By Chris Dale – Independent Legal Services, Professional & Consultant at eDisclosure Information Project
There was a time when the conduct of electronic discovery was simply passed to a company’s external lawyers. They in turn would involve external providers of services for the technical aspects of collection and processing and use their own resources (that is, their staff) for the most expensive component, document review.
They were able to point to this as the norm, to talk of such manual review as ‘the gold standard’, and (in the US at least) to mutter about the risk of sanctions as the excuse for the bills which resulted. They had little incentive to reduce the scale of the task, for example by minimising the review pile before review began, and the clients seemed to buy into this.
Increasingly, companies are taking responsibility themselves for the conduct of electronic discovery, either by actually taking part of the exercise in house or by specifying the use of certain providers or technology. In addition, they have started to exercise more control over budgets and to question the old way of doing things. This evolution has taken us to a point where the client is effectively managing the process and calling on lawyers and others for those parts of the task which it cannot sensibly do for itself.
Before going on, it is necessary to observe that electronic discovery embraces different jurisdictions, each with different influencing factors, and that it goes beyond civil litigation into the conduct of regulatory investigations, internal investigations and exercises designed to check on compliance. A short article like this cannot pretend to do more than generalise about the ways in which companies are changing their approach to managing discovery. A company with frequent litigation, fear of regulatory investigations and with skills and a budget to match will behave differently from one which has none of these things. Nevertheless, certain themes cross these boundaries.
If inside counsel is, or should be, paying more attention to the cost and other components of electronic discovery, what practical form does that interest take? Elements include anticipation (that is, taking steps to mitigate in advance the effect of prospective eDiscovery challenges), budget control (both matter by matter and across all matters), selection control (choosing external lawyers who know their stuff) and what one might call execution control (maintaining interest and involvement which reflects the fact that it is your data, your objective and your money which is at stake here).
The word ‘anticipation’ is used here deliberately to imply something broader and even less specific than the term ‘information governance’ (IG) which is currently fashionable. ‘Anticipation’ sweeps up the easily-accepted idea that if a company’s business must inevitably involve searching through information in response to an external or internal requirement, such as litigation or an investigation, then it makes sense to do whatever you can pre-emptively to reduce the cost and improve the quality of such exercises.
It is helpful to consider what is meant by information governance even if it is not exactly coterminous with ‘anticipation’ as used here. The Information Governance Initiative defines IG as “The activities and technologies organisations employ to maximise the value of their information while minimising associated risks and costs”.
One of the attractions of this definition is that it mentions the search for value before the minimisation of risks and costs, reminding us that, even in a formal eDiscovery context, the exercise is aimed at finding value (that is, evidence and the elements needed to underpin decision-making) as well as the formal compliance with rules of court or regulators’ demands.
The simplest component of information governance – albeit one which is simpler to explain than to execute – is the minimisation of the overall body of data by a programme of what is called ‘defensible deletion’. Such a programme accepts that a very high proportion of data held by an organisation is ROT – Redundant, Obsolete or Trivial, the word ‘redundant’ bringing with it the very high element of duplicated data which exists in most organisations’ systems.
It is not easy to identify a return on the investment in even this aspect of information governance, but a large part of it lies in the reduction of the time and costs of any discovery exercise, something which inevitably follows from there being a smaller corpus (and a more refined one) to start with. It goes beyond the scope of this article to set out how to achieve this (something which, in any event, will vary from company to company) but it is hard to argue with the simple proposition that a reduction in ROT will lead to a reduction in eDiscovery costs, while also increasing the likelihood of finding evidence which matters. Inside counsel who want to reduce eDiscovery costs should start here.
Budget control (both matter by matter and across all matters)
If the days are gone when companies simply pass work to law firms and accept the bill in due course, what has replaced that? At one level, we have seen the simple but effective method of just imposing a cap on what can be spent, leaving the lawyers to work within that. Many companies, however, have more sophisticated ways of dealing with the problem, including matter-management and e-billing technology, detailed matter level budgets, alternative fee arrangements, evaluation of outside counsel’s adherence to billing guidelines and defined panels or pre-approved lists for outsourcing the work.
That has been accompanied by close consideration as to where and by whom the work should be done. The rise of third-party providers of eDiscovery services means that there are alternatives to simply asking external lawyers to do whatever they think is right using their own resources. Methods include the use of managed review services, fixed price contracts with technology providers, and the imposition of a requirement to use particular technology. Hand-in-hand with all this we see a growing number of companies who are building their own resources in-house, if only for the early stages of preservation, legal hold, collection and first-stage processing.
Specialist companies now offer services aimed at equipping in-house counsel with both the tools and the skills to manage all this. One such company is Huron Legal, whose recently published IMPACT Benchmarking Survey shows how some companies are imposing and enforcing both new fee structures and greater transparency on their lawyers.
Those companies who have recognised the importance of electronic discovery are likely to choose external lawyers with appropriate skills. One ought, of course, to be able to take for granted that a law firm knows the rules, a confidence which seems sadly misplaced in all too many cases. A recent survey in the US by Exterro points to serious judicial concern about the competence of many of the lawyers who appear before them. Anecdote, as well as the occasional judgment or Opinion, suggests both in the UK and the US that many lawyers do not know enough about the court requirements for discovery.
For example, the UK rules offer many opportunities to limit the scope of disclosure – this lies in the narrow definition of a disclosable document, in the fact that searches are expressly required to be reasonable ones, and in the requirement that every aspect of the conduct of litigation must be proportionate. There is therefore a positive duty on lawyers to find the best way of doing the task, with scope, method and cost all to be considered and presented to opponents and the court. The UK requirement may be more extreme than in many other jurisdictions, but proportionality is required even under the US Rules of Civil Procedure.
Three main elements are required here – the knowledge of the rules which permit or require eDiscovery scope to be limited, an understanding of the tools and techniques which allow this scope to be limited without the omission of documents which matter, and the skill to articulate the arguments in favour of reduced volumes. A lawyer capable of this has the potential to significantly reduce the overall costs of a case.
It goes further than that – the skill to make these assessments quickly and economically allows an early assessment to be made of both prospects and costs; armed with that assessment, a company can consider the terms on which settlement might be made, whether with an opponent in litigation or a regulator. The company is looking not just for a competent litigator, but for someone to advise on business decisions.
Beyond that, there are other factors which in-house counsel ought to require of their lawyers. One is the ability to cooperate as to the mechanics of discovery. This is in fact required by the rules, but many lawyers feel that their clients expect them to take every point in order to maintain an aggressive profile. Whilst it is true that this approach can sometimes win cases, it is also the case that taking every point clocks up costs. The excuse given by many lawyers is that this is what they think their clients expect of them. It makes sense for the clients to ask the lawyers to explain what advantage is likely to be set against the cost and against the judicial distaste often shown for such an approach.
Clients increasingly expect that the lawyers will be willing to enter into alternative fee arrangements and, to some extent at least, to share the risk when cases go over budget for reasons beyond the control of both client and lawyer. As mentioned above, corporate clients are increasingly making their own arrangements with eDiscovery providers – the evidence for this lies in the fact that many providers have almost stopped marketing to law firms and instead target corporate clients direct. That makes it part of the in-house lawyers’ role to be able to evaluate the offerings of competing providers, whether for software or services or both.
There are some decisions to be made even before considering specific competing providers. As mentioned above, some companies are taking part of the eDiscovery function in house; that may extend only to legal hold and collection, but may go beyond that into the licensing of processing and review software to operate behind the company firewall. Alternatively, companies may prefer to leave the software in the hands of a provider and either manage it themselves or delegate management to the provider, working together with the lawyers.
Which route a company takes will be dictated by a number of factors, including the anticipated throughput, the relative costs and the skills available (or not) in their own staff. Sometimes a hybrid approach is best, with different decisions made from case to case depending on its size, on the degree of risk involved and on other pressures on the in-house department.
At a more simple level, corporate clients should enquire what technology is to be used and to ask what experience the providers have in working for clients whose discovery needs are similar to theirs. Like lawyers, eDiscovery providers are amenable to more inventive fee structures than simple per custodian or per GB rates for those clients who want them.
The discovery services providers are increasingly providing dashboards which allow clients, whether corporations or lawyers, to have an overview of cases as they progress. Many companies will have more than one discovery provider.
This is far removed from the old model under which the client simply passed the decision-making to its lawyers. It requires a new set of skills within the company, as well as a degree of cooperation between internal departments – legal, IT and records management for example – which does not always come naturally. It also requires the ability to manage a project – or a list of projects – in which parts of the eDiscovery function are delegated to different players.
These are, after all, the clients’ documents, the clients’ objectives and the clients’ bills, and it seems right, and not just for reasons of cost, that in-house counsel are taking greater control of their eDiscovery matters.
About The Author:
Chris Dale qualified as an English solicitor in 1980 after reading History at Oxford. He was a litigation partner in London and then a litigation software developer and litigation support consultant before turning to commentary on electronic disclosure/discovery. He runs the e-Disclosure Information Project which disseminates information about the court rules, the problems, and the technology to lawyers and their clients, to judges, and to suppliers. He was a member of Senior Master Whitaker’s Working Party which drafted Practice Direction 31B and the Electronic Documents Questionnaire. He writes an authoritative and objective web site and blog on the subject and is a well-known speaker and commentator in the UK, the US and other common law jurisdictions.