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Idealistic musings about eDiscovery
An e-mail exchange this morning with one of our product managers has got me thinking … and that’s always dangerous.
Most enterprises that issue legal hold notifications to their custodian employees use good ol’ e-mail. The hold notification gets pasted into the body of the e-mail, and off it goes, (theoretically) to the recipient. Perhaps the e-mail was sent with a return receipt requested; and if the recipient is feeling generous, that receipt just might come back to prove that the message was received. As for whether the notification ever gets read? Well, we’ll just have to assume the best, won’t we?
Problem is, this isn’t a very practical solution. First, let’s look at the logistics. E-mails are not only subject to one-click deletion, but (at least in Microsoft Outlook and Exchange) can also be subject to custom routing rules. A user with the appropriate software permissions can easily create a rule to route all e-mails from, say, the Office of the General Counsel directly to the “Deleted Items” folder.
E-mail retention on the enterprise level also tends to be subject to shorter data preservation times than other types of electronic documents. If a custodian is on vacation when they get the e-mail, there is a possibility that the e-mail may not be there for download when the custodian gets back.
Finally, even if the e-mail is delivered in a timely manner and doesn’t get deleted, there’s no guarantee that the custodian will actually read it. And even if they do read it, they have the option (again, in Outlook; I don’t know about other systems) of denying the sender’s request to return a receipt.
The point of all this is that the enterprise remains vulnerable to “plausible deniability”. If a custodian can be shown to have read the hold notice, and they then proceed to violate it by spoliating evidence, the enterprise can likely protect itself from liability by arguing that in violating the hold notice, the custodian was acting outside the course and scope of their employment. Without that proof, the enterprise may remain firmly on the hook.
Now, the content of the hold notice itself is probably privileged from discovery under attorney-client privilege and attorney work produce privilege. However, the process of issuing that hold notice, and of obtaining proof of receipt, may not be privileged. In the recent case Cannata v. Wyndham Worldwide Corp., 2011 WL 3495987 (D. Nev. Aug. 10, 2011), the court held that the opposing party was entitled to know “what has actually happened in this case, i.e., when and to whom the litigation hold letter was given, what kinds and categories of ESI were included in defendant’s litigation hold letter, and what specific actions defendant’s employees were instructed to take to that end.” (Emphasis mine. I commend to you Dennis Kiker’s excellent discussion of the Cannata case at his blog.)
At Autonomy, our legal hold software notifies the custodian via e-mail that they have a message awaiting them from the GC’s office, and to click on an enclosed link. The link serves a form from our workflow management engine, completely independent from the e-mail, containing the language of the legal hold notification, and requiring an electronic signature as acknowledgment that the form has been received and read. This ensures that the custodian cannot claim, “I didn’t get the e-mailed notice; and if I did, I deleted it; and if I didn’t delete it, I didn’t read it, etc.,” as a way to shift liability for spoliation back onto the enterprise. To me, this seems a MUCH better and safer practice that is more likely to withstand judicial scrutiny. (This is my opinion, not influenced by anyone at Autonomy, and I firmly and personally believe what I have written here.)
The Zubulake V opinion (229 F.R.D. 422, 433 (S.D.N.Y. 2004)) set the standard quite plainly: ‘‘[A] party cannot reasonably be trusted to receive the ‘litigation hold’ instruction once and to fully comply with it without the active supervision of counsel.’’ So why do so many counsel continue to insist that an e-mail “blast” of hold notices is good enough? Food for thought …
I’m on vacation for the next couple of days, but here are some eDiscovery links I’m following and will have more to say about after I get back:
From Law.com: E-Discovery ‘Command’ Culture Must Collapse (I agree with this article completely; the time has come for collaboration rather than foot-stamping; see also Ralph Losey’s blog post We Are at the Dawn of a Golden Age of Justice)
From Richmond Journal of Law & Technology (via @ComplexD): Using Keyword Search Terms in E-Discovery and How They Relate to Issues of Responsiveness, Privilege, Evidence Standards and Rube Goldberg (I’ve skimmed this law review article, and look forward to spending more quality time with it on the plane tomorrow)
And two links re predictive tagging (or “Meaning Based Coding”, as my company’s marketing department likes to say): Companies That Outsource Face New Legal Risk (from Law.com), and Predictive Tagging: Finally, Some Judicial Cover (from LexisNexis, talking about Judge Peck’s article Search, Forward: Time for Computer-Assisted Coding).
Also, on Thursday, October 20, I’m speaking to the Houston chapter of Women in E-Discovery on the topic, “Predictive Coding: Ready for Prime Time?” Write to firstname.lastname@example.org if you want more information.
Yeah, I know. You think it will never happen to you.
You just go along about your merry way, litigating the way you’ve always done it. It hasn’t happened to you yet, after all.
Oh, you’ve heard about the cases, the tens of thousands of dollars in fines, the adverse inference sanctions that led to verdicts in the millions and even the billions. You’ve heard about Zubulake and Morgan Stanley and Creative Pipe and that ridiculous Qualcomm case (those attorneys did get to keep their law licenses after all, didn’t they?). You know those cases have absolutely nothing to do with you.
You practice mostly in state court. All those Federal Rules amendments, they apply to the other guys, the ones who spend all their time in motion practice. You’re a litigator, darn it. You don’t push paper, you get out there and work for a living. So it’s not going to happen to you.
Maybe you heard – maybe you didn’t – that the Texas Supreme Court pretty much adopted the growing case law governing electronically-stored information in federal courts to govern eDiscovery in Texas. In re Weekley Homes, L.P., 295 S.W.3d 309 (Tex. 2009) is the citation. But what difference does that make? It’s not going to affect you.
Or … is it?
You’ve certainly heard the dire warnings, from people like – well, like me. eDiscovery is here to stay, whether you like it or not. Eighty percent of a company’s data, and about 91 percent of all information created today, is in electronic format. The “smoking gun” that you’re going to be looking for, or that the other side is going to try to hide from you, is probably going be in an electronic file. Those who do not learn to surf the information wave are likely to be swamped by it.
You may have noted that criminal law cases, family law battles, employment discrimination matters, workers’ comp fights, wrongful death suits, and even the good ol’ slip-and-falls are beginning to turn on who sent which e-mail to whom, or what file got downloaded to which computer and when. But that’s those guys, you keep telling yourself. You simply don’t need to learn anything about eDiscovery. It can’t happen to you.
I thought “it” couldn’t happen to me, either. Get in a car accident? Me? No way! But I still fasten the seat belt every time I get into my car, because there’s not a victim in the world who thought it would happen to him. My father does the same thing. Every time he gets into his car, he fastens his seat belt.
A few years ago, that seatbelt saved him from certain death. It wasn’t his fault, it was the oncoming driver swerving into his lane. It couldn’t happen to him.
Except … it did.
How can I analogize my father’s brush with destiny to your refusal to learn anything about eDiscovery? I can do so because, even though it couldn’t happen to him, his preparation saved him when the unfathomable did happen. His injuries, thankfully, ended up being relatively minor.
You don’t have to become a computer expert to learn a little bit about eDiscovery. Heck, you survived college, three years of law school and six weeks of bar review. You can spend a little quality time on the Internet and learn a thing or two about eDiscovery. (You can use Google, right?) Guess what? Those web pages you’re surfing get cached on your computer’s hard drive, and might be discoverable as evidence. That’s eDiscovery.
Guess what else? If your client wants to pursue a claim against her employer, and writes you a privileged e-mail from her work computer, there’s a lot of disagreement over whether using company assets to send her personal e-mail waives her expectation of privacy, and therefore, your privilege. That’s eDiscovery, too.
Starting to hit a bit closer to home, is it?
eDiscovery is not just for the federal court practice lawyers. It’s not just for in-house counsel who have to manage their enterprise’s data flood. It’s not just for the big players, and it’s not just for the big-firm attorneys. eDiscovery affects every lawyer who litigates, and a lot of the ones who don’t. Knowing how to use it effectively to support your case can be a tremendous advantage. Not knowing how to comply with opposing counsel’s eDiscovery request can make you the next sanctions case that everyone seems to be talking about.
Still think it will never happen to you?
Can you afford to be wrong about that?
[Note: This was originally written as part of an article for a print publication for Texas lawyers, but was cut from the publication draft. Most references to the Texas Rules of Professional Conduct (TDRPC) can also be read to refer to one of the ABA Model Rules of Professional Conduct. – Gary]
It is certainly no surprise to any member of the Texas bar that TDRPC 1.04(a) emphasizes, “A lawyer shall not enter into an arrangement for, charge, or collect an illegal fee or unconscionable fee[.]” This means that, in addition to charging clients reasonable fees for the work the attorneys do personally, they should not artificially inflate the fees passed through from, let’s say, a team of document review attorneys. These temporary attorneys typically work for an outplacement firm, and get paid $25-35 per hour for their time reviewing documents (increasingly, all electronic) as part of the first-pass document review. The outplacement firm marks up these fees in billing the law firm. Frequently, the law firm will then mark up the fees again in billing its client.
This raises the ethical question: How much can a firm ethically mark up the contract attorneys’ time? Most people would not consider a reasonable markup indefensible (after all, the law firm has overhead costs too). But how much is “reasonable”? Let’s presume that you hired an expert witness who charged your firm $15,000 for his services, but the firm billed the client for $50,000 for the expert. Most grievance committees wouldn’t blink at issuing sanctions for this egregious markup.
Similarly, firms mark up the fees of their staff attorneys. However, given that contract reviewers are not technically engaged in the practice of law when performing first-pass document review (they do not, after all, determine how the documents they review fit into the theory of the case), at what point does the firm’s markup cross the line into “an illegal or unconscionable fee”? One team of bloggers has argued that since contract review attorneys exercise no independent legal judgment, they are essentially “a piece of office equipment” and therefore, like charges for copies or courier fees, they should have their costs marked up only minimally.
Except in the context of attorney fee awards generally, courts haven’t yet wrestled with the ethical implications of contract review attorney markup. A malpractice case pending in L.A. Superior Court, J-M Mfg. Co., Inc. v. McDermott Will & Emery, will likely shed some light on this issue eventually. The plaintiff has sued the McDermott law firm claiming that they did not adequately supervised an outsourced document review project, and that as a result, some 3,900 privileged documents (out of about 250,000 total) were produced that should not have been. This matter, however, will take years to result in a written opinion. [Many thanks to Joe Howie for posting the Complaint.]
The notion of “reasonable fees” goes beyond merely marking up an outside reviewer’s bill. A trio of respected commentators – Patrick Oot, Anne Kershaw, and the aforementioned Joe Howie – have argued that in ESI collections, failure to utilize technology to consolidate duplicate records prior to review, thereby requiring multiple reviewers to look at exactly the same content to make exactly the same responsiveness and privilege decisions (each of whom must of course bill for their time separately), is by definition double-billing and, therefore, unethical. They wrote:
If ediscovery were a small part of litigation and duplicate consolidation had an imperceptibly small impact on ediscovery, the whole debate might be dismissed under the rationale of. However, the cost of ediscovery in general, and the cost of relevance and privilege reviews in particular, have been a major concern for years. There are no excuses for “not getting it” when it comes to ediscovery. Lawyers who bill hundreds of dollars an hour are implicitly promising a certain level of competence that would include the basic notion of consolidating duplicates.
These commentators go on to note, “[L]awyers are making representations to their adversaries and to the courts regarding the volume of ESI that has to be handled and the time required to review those records. Lawyers who don’t properly consolidate duplicates are inflating the time and cost required to review their productions.” Such behavior would violate TDRCP 4.01: “[A] lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person[.]” It might also run contrary to Comment 6 to TDRCP 1.04, noted in the first paragraph above: “[A] lawyer should not abuse a fee arrangement based primarily on hourly charges by using wasteful procedures.”