e-Discovery Brief

Controlling E-Discovery Costs in a Big Data World

Dan Johnson — Mon, 03 Jun 2013 12:56:46 GMT

Legal IT professionals are all too aware that the task of managing large mountains of data has always been a defining characteristic of our industry. Now that we've had to layer on the explosion of digital and social media content, we've got a whole new set of challenges in front of us. The attorneys we support are looking to us for new approaches to help them make sense of all this data.

The World of Big Data

In particular, lawyers are taking greater notice of the legal, ethical and technological issues around the new frontier for information technology: big data. IT professionals are on the leading edge of this new battleground, developing innovative approaches to information governance and implementing sophisticated technology systems to harness the power of this data avalanche.

One promising application for big data analysis is in electronic discovery, where fast, high-performing data analytics can substantially reduce the time and cost of preparing for a case. In fact, at the root of any e-discovery project or process is the ability to identify, collect, index and analyze big data. As many legal IT professionals are discovering, new analytics tools and big data technology innovations are making e-discovery software smarter, which can only help law firms and their clients better manage risks associated with failing to produce all relevant documents in a lawsuit or investigation.

However, big data not only bring improved tools to manage large quantities of information, there are also new challenges to identify the most relevant data in e-discovery. The process involves gathering information from a diverse range of sources, storing that content and then developing systems so the information can be mined, analyzed and produced. Big data require an IT environment that can easily scale to handle high electronic data discovery processing without experiencing technical problems.

For law firms of all sizes, there are four key "best practices" for conducting e-discovery more efficiently while controlling costs in the big data environment.

1. Develop a Strategy for Information Governance

It's important to start out by creating and putting into place a comprehensive data management program for compliance with regulations, statutes and best practices. This should involve the development of customized guidelines and procedures for the creation, storage and disposition of any and all types of data. Also create email policies, litigation hold procedures and disaster recovery plans.

Many organizations find that one way to improve efficiency and reduce costs is by performing an inventory of enterprise data - developing a data classification process and creating a data retention policy. You can then develop organizational management policies and procedures for electronically stored information (ESI) that include electronic email policies and develop workflows to deal with the potential for large amounts of nonsearchable data, including hard copy documents.

Finally, turn your attention to security issues as part of your information governance strategy. Stay current on regulatory and legal data security obligations so you can create a data security approach based on repeatable and defensible best practices. Be sure to develop a data breach response plan that is unique to your organization.

2. Establish Rules for Data Extraction and Collection

While there are numerous methods used for data collection in e-discovery, they can be narrowed down to two general categories: automated and manual. With the explosion of big data, we have seen a proliferation of automated ESI collection tools on the market. While these tools have helped manage an enterprise's data and provided more streamlined methods for the collection of ESI, many firms still opt to go the manual custodian, "self-collection," route.

The courts have yet to stake out a clear position on either method of collection, but the Sedona Conference has provided some general guidance in this area. In their "Best Practices Commentary on the Use of Search & Information Retrieval Methods in E-Discovery," practice point one states: "In many settings involving electronically stored information, reliance solely on a manual search process for the purpose of finding responsive documents may be infeasible or unwarranted. In such cases, the use of automated search methods should be viewed as reasonable, valuable, and even necessary."

Regardless of the collection methods used, it is the education about, compliance to and ongoing review of your data management policies that are the critical tasks that should be undertaken by corporations and outside counsel to maintain a repeatable and defensible ESI collection process for e-discovery.

3. Prioritize Data Sets

There are three primary methods used to prioritize and organize data sets to be reviewed by counsel:

Keyword searching

Concept searching

Use of analytics or predictive coding technology

Each approach has its own unique set of advantages and disadvantages and, when used in conjunction with careful documentation and appropriate iteration, should survive a challenge by a party's opponent in litigation. The optimal workflow will likely require a hybrid approach applying two, or perhaps all three, of these approaches to reach the best results.

For example, the use of analytics and predictive coding typically returns more relevant documents without the limitations of traditional searching logic. However, a well-planned and well-constructed keyword search can be more effective for certain situations, such as locating specific date ranges and/or proper names. Putting these technologies and methods together with the proper workflow, methodology and documentation will deliver the best results and better maintain defensibility if challenged.

More important than the actual technology is how the legal teams - and the professionals who are familiar with system limitations - combine them into the optimal workflow best suited to meet the requirements for a given case. In the end, the success of these approaches is based more on the personnel and workflow and not the technology itself.

4. Select the Best Technology Tools

Many law firms and organizations have responded to the explosion of data and the resulting increase in litigation matters by choosing to invest in their own e-discovery software tools to manage tasks. With so many software options available, companies have to evaluate their needs carefully before determining the right e-discovery software for their specific requirements.

Every organization is unique, and there isn't a "one size fits all" option available. Therefore, the evaluation process of e-discovery solutions that are affordable and guarantee a good return on investment is of the utmost importance.

The first step in evaluating the actual tools is to decide which part of the e-discovery process you want to invest in. Some firms have decided that having ESI processing and analysis capabilities in-house is their priority over developing their own robust document review platform. Others have determined they are best served by outsourcing their processing needs and prefer to host and manage their own document reviews internally. Still others have made the decision to invest in all areas of the e-discovery continuum and take greater ownership of the entire process. Only the professionals inside each individual organization are capable of making these decisions, and they should only be made after careful and thorough analysis.

Any investment in e-discovery technology can be quite expensive, and you don't want to lock yourself into a solution that won't deliver what you need. These systems should be fast, powerful and versatile enough to process and manage a large and diverse population of data. Surveys have shown that lawyers' top priorities are speed and ease of use when using document review software. Selecting a tool that contains the features and functionality your lawyers and review teams desire while maintaining the necessary speed and ease of use will go a long way toward ensuring a successful implementation.

Scalability and flexibility are other important factors in selecting the right tool. A typical challenge for many organizations handling large projects is ensuring their tools can scale to handle very large volumes of data in a short time frame. In addition, a tool that has the flexibility to be customized to meet the unique and specific needs of any matter can prove to be very beneficial.

More Data Breeds More Efficiency

Litigation discovery has always been an intensive process. The traditional approach was largely a waiting game of putting off discovery until it was finally required to begin the time-consuming process, oftentimes with attorneys hunched over boxes of documents for hours at a time. Legal IT professionals can attest better than anyone, the accelerating volume of data creation in the digital age has simply outpaced our ability to manage it effectively during litigation discovery, which is now more complex and costly than ever.

The good news is that the brave new world of big data is leading us to establish clearer rules for data extraction, more logically prioritized data sets, smarter information governance strategies and better technology tools. This may not tame the explosion of electronic data in the litigation world, but it does provide hope for navigating those mountains of data better while managing risk and making the e-discovery process more efficient.

rian Ingram is a litigation technology and e-discovery professional with over 20 years of experience in the legal profession. Having spent the majority of his career managing litigation support departments at large law firms, Brian has been involved in some of the largest matters in the nation involving electronic evidence. He has also spent time on the corporate side of the industry. Brian is currently head of the Litigation Technology Consulting division at LexisNexis. He can be contacted at brian.ingram@lexisnexis.com.

What Infinite E-Discovery Searches Need is a Reboot, Not Kumbaya

Dan Johnson — Mon, 03 Jun 2013 12:56:34 GMT

You've been tromping through the desert for days. Your skin is starting to look like a forgotten hot dog on a backyard grill. Parched, you think you could drink a swimming pools worth of water. But somewhere between a glass of water and a thousand gallons, you've had enough. Drink too much and you will simply drown. It's important to know when it is time to say, "That was refreshing. I'm done. Please pass the Solarcaine®."

E-discovery can be like that. Just because technology allows us to create oceans of data -- and gather oceans of data-it doesn't mean we should and it doesn't mean it is in the best interest of your client.

Nationally recognized ED expert George Socha, co-founder of EDRM, moderated a panel at LegalTech® New York 2013 which addressed a number of topics, including the massiveness of e-discovery, the benefits of e-discovery, and the call for more cooperation among litigants.

E-Discovery Should be Celebrated
Panelist Brian Ingram of LexisNexis® Litigation Solutions proposed the session, titled "Improving Client Outcomes with E-Discovery," which Socha kicked off by asking whether electronically stored information can be put to work for clients in a positive way.

Nixon Peabody LLP attorney Jonathan Sablone commented that everyone talks about e-discovery as a pain, a cost center, a burden, but in a lot of ways ED has made discovery much more efficient. "We used to sit in giant warehouses in Houston with giant stacks of boxes for months and months and months reviewing documents," he said. "That still happens, but ED has made the process much more efficient with de-duping, culling, searching and sorting. It used to be you would go to a filing cabinet, copy it and start reviewing. What drives everybody crazy is the volume of data, not the electronic piece. What has ED done for us on the efficiency side? ED has brought us light years ahead of where we were, and it has been a huge benefit in the legal world and for clients. It's something we should celebrate. The challenge for lawyers and clients is how can we deal with the levels of volume and still be able to take advantage of those efficiencies."

Lathrop & Gage LLP attorney Robin E. Stewart said additional concerns come from the multiple data formats and platforms. "When everything was paper there was just paper," she said. "There wasn't much of it and you didn't have the multiple platforms."

"Much of the apprehension with ED is the upfront cost," added panelist Scott T. Lashway, in-house counsel at MassMutual Financial Group. "But companies in large part have themselves to blame. Companies have been brilliant at storing data without any recognition of why or what they will do with it. I don't think a lot of companies out there are looking at what they are going to do with massive amounts of data on legacy systems, where there are fewer people who have the expertise to work with those systems."

He also expressed surprise that youth and technological sophistication do not always go together. "You would think younger lawyers coming out of law school would have more affinity for the technological challenges clients face," Lashway said. "As in-house counsel retaining outside counsel, one of the things I am surprised by is the lack of sophisticated technology knowledge among young lawyers. I am not seeing the [expected] generational divide between newly minted lawyers who live on iPads versus more senior lawyers who were in those warehouses [reviewing boxes of documents]."

The E-Discovery Gods
As for the expanding vastness of ED searches and requests in litigation, Socha offered one theory, perhaps fueled by fear.   Speaking to the two trial attorneys on the panel, Sablone and Stewart, he said, "You are unusual in this in that you come even close to trying a case, but many attorneys don't even take depositions or argue motions. That means they haven't had to make a lot of difficult decisions-especially when it comes to going to trial-that you have to make, [such as] saying 'I have done enough, I am ready to go to trial.' Instead, they keep doing more because the more discovery they conduct the longer they can push off going to trial."

Sablone said it does speak to the reality of litigation. "Eventually, you get to trial, or mediation or a pre-trial hearing. You need to now put some evidence up. You need to put evidence in front of a judge or a jury. What I have seen is this. You have a cadre of people whose life is consumed with- forget the "e-"-consumed with discovery. They talk about terabytes of data. Have they ever put documents in front of a jury? After you get to about 100 documents you just max them out! You are not going to put a case on with a terabyte of data. It just isn't going to happen. You need those 500 key documents in any particular case."

"For me," Sablone said, "it's not about 'how can we push the other side to give us more data?' or 'how we can use search terms or predictive coding or technology to get more?'   It's really about narrowing what we've already got to get something smaller. The key, if you want to be efficient for your clients, is that you get what you need to put on a case for your client as opposed to setting loose the ED gods and two years later saying 'I am done and I've got 500 gigabytes of data I am going to produce.'"

Cooperation in Litigation? Have We Met?
Stewart noted the echoing cries for cooperation in discovery. The Sedona Conference is pushing this and it's leaking out into cases, she said. Much of the push for cooperation is coming from theories, she said, not from attorneys who try cases or practice litigation. "You might say we should cooperate and it sounds good, but we're in an adversarial system and so what does cooperation really mean? When the other side asks for 'any and all' documents, am I supposed to just cooperate and give them 'any and all'? You're rarely going to get something like that."

Sablone said the problem isn't really a lack of cooperation, saying that choice of words is misplaced. "The problem doesn't come when we don't cooperate. The problem comes when we don't agree. If we could agree we wouldn't be litigating," he said.   Sablone reminded everyone that litigators are dealing with adversaries, so "what you can do with them in discovery is not 'cooperate,' but 'confer' on what makes the most sense for both sides."

"[The word] 'cooperation' implies that discovery becomes a joint endeavor," he said, and that's not the nature of the adversarial system.

Picking up on this theme, Lashway pointed to the recently released ED guidelines in California which go so far as to suggest that each party appoints an e-discovery liaison.

"That is inconsistent with my experience in litigation," he said, "but there can be cooperation among the client, the law firm and the ED specialist. All too often you have people making decisions early on in a case who are not informed on a variety of issues." Stewart and Ingram emphasized the importance of early internal cooperation. Stewart added that internal cooperation must take place in advance of a meet and confer conference so your team is on the same page before meeting with the other side.

Key Takeaways

Challenge the mindset that gathering all imaginable documents is essential to presenting a good case that is based on the amount of evidence judges and juries can actually consume in evaluating your case.

Get your litigation team-the attorney, the client and the ED specialist-together to cooperate on handling data and ED requests well in advance of the meet and confer meeting with your adversary.

Oftentimes firms and corporations put too much emphasis on the tools and technology. While the tools you select are important, more important is having the proper people and workflows in place to help guide and manage the e-discovery process and make it more repeatable.

Whether you are outside counsel or inside counsel, review your client's or your corporation's document retention policies to see whether all that data being stored is really just an unnecessary liability.

E-Discovery Checkpoints Part 3

Dan Johnson — Mon, 03 Jun 2013 12:56:24 GMT

E-Discovery Checkpoints: A 360-Degree View-Part 3

Identifying, Assembling and Sorting the Data From the Inside

By Susan Winchurch, J.D.

In complex litigation involving discoverable documents numbering in the tens of thousands, the first critical steps in the discovery process are taken in-house.

LexisNexis recently assembled four speakers for a Webinar to address the critical early stages of discovery, presenting the perspectives of a U.S. Magistrate Judge, an experienced e-discovery litigator, a corporate data security executive and a litigation technology expert, in a complex hypothetical computer-hacking case.

Note: This is the third in a four-part series covering what the speakers had to say. This article will focus on the practical aspects of locating, identifying and processing of data-key concerns for in-house attorneys and in-house data security professionals. Previous articles discussed the bench's expectations for lawyers involved in discovery and the litigator's mandate to work closely with her client to facilitate efficient production of discovery.

The speakers based their presentations on the hypothetical case of Beta Co. v. Alpha Co. which featured two corporate rivals. Beta, the plaintiff, alleged that Alpha, the defendant, hacked into Beta's databases in order to pirate proprietary information with the intent to beat Beta to the market with a competing video game. Alpha countered that Beta launched a social media campaign against Alpha to generate negative reviews of Alpha's competing game. The claims ranged from patent infringement to corporate espionage and implicated a massive volume of potentially discoverable information, spanning four countries, including 20 million emails.

U.S. Magistrate Judge John M. Facciola started the discussion by warning that the bench does not tolerate counsel or parties who ignore discovery management protocols or those who pay only lip service to the "meet and confer" requirement of Federal Rule of Civil Procedure 26. Lawyers must collaborate meaningfully to find solutions to a discovery impasse, to demonstrate a firm grasp of the technical issues inherent in electronic discovery, and to hire competent experts who can guide them through the process. Lawyers will need to have a command of the theories of liability underlying the litigation, the nature of the case, and the appropriate methodologies for searching, collecting and preserving electronic data. Any claim that a request is overbroad requires support. "There is not a federal judge left in the country who is going to let you get away with a one-sentence page that says 'this is too burdensome,' " said Judge Facciola. Counsel will be called on to demonstrate exactly why the request cannot be satisfied.

Twenty-five-year litigator and law professor Mollie C. Nichols of Redgrave LLP, focused on the lawyer's role in counseling the client, starting by establishing a solid working relationship with in-house counsel, technology staff and business unit heads, to assess potentially relevant company information, where it is stored and the technical challenges inherent in locating and producing the information.

The process starts from the inside. Panelists Matthew McKeever, Vice President of Security and Compliance with Reed Elsevier, and Trent Walton, President of Electronic Legal LLC and Cumulus Data LLC, gave insight into the internal data collection and preservation process.

Breaking it Down

The critical role of the security and compliance professional emerges instantly, said McKeever. When a lawsuit is filed, the company needs to be sure from the outset that "we gather the appropriate data in a systematic and reasonable way," he said. Especially in a hacking case, McKeever noted that the company needs to keep in mind, as data is assembled, that the civil case may give rise to criminal allegations, and this possibility must inform the data collection process from the beginning.

But the fundamental issue, McKeever noted, is the large amount of data. Immediately, the company must devise processes for breaking it down and deciding what portion of it is relevant. Of the 20 million emails in the database, only a portion of them are relevant. "We need to break that issue down and working with internal and outside counsel, we need to scope that out," he said. He echoed Nichols' earlier comments, noting that the company needs to identify its key custodians. In this case, the development teams who devised the disputed computer game are within the scope of discovery. "But maybe the finance guys are, or are not, in scope and we need to break that down," he said.

Because data-such as emails-may be dynamic, it is subject to change and manipulation. The company needs to implement controls quickly to stop material from being deleted. At the earliest stage of the case, McKeever said, "We don't know if it's a hack, or a bad actor on the inside. We need to be careful, and as covert as possible, and work with Molly's [legal] team to decide what to collect," he said.

In a case like Beta v. Alpha, featuring data located in different geographic locations, collection and assembly becomes more complicated, particularly as the data crosses borders. Nichols noted that the privacy laws of the various jurisdictions in which the data resides will be implicated. For example, Massachusetts data privacy laws are potentially applicable even if no computer servers are located in Massachusetts-the involvement of a Massachusetts resident is sufficient to implicate Massachusetts law, which, Nichols said, covers the personal information of any Massachusetts resident and dictates how that information is to be stored and encrypted, possibly even requiring the use of armed guards if the data resides on non-encrypted backup tapes.

Choose Technology Wisely

As matters become more complicated, so do the tools that are available for data sorting and likewise the decisions about how much to spend on forensic and data collection technology.

The company needs to be mindful of costs, Walton observed. "This is the point where you can get technical experts involved, and learn about all the latest greatest techniques to streamline the discovery and project costs." These include encrypted remote forensic collection devices, being able to project data sizes, and techniques to project the billable time that could be involved to go through and identify the data. As useful as these tools are, each one comes with a price tag, and the company needs to tailor its technology "spend" to match its actual need.

Walton added that at the preservation stage, it is important to remember that data doesn't have to be transported across borders. It can be preserved in the country in which it was generated. "It all depends on what we determine to be discoverable evidence," he said.

It falls on the in-house security expert to work with in-house and outside counsel to decide what data is confidential, McKeever said. "When we give out an encrypted hard drive, we need to make it clear if one party's data is more sensitive than others." For example, the employee who generated sensitive project plans and market research must be identified so that her data can be handled appropriately.

Companies also should periodically survey their databases, McKeever said, and identify where the most sensitive information-such as credit card data-resides so that, when e-discovery plans are being devised, privacy laws are respected. "It's always good to know where your sensitive information is, so you can protect it," he said.

Manual Sorting: A Bygone Method

As the company devises its e-discovery plan, the panel agreed, the idea of manually sorting the data should be dismissed out of hand. In a case like Beta v. Alpha, the sheer volume of the information forecloses any notion of manually sorting and delivering data. "If you came into my court and said that you were going to do this manually you'd be out of my court in about 30 seconds. I only have an eight-year term and I don't plan to spend it on this case," Judge Facciola commented. "That's preposterous." Each side, he said, will be expected to hire a competent vendor to manage the e-discovery process.

"The judge is spot on here," said McKeever. While as recently as a few years ago, it was still possible to survey the data "with a few tools and keyword searches and get down to a manageable lot," today, companies will be dealing not just with email, but with voicemail, videos, drawings and other media. The company needs to confer with its e-discovery vendor and devise a method of converting voicemails, videos and drawings to a reviewable format. The company must work with its vendor to identify exactly what is relevant. If there are 80,000 voicemails, perhaps only 100 people will have left potentially relevant messages. The in-house team needs to work with counsel to identify what is relevant "so that whatever we're sending to the vendor is reasonable and helps keep the costs down," McKeever noted.

Walton agreed. "The days of linear document-by-document review are pretty much gone. The amount of data is increasing exponentially every single year," he said, adding that the volume is so high and the formats so varied that finding the review methodology is a challenge unto itself. "A lot is determined during the meet and confer at the beginning to see what we do have and what techniques we can apply to these different sources of data and get them down to a manageable set," he said.

Narrow the Data Set

Also important for companies to remember, observed Walton, McKeever and Nichols, is the question of preservation versus production. While a broad set of data may be preserved internally, the actual data that is subject to discovery should be reasonable, but narrower. The company may have 800 vendor contracts in its database, but you must query whether the contracts with the companies that clean the offices or wash the outside of the building are relevant.

"You really do have to work with your custodians and your IT to narrow that data set as much as possible," Nichols said. "That's what the meet and confer is for, but you have to be working with your client to drill down as to what needs to be collected and reviewed."

"The name of the game," said Walton, "is what's reasonable? What type of evidence is in there, and is it going to be helpful to the case? What are the techniques we can apply to it, what are the costs associated with it?" It is, he said, a cost-benefit analysis.

Key Takeaways

1. In-house security experts need to be pro-active in the identification of sensitive data. The process starts with occasional surveys of a company's databases to identify where particularly sensitive data resides.

2. Practicality and reasonableness govern what is produced. If a company has 80,000 voicemails, it must devise a sound methodology for determining which of the 80,000 are potentially relevant.

3. Manual surveys of documents are a thing of the past. With ever-increasing volumes of data, companies must be prepared to hire competent vendors to manage e-discovery. Courts will not tolerate any company attempting to pass through a manual review process.

Note: Part 4 of this series will focus further on the contributions collectively of Magistrate Judge Facciola, Mollie C. Nichols of Redgrave LLP; Matthew McKeever, VP Security & Compliance with Reed Elsevier; and Trent Walton, president of Electronic Legal LLC and Cumulus Data LLC. Part 4 will address emerging trends in e-discovery.

Federal Judge Orders Defendant to Hire a Vendor

Dan Johnson — Mon, 03 Jun 2013 12:56:15 GMT

Having "Difficulty" Complying with Discovery Orders? Then Get-And Pay-For an E-Discovery Vendor, Court Says

In case anyone didn't get the memo, please be aware that just because you don't have the data, it doesn't mean you don't control it and can't produce it.

In yet another example of magistrate judges taking the lead in the use of e-discovery vendors and search protocols, U.S. Magistrate Judge David T. Bristow of the U.S. District Court for the Central District of California-frustrated by a defendant's "discovery failures" and "wholly inadequate" production-directed it to pay for an e-discovery vendor and to work out the search methodology with the plaintiffs (Carrillo v. Schneider Logistics Inc., No. CV 11-8557-CAS [DTBx], 2012 U.S. Dist. LEXIS 146903 [C.D. Cal. Oct. 5, 2012]).

In this wage-and-hour case brought by workers against warehouse operator Schneider Logistics Inc.- a provider of services to retail giant Wal-Mart and others-a dispute broke out over the production of thousands of documents and multimedia.

The workers claim that Schneider failed to produce documents relating to its business with Wal-Mart and even failed to conduct a proper search. The parties resolved their dispute during a meet and confer and proposed an order. The court directed Schneider to produce documents relating to Wal-Mart, among others, and to produce a custodian of records most knowledgeable about Schneider's document retention policies.

Schneider produced 23,000 more documents, many of which, the court notes, Schneider had claimed did not exist. The two custodians Schneider provided could not answer basic questions about the company's retention policies. To make matters worse, one of Schneider's employees testified that she continued to delete emails and reports right up to the time of her deposition, and was not directed to do otherwise. The plaintiffs objected to gaps in Schneider's production, noting missing emails and surveillance video.

The court agreed with the workers' argument that Schneider's production had been "wholly inadequate," saying the company's "continued discovery failures" fall into three categories: 1) it did not conduct a "reasonably diligent search" for responsive documents; 2) it improperly withheld responsive documents; 3) it did not take adequate steps to preserve documents.

Noting the time and cost incurred by the workers due to Schneider's discovery failures, Magistrate Judge Bristow directed that an outside vendor be contracted to collect emails and other ESI. The court said it "does not have any confidence that ordering Schneider to conduct a good faith search for electronically stored information will be productive." He said Schneider "has repeatedly certified that it produced all responsive documents, only for plaintiffs to spend substantial time and resources demonstrating that those representations were false."

Schneider objected, saying it did not possess the Wal-Mart network servers where the responsive ESI was stored, therefore the ESI was not in Schneider's "care custody and control." The court rejected this argument. The phrase "possession, custody, or control" is "disjunctive" and is only one of the requirements that needs to be met-"actual possession is not required." As long as Schneider had the legal right to produce documents from another source upon demand, that qualified as "control," the court held.

"[T]he fact that Schneider does not physically possess the server that stores the Wal-Mart emails is immaterial. The electronically stored information is within Schneider's control by virtue of the fact that the Schneider employees use the Wal-Mart email accounts as their primary work email." The court found it "inconceivable" that Schneider could not request the relevant ESI, and gave Schneider seven days to retain an outside vendor that would collect all the ESI from Schneider's and Wal-Mart's or other third-party with servers relevant to the case. The vendor also would, the court directed, prepare a log of all documents and Schneider would create a privilege log. "[N]o documents identified by the vendor may be withheld on relevance grounds," the court added.

If the parties could not agree on a vendor, the search protocol or the computers to be searched, the court would resolve their disagreements. Schneider, however, would pay for the vendor. Just as with the emails, the court said Schneider must produce surveillance video because it has the right to request it from the warehouse's security company.

With that, the court said sanctions were warranted against Schneider as well as payment of the plaintiffs' attorney fees.

Key Takeaways

Know that "control" over documents does not mean you have to have the documents in your possession.
Know that if you are challenged by massive discovery, courts are increasingly taking the initiative to require the use of outside vendors, and in some cases dictating the protocol to be used.
Ensure that you and your client have "reasonably diligent" document search methods in place.
Ensure that you and your client have adequate document preservation methods in place.

Of course, don't even think about holding back potentially responsive documents.

To Define “Data Privacy,” You Will Need a Map, a Calendar and a Clock

LexisNexis Litigation Resource Community Staff — Fri, 15 Mar 2013 15:58:00 GMT

What is "data privacy"? It is a lot like asking what "food" is. The answer depends on where you are, who you are, what time it is and how hungry you are. Breakfast in Japan often comprises miso soup, grilled fish and white rice. In America it might be eggs, bacon, toast or Rice Krispies. Menu items leading up to Medieval times would turn your stomach. Ask today's food editor at The New York Times® and an 18th century native of the South Pacific and you will get wildly different answers. Let's skip specifics.

While not nearly as stomach-turning, the same elements of time, place, circumstance and need come into play when defining data privacy.

EDRM co-founder George Socha recently teamed up with LexisNexis® Litigation Services to produce four educational sessions designed to "demystify e-discovery" during a full day at LegalTech®. One of those sessions was titled "International Privacy: The Impact on Cross Border Litigation," and Socha began with a search for a definition-certainly knowing what he was getting into.

Baker Hostetler attorney Gonzalo Zeballos, a seasoned international litigator whose experience spans five continents and more than 30 global jurisdictions, took the first shot at a definition. "In the international context, how you define data-what's personal data, what's sensitive data-can vary tremendously from jurisdiction to jurisdiction. As American lawyers, we bring our preconceptions to what this means to how we handle litigation events to litigation events abroad. We focus on breach in the United States. That's the way our society works. It's an open society, a very transparent society. In the rest of the world they worry about collection. A lot of this is due to historical problems where governments have abused things like religious information, sexual preference and political affiliations. When you ask 'what is data?,' the answer really depends on where you are and the nature of the activity you're looking at. A lot of jurisdictions will define personal information as anything that identifies anyone as an individual. In other parts of the world it is defined as race, sexual preference, religion, or trade union membership. And in the United States these are things you collect as a matter of course and don't really worry about."

Linda Clark, who acts as lead counsel to the Reed Elsevier Privacy, Security and Compliance Organization, said "the concept of privacy in the U.S. is very consumer-protection-centric, and in the UK, for example, it's a right." The concept of privacy, especially as you get into the international litigation context, will vary depending on who the individual is and what the expectations of government regulators are. "So the lawyer's answer for me," she said, "is 'it depends.'"

Edward H. Rippey, a patent litigator and head of Covington & Burling LLP's E-Discovery Practice Group, agreed that "data" means different things in different contexts. "At Covington & Burling, the privacy practice group is concerned about giving advice to multinationals about how to move certain bits of information, and certain blocking statutes and where there have been breaches of privacy." In e-discovery, "we're more concerned with privacy in the context of litigation and what kind of protective orders to use." He said when attorneys team up at his firm they have a privacy person and an e-discovery person in the discussion "because we are looking at the case through a different prism."

When it comes to international privacy, Socha said, people tend to talk about Germany, France, the UK and the U.S. "But what else are we looking at?"

Zeballos said that is only the beginning. "Even in Europe there is the EU Directive on privacy which told the member states 'you have to implement laws that meet these minimum standards.' I would say that Europe is probably one of the easiest places to go to. Where it gets complicated is when you don't have a statutory framework. Look at Brazil, which has a statute in the works. You will find no breach notification requirement - and if you have a stolen laptop there, you would be wrong to assume you don't have a problem because there are other laws, like consumer protection laws, which require you to notify consumers when you put their name in a database that they didn't ask to be put in. Whether or not there is a statutory notice requirement, you may be significantly mitigating your exposure if you notify. Then you have a country like Japan which has a law on data protection and doesn't make a distinction between personal data and sensitive data. But there is another regulation for financial services companies which tells you that personal or sensitive data cannot be transferred across border without consent. So it is more complicated than looking at a statute and the basic framework."

Map and Classify

Socha asked about what practices or resources are out there to help firms and companies track all of this.

Clark emphatically endorsed company-wide data audits. "You must have a data inventory and apply a classification to that inventory in a matrix or some other fashion which maps those laws to that data so that you can start planning for the eventuality of litigation." This way, she says, when a situation arises "you will already know how the laws apply to these sets of data, as opposed to getting a litigation demand from the U.S. dropped on you requesting what Germany might consider a repeated and massive transfer and not knowing what's there." She added that, within the classification, you should apply the policies and procedures you have already in-house for managing information, whether it is data destruction, data security, redaction and the consent of people whose information you maintain.

Noting that his firm's clients are multinational global corporations, Rippey said, "Those [companies] who are ahead of the curve have done this mapping and they know what countries' laws apply and where that data is. So that when they get hit with a lawsuit or subpoena they are already ahead of the curve. Conducting an audit like this is money well spent," he said. Clark added that it also helps demonstrate to a regulator what you have done to protect data.

Zeballos cautioned attendees that "following the rules here [in the U.S.] doesn't mean you have followed the rules abroad," and advises companies to get local representation. In addition to being in tune with changing regulations, Clark said local counsel also has relationships with the governing authorities.

The cost of such audits is driven by many variables, but it was put in the range of between $5,000 and $100,000. "Companies that come out losers in this are the ones who don't do this work ahead of time and spend an amount that is small in relation to their overall litigation budget," Rippey said.

Zeballos said a challenge arises when you receive data in multiple jurisdictions with conflicting laws. He noted a case in which data was transferred from one country to the U.S. in order to satisfy the U.S. breach notification obligations, but because the country in which the data resided was a cross border consent jurisdiction, the company created a second breach event by transferring the data. Socha recalled a situation where a lawyer had a choice between going to jail in the U.S. or in France.

One Country's Criminal . . .

Illustrating how different the laws can be, Zeballos said France has an anti-pretrial blocking statute which criminalizes compliance with U.S. pretrial discovery rules. "You could be the American lawyer of a French client and you're in a terrible situation because, either to vindicate your cause of action or to defend, you don't put in those documents [then] you're going to get at best, a negative inference or at worst, sanctions. You may lose your case because of it. As an American lawyer, ethically, you can't advise your client to break the law. It has to be a business level decision at the corporation."

Socha asked, "Is there a difference between privacy and data transfer?"

"If you are in the position where you have privacy concerns and a transfer obligation," Clark responded, "the in-house perspective is to make sure everything is as narrowly tailored and narrowly responsive as possible, whether it means doing an in-country review to redact information prior to providing it; or getting consent of individuals; or objecting and having a court order; or whatever makes you more comfortable. The privacy expectations of the country where the information resides are a very serious concern. If you don't respond as narrowly as possible and provide the least information, you're going to have a problem. It's a fundamental paradigm shift from the U.S. model of mass production and then deciding what's responsive. Even using keyword searches on an international basis presents a problem because you are creating a set of information that is part of that review that might not need to be in that pool to begin with."

Rippey said narrowing responses, teaming with local counsel and having a good rapport with opposing counsel are ways to deal with these issues.

Clark said, internationally, there is a perception that U.S. courts are arrogant. "That comes from the perception that our data protection is not adequate. Take that into account before you respond with documents -- take steps to combat that perception, by doing such things as getting an outside auditor, so when someone expresses concern about a transfer you can try to demonstrate that you have taken steps to ensure that the data is safe."

Dueling Investigations

An audience member commented that when you are dealing with courts, at least vis-à-vis with the EU Privacy Directive, you have much more of a chance to get things through. Plus, she said, you have the Hague Convention and a court order so there are the derogations in the various country laws that allow for the transfer of data. Where you run into problems, she said, is when you have the SEC or FTC asking for documents where it's not a court and you cannot transfer the data.
"You're stuck between a rock and a hard place," she said.

Rippey said this is a problem not just in the data transfer context but in every context where there is an investigation. "The SEC wants their information and they want it now," he said. "Their requests can be overly broad and you can't negotiate with them because they are passing judgment on you. It is a problem inherent in the process where they are your opponent and your judge, basically. It is a problem in the investigation world, not just in this context specifically."

"The problem you have," Zeballos said, is this: "In a civil investigation the pre-trial blocking statutes often eliminate the legal obligation exception to the transfer of data across border without consent. The other problem you have within the context of investigations . . . where you have to get documents abroad and they are sitting on someone's desk. Normally what you do in the U.S. when you have an internal investigation is you lock down the guy's office, you go through his laptop, you go through his files, you issue a litigation hold on the entire department. No one touches anything this guy wrote or anything thing this guy said. The problem is, you do that and in some jurisdictions you have violated the data privacy statute, you've violated the anti-tipping-off statute, and in some cases just the issuing of a litigation hold has been held to violate the anti-tipping-off statute, which criminalizes letting a person who's being investigated know that they are being investigated. And if the SEC is investigating a trader sitting at a desk in London he might also be being investigated by the Financial Services Authority in London at the same time. And if you tip that guy off you might be creating a huge problem for your client. But it's very difficult to negotiate under those circumstances because they want the information."

As for a possible solution when faced with competing investigations by various regulators, Zeballos said he has had some success in having those regulators speak directly to one another-that is, he said, "if you happen to be lucky enough to know there is a simultaneous investigation." He added that approach works best if the European investigator comes in first and the SEC comes in later. "If the SEC comes in first, they want what they want," he said.

Privilege

The panel turned to the subject of attorney-client privilege, which Rippey said is a big issue in international disputes. The challenge is knowing the various global privilege rules.

Illustrating this point, Zeballos pointed out that in Luxembourg there is no attorney-client privilege between employees and in-house counsel. If you ask an in-house attorney to discuss an issue with his CEO, you have now created a discoverable communication, perhaps an admission, where your in-house lawyer might say "we're in trouble" or our guy "broke every law in the book."

He pointed to a case where French in-house lawyer communications were held to be discoverable in a U.S. case in which everyone agreed U.S. law applied. The court held there was a prima facie requirement that, for attorney-client privilege to attach, an attorney has to be admitted to the bar. "But a French in-house lawyer can't be admitted to the bar because salaried employees cannot be members of the bar in France," Zeballos explained.

Key Takeaways

Understand the various definitions of private data across the world.

Don't assume U.S. privacy regulations are the same as global regulations.
Secure local counsel in international matters.
Map your data to international rules so you are ahead of the curve when litigation ensues.
Connect regulators who are heading up completing investigations.
Understand attorney-client privilege rules in local jurisdictions.

E-Discovery Checkpoints: A 360-Degree View – Part 2: The Lawyer’s Perspective

LexisNexis Litigation Resource Community Staff — Fri, 01 Mar 2013 16:52:00 GMT

When it comes to network hacking, corporate espionage, intellectual property theft and managing massive volumes of data in a multi-million-dollar business dispute, everyone can pretty much plan to check their joysticks at the door.

LexisNexis recently assembled four speakers to address the critical early stages of discovery, presenting the perspectives of a U.S. Magistrate Judge, an experienced e-discovery litigator, a corporate data security executive and a litigation technology expert, in a complex case involving a dizzying volume of potentially discoverable information. This is the second in a four-part series covering what the speakers had to say. This article will address the role of the attorney in the process-from preservation through review and collection of data-focusing primarily on the comments of Mollie C. Nichols, a partner with Redgrave LLP.

The Webinar charted the probable course that discovery likely would take in the hypothetical case of Beta Co. v. Alpha Co., a complicated litigation matter pitting two rival video game manufacturers against one another. The claims ranged from patent infringement to corporate espionage, and implicated a massive volume of potentially discoverable information. Much of that information comprised elusive electronic data, with servers located in several states and countries. Beta alleged that Alpha hacked into Beta's databases to pirate proprietary information with the intention of beating Beta to the market with a competing video game. Among the more problematic allegations, from a discovery standpoint. was the charge by Alpha, the defendant, that Beta, the plaintiff, had launched a social media campaign against Alpha to generate negative reviews of Alpha's competing game.

U.S. Magistrate Judge John M. Facciola launched the discussion with an overview of what the bench expects from litigants when massive volumes of electronic information-starting with email and extending to more elusive media such as Twitter® Tweets, texts, and voice mails-demands aggressive management of the pretrial process. Lawyers can expect the bench to hold their feet to the fire, to adhere to increasingly common specific protocols for proactive management of discovery, and in particular to take seriously the "meet and confer" requirement imposed by Federal Rule of Civil Procedure 26, so that the parties and the bench will have a meaningful opportunity to resolve discovery issues as they arise and before costs run out of control. Lawyers will be expected to demonstrate a firm grasp of the technical issues inherent in the nature of electronic discovery, and to avail themselves of experts who can capably shepherd them through the discovery process with an eye toward efficiency. Lawyers will need to have a command of the theories of liability underlying the litigation, the nature of the case, and the appropriate methodologies for searching, collecting and preserving electronic data.

[To read the first installment of this series, click here.]

Getting the Lay of the Cyber Land

In this context, Nichols told the audience, the role of the litigator is to marshal the appropriate resources so that she can guide the client through the discovery process. The first step is establishing a solid working relationship with the client to identify the repositories of potentially discoverable litigation, she explained.

"It is very important as outside counsel, that I have the opportunity to work directly with my client, both in-house counsel and technology staff, and perhaps business unit heads, to figure out what the landscape of the potentially relevant information is, where it is stored, and what are the technical challenges, including where is it located," she explained. In a case like this one, part of the analysis involves identifying whether any of the information is located outside of the United States. "As best we can we need to identify the key players or the relevant custodians of this data," she added.

In a case involving an issue as complicated as computer hacking, there is an immediate need to bring in technical experts to determine how the intrusion occurred, what information was taken and from what sources, Nichols said. In addition, the lawyer will need to familiarize herself with the client's specific document retention methodologies. Some clients, Nichols explained, are able to preserve all data in a business unit, whereas others are more custodial based, relying on a designated person to retain data. The investigative stage is instrumental so that the lawyer understands what data types exist and how to implement a preservation plan. "It will take working with your client in order to determine how to preserve the data that's involved in this particular matter," she said. From preservation standpoint this represents a challenge, because data will encompass a broad spectrum of data: video images, employee records, contracts, emails,Twitter Tweets, and data stored in multiple places.

Data On the Move

At the next stage of discovery, review and collection, Nichols noted, lawyers and their clients need to be mindful of state data protection and data privacy laws. For example, she said, the Massachusetts data privacy law is potentially applicable even if none of the servers containing relevant information are located in Massachusetts. The law, she explained, covers the personal information pertaining to any Massachusetts resident, and how that information is to be stored and encrypted. "You have to be mindful of state privacy laws and data protection laws as the data starts moving," she cautioned.

In a case such as Beta v. Alpha, she added, the existence of servers in other countries adds to the complicated nature of the discovery. Some countries have enacted laws that prohibit the cross-border transfer of data unless certain processes are followed. France and Germany have enacted blocking statutes that prohibit production of certain information in United States civil litigation. Canada, Nichols added, also restricts to a certain extent, the transfer of data across the Canadian border into the United States. "We've got to be very careful that we're working with our clients and data protection authorities in those countries, in order to get consent where necessary, in order for data to be produced within the litigation," she noted.

Even further complicating this issue, Judge Facciola added, is the divergence of views in the American courts about the significance of the blocking statutes. The U.S. Court of Appeals for the Seventh Circuit, he said, has dismissed concerns that American companies should have any concerns regarding the blocking statutes, but others disagree. When the blocking statutes are involved, he said, the "meet and confer" requirement is automatically implicated. Where there is data overseas, the lawyers have to meet and confer on the process. "You just don't serve a subpoena to Germany and wait for the response," Judge Facciola added. "That's not the way it works."

In-house counsel in multi-national companies need to reach out appropriately to outside counsel to get a handle on what can and cannot be done under privacy laws, added panelist Matthew McKeever, VP Security & Compliance with Reed Elsevier. "EU privacy laws do allow "carve-outs" for data transfer agreements. Internal counsel should be reaching out to their privacy counsel," he said. In many cases, portions of the data may have to be collected and processed separately in a particular jurisdiction or country.

In a case such as this one, involving competitors, lawyers also need to work with the court to craft the appropriate protective order, involving a controlled review of the data and possible redaction of certain data, Nichols noted.

It's critical that the attorney turn to technical experts for help, Nichols said. "Use your technical people in all aspects of the litigation," she advised. "Have them at your side. I have a computer expert on speed dial."

Note: Parts 3 and 4 of this series will focus further on the contributions collectively of Magistrate Judge Facciola, Mollie C. Nichols of Redgrave LLP; Matthew McKeever, VP Security & Compliance with Reed Elsevier; and Trent Walton, president of Electronic Legal LLC and Cumulus Data LLC. Part 3 will address the practical aspects of the discovery process from the panel's perspective, and Part 4 will address future trends in e-discovery.

Key Takeaways:

1. Increasingly complicated forms of data production mandate that lawyers make efficient use of technical expertise. Have your computer go-to person on speed dial.

2. When confronting the production of large volumes of electronic data, counsel must be cognizant of the web of privacy laws, international blocking statutes, and the like. In-house counsel needs to know when to reach out to outside counsel with expertise in these areas.

3. Lawyers need to work proactively with their clients to understand the manner in which the client maintains its data, and who within the client is the repository for data. This needs to happen at the outset of discovery.

Big Data & E-Discovery: Your New Resource in Telling a Better Story

LexisNexis Litigation Resource Community Staff — Fri, 01 Mar 2013 16:48:00 GMT

Are you using data analytics to identify profitability of individuals or specific matters? Or to support or refute claims and allegations? Or to spot and exploit trends and opportunities? While definitions may vary, these are some of the things made possible by "big data," according to legal and technical experts who shared their insights during a panel discussion hosted by LexisNexis® Litigation Solutions at LegalTech® New York on Jan. 30, 2013. Speaking to a packed conference room, the panel comprised four thought leaders who were moderated by nationally recognized e-discovery expert George Socha, co-founder of EDRM.

Big Definition: Volume, Velocity, Variety
Orrie Dinstein, Chief Privacy Leader and Senior IT & IP Counsel for GE Capital, started off by saying that "big data" is not just a large amount of data, although that is part of it. He also believes there needs to be a problem to solve. Dinstein defines big data with the "Three Vs." First, is Volume. That means terabytes or petabytes-once unimaginable volumes of data.

Second is Velocity. Dinstein defined this with a hypothetical. A power plant has a thousand sensors all connected to a central system and each sensor is reporting back status information at constant intervals. Taking Dinstein's example, at a rate of a thousand bits of information perhaps every second, each day would generate over 1.4 million bits of data, or 511 million bits of data a year-and that is only one source of data. Capturing all that data poses a challenge. Fellow panelist Jon A. Neiditz of Nelson Mullins Riley & Scarborough LLP said he defines velocity with a question. "Would you cross the street based on information that is five minutes old? That is what we mean by velocity."

The third "V," Dinstein said, is Variety. In the e-discovery context the parties may be gathering email, documents, Web activity and voice mail-both structured and unstructured data. When all of this goes into a single bucket-that variety creates a big data type of issue, he said.

Jon A. Neiditz of Nelson Mullins Riley & Scarborough LLP said big data also helps solve problems and tell stories. With different modes of analysis brought to bear on varieties of data, it can be used for "sense making" and pattern detection, he said.

Browning Marean of DLA Piper gave the example of Google^TM Flu Trends (www.google.org/flutrends), in which the company analyzes peoples' search terms as indicators of, as Google puts it, "current flu activity around the world in near real time."

Other examples of big data's uses were the examination of information coming into call centers with details of product problems or HR complaints, data that can be mined to spot potential problems.

How Firms Might Use Big Data

Chris Emerson, Director of Practice Economics at Bryan Cave, brought his technology background to the firm, applying collection, coding and analysis of data to determine, for example, whether a case involving overtime violations in an employment case was really as big an issue as a plaintiff attorney claimed it was. "We were able to show that the magnitude of the violations was much smaller than they thought, then we were able to push the case to a settlement. This also saved the client money by not having to get outside analysis," he said.

Emerson said he is using data, including time entries at the firm-with a fair amount of coding, cleanup, human work and "training" the system-to analyze the outputs of attorney work in several task categories. He said the system filters data much in the same way an email system filters junk mail-just one type of filter an email system puts on incoming messages. Once in place they were able to understand how much time it took attorneys to complete certain tasks. From that the firm was able to produce better budgeting information, he said. Emerson replaced what at one point in time was a man standing next to workers with a clipboard and stopwatch.

Emerson said he uses this kind of data analysis to determine the profitability of a particular client or matter-or even a particular attorney. "We deliver a lot of financial reporting to the management and compensation committees about attorneys. We found that some matters, although they looked good originally, were not that profitable," he said. With his processes in place they are able to look at the top 10% and bottom 10% of profitable attorneys and explain the factors that play into why they are different.

But something had to be done with how information was relayed. "We knew that the traditionally dense spreadsheets needed to be replaced by narratives that would explain why an attorney's number was what it was. We then wrote a real piece of software that can go out anywhere at the firm and connect different pieces of software, databases and Web-then determine different story angles. The report includes factors such as who is new to the firm and who has business relationships" -just two factors that play into an attorney's profitability. "Using this kind of analysis we also can generate next opportunities and dashboards. For example, there might be an opportunity to collect from a certain client or identify a matter that is buried among others."

Responding to the types of data Emerson said was being collected on individuals, Dinstein said "the privacy lawyer in me is sitting on the edge of his seat." He raised questions about disclosures, consents by the individuals and the potential for international privacy issues for global firms. But, in the context of this poses a big data challenge, he agreed this is a big data issue because of the variety of data being analyzed from different sources.

High-Trust Culture Required

Neiditz said the privacy issue is a critical one, and can only take place in a "high-trust culture" which, he said, apparently is present at Emerson's firm. "You have to allow for the laying of different kinds of data over other kinds of data," he said. "You need good information security and rules." Neiditz sees the upside, but also wonders if this information becomes to your legal career what your credit score has become to online dating. "Will your profitability score at one firm follow you to your next job interview?" he asked.

Moving on, Emerson provided another example in which data analysis helped Bryan Cave on the business front. There was an assumption at the firm that there was a correlation between the size of a book of business and an attorney's productivity. Because his group was able to analyze the right data, they were able to say there was no such correlation. He said there is a culture of trust at Bryan Cave which permits him to dig as far as necessary to get the right answer to a business question, even if it isn't a popular answer.

An audience member asked about-in the employment context-information such as who has a relationship with whom at a company and whether that information can be added to a database and analyzed.

Telling a Positive Story

An audience member asked whether information about relationships in the employment setting can be added to a database and analyzed. Neiditz said that if a company or firm wants to demonstrate that it does not have a hostile work environment, for example, then they "need to work with this data on a privileged basis and demonstrate improvement over time. Then you have a story of improvement. That is what big data can do for you. If it is within a framework of a structured program it can be immensely powerful. These things have to take place in a high trust environment with a truly legitimate authority who is using that information very carefully and with consent." Later, Marean added that use of social media data will be most robust in the employment law arena.

Marean said that in the context of litigation holds, which he manages, he believes you have to start with human interviews so you get the highest quality of information initially. From there you gather information from various silos and databases, and create data maps to get your arms around the data. You must start with interviewing four or five people who have the information you need and find out where the data is, what it looks like and what you should be looking at.

Neiditz said organizations need to be careful about what records they are creating, partly because of privacy concerns and partly because information may be discoverable later on. He also cautioned people that the law allows Facebook® and others to block you from looking at private data, but that the government does not have such roadblocks. "The Government has broad access to big data watering holes," he said.

Risk Profiles

Emerson suggested that if you can find a way to audit email and other documents, this will enable you to identify the departments with the highest risk profiles. "Executive managers will not want to be in the highest risk group, so you will set up a race to the bottom among competitive managers," he said.

Asked for final thoughts for the audience, Marean said you must study and understand your organization's information governance. Neiditz added that such a program has to enable you to keep useful information for the purpose you retained it and eliminate the information you don't need. Not an easy task. Corporations have to look at their infrastructure, including employee devices used for business, or BYOD, cell phone clouds and data lakes that have been allowed to remain because they have value to your company. But the information can be taken out of context and become very dangerous.

Dinstein said companies and firms need to focus on privacy. You must know where the data is and where it came from. Next is security. "The bigger the repository, the more the bad guys will be interested in it," he said, noting that hackers from China who found large U.S. companies too difficult to attack, turned to M&A law firms because they know attorneys have volumes of valuable information, like trade secrets and other intellectual property.

Key Takeaways

Evaluate your firm's data and the potential to put it to work for you and your client.

Examine your firm's culture to see whether it has the requisite "culture of trust."

Explore ways in which data analysis can improve your ability to tell the story of your case.
Evaluate and understand your organization's information governance.

Insurer’s Contractual Access To Agent Files Qualifies As Control Under FRCP 34

LexisNexis Litigation Resource Community Staff — Fri, 01 Feb 2013 18:21:00 GMT

The contractual right to something-even if you don't have it in your hands-can qualify as possession, custody and control.

This is how the U.S. District Court for New Jersey saw it recently in holding that the contractual right to have access and control over independent title insurance agent files, even without physical possession, was enough to establish "possession, custody, and control" under Federal Rule of Civil Procedure 34. The court determined that First American Title Insurance Company was required, therefore, to instruct its agents to preserve those documents.

The ruling in Haskins v. First American Title Insurance Company means that documents in the agent files, while not in First American's actual physical possession, are still subject to the reach of a litigation hold because First American's contracts with its independent agents obligated the agents to grant First American control over and access to its agents' closing files. The court ordered First American to serve a litigation hold letter on its present and former independent title agents in New Jersey.

In Haskins, plaintiffs sued First American because of an alleged scheme to overcharge customers for title insurance when they refinanced their residential mortgages. First American had entered into separate, but similar, agency contracts with each agent, which addressed the agent's duties and responsibilities, including the maintenance of their First American files.

The pivotal issue before the court was whether First American was required to direct its agents to implement a litigation hold. In deciding, U.S. Magistrate Judge Joel Schneider noted that federal courts construe "control" broadly for Rule 34 purposes. Consequently, First American had control if it had "the legal right or ability to obtain the documents from another source upon demand."

Judge Schneider rejected First American's claim that it lacked control over its agents' files. "First American's agency contracts contain language plainly indicating that it has control over and access to its agents' closing files," he wrote, noting that, in the course of discovery, the parties produced copies of several agency contracts that were representative of the "thousands" of contracts it may have entered into. The contracts specifically granted First American with access to and the right to examine, copy, and audit information from the files.

"Since First American has the legal right to obtain its agents' documents on demand, this establishes control pursuant to Rule 34," Judge Schneider wrote, adding that the fact that some of the contracts specified that the files were the property of the agents did not negate control for purposes of Rule 34. He likewise rejected First American's claim that it could not force its agents to comply, because First American could claim that the agent breached its contract if the agent did not produce the requested files.

Having determined that First American "controls" its agents' closing files, he turned to the plaintiffs' request that First American be ordered to direct its agents to preserve their closing files for the possible use or production in the case. A duty to preserve documents arises when a party "knows or reasonably should know" that litigation is foreseeable.

"Here, the duty to preserve clearly applies to First American because litigation is already in progress. Further, the closing files of First American's agents are plainly relevant to plaintiffs' claim. Thus, if it has not already done so, First American must implement a litigation hold to preserve all documents relevant to this litigation that are in its possession, custody, or control," Judge Schneider wrote. The agent documents may be within First American's control even if it did not have physical possession of them.

Key takeaways:

1. Physical possession is not essential to establishing control. Your client may be found to have control for Rule 34 purposes by virtue of contractual obligations.

2. "Control" extends beyond your client's own bricks and mortar. In cases where control is derived from contractual obligations, clients will need to implement systems and procedures for preservation of documents outside their organization-control extends beyond the client's in-house personnel to outside agents and affiliates.

There Is Nothing Like The Real Thing: Copied And Pasted Data Insufficient Under Rule 34, Court Rules

LexisNexis Litigation Resource Community Staff — Fri, 01 Feb 2013 17:01:00 GMT

When you're expecting a swell gift-and when only a name brand will do-it is hard to fake a smile of gratitude when you tear off the wrapping paper to reveal your brand new R-Manny suit. You look at it in dim light and without your glasses. You try to convince yourself it's just as good. But as you stand there, trying to imagine convenient applications of a jacket with one sleeve that is four inches longer than the other, you know there is nothing doing.

A litigant seeking data in this discovery story probably felt the same way. And so did the court. One hundred pages of printed material, consisting of an email document containing copied and pasted materials excerpted from blog and website postings is not in the form "in which it is ordinarily maintained" and therefore insufficient under Federal Rule of Civil Procedure 34, the federal judge in the case ruled.

In German v. Micro Electronics, Inc., 2013 U.S. Dist. LEXIS 4594 (S.D. Ohio Jan. 11, 2013), an employment case, the United States District Court for the Southern District of Ohio rejected the plaintiff's argument that financial and physical hardship justified the manner of production. The case focused largely on the appropriate manner of production for online content, including the plaintiff's calendars and online activity, such as blogging. The plaintiff had argued that she could not afford to make copies and that carpal tunnel syndrome rendered her unable to use her hands on a laptop or Apple® iPad®.

The plaintiff produced electronic material copied from blogs and websites, which was then pasted into a lengthy email and printed by her attorney. However, the defendants maintained that the production was deficient because "it was not guaranteed to capture the original and complete text, formatting, and images of a blog or website." The defendants preferred production as PDF copies or a format that was similarly "reviewable and captures the documents in their original format." The court, in addition, noted that the production did not accurately identify the source of the text.

The court rejected the plaintiff's argument that production of screen shots was unduly burdensome and not mandated by Rule 34 because the materials were "ordinarily maintained" on external servers within multi-tiered Web pages, rendering the creating of PDFs time- and cost-intensive.

The court dismissed her claim that her production complied with Rule 34(b)(2)(E)(ii) as "disingenuous," saying it was "beyond dispute" that the one-hundred-page printed email with copied and pasted excerpts is not in the form "in which it is ordinarily maintained." The Rule mandates that "[I]f a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms." The Court was also troubled by the fact that the production format stripped "the entries of their original and complete text, formatting, images, and likely the source."

Key takeaways:

1. While the court exhibited some flexibility about the form of production, including a potential acceptance of PDF format or screenshots, the case shows that a blanket claim of "hardship" will not render acceptable a production format that clearly does not comport with Rule 34.

2. This case highlights the significance of the "meet and confer" requirement of FRCP Rule 26. The fact that defense counsel was willing to consider screen shots and PDFs as a compromise indicates that compromise was possible, but plaintiff was not willing to come far enough to resolve the dispute.

3. The case also points out the increasingly complicated issues that arise in connection with the production of electronically stored information (ESI). Particularly regarding online content, the methodologies for collection and preservation of ESI mandate that attorneys hire outside experts to help manage the discovery process, avoiding the expense of defending a motion to compel, or worse, sanctions for failure to comply.

In A Lurid Story Of E-Discovery And Ham, Magistrate Judge Tells Parties To Pay For A Forensic Expert To Sort Through The Data

LexisNexis Litigation Resource Community Staff — Fri, 01 Feb 2013 16:58:00 GMT

In case you read the E-Discovery Brief to your kids at night, please be aware that this article contains sexual content not suitable for children under the age of, well, it's just not suitable. This is a story that involves sexual harassment, text messages, amorous Facebook^® musings, foul language, and ham-ham that is smoked for more than 20 hours "then finished with a sweet crunchy glaze." Also, this story involves electronic discovery.

In this story, the Equal Employment Opportunity Commission (EEOC) brought claims against the Original HoneyBaked Ham Company of Georgia, Inc. HoneyBaked allegedly subjected female employees to sexual harassment and retaliated when they complained about the harassment. HoneyBaked wants the women's social media information to assess their emotional and financial state during the time they are claiming they were distressed by the whole alleged affair, and to assess their credibility.

Magistrate Judge Michael E. Hegarty of Colorado said the class members used social media to communicate with each other about their treatment at HoneyBaked. The court explained that each class member voluntarily filled up a background folder titled "Everything About Me." The judge said that if there is relevant material in those folders that may lead to admissible evidence, "the presumption is that it should be produced."

"The fact that [the information] exists in cyberspace on an electronic device is a logistical and, perhaps, financial problem, but not a circumstance that removes the information from accessibility by a party opponent in litigation." (EEOC v. The Original HoneyBaked Ham Company of Georgia, No. 1:11-cv-02560-MSK-MEH, USDC Colo.).

Judge Hegarty determined that "there is no question [HoneyBaked] has established that the documents it seeks contain discoverable information." For example, he pointed to a photo one of the women posted of herself wearing a t-shirt imprinted with a foul adjective-easily the most offensive term used to describe a woman-a term she says a HoneyBaked employee used to describe her. Also on her Facebook page, according to the judge's order, this class member shared her financial expectations from the suit, her feelings about the loss of a pet and a broken relationship. She also described her positive outlook on life post-termination, her sexual aggressiveness, her post-termination employment, her sexual liaisons, her income opportunities, and sexually amorous communications with other members of the class. The list goes on. (Are you ready to close your Facebook account yet?)

Judge Hegarty found all of these categories potentially relevant and ordered more of the same.

"Given the fact that [HoneyBaked] has already obtained one affected former employee's Facebook pages, and that those pages contain a significant variety of relevant information, and further, that other employees posted relevant comments on this Facebook account, I agree that each class member's social media content should be produced, albeit in camera in the first instance. I do not believe this is the proverbial fishing expedition; these waters have already been tested, and they show that further effort will likely be fruitful."

The judge said he appreciated the privacy concerns raised by the women, and that he "was not sold" on HoneyBaked's alleged areas of relevant information, particularly that the information would demonstrate a positive attitude among the women. So, he established a process "designed to gather only discoverable information." And to do so he will use a forensic expert as a "special master," which the parties will pay for.

With that, he directed the parties to provide any cell phone used to send or receive text messages during the relevant time frame; access to social media websites used during the relevant period; and access to relevant email accounts or blogs.

The parties will collaborate to create a questionnaire for the claimants designed to identify potential sources of discoverable information; and instructions for the special master defining the parameters of the information he will collect.

The Court will review hard copies of the material in camera and require the production to HoneyBaked of only that information he determines is legally relevant. The court will then deliver relevant material to the EEOC, which will conduct a privilege review, designate the material as appropriate under the Protective Order in this case, then deliver the non-privileged material to defense counsel along with a privilege log containing any withheld information. All irrelevant material will also be returned to the EEOC. The judge said he would provide the EEOC an opportunity to make a record of objections to the material determined to be relevant.

Key Takeaways

● If your client is claiming emotional and financial distress, assume that their most private data may be considered fair game in court.

● Do not think you or your opponent will decide a forensic expert is needed in your case. The judge may make that determination on his or her own.

● If a court determines a forensic expert is needed, assume you will have to foot the bill.

ell everyone you know-your children, your friends, your accountant-do NOT post anything on their social media site or say anything in email or text that they would not want the world to know now or anytime in the future.

Apple® Products: Sturdy Security, PC Differences Require Special Attention in Discovery

LexisNexis Litigation Resource Community Staff — Sun, 13 Jan 2013 19:20:00 GMT

It seems like they have been around much longer, but the first iPod^® was released by AppleInc. in November of 2001. Suddenly many consumers were using a product made by the maker of Mac^® computers, loved by the likes of artists, designers and educators-but not the average cubicle jockey or corporate exec. That was the domain of Windows^® PCs. As people came to love their iPod^®digital devices they became more familiar with the Apple way of doing things. At the same time, cross-platform compatibility barriers were coming down, meaning a PC user could buy a Mac and no longer feel like she was trying to plug her TV into a tree.

Attend any legal conference today and you are as likely to see as many MacBook^®computers, iPad^® and iPhone^®devices as anything else. Today, Apple reports that iPhone and iPad sales account for nearly three quarters of its revenue. And, it follows that more Apple products are storing potentially discoverable data.

Two Covington & Burling LLP attorneys wrote in a recent article that document collection from Mac computers, iOS mobile devices, third-party applications and the iCloud^® presents "unique issues that will need to be addressed when drafting and implementing document collection plans."

Jihad F. Beauchman and Edward H. Rippey offered insight and guidance to other attorneys in an article titled iDiscovery: Collecting Documents from Apple's Mac Computers and iOS Mobile Devices, published in a recent issue of the EDDE Journal, produced by the E-Discovery & Digital Evidence Committee, ABA Section of Science & Technology Law.

"The technical differences make it difficult to adequately implement a thorough document collection plan on Macs using only Windows tools. Using Windows tools to perform collection on Macs can lead to corrupted or unreadable files and inaccurate metadata," Beauchman and Rippey wrote. "For example, when analyzed by a Windows machine, a single Keynote^® file (similar to PowerPoint^®) may appear as a folder with multiple subfolders containing numerous corrupted files that do not accurately reflect the content as it existed on the Mac computer."

The attorneys say it is critical to work with Mac specific tools and with vendors with experience collecting ESI on Mac computers as well as Windows PCs. Also important, they say, is make sure "information is collected natively and that properly formatted drives are used to collect the information." Beauchman and Rippey wrote that when an external drive is later formatted for Windows it may not retain important metadata and some files could be corrupted. FireVault encrypted files must be decrypted before imaging a drive, which can take as long as 24 hours. "Improper formatting or corrupted files can signify sloppy collection and could lead to further scrutiny of the document collection efforts," the attorneys warn.

These are just some of the risks, warnings and solutions Beauchman and Rippey offer in the article.

Note: Edward Rippey of Covington & Burling will be one of the presenters at a day of legal education sponsored by LexisNexis on Jan. 30, 2013, as part of LegalTech^® New York 2013. The program will be moderated by e-discovery thought-leader George Socha, Esq., featuring interactive panel discussions with 16 other experts on big data, cloud computing, international privacy, and using e-discovery to obtain better client outcomes. For more information and the full agenda please visit: www.lexisnexis.com/2013-legal-tech.

Key Takeaways

● Work with vendors skilled in collecting data from Mac as well as PC computers.

● Use Mac specific tools when handling Apple equipment.

● Insist that data is provided in its native format.

● Take care when first handling Mac data to preserve precious metadata and protect files.

● Download and read the complete article by Rippey and Beauchman. Click here to download a PDF of the article.

For more information about LexisNexis products and solutions, connect with us through our corporate site.

E-Discovery Checkpoints: A 360-Degree View-Part 1

LexisNexis Litigation Resource Community Staff — Sun, 13 Jan 2013 19:13:00 GMT

Any image of a judge luxuriating on the bench like a silent referee on the elevated sidelines of the proceedings quickly melts away like tiny birthday candles when it comes to electronic discovery. To use a boxing metaphor, judges are clearly the "third man (or woman) in the ring," intent on making sure the fight doesn't get out of hand.

What boundaries are in place and what questions are asked early in the life of a case will prove critical to keep the proceedings in general-and costs in particular-from going through the roof. LexisNexis recently assembled four speakers to address the critical early stages of discovery, presenting the perspectives of a U.S. Magistrate Judge, an experienced e-discovery attorney, a corporate data security executive and a litigation technology expert. This is the first in a four-part series covering what the speakers had to say.

The Webinar was designed to call out critical decision points and questions that will or should arise in the timeline of a complicated, data-drenched dispute. In this instance, the speakers followed the timeline of a hypothetical case-called Beta Co. v. Alpha Co.-involving allegations of everything from patent infringement to corporate espionage in a contentious, high-stakes battle between two video game companies. Beta Co. v. Alpha Co. involved massive volumes of data (e.g., 20 million emails), many formats (e.g., voice mail, video), many levels of sensitivity (e.g., employee records, Social Security Numbers), with servers located in several states and countries.

A Radical Transformation

U.S. Magistrate Judge John M. Facciola of the U.S. District Court for the District of Columbia, started off the discussion, sharing what his immediate questions for the litigants would be and what he would expect of them.

"The way a judge is going to approach litigation these days is a radical transformation from the way it used to be," he warned. "We have entered a period of extremely aggressive management of the pretrial process [by judges] due to the massive amounts of data involved. If the judge doesn't do so, he's asking for trouble."

The judge noted the adoption of protocols that supplement the Rules of Civil Procedure, pointing to courts in California and New York, as examples. These courts are "trying to make the Civil Rules meaningful to resolve discovery problems before they arise," Judge Facciola said.

For example, courts are beginning to require certifications from attorneys that certain tasks on a checklist have been completed. The theory behind this is that the lawyers will make sure they discuss e-discovery challenges early and have proposals to handle them.

Preservation Expectations

Courts will start off making sure preservation of evidence is tackled. The judge will want to know what kind of agreement the parties have crafted to preserve data. Are they going to use a custodian? Are they going to identify the appropriate people who are knowledgeable about the data? Will they have a bird's eye perspective of the data? Are there any objections right away that any information is not being preserved? He or she wants to be sure all forms of communication are taken into account. People in general and the younger generation in particular no longer rely solely on email, he said, which is often replaced by text messaging, instant messaging and social media sites.

Based on the enormous universe of information potentially involved in Beta v. Alpha, the judge assumed that the parties would retain vendors. Also, he will want to know about, and expect, liaisons selected for each party so he can get quick answers. These data liaisons are becoming "essential and crucial" in complex cases, the judge said.

Headaches

"The single most important aspect of this case-the thing that is going to cause the most headaches," the judge said, "is that these are competitors. There will be awful fights about the availability and accessibility of ESI in terms of who can see which documents under what circumstances. How are we going to draft a protective order? Are we going to have fact discovery first, then turn to expert witnesses? I want to know more about this hack [Beta] is complaining about. Is that the source that helped [Alpha] beat [Beta] to market? If so, then who was responsible?" The judge wants to know.

Judge Facciola said he also will want to know more about the theories of recovery, saying they will be an indicator of discovery demands and challenges down the road. "I certainly don't want [the parties] to argue a motion for summary judgment, but I want to know a lot more about the nature of the case because that is going to drive the single most important issue here-and that is the proportion of the discovery I am going to permit against the ultimate cost of this case."

A Terrifying Matter

"This is the kind of case that terrifies me, because just looking at it, I know that if everybody goes crazy we are going to spend a lot more on discovery than we should and therefore going to create a situation in which people are going to settle not because they should settle or because justice suggests they settle, but simply to be relieved of unreasonable costs."

Next, the judge said he will want to look at the methodology the parties will use to gather and search information. The Southern District of New York is being very specific, he said, discussing things like key words, hit reports, response rates, machine learning or other advanced analytics, limitations on data fields, and whether the parties are going to search backups and legacy data.

"These questions suggest that the lawyers already have an extraordinary level of competence in the search capability, which is developing rapidly," Judge Facciola said. "I am going to think very early on about the search methodology."

In terms of a protective order, the judge says he has them on hand for cases involving competitors, but they are often "more restrictive than they should be," not even allowing the parties to work at home, for example. Judge Facciola referenced an article appearing in the Federal Courts Law Review (www.fcrlr.org) titled "Computer Software-Related Litigation: Discovery and the Overly-Protective Order," which says tight restraints can dramatically increase the cost of litigation in complex intellectual property cases. The authors-Lydia Pallas Loren, a professor with the Lewis & Clark Law School in Portland, Oregon, and Andy Johnson-Laird, a long-time forensic software analyst and president of Johnson-Laird Inc. in Portland-wrote that even when sensitive information is protected by a strict protective order, disclosing that information can be accomplished without undue costs.

Weapons of Mass Protection

"Lawyers often agree to protective orders that significantly and unnecessarily increase the costs of discovery," the authors wrote. "Attorneys should pay careful attention to the provisions addressing the requirements of production and analysis. Additionally, attorneys must understand the consequences of the clauses contained in protective orders in these types of litigation . . . [I]t is possible," the authors say, "to provide robust protection for disclosed source code while at the same time not unnecessarily and dramatically increasing the cost of discovery by weaponizing the protective order." "[A]ppropriately scoped discovery and protective orders will assist in minimizing the costs associated with discovery. We have seen a clear relationship between the number of restrictions placed on forensic software analysts and the cost of the resulting analysis," Loren and Johnson-Laird say.

In the spirit of demanding cooperation on the scope of discovery and protections, Magistrate Judge Facciola said he will not accept lip service. "If I sense that [there] has been a drive-by meet-and-confer where ten minutes before the hearing [the attorneys] had a cup of coffee in the cafeteria, I assure you they are going back to the cafeteria and coming back with an order that I can live with."

"If I don't take the aggressive approach early on and [instead] wait until all Hell has broken loose, it is difficult to put the pieces back together again," the judge said.

Note: Magistrate Judge Facciola was joined on the panel by Mollie C. Nichols with Redgrave LLP; Matthew McKeever, VP Security & Compliance with Reed Elsevier; and Trent Walton, president of Electronic Legal LLC and Cumulus Data LLC. In Parts 2, 3 and 4 we will cover their insights and contributions to the Webinar. If you missed it, you can still learn from the Webinar as we have posted it online-for free with registration. Click here to go to the registration page.

Key Takeaways

● Expect to certify that you have followed a checklist of e-discovery items to cover with opposing counsel.
● Expect your judge to look for proportionality as you set your discovery expectations.
● Plan to incorporate data generated by newer forms of electronic communication, beyond email, in your discovery.
● Identify a knowledgeable and available data liaison for your judge.
● Look for ways to control discovery even when litigating against a competitor over high-value intellectual property.
● Take meet-and-confer sessions very seriously, and be prepared to demonstrate that you did, or plan to spend more time in the cafeteria.

For more information about LexisNexis products and solutions, connect with us through our corporate site.

Outbreak of Reason Reported in Northern District of California: New E-Discovery Guidelines Released

LexisNexis Litigation Resource Community Staff — Sun, 13 Jan 2013 19:12:00 GMT

American litigators in high-stakes cases can be aggressive, clever, passionate, smart and, if necessary, ruthless. And costs be damned! It's how they roll. In fact, some people who study these things say that the testosterone levels of trial attorneys-males and females alike-are higher than their friends (or enemies) who don't go to court. It's all that aggression and passion! Even during some saliva tests, trial attorneys reportedly spat with greater enthusiasm and regular Joes and Janes.

But in some corners of the judicial system there seems to be an outbreak of reason and calm infecting our rancorous courtrooms which we're so proud of.

Yes, participants in the ongoing campaign to bring some sense to massive and costly discovery of ESI have scored a victory in California. The rules committee and the judges of the U.S. Northern District unanimously adopted e-discovery guidelines with "getting along" in mind. U.S. Magistrate Judge Elizabeth D. Laporte, head of a bench-bar committee, said "these tools are designed to promote cooperative e-discovery planning as soon as practicable that is tailored and proportionate to the needs of the particular case to achieve its just, speedy and inexpensive resolution, consistent with Rule 1 of the Federal Rules of Civil Procedure."

Three specific tools were adopted by the court:

1) Guidelines for the discovery of ESI

2) An ESI checklist for use during the Rule 26(f) meet-and-confer process

3) A model-stipulated order

In a statement accompanying the announcement on the court's website, it was clear the judges want attorneys to pay close attention to their new guidelines. "Knowledge of the Guidelines and a report on whether the parties have considered entering into a stipulated e-discovery order are now mandated by the judges' uniform Standing Order and use of the Checklist is strongly encouraged."

The ESI Guidelines, a straightforward three-page document, offers succinct direction on cooperation and made it clear that it is not expecting-and does not feel the guidelines interfere with "an attorney's zealous representation of a client." Since the cooperation mandate is restricted to e-discovery, we doubt U.S. litigators will begin to see symptoms of "Low T" anytime soon.

Proportionality

On the subject of discovery proportionality, the Guidelines read: "To assure reasonableness and proportionality in discovery, parties should consider factors that include the burden or expense of the proposed discovery compared to its likely benefit, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in adjudicating the merits of the case. To further the application of the proportionality standard, discovery requests for production of ESI and related responses should be reasonably targeted, clear and as specific as practicable."

The Guidelines direct litigants to discuss preservation "at the outset of a case, or sooner if feasible" and to periodically revisit the subject during the case.

Meet-and-Confer Agenda

An agenda for the required meet-and-confer conferences should contain these items, the court said: 1) preservation; 2) systems that contain discoverable ESI; 3) search and production; 4) phasing of discovery; 5) protective orders; and 6) opportunities to reduce costs and increase efficiency. The court goes on to give guidance for each topic. For example, with regard to controlling costs and finding efficiencies, the Guidelines say: "Opportunities to reduce costs and increase efficiency and speed, such as by conferring about the methods and technology used for searching ESI to help identify the relevant information and sampling methods to validate the search for relevant information, using agreements for truncated or limited privilege logs, or by sharing expenses like those related to litigation document repositories."

The court comes out and "strongly encourages" informal discovery "at the earliest reasonable stage of the discovery process."

"Counsel, or others knowledgeable about the parties' electronic systems, including how potentially relevant data is stored and retrieved, should be involved or made available as necessary. Such a discussion will help the parties be more efficient in framing and responding to ESI discovery issues, reduce costs and assist the parties and the Court in the event of a dispute involving ESI issues."

E-Discovery Liaisons

Prepared and knowledgeable e-discovery liaisons will be expected at most meet-and-confer conferences. Such a person "will be, or have access to those who are, knowledgeable about the location, nature, accessibility, format, collection, searching and production of ESI in the matter." The court says this is the case whether the individual is outside counsel, an in-house attorney, an employee of the party or a consultant.

The Guidelines conclude with "judicial expectations of counsel," such as familiarity with the Guidelines themselves, the Federal Rules, the 2006 Amendments and the accompanying 35-point checklist for meet-and-confer conferences.

The documents are available from the court's website:

Guidelines for the Discovery of Electronically Stored Information (.pdf)

ESI checklist for use during the Rule 26(f) meet-and-confer process (.pdf)

Model Stipulated Order Re: the Discovery of Electronically Stored Information. (.doc)

Standing Order for All Judges of the Northern District of California (.pdf)

Key Takeaways

● If you practice in the Northern District of California, you might do well to memorize these Guidelines.
● Make sure you have a qualified, knowledgeable and well-prepared e-discovery liaison at your meet-and-confer conferences.
● Start cooperating on e-discovery as soon as possible.

For more information about LexisNexis products and solutions, connect with us through our corporate site.

Use Predictive Coding and Get an E-Discovery Vendor, Judge Says, Or Tell Me Why You Shouldn't

LexisNexis Litigation Resource Community Staff — Mon, 03 Dec 2012 22:55:44 GMT

Years ago, humorous writer Fran Lebowitz was asked about criticism of a judge overseeing one of the highest profile murder trials of all time. The jurist was taking heat for what people viewed as a laid back or merely observant role in the courtroom, allegedly enthralled by the performances of the legendary trial lawyers in his midst. True or not (probably not) there it was. When asked for her take, Ms. Lebowitz said, "He didn't want to look like he was judging anyone. He didn't want to come off as judgmental. I mean, who is he to judge?"

But appearing to be judgmental certainly was not the case recently when it came to judging the value and validity of predictive coding and electronic discovery vendors. Hon. J. Travis Laster, Vice Chancellor, Delaware Chancery Court, took discovery by the horns in a complex matter before him and, seeing the parties' need to review massive volumes of data, told their attorneys to pick one of these "wonderful discovery superpowers" and use predictive coding. If this was not the way to go, he told the lawyers to brief him on why (EOHB, Inc. et al. v. HOL Holdings, LLC, CA No. 7409-VCL [Del. Ch. Oct. 15, 2012]).

Here is how Judge Laster put it from the bench during a hearing on the matter:

"This seems to me to be an ideal non-expedited case in which the parties would benefit from using predictive coding. I would like you all, if you do not want to use predictive coding, to show cause why this is not a case where predictive coding is the way to go. I would like you all to talk about a single discovery provider that could be used to warehouse both sides' documents to be your single vendor. Pick one of these wonderful discovery super powers that is able to maintain the integrity of both side's documents and insure that no one can access the other side's information. If you cannot agree on a suitable discovery vendor, you can submit names to me and I will pick one for you.

"One thing I don't want to do-one of the nice things about most of these situations is once people get to the indemnification realm, particularly if you get the business guys involved, they have some interest in working out a number and moving on.

The problem is that these types of indemnification claims can generate a huge amount of documents. That's why I would really encourage you all, instead of burning lots of hours with people reviewing, it seems to me this is the type of non-expedited case where we could all benefit from some new technology use."

In their commentary on the decision, Michael C. Hefter and David A. Shargel of Bracewell & Giuliani wrote that this signals the "growing acceptance of predictive coding of electronically stored information." They called out the fact that the judge made the decision on his own initiative, without a motion from the parties, and that this appears to be the first time predictive coding was condoned by the Delaware Chancery Court, which is highly respected by courts in other jurisdictions.

Orrick e-discovery attorneys Wendy Butler Curtis and Jeffrey W. McKenna expressed concern about the court's action. "Sophisticated and unsophisticated litigants alike shudder at the thought of courts mandating specific discovery practices or selecting vendors. Whether on motion or sua sponte, such decisions by courts are contrary to the well-established principle that a responding party is best situated to evaluate the procedures, methodologies and technologies for collecting, searching and producing its own electronically stored information and fail to account for company investments in internal tools, preferred vendor relationships or company-specific and unique data requirements."

Key Takeaways

Do not assume it will take a motion for you to wind up using an e-discovery vendor and applying predictive coding, aka computer-assisted review.
Be aware of the trend that predictive coding is increasingly accepted as a superior method for reviewing large amounts of data in complex litigation.
Be aware that e-discovery vendors have an increasingly good reputation among judges.

For more information about LexisNexis products and solutions, connect with us through our corporate site.

U.S. Judge Says Plaintiff's Litigation Hold Doesn't Pass Smell Test, Directs It to Pay for Spoliation Probe

LexisNexis Litigation Resource Community Staff — Mon, 03 Dec 2012 22:43:33 GMT

Will your litigation hold meet a judge's expectations? And if not, what are the potential consequences? Are you looking at sanctions or millions of dollars' worth of forensic discovery? To get a glimpse of at least one federal court's view on this, we look to the Oct. 2, 2012, decision in Scentsy v. B.R. Chase handed down by Hon. B. Lynn Winmill, Chief District Judge of the U.S. District of Idaho (No. 1:11-cv-00249-BLW, Oct. 2, 2012; 2012 U.S. Dist. LEXIS 143633) [enhanced version available to lexis.com subscribers].

We're talking "scented warmers" here. For the uninitiated, if you want your room to smell like a tropical oasis, a comfortable leather chair, or even a blueberry cheesecake, you can buy one of these devices, plug it in, and the warmed fragrance oils will transform your space into a corner cafe, a pool room, or a newborn baby. You can get one that looks like a snowman for winter, Frankenstein for Halloween, or proudly wave your college colors with the Scentsy^ "Campus Collection." Other holiday options include a menorah design for Hanukkah or Santa's bowl-full-of-jelly mid-section for Christmas.

While it may be lighthearted and whimsical, the manufacture of fragrances and flavors is big business, and the complex formulae are vigorously protected from competitors.

It is the scented warmer designs that are at issue in litigation between Scentsy Inc. and B.R. Chase, LLC-would-be maker of certain Harmony HomeBrands scented warmers. In this less-than-harmonious litigation, Scentsy sued Harmony over designs, alleging copyright and trade dress infringement.

Harmony charged Scentsy failed to produce and spoliated key documents as the result of an insufficient litigation hold put in place orally by Scentsy's in-house counsel. Harmony moved to compel Scentsy to conduct a highly expensive forensic examination of its computer systems-on its own dime-to retrieve any deleted discoverable data. Harmony also wanted the court to hit Scentsy with sanctions.

Key questions before the court included when Scentsy knew it was going to initiate litigation; when it implemented its hold; whether potentially relevant documents were destroyed; whether there was evidence of spoliation; and whether Scentsy's litigation hold was adequate to prevent spoliation, inadvertent or otherwise. The court noted that most courts have held that pre-suit destruction can constitute spoliation when litigation was "reasonably foreseeable" but not where it was "merely possible."

Instead of a written litigation hold, Scentsy's general counsel spoke to individuals who would have had information about Harmony Home Brands or the scented warmers implicated in the dispute. The Scentsy GC apparently directed that such documents not be deleted. The parties dispute when Scentsy anticipated litigation, whether it was about the time the complaint was filed or earlier. Also, it is Scentsy's document retention policy that emails, but not other documents, be deleted when they are six months old.

The designs in question were created between 2006 and 2009. Harmony maintains Scentsy contemplated litigation by May of 2010. And a key piece of evidence-a computer and hard drive used by a Scentsy designer-failed and/or was destroyed early in 2010. Its data was not recoverable. Scentsy sued in May 2011. Scentsy contends that even if it began contemplating litigation against Harmony in May 2010, any relevant documents not produced were long destroyed either under Scentsy's general retention policy or when its lead designer's computer hard drive failed.

"The Court has serious concerns with Scentsy's retention policy and litigation hold process. Generally not deleting documents, and orally requesting certain employees to preserve relevant documents concurrently with filing a lawsuit, is completely inadequate. It is very risky-to such an extent that it borders on recklessness. However, in this case there is very little chance that any of the documents at issue in the pending motion were destroyed because of the policy. The Court has been provided with no reason to question Scentsy's representation that the bulk of the documents were inadvertently destroyed when [ designer Stewart's] hard drive crashed, and that this occurred before Scentsy even knew about Harmony. Scentsy has provided the Court with testimony, given under oath, to that effect. Harmony has provided no evidence to the contrary. Moreover, all the warmers were designed and placed on the market no later than November 1, 2009. Thus, even if Scentsy contemplated suit in May 2010, as suggested by Harmony, the emails related to the design of the relevant warmers would have been already been deleted based on Scentsy's document retention policy-which deletes emails over six months old."

However, there is a chance that some documents-particularly those related to the three warmers designed by someone other than Stewart-were destroyed after Scentsy anticipated this litigation. Scentsy's Vice President of Information Technology said that all non-email documents saved to an employee's personal computer hard drive are preserved indefinitely, and the company GC said there really is no retention policy for such documents. He added that files other than email are stored based on the authors' intent. "We don't delete data off of user drives," the GC said.

After reviewing this and additional evidence, the court held that Scentsy's GC did not issue his oral litigation hold until "roughly concurrent with the filing of the Complaint" in May 2011. So, the court found that there was, under either party's argument, a window of time between when the suit may have been anticipated and the date it was filed. Either way, the court said, there is only a slight chance that destruction of relevant documents took place; no one can say for sure. "[T]here is no way to know," the court found, adding that this "uncertainty was caused by Scentsy's inadequate retention policy coupled with its late and imprecise litigation hold."

The forensic examination could cost Scentsy into the millions of dollars, which the court determined was an undue burden and cost. "However, Scentsy should not be completely let off the hook simply because the cost is high. "[T[he Court has inherent power to make evidentiary rulings in response to the destruction of relevant evidence if spoliation occurs before the litigation is filed. . . . If information is uncovered that spoliation occurred, the Court will consider giving an adverse inference instruction at trial or dismissing some or all of Scentsy's claims. Spoliation is a serious matter, and Scentsy's document retention and litigation hold policies are clearly unacceptable. The Court assumes that Scentsy will improve those policies in any future litigation. The failure to do so may result in this or some other court finding that Scentsy's failure to act, in the face of the warnings given in this decision, constitutes the kind of willfulness or recklessness which may result in serious repercussions."

While deciding not to impose sanctions on Scentsy, the court said it has "in essence" sanctioned Scentsy by requiring it to pay Harmony's costs of deposing Scentsy employees to determine whether spoliation took place, and by "giving Scentsy a shot across the bow that if there is evidence that spoliation occurred, future consequences will be harsh."

Key Takeaways

Evaluate your document retention policy.
Educate your employees about your document retention policy.
Put your litigation holds in writing.
Ensure that your litigation holds are being implemented.
Inventory your data. Know what it is, where it is, and who has it.
Know and be able to prove when you anticipated litigation.

For more information about LexisNexis products and solutions, connect with us through our corporate site.