so easy to keep electronic documents they are rarely destroyed, and the volume of data can be (and generally is) enormous. When it comes to e-Discovery there is both the text of the actual document and the metadata, i.e., the super-rich data “behind the scenes” such as author, creation date, etc. All of this ESI data adds up. Unfortunately, the larger the database, the more expensive the process will be.
What are the key stages of e-Discovery?
The e-Discovery process includes multiple key stages:
- Preserving ESI. This includes the “legal hold” process where parties to litigation are required to preserve all relevant information relating to the claims and counterclaims set out in the lawsuit. This typically requires the suspension of your normal record destruction process.
- Identifying ESI. In-house counsel must next identify the various types of ESI held by the company, in particular the custodians, the locations, and the amount of such information.
- Collecting ESI. This involves the process of gathering the responsive ESI from the custodians or other locations. It requires that the metadata and native formatting not be changed, meaning that collection is typically a task for forensic professionals and not something you can do on your own.
- Processing ESI. The ESI that is collected must be stored and processed. This is a highly technical (and expensive) process that involves removing non-responsive data, duplicates, etc. The end result is a “pristine” database that can be reviewed by counsel for response documents, etc.
- Reviewing ESI. Both parties to litigation must review their respective databases to identify responsive documents (i.e., documents responsive to the requests of the other side), along with privileged documents (i.e., those covered by attorney-client privilege or the work product doctrine), and, most importantly, so-called “hot” documents (i.e., documents that are particularly good or bad for that party – attorneys always hope that there are no “smoking guns” present in the documents). The review usually involves a large number of lawyers looking at each document using a computer database to “tag” the document as responsive, privileged, or “hot.” More and more, parties rely on artificial intelligence (aka predictive coding), keyword searches, and other technology assisted review (“TAR”) to speed up the review process and reduce costs.
- Producing ESI. Once the records are reviewed for responsiveness, they are made ready to produce to the other side. This involves labeling the documents with numbers (so the parties can refer to specific documents by number range) and a technical process of transferring the production set to the other side, usually via an FTP file transfer but, sometimes, on a portable storage drive or other media, depending on the size. Any document withheld because of privilege must be sufficiently identified in a written privilege log and provided to the other side as well.
Each step above involves a lot of time and costs for each party, especially because the rules of discovery provide wide latitude to request information that “may” be relevant. To make it worse, there are typically numerous contentious battles between the lawyers for each party as to what is or what is not responsive, whether each party has untaken its obligations in good faith and produced the right documents, and what documents are, or are not, privileged and can be withheld. The goal of in-house lawyers, therefore, is to create a defensible process whereby, if questioned, you can demonstrate the reasonableness and completeness of the preservation, the search, and the production.
What are the key rules and laws involving e-Discovery?
There are numerous rules and judicial opinions that cover the e-Discovery process. For our purposes, the Federal Rules of Civil Procedure as key (and most states have equivalent rules). Rule 26 is the most important of the FRCP when it comes to e-Discovery. Rule 26 sets out many important concepts, such as:
- Rule 26(a) – requires that each party make certain initial disclosures of information and documents without waiting on a discovery request from the other side.
- Rule 26(b) – requires that the benefits of the requested discovery (including e-discovery) be proportional to the cost and effort to gather and produce it.
- Rule 26(c) – provides a process for the parties to enter into a protective order to limit the disclosure of competitively sensitive information (e.g., some records are for outside counsel eyes only).
- Rule 26(f) – sets out a conference process whereby the parties attempt to agree on the “rules” of what must be collected and produced.
- Rule 26(g) – sets out the standard of care a party must utilize when searching for responsive information. In short, each party must make a “reasonable inquiry” into their data. As you can see, such a vague standard is ripe for battles.
FRCP 37 provides some comfort to the parties in that while it permits sanctions for failure to preserve ESI, it limits those sanctions to behavior where the party’s actions demonstrate the intent to deprive another party of information. Additionally, Federal Rule of Evidence 502 allows a party to pull back privileged documents if accidentally produced to the other side (parties to a lawsuit also negotiate so-called “claw back” agreements that allow them to pull back privileged documents accidentally produced to the other side). Lastly, many courts have local rules that provide further guidance or requirements when it comes to e-Discovery.
There are many cases where judges have laid down comprehensive reviews or rules when it comes to e-discovery. None, however, is more famous or more important than the case of Zubulake vs. UBS Warburg where in 2003 -2004 Judge Shira Scheindlin wrote a series of detailed opinions setting out the ground rules in the form of balancing tests around the production of e-Discovery at a time when the process was relatively new. If you read nothing else, reading her decisions in Zubulake will give you a solid background in the e-Discovery process as they are still followed today.
All in-house counsel should have a basic understanding of the e-Discovery process and the rules that govern it. Inevitably, there will come a time when in-house lawyers must deal with this process Having a reasonable background in what it entails and the obligations it imposes on litigants can save a lot of pain and angst when the company’s leaders are looking to their in-house lawyers for guidance on what to do. Moreover, staying appropriately educated on the e-Discovery process is a requirement under Model Rule of Professional Responsibility 1.1 (duty of tech competence). Fortunately, for those in-house lawyers with access to Practical Law, there are numerous e-Discovery resources available including the e-Discovery “tool kit” which provides you with everything you need to deal with this important area of the law, from checklists and templates to training materials and summaries of the law.