Publications: E-Discovery Update - Winter 2009

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Monitored and Minimized Usage: Limiting E-Discovery Costs Through Usage Policies

By James M. Carlson

Many litigation strategies deal with minimizing the cost of handling e-discovery issues after litigation has already begun. Others deal with proper management of information before a case is even filed. This article addresses a third approach – limiting e-discovery costs by controlling the actual amount of electronically stored information (“ESI”) held by a company. By implementing cleverly crafted policies for both computer and Internet use, a company can control and minimize the amount of ESI that needs to be collected. Such policies also reduce the data storage costs incurred by companies. Usage policies can reduce e-discovery costs by: (1) limiting or completely barring Internet access; (2) limiting the use of document types or programs by certain employees; and (3) restricting the use of company cell phones and Blackberry devices.

Does Everybody Need to Surf the Web?

One way to reduce e-discovery costs is to explicitly bar the use of any programs that can access the Internet. Many companies already do this in order to promote productivity and encourage the use of computers for only work related activities. For e-discovery issues, however, banning or limiting Internet usage results in a reduced amount of material that can be requested during litigation. This includes web surfing histories or programs downloaded from various websites or sent via internet e-mail services rather than company e-mail accounts. Typically, all of these documents would be discoverable in a lawsuit. When asked to, companies will be required to cull through this information and thus produce it to opposing counsel. Imagine a much simpler situation where a company can simply respond “these employees cannot access the Internet” to such request. By instituting a policy that strictly limits Internet usage, companies can avoid many of the costs associated with such a production.

Does Everybody Need to Use All Document Types?

Another way to limit e-discovery costs is to explicitly limit which employees have access to certain types of program and data files. In fact, companies that create a data-map of their ESI already have done this to some degree. In other words, a company may institute a policy where employees who do not need to create spreadsheet documents do not have any spreadsheet programs on their computers. Therefore, there would be no reason to search the computers of those individuals. It allows a company to have streamlined answers to discovery requests by knowing a short list of who could have created and stored certain documents.

Does Everybody Need a Blackberry?

Companies should take a hint from President-Elect Obama and attempt to limit their use of Blackberry devices and other handheld computer devices if at all possible. While they are very convenient devices, Blackberry devices and cellular phones also can create a great deal of costs related to e-discovery. The information stored on these devices is absolutely discoverable and many times companies will be forced to produce these devices. Even text messages that are relevant to a lawsuit are completely discoverable under federal and most state rules. Photographs snapped by company issued cellular phones with camera capabilities are also discoverable. By eliminating or simply limiting the number of these devices in use, companies can significantly reduce the cost of responding to related discovery requests.

Too Much Information? Just Limit It.

Before ESI ensnares your company in high costs linked to e-discovery production, consider limiting the actual amount of ESI at your company. By trimming the amount of ESI now, you may end up saving your company considerable fees if and when litigation begins.

Limiting the Scope of Discovery by Agreement

by Nile N. Park

Limiting discovery by agreement is an important tool for reducing litigation costs. However, it is not appropriate or beneficial in every case. This article discusses several factors that should be considered before attempting to enter into such an agreement.

The concept of entering into an agreement to limit discovery is not a new one. In fact, as an effort to curb unnecessary expenses, establishing procedure by contract “plays an increasingly central role in American civil justice.”¹ The primary purpose of limiting discovery by agreement is to cut unnecessary litigation costs. The Advisory Committee Notes of the Federal Rules of Civil Procedure states, “Counsels are encouraged to agree on less expensive and time-consuming methods to obtain information, as through voluntary exchange of documents, use of interviews in lieu of depositions, etc.”² Accordingly, Federal Rules of Civil Procedure 29 permits parties to enter into written agreements to modify “procedures governing or limiting discovery...” In effect, the discovery rules set forth in the Federal Rules, including the rules on production of electronically stored documents, act merely as default rules that can be altered by agreement between the parties to fit the particular needs of the case.³

In the case of e-discovery, parties can agree to limit all sorts of issues. Parties may agree to limit searches of computer databases to a handful of “keyword” searches. They may agree to limit the timeframe of searches. They may even agree to limit the very type of documents or data that will be subject to search and discovery.

Establishing the scope of discovery and terms of the agreement requires both a legal and business assessment. First, legal issues must be considered, such as what information is necessary to establish your case, what information is sought by the opposing party, how such information is stored, the costs of producing such information, and which party would bear the cost of discovery. After these factors are carefully considered, a business determination weighing the potential cost and benefit is required, asking how much attorneys’ fees, costs, and expenses may be incurred for discovery to be cost-effective.

Obviously, these inquiries should be made prior to engaging in negotiations on the terms of the agreement. However, before even considering an agreement to limit discovery, the initial consideration of whether such an agreement is appropriate for the particular case is essential. Although limiting discovery by agreement is an invaluable tool for reducing litigation costs, it is not suitable for all cases. First, an honest assessment of the parties’ relationship must be made. If the opposing party is antagonistic and unwilling to cooperate, attempting to come to an agreement as to the scope of discovery may be unrealistic. Second, while in some cases the relevant evidence and its location is obvious, in others, it may be difficult to determine in advance what relevant evidence is available and how to obtain such evidence. In the latter cases, limiting discovery by agreement may cause inadvertent waiver of rights to discover critical evidence. However, this concern may be mitigated by including a clause that renders the agreement unenforceable if a party becomes aware of relevant evidence that is beyond the scope of discoverable materials under the agreement.

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¹ David Marcus, The Perils of Contract Procedure: A Revised History of Forum Selection Clauses in the Federal Courts, 82 Tul. L. Rev. 973, 974 (2008).
² Fed. R. Civ. P. 29 advisory committee’s note.
³ Henry S. Noyes, If You (Re)build It, They Will Come: Contracts to Remake the Rules of Litigation in Arbitration’s Image, 30 Harv. J.L. & Pub. Pol’y 579 (2007).

Discovery Response Action Plans (“DRAPS”): How to Save Money by Establishing Standardized Responses to E-Discovery Requests

by James M. Carlson

Especially in a tricky economy, companies involved in litigation face significant costs if they ignore e-discovery concerns. But even if e-discovery concerns are properly addressed, companies can still face significant costs. The key is to both manage costs and effectively address e-discovery concerns. One effective tool in battling these rising costs is a Discovery Response Action Plan or DRAP. This is a protocol that establishes a standardized, streamlined response to e-discovery requests. By having a DRAP in place, a company will have an action plan and task force in place to effectively, efficiently, and economically respond to requests for electronically stored information (“ESI”). That preparedness will translate into dollars saved once action is required.

Why does a DRAP save money? Because a DRAP outlines a proactive plan of response rather than reacting after discovery has been served or an investigation launched. Having such a plan in place can save costs much in the same fashion that any other risk management policy protects companies. This article outlines some basic strategies to be included in a company’s DRAP. The basic steps require: (1) having an individual ready to act as records custodian; (2) being able to quickly recover “typical documents”; and (3) having form responses ready to answer typical discovery requests.

DRAP Step One: Readying a Records Custodian

The first thing that a company should do in preparing a streamlined response to discovery is to designate an individual to act as records custodian. Hopefully, a company already has a functioning Digital Document Retention Policy (“DDRP”) to give explicit guidance as to what documents should be saved and for how long. And hopefully that DDRP designates a records custodian to manage and deal with documents issues. By designating such an individual, a company avoids a panicked search for somebody with knowledge about document management when litigation flares up. Moreover, experienced counsel will seek the deposition of the records custodian very early in the litigation process. By doing so, opposing counsel can determine whether or not a company is prepared for litigation or simply rushing to get ready.

The failure to have a records custodian both designated and prepared hurts a company in two ways. First, without a records custodian designated, there is a rush to locate such a person after the discovery requests come in and after the documents may already be lost. Second, that individual will be unable to explain at deposition the document procedures at the company. As a result, a case can quickly become focused on lost documents when it should be centered on the real issues. Just by having a document custodian named and even cursorily prepared easily saves hours of company time – and even more costly – legal fees.

DRAP Step Two: Identifying and Retrieving Typical Documents

The next step is to have a process in place to allow a company to quickly and cost effectively access “typical documents” in order to review and produce them. This means having a process for recalling stored information, freezing currently used information, and being able to provide it to counsel for review in a timely fashion. Again, the key here is to complete this work before it is needed. Otherwise, there is a risk of higher costs and even lost information.

DRAP Step Three: Form Responses to Discovery Requests

Third, a company needs to sit down with legal counsel and go through typical questions that the opposition will ask via written discovery. By doing so, experienced legal counsel can anticipate and have prepared complete answers regarding the ESI contained at the company. Moreover, legal counsel can create a form response to many of the routinely asked questions and routinely sought after documents. It allows companies to have most of these steps already completed far before litigation begins. By doing so, a company may only need to update its latest draft of responses in order to meet its obligations. The cost savings for such an approach can be staggering.

These three steps are just initial goals in setting up a discovery response plan. A company can meet with its internal IT personnel and especially its legal counsel to develop a comprehensive response plan. By planning for the hurricane of litigation before it strikes, companies can save money and prevent disasters due to hasty decision making.

Clawback Agreements: What They Are and When Are They Used in Litigation

by Jessica K. Thomas

With the production of electronically stored information becoming more mainstream in litigation, courts are becoming more familiar with the production costs and issues that may arise. Of the electronic discovery issues being addressed in courts today, few are as baffling as the issue of how to perform an effective and efficient review for privileged materials among electronically stored information.

The issue arises mostly when a client has not managed or stored its potentially privileged documents in a method so as to separate them from the general population of documents. This can lead to production errors. Generally, e-mail communications can be retrieved with attorney names as search terms or by reviewing selected mailboxes. But what of the remainder of documents culled from a company’s server?

To prevent parties from spending hundreds of man-hours and thousands of dollars on review by companies, attorneys and consultants alike, the “clawback” agreement has taken hold. Stemming in part from the new Federal Rule of Civil Procedure 25(b)(5), a clawback agreement, as executed by the parties, allows parties to produce electronic data while preserving the right to claim privilege for documents discovered by either party in the production. Therefore, a party may produce documents without conducting an overly extensive, “scour the earth” type of privilege review that might otherwise be required due to waiver concerns.

However, this does not mean that attorneys and their clients should throw caution to the wind. Attorneys should still conduct a reasonable search to find privileged information among their clients’ electronic data. Most companies that have extensive electronic data also employ in-house IT personnel with the expertise to perform searches based upon subject, time and/or search term limitations. Should the client not have these capabilities, there are a number of vendors who provide these services in a cost-effective and efficient manner. While this step may seem “extra” in light of a clawback agreement, performing an initial search for privileged information can save both attorneys and clients the frustration of dealing with inadvertently produced privileged information down the road.

Moreover, it is best practice to have the clawback agreement as part of the protective order executed by the parties and entered by the Court. The additional protection afforded by a protective order approved by the court and entered into the record certainly keeps the parties better accountable not only to one another, but to the court as well.

Our next issue will include a discussion about the new Rule 502 of the Federal Rules of Civil Procedure, which addresses clawback agreements in the context of discovery in federal courts.

Taking Advantage of Every Opportunity to Cut Discovery Costs: The Lessons of Kipperman v. Onex Corp.

by Nile N. Park

In this economy, any precautions that could be taken to cut discovery and other litigation costs cannot be overlooked. Kipperman v. Onex Corp., No. 1:05-CV-1242-JOF, 2008 WL 4372005 (N.D. Ga. Sept. 19, 2008), not only demonstrates the need to evaluate electronic information before agreeing to perform any broad searches, but it teaches to cooperate with any initiatives taken by the court to limit unnecessary discovery. In Kipperman, a federal district court ordered defendants to search three backup tapes selected by the plaintiff based on search terms provided by the plaintiff. The court, however, attempted to narrow the plaintiff’s search and directed the plaintiff to “be more artful with its search terms.” The court gave the defendants an opportunity to narrow the plaintiff’s search by providing a list of people to the plaintiff, and the court suggested that the plaintiff use the list “to review whether all mailboxes needed to be searched.” However, the defendants failed to provide a list of names and “agreed to search and restore all mailboxes with the search terms provided by plaintiff.”

Unfortunately, the search produced thousands of irrelevant e-mails. To illustrate the defendants’ dilemma, the court described how the plaintiff included the term “republic” to obtain emails related to “Republic Builders Products,” but the term returned thousands of results having nothing to do with relevant matter, relating to the defendants’ business in “Republic of France,” “Republic of Ireland,” and “Czech Republic.” The defendants turned to the court, and asked it “to excuse them from producing...the results that they deem to be irrelevant...”

The court began its ruling by first noting its broad discretion to act under Federal Rules of Civil Procedure 26 was considerable. The court then denied the defendants’ request to excuse them from producing irrelevant e-mails. The court was not entirely unsympathetic, recognizing “the massive amount of discovery involved in this matter, the considerable burden of working with it, and the overproduction that often comes with e-mail production.” However, the defendants already had an opportunity to narrow the plaintiff’s search but failed to take advantage of it. The court stated, “[d]efendants must now lie in the bed that they have made.”

The clear lessons of Kipperman v. Onex Corp. are to assess the amount of electronic discovery before agreeing to perform any broad searches and to take advantage of any opportunity afforded by the court to reduce discovery costs. Such efforts may not only cut costs, but they also demonstrate to the court cooperation and diligence in minimizing unnecessary discovery. Kipperman indicates that courts will probably respond more favorably to requests to adjust the scope of discovery if precautionary steps have already been taken by the requesting party.