The Days of the Bates Stamp Are Numbered

As a kind of strange lawyer-mid-life-crisis, I wrote my first law review article last year: HASH: The New Bates Stamp, 12 Journal of Technology Law & Policy 1 (June 2007). Following tradition, I tried to make the opening sentences as clever as possible:

For over one hundred years, complex litigation has relied upon the ubiquitous Bates stamp to try and maintain order and clarity in paper evidence by placing sequential numbers on documents. In today’s world of vast quantities of electronic documents, the days of the Bates stamp are numbered. Instead, the future belongs to a new technology, a computer-based mathematical process known as “hash.” (emphasis added)

Ok, maybe not so clever, but still, I was delighted to see an article this week entitled Bates Stamps’ Days May Be Numbered by Tom O’Connor in Law.com’s Legal Technology section. No big surprise here as I met Tom a few weeks ago, and we talked about hash. (I tend to do that, a lot.) I liked how Tom saw the conversion from Bates stamping to hash as symbolic of a paradigm shift, not only in e-discovery, but in the world at large. Tom and a few others, such as Craig Ball, see a significance in the move to hash beyond what I understood when I wrote the article. They also have a better grasp of how this fits with other e-discovery technologies and procedures to facilitate what Tom claims are huge savings in time and money. I gave Tom a copy of my article, as he had heard about it from Craig but not yet read it. (Yes, I usually keep an extra copy in my briefcase.)

I mentioned Tom’s ideas in a prior blog, e-Discovery at the Harvard Club in New York City, based on his presentation at the CLE. The article Tom has since written, Bates Stamps’ Days May Be Numbered, provides more meat for the bones, which I will attempt to summarize here and place into proper hash context.

For those not real clear on what hash is, and what it could possibly have to do with the 19th Century Bates stamp shown above, I suggest you read my law review article. But if the thought of reading a 44 page academic paper with 174 footnotes leaves you cold, I suggest you try my Hash Page summary instead, or my earlier blog on Hash. They will give you a pretty good idea of how hash is the mathematical foundation of e-discovery, not a corned beef dish, and why this math should render sequential numbering obsolete. There are also many interesting comments left on these blogs by experts in the field, including an esoteric argument I had with a few vendors concerning the legal efficacy of hash in ESI authentication. These short articles do not go into law-review-depth, but do lay a helpful predicate to understand what Tom is talking about.

Tom’s article begins by noting that most people doing e-discovery today still rely on Bates stamping. They scan and sequentially number ESI as if it were a piece of paper. Then he observes, as I did in my introduction, that this system will not work “in today’s world of vast quantities of electronic documents.”

But that process is simply not effective when dealing with terabytes of data. To address the sheer volume, many vendors are advocating a new way of working with electronic documents that can reduce costs as much as 65 percent by eliminating the need for text extraction and imaging in the processing phase. Beyond immediate cost savings, this approach also provides cheaper native file production, reducing imaging costs for production sets and saving up to 90 percent of the time needed to process documents. How? By not using Bates numbers on every page.

Later Tom explains that the alternative to Bates numbers is hash values. But first, he details how and why this conversion can save so much time and money:

Currently, to provide Bates numbering, many vendors generate TIFF images from native files and then Bates number those images. But this process complicates native file review and — at anywhere from eight to 20 cents per TIFF — adds considerable cost to the process. Typically, during processing, data is culled, de-duplicated; metadata and text are extracted; and then a TIFF file is created. An unavoidable consequence is that the relationship of the pages to other pages, or attachments, is broken — and then must be re-created for the review process. Page-oriented programs handle this by using a load file to tie everything together from the key of a page number. But most new software use a relational database that stores the data about a document in multiple tables. To load single page TIFFs into a relational database involves a substantial amount of additional and duplicative work in the data load process.

These steps are avoided by changing to an identification system based on hash values of entire ESI files (which Tom here calls “documents”) that eliminates the need for tracking of individual pages. Here is how Tom explains it, using a lot of e-discovery oriented tech-talk, which, if he is speaking, is usually tempered by a few laughs and war stories:

A document-based data model, rather than a page-based approach, eliminates the text extraction and image creation steps from the processing stage and cuts the cost of that process in half. Documents become available in the review platform much faster — as imaging often accounts for as much as 90 percent of the time to process. This enables early case assessment without any processing, by simply dragging and dropping a native file or a PST straight into the application — which cannot be achieved with the page-based batch process. Relational databases allow for one-to-many and many-to-many relationships and support advanced features and functions — as well as compatibility with external engines for tasks such as de-duping and concept searching. Applications that support these functions — such as software from Equivio, Recommind and Vivisimo Inc. — are all document-based and will not perform in the old page environment. Programs that use the document model can eliminate batch transfer. This process (See Diagram 1 below) increases data storage due to the need for data replication in the transfer process and is also prone to a high rate of human error. And elimination of the time that inventory (in this case, electronic data) is stationary will eliminate overall cost as well as reduce production time

Tom’s diagram above shows the Bates stamp work flow model for traditional Tiff image e-discovery process and review. This procedure treats ESI as if it were paper, and uses sequential numbering, instead of hash, to identify information. According to Tom, this traditional procedure requires a number of time consuming and expensive batch transfer processes. He says these steps are unnecessary and can be eliminated in pure native review that relies on hash. The more simplified “Bates-free” process is shown by Tom’s diagram below. In his words, this is “an easier, faster and more cost-effective e-discovery process.”

Tom concludes that:

A modern litigation support program must be able to review native documents that are not just paper equivalents, and directly enable review of any file that is in common use in business today. The future belongs to these new technologies, where native files are processed without the need to convert to TIFF and are identified by their unique hash algorithm. Attorneys and clients who focus on a document-based system will save time and money and can conduct native file review. In today’s world of vast quantities of electronic documents, the days of the Bates stamp are numbered.

I could not agree more, especially since, unlike the tile, Tom now says the “days are numbered” and not “may be numbered.” I have no doubt about it, even though it may still take many years to get there. Old habits die hard, especially in the legal profession. Still, some day, Bates stamping will seem as quaint and antique as the original Bates numbering machine itself. The original shown above was invented in 1893. The first section of my law review article explains the history of this invention, and how Thomas Edison (shown right) purchased the patent from Edwin G. Bates. Then I go into the theory of hash and native ESI. I explain that hash is the digital fingerprint that identifies every electronic file, and reveals any change in the file. I also explain how hash is used in various e-discovery processes, and examine just about every legal decision ever written which mentions hash algorithms.

In case you have never seen a hash value before, here is an example: 4C37FC6257556E954E90755DEE5DB8CDA8D76710. There are many different types of hash formulas, but all produce lengthy alphanumerics hash values such as this. The two most popular are the SHA-1 hash algorithm which creates a 40 place hash value (shown above), and MD5 hash which produces a 32 place value. Both are too long for a practical naming convention to replace a Bates stamp. So I propose that the value be truncated and only the first and last three places be used. Thus the above hash would be shortened to 4C3.710 . I also propose that the # symbol stand for hash. (The # symbol is already commonly known as the hash mark in most of the world, but in many English speaking cultures, including the U.S., it is also called the number sign or the pound sign). So I propose to abbreviate the above SHA-1 hash with #4C3.710. Some of the technical details of this naming protocol are addressed in the law review article. Others will have to be worked out with time and experience, and the adoption of more standards in the e-discovery industry.

I conclude my article by imagining what a courtroom of the future might be like without the Bates stamp:

In countless courtrooms today, a mantra something like this is heard often: “I am handing the witness a document pre-marked as ‘Trial Exhibit 75’ and Bates stamped as ‘Dr. Smith 0573.’” In the future, the author expects something like this will be heard instead: “I am putting on screen for the witness to view an ESI file pre-marked as ‘Trial Exhibit 75’ and hash marked as ‘Dr. Smith Hash 4F7.C3B (Dr. Smith#4F7.C3B).’” The ESI file may still sometimes be converted to paper, in which case it could be handed to a witness, instead of put on a screen, but the same naming protocol would apply and it would bear a “hash mark” somewhere on the bottom: “Dr. Smith#4F7.C3B.”

Sorry, Mr. Bates, your one hundred-year-plus reign is over.

ABA Litigation Section Reacts to the Qualcomm Case and Recommends e-Discovery Checklists

The Litigation Section of the American Bar Association has published an online article on Qualcomm v. Broadcom. Written by Kristine L. Roberts, Litigation News Associate Editor, the article is significant for its glimpse into the thinking of ABA leaders on electronic discovery abuses. Essentially the ABA litigation leaders remind practitioners of the importance of discovery, and recommend e-discovery checklists as a good way to stay on top of the process and avoid another Qualcomm. While I agree that checklists can be useful, they have their limits, and in my view must be supplemented with expert advice, not to mention a strong sense of ethics and professional responsibility. 

Erica Calderas

Erica L. Calderas is the Co-chair of the Section of Litigation’s Pretrial Practice and Discovery Committee.  Erica is quoted in the article as saying:

The Qualcomm decision reminds all litigators—in a very forceful way—of the serious obligations we undertake in responding to discovery.

She is right on there. Discovery, especially complex e-discovery, is not something you can just delegate to a first year associate and forget about it. It is critical to the outcome of most cases, and can be easily messed up if not done right.

Erica recommends that attorneys use standard form e-discovery checklists in every case to make sure they cover all of the bases and avoid e-discovery violations. Good advice. This is especially important for a general litigator who does not have the assistance of an e-discovery specialist in a small case. Erica specifically recommends that attorneys:

[Use checklists to] ensure that you apply a consistent protocol in any new matter—for example, that you routinely instruct your client to preserve evidence, that you identify witnesses with knowledge, that you determine how the client maintains its documents, that you ask the right questions regarding where potential documents may be located, and that you ask about additional relevant documents and potential witnesses in every witness interview.

Checklists and Specialists

Law firms are now beginning to create and employ such checklists as a routine matter in all litigated matters. For instance, many already follow Erica’s advice and routinely instruct their clients on preservation duties at the beginning of a case. This is not a mere CYA exercise. For many clients, even otherwise very sophisticated ones, it can be a real wake up call. Many in-house counsel are, for instance, unaware of automatic ESI deletion programs, PC and backup tape recycling, forensic collection, and the like. They may need significant help to implement an effective preservation hold and collection program.

A few law firms are taking this a step further and recommending to their litigation attorneys that an e-discovery specialist be included in any significant case. This is not a hard and fast rule; merely a recommendation. In some firms, this advice is often not followed until after there is a problem, instead of at the commencement of the firm’s representation when their input could do the most good.

One large firm, Hunton & Williams, has gone beyond mere recommendation. They have promulgated a rule requiring e-discovery attorney involvement. In their words, they have begun “implementing requirements that an e-discovery specialist be assigned to all significant matters involving ESI.“ Hunton & Williams has 1,000 attorneys in 18 offices, and, of course, many e-discovery specialists. They are, to my knowledge, the first law firm to explicitly make this a requirement, not just a recommendation. Hunton’s Sherry Harris, whom I met last week at the Harvard Club CLE, brought this to my attention and obtained permission for me to share this. This is an important step and the management of Hunton should be congratulated. I expect that other law firms will follow in their footsteps, and eventually this will be commonplace. This is far more effective a solution than just distributing checklists to all litigators and hoping that everything gets done right.

The participation of e-discovery specialists can work seamlessly if the law firm requires it, and if the firm actually has such attorneys to carry it out. But at this point very few law firms actually  have specialists like that, and, of course they do not require what they cannot deliver. Today most law firms, especially small to medium size firms, do not have these specialists. They must look to outside entrepreneurs for assistance when there is a significant matter involving ESI. Of course, I am not saying that every litigated case needs that kind of input. The principles of proportionality and economics must always be followed, and many cases today still do not have a large e-discovery component. 

From what I have seen, although there are many e-discovery vendors, there are still only a few attorneys who specialize in e-discovery. Their numbers are, however, beginning to increase, especially among younger lawyers. The few who are full time e-discovery lawyers typically operate as independent entrepreneurs, or in small groups, or are employed by large vendors and consulting companies. This allows them to consult and be retained by other firms. A few e-discovery attorneys are shareholders, or of counsel, to some of the nation’s largest law firms, such as Hunton & Williams. Over half of the top 50 firms have e-discovery lawyers, but even then with varying levels of expertise. These big firm attorneys are usually fully occupied serving the litigators in their own firm, and are only rarely retained by other law firms as co-counsel.

Instead, the e-discovery lawyers who are on their own, or with consulting firms, are the specialists usually retained by law firms, both big and small, who lack attorneys with such arcane skills. As mentioned, they are usually called in to assist on projects after there is trouble of some kind. It is always challenging to bring in an outside attorney as an expert to assist in a case, but it is particularly difficult when it occurs after a problem develops. For one thing, how do you explain “the cleaner” to the client? No doubt it is the fault of the other side, or perhaps the judge. There can also be relationship issues when new attorneys from different firms work together for the first time. This is especially difficult when the trial attorney in charge has made a mistake and does not want to hear about it, nor understand the complexities involved. Yet, this is typically how and when most e-specialists get involved in litigation.

David Soley

Also quoted in Kristine Robert’s article was David A. Soley, of Bernstein Shur, Co-chair of the Section’s Trial Practice Committee:

We should not be surprised by the ruling, [the opinion] reflects what day-to-day practice ought to be. Attorneys are professionals and have professional standards to uphold, including a duty of good faith and reasonable inquiry in responding to discovery.

I assume David was referring to the sanctions imposed against Qualcomm and its attorneys for not upholding professional standards by trying to hide over 30,000 emails critical to the outcome of the case. David goes on to say that:

because lawyers will be held responsible for their clients’ production of documents, lawyers must go to the site where documents are kept. . . . the lawyer must understand what the client did and then verify it.

Once again, this comment (in my opinion) verifies the need for trial lawyers to obtain the assistance of e-discovery specialists in any large case involving complex computer systems. Counsel must not only understand what the client did, they must be sure their actions complied with the Rules and met the minimum forensic standards for admissibility as evidence. Also, they need to have the backbone to correct a client who screws up, or, as in the Qualcomm case, wants to hide the ball. 

David, who is himself a trail lawyer specializing in real estate litigation, does not talk about retaining e-discovery experts, but again suggests use of checklists.  Here is Kristine Roberts’ report of his comments:

Calderas recommends that to avoid e-discovery violations, attorneys should use checklists to “ensure that you apply a consistent protocol in any new matter—for example, that you routinely instruct your client to preserve evidence, that you identify witnesses with knowledge, that you determine how the client maintains its documents, that you ask the right questions regarding where potential documents may be located, and that you ask about additional relevant documents and potential witnesses in every witness interview.” Calderas also suggests that litigators enter into agreements with opposing counsel regarding what search terms will be used, the places at which relevant evidence may be found, and the persons whose files will be searched.

This is all good advice to be sure, but is it sufficient in a complex case involving large amounts of ESI?

ABA’s Checklist to Avoid Qualcomm’s Fate

The article concludes with a checklist summarizing the recommendations of the ABA leaders on how, as they put it, “to avoid Qualcomm’s fate.” 

1. Use checklists and develop a standard discovery protocol.

2. Understand how and where your client maintains paper files and electronic information, as well as your client’s business structures and practices.

3. Go to the location where information is actually maintained—do not rely entirely on the client to provide responsive materials to you.

4. Ensure you know what steps your client, colleagues, and staff have actually taken and confirm that their work has been done right.

5. Ask all witnesses about other potential witnesses and where and how evidence was maintained.

6. Use the right search terms to discover electronic information.

7. Bring your own IT staff to the client’s location and have them work with the client’s IT staff, employ e-discovery vendors, or both.

8. Consider entering into an agreement with opposing counsel to stipulate to the locations to be searched, the individuals whose computers and hard copy records are at issue, and the search terms to be used.

9. Err on the side of production.

10. Document all steps taken to comply with your discovery protocol.

Once again, all good advice, so long as you understand the limitations of such general advice. Further, if the point is to avoid another Qualcomm, mandatory ethical training should be included, along with the admonishment to walk away from any client who would have you hide evidence or lie to the court. There is no price on a sound night’s sleep. 

Limitations of Checklists

The above ten step checklist is, in my view, only helpful as a general starting point. Law firms should establish much more detailed forms and procedures to do e-discovery right. I know I have personally spent weeks doing just that. My firm, like a few others who have made such efforts, naturally holds such information as a trade secret. You can of course find many checklists online from a variety of sources, but they will all be generalized, and serve only as a starting point for further research, or teaser for retention of services. For one pretty good example, see the e-discovery checklist included in the Association of Corporate Counsel website. The same essentially holds true for form-books and commentaries. No complex area of law can be solved with simple forms and checklists, although again they can be helpful as a starting point. See for example, Electronic Discovery and Records Management Guide: Rules, Checklists and Forms 2008 ed. by Jay E. Grenig, Browning E. Marean and Mary P. Poteet, and Arkfeld’s Best Practices Guide for ESI Pretrial Discovery-Strategy and Tactics (2008-2009) by Michael Arkfeld.  This is especially true of e-discovery which is a combination of the fields of law and technology. In e-discovery, the facts are always different and rapid changes in technology quickly makes yesterday’s solution obsolete. 

Even if the detailed forms and checklists developed by a few experts for private use were no longer confidential, these checklists would not, by themselves, do that much good. They are meant to be used with the assistance of the experts who created them. Forms and checklists require background knowledge and team work with experts to function properly. They work best as a general guide, and reminder not to overlook necessary steps. They also let you know when and how to call for help. Sometimes just knowing what you do not know is half the battle. Step 7 in the above ABA checklist recognizes this in recommending employment of an e-discovery vendor. But be careful in relying too much on some vendors, especially those who are little more than copy-shops and have no in-house legal input.

The truth is, without experience and occasional guidance, simple checklists alone can be counter-productive. They can easily be misunderstood and provide a false sense of confidence. Sometimes it pays to be a little worried and concerned. I am sure that is one of the lessons Qualcomm’s former lawyers have learned. Perhaps the great poet Alexander Pope, whom I have quoted before, said it best in his An Essay on Criticism (1709): 

A little learning is a dangerous thing; drink deep, or taste not the Pierian spring: there shallow draughts intoxicate the brain, and drinking largely sobers us again.

 

e-Discovery at the Harvard Club in New York City

The stately 19th Century Harvard Club this week hosted a cutting edge 21st Century conference on e-Discovery. It was organized by ALM, who also puts on the Legal Tech trade shows. I was curious to see this private club and happy to speak at this event for N.Y. paralegals and attorneys. I was not disappointed by the wood-paneled Harvard atmosphere (where I took a few photos shared here), nor the content of the CLE. The event entitled Managing Today’s Discovery Process was well run, thanks to the organizer, Karen Abrams of ALM, and the program chair, Sherry Harris, the Senior Case Management Specialist for Hunton & Williams.

David Shonka of the FTC

Before the event, I got a chance to speak with the head of the Federal Trade Commission’s e-discovery team, David Shonka. David is also the FTC Assistant General Counsel for Litigation. David, like me, didn’t go to Harvard and was delighted to see the inside of the Harvard Club for the first time. We started talking about Qualcomm and both agreed it was The Big Case of the year. He endured my righteous rant about Qualcomm and attorneys who do not play by the rules, the ones who deliberately hide evidence they know should be produced. We also agreed that this kind of unethical conduct was nothing new, nor unique to e-discovery. It has always gone on, but in the olden days of paper discovery, it was far harder to expose. Today, with electronic discovery, hide the ball is suddenly a high risk undertaking. David picked up on my somewhat angry tone (over the years I have suspected several opposing counsel of playing this game, but have never been able to prove it). He said that in view of my strong opinions on this topic, I would probably like his presentation.

He was right. The FTC e-discovery team leader began with an overview of the incredible facts of the Qualcomm case. This was a prelude for this primary message, that there are only three fundamental principles to follow in e-discovery. They are, in his words:

Don’t Lie.
Don’t Hide Things.
Don’t Make Promises You Can’t Keep.

David pointed out that a law firm’s reputation for truth and honesty are key. If David thinks he is dealing with a lawyer that does not follow these fundamental precepts, then the FTC will naturally be much more demanding in their requests for information, and harsh in their treatment. Conversely, David is willing to negotiate and exercise leniency when an attorney is honest and forthcoming, and reveals the bad with the good. This attitude, in my experience, is also followed by most judges.

On the point of “don’t hide things,” he stated that anytime you have to have meetings, to try to “figure out an argument why something is not responsive, it is responsive.” You should produce it, you should not try to hide it. If not, in David’s words, you risk the principle that: “You are known by your last lie.” And that reputation will last for a long time. No doubt the boys in the 18th Century Harvard Philosophy and Advocacy Clubs (certificates shown above) would have agreed.

The FTC e-discovery chair stated that, in his view, parties have three general options for responding to discovery:

1. Hardball - prolongs investigation and is costly.
2. Let’s-see-if-they-can-find-it - again, prolongs investigation and is costly.
3. Co-operation - fastest, surest results and is the least costly.

David said the third path of “negotiation” is only the way to go for all e-discovery situations, but especially if you are responding to the FTC. No doubt the Harvard class of 1925 shown below would agree. (Note the sign they are holding on the right is not about one of my ancestors, instead it says “The Mess is Still Fundamentally LOUSY”, which is, I think, a reference to the food.)

Aside from general principles, David also had some practical advice on e-discovery, and how to find the relevant information, and not waste your time on non-responsive ESI. Here is his chart of the process he recommends:

Process of Narrowing ESI:

1. Preliminarily Identify Issues and Sources of Information:

a. Key players (12-36 max in any case)
b. Occasional players (only search if you have to)
c. Fringe players (rarely ever search)

2. Data

a. Enterprise systems
b. Local systems (particular office or groups)
c. Individual systems
d. Archives
e. Back-ups (and Legacy Data)

Most of the time all of the relevant data needed for a case will be stored on the key players’ Enterprise, Local and Individual systems. Sometimes you may also need to look at Archives too, depending on what you find in the more easily accessible stores, and how difficult it is to get at the ESI on Archives. Back-up tapes and Legacy Data are not usually needed. David explained that the FTC typically only requires two daily backup tapes be preserved, just in case they want to look at them later, which they usually don’t. He noted with a chuckle that the FTC picks which two tapes to preserve, not the respondent, and they usually just pick two at random.

On the issue of Litigation Holds, the FTC team leader recommended that a senior, experienced attorney personally supervise the preservation process and deal with all of the key players directly. This is at odds with the practice of many companies and firms that tend to delegate this task to younger, less experienced attorneys or paralegals. Probably not a good idea to do that when dealing with the FTC. If a second year associate messes up, you are not likely to have much sympathy. If an older guy like me screws up (yes, it happens), maybe they will cut you some slack.

On a promising note for large companies, he said that parties and the courts should always remember that companies are not in the business of preserving and holding evidence to produce to adversaries who may someday sue them. If e-discovery becomes so burdensome that it impairs businesses’ operations, then something is fundamentally wrong.

David’s presentation also included the fundamental message of this blog, that building an interdisciplinary team is key to e-discovery compliance. He recommended, as do I, that the team include IT, in-house and outside counsel, and vendors. He also advised that you “get everybody in the same room.” Otherwise, you will inevitably play the old child’s game of telephone, where a simple message is whispered for one person to the next, and by the time it reaches the last person, it is totally screwed up. He said it may seem expensive to some companies to assemble such a multidisciplinary team, and have them meet regularly and in-person, but he is convinced you save money in the long run.

Apparently the FTC has been using such a team approach to e-discovery for several years now and they are pleased with the results. He told me before the CLE started that they now have two attorneys who only do e-discovery, and they have help from a number of techs and paralegals. Of course, the FTC cannot force companies under investigation to also use a team approach, and specialized attorneys, but David did say publicly that they will sometimes refuse to meet with a company’s lawyers unless they bring the IT liaison with them to the meeting.

David also spoke of the serious risk of just relying on custodians for self-collection. They may print out, or transfer to a disk, but they are likely to do it in a way that messes up the metadata. He stated that metadata is only rarely needed for production, and depends on the case, but you should still try and preserve it as best you can. Still, the main reason you should not rely on custodians alone for collection is that they are “self-interested.” They may, for instance, want to avoid embarrassment and not produce certain very relevant emails that they wished they had not written. In his opinion, you can do the collection in-house, and do not have to hire an outside vendor, but you should use a qualified technician to go to the computers and collect the data, and not just rely on the custodians. As to forensic imaging, where outside experts are typically used, that is only rarely needed in special cases where there are indications of criminal conduct.

Sherry Harris

Sherry provided the opening keynote address. She has over 30 years experience with Hunton & Williams and is now the dynamo behind their e-discovery efforts. Although not an attorney, she knows far more about the subject than most experts. She commented on my sports analogy blog on e-discovery, and said how important it was for paralegals to help make sure the attorneys they support never drop the ball. Like most everyone else, she also talked about Qualcomm, and the outside counsel who now stand to be sanctioned. She emphasized that this is something you never want to have happen to your law firm. One way to avoid this is for lawyers and paralegals alike to, in her words, “stay aware of evolving case law.” She also said that in her experience, “traditional discovery is gone forever; but right now people are resisting the changes.” Her advice: “Make technology your friend.”

Vendor Selection and Negotiation

Next, Jennifer Tomaino, attorney member of the Verizon e-Discovery Team, and Oliver Gierke, Litigation Case Manager for White & Case, presented on Vendor Selection and Negotiation. It would be hard to imagine two people better qualified to speak on that topic. Jennifer is Patrick Oot’s “right hand man” (so to speak) for Verizon, and so has a good perspective on corporate e-discovery teams and their procurement of vendor services. Oliver is a key technical member of the White & Case e-discovery team, a law firm with 2,300 lawyers in 37 offices located in 25 countries.

Jennifer and Oliver both noted that paralegals play a key role in vendor selection because they work closely with vendors to get the work done, and are in the best position to evaluate performance. They also both commented on how big the e-discovery industry has become, now approaching three billion dollars a year

Jennifer Tomaino stated that Verizon does its own preservation and collection, and vendors do not usually get involved until the procession stage. Verizon is looking to take even more of the e-discovery process in-house in the next few years, and may move into review. In her experience, the review tools that the vendors offer are all fairly similar. She cautioned that “technology can help, but is only as good as the people using it.”

Jennifer suggested that you look for recommendations from others who have recently used a vendor. Also, you may want to employ a formal two-step procedure where you issue an RFI - request for info, and then an RFP - request for product proposal. She suggested you study the Sedona’s sample RFP in their vendor selection paper, but do not simply use the form without thought and customization. Jennifer also noted, and Oliver agreed, that a Vendors’ project managers are key. They need to provide quality, accessibility and responsiveness (24/7). Since Verizon is, in Jennifer’s words, a serial litigant, they can get the best rates because of the volume. Still, try and be creative in making deals with vendors, who usually charge by the amount of ESI, and/or time. For instance, she suggested trying to get a deal where you only pay for hits, not misses.

Oliver Gierke has found that vendors can offer both expertise and cost control. Their expertise includes: 1) data forensics, which he has never seen done in-house because you may need an independent expert to testify on authenticity and chain of custody; 2) collection; 3) processing; 4) hosting data for review because most companies and firms do not have the capacity to store large amounts of ESI; 5) production; and 6) consulting. Vendors can provide cost control by: 1) exclusive or long term contracts at discounted rates; 2) retention of data only when needed; and 3) hiring contract lawyers for review. He thinks that a good vendor can save you a lot of money, although the expenses are front-loaded at the beginning of the case. Oliver also noted a few pitfalls of reliance on outside vendors. Their services are expensive, there is less control than doing things in-house, and more room for miscommunications.

Oliver recommends that you meet with vendors in person and know in advance who will be assigned to the project. You should make sure that the vendors can clearly explain what they will do in a way you can understand and explain to others. Beware of those who speak only in jargon. Also, and many who spoke at the CLE later emphasized this point, be sure to find out if the vendor is going to use subcontractors and check them out as well. Look out for vendors who get the contract and then sub everything out to third parties. Finally, Oliver recommends that you renegotiate pricing with a vendor every 6-12 months. The industry is rapidly changing and prices are going down.

Tom O’Connor

Next up was Tom O’Connor, who spoke on Cost Containment Strategies. Tom is an independent consultant from New Orleans, and the Director of the Legal Electronic Document Institute, a non-profit he organized. Tom noted the technology consulting company, Gartner, estimates that 20% of the e-discovery companies existing today will be out of business in a year. He suspects many of the rest will be lost through consolidation, with a few big companies buying all of the rest.

Tom opined that process management is key to cost containment. You need to set up best practices that are repeatable, yet still flexible. Tom also pointed out the inherent tension between in-house counsel trying to preserve costs, and outside counsel who must answer to the judge, and have an ethical duty to the client and the court. Again he talked about Qualcomm, but pointed out that this is nothing new; there are many cases driven by this conflict.

The part of Tom’s presentation I liked the most was his discussion of the paradigm shift now in progress in e-discovery, as a mirror of the world. The Old Paradigm was based on single page TIFF with bates numbers, and review as single pages. It thought of documents in terms of paper pages. The New Paradigm is native file based, where you produce, process and review in native format. Our idea of a “document” should completely change. It is all bits and bytes now. Stop treating it like paper where you Bates stamp each page. Under what Tom calls the new Docucentric paradigm, you set up a unified enterprise wide relational database with data extraction as needed. Under the new system you automatically extract metadata fields, and do deduplicating, near deduplicating and other processing. He thinks that good content management systems are key to making this happen. The new native ESI paradigm is faster, more efficient and far less expensive than old paper concept systems.

I agree with Tom wholeheartedly on these new native paradigm insights. Tom said that many object to going native because they think you need TIFF and bates numbers in order to preserve authenticity and stay organized. Tom disagrees and thinks that the Bates stamp has been replaced conceptually by hash, and cited to my law review article, HASH: The New Bates Stamp. He thought I was going to speak about that later (I wasn’t). The bottom line for Tom is that there is a huge cost reduction possible by eliminating TIFF and working in native. Tom claims it is in the range of 30-40%, but notes that some vendors claim the savings is more like 80-90%.

Afternoon Program

Next came lunch, followed by my presentation: e-Discovery Teams: the New Gold Standard. I explained why corporations and law firms are moving to the multidisciplinary team approach, and corporations’ especially are taking it in-house. I covered the benefits of the team approach, and why so many companies are having trouble doing it. Everyone seems to agree it is the Holy Grail of e-discovery, but just like the mythical chalice, it is nearly impossible to find. I had a good time because the attendees were very attentive and laughed at the right times. As a plus, I got to use my new Macbook Air and Keynote 2008 presentation software.

After me came several good presentations, but they will be shortchanged in this blog simply because I was too tired after my work to focus and take notes of what they said. Scott M. Cohen, Director of Practice Support for Proskauer Rose presented with Dottie Perillo, a paralegal from Dupont’s e-discovery team. They spoke on a subject close to mine, Achieving a State of Litigation Readiness - Bringing About Effective Dialogue Between Inside and Outside Counsel and the IT Department. I do recall meeting Scott the night before and trading old computer stories. I do not run into that many people who remember my first computer, the TI-99/4A, nor appreciate how amazing it was to be able to program both speech and animation on it back in 1981. Scott is also one of the few people I have met who actually used the whistle in the Captain Crunch cereal boxes as part of his telephony research when he was a kid in high-school.

Next came the unforgettable Monica Bay, Editor-in-Chief of Law Technology News. Her topic was How EDD is Changing the Job Market. I remember her strong presence and unbridled enthusiasm, but not enough of the content about the job market to try to summarize it. I think she said it was in fast transition, and right now, no one is too sure where it is going. The only thing clear is that paralegals with good computer e-discovery skills are in very strong demand, and this demand is certain to increase. I also recall her scolding many blue chip law firms for not being inclusive enough of paralegals and IT. She also talked about Darwin and survival of the most agile, and that if the old line big firms did not change fast, and form bona fide interdisciplinary teams, that they will go the way of the dinosaur. They will not be able to compete, and their long term clients will leave them for more agile specialists, ones not hung up on attorney old-boy networks. No, she does not mince words.

Kenton Hutcherson, a sole practitioner from Dallas, whom I had met before at Sedona, presented on using metadata to uncover hide the ball tactics by the other side. He told a story about a case he had just out of law school, a few years ago. He took a case all of the partners said was a loser, and achieved a favorable settlement by analyzing the metadata in load files the defendant produced. He discovered what appeared to be intentional duplication of irrelevant files, coupled with attempts to bury the hot files. Kent then used a killer ESI spoliation motion to force a high settlement.

Kent says that he later heard both outside and in-house counsel were fired because of that case. One presumes it was because their fraud was exposed, but maybe it was just because they lost, not on the merits, but because of e-discovery blunders. In any event, I felt sorry for Kent because his PowerPoint did not work properly, probably because of the Microsoft version issues, and the fact that the laptop furnished by ALM was accidentally loaded with a trial version of Vista. Personally, I now always bring my own MacAir, but even then you can still face difficulties because it sometimes won’t work with old projectors. The e-discovery presentation world is much like e-discovery itself, if something can go wrong, it usually does, and so it always pays to have a back-up plan (or two).

Two New Articles of Interest on e-Discovery Teams

I discovered two new articles this week on my favorite subject, indeed the name of this blog, e-discovery teams. The first is a cheerleader kind of easy read by Dale Buss of Corporate Counsel magazine. He quotes many in-house counsel who are pleased with their team efforts. The second article is by attorney Eric Friedberg of Stroz Friedberg. It contains legal analysis and insights into the multidisciplinary team approach. Friedberg wrote this article in connection with an event for the Sedona Conference so you know it is a serious work.

David Buss’ Article

Dave Buss’ article on e-discovery teams is entitled Keeping Your Firm’s E-Discovery In-House. It is an informal report based on interviews with in-house attorneys and paralegals already involved with e-discovery teams. It highlights a truth already known by everyone in the e-discovery world, that the legal profession is entering a Revenge of the Nerds phase of litigation. Buss reviews a few of the benefits of managing e-discovery in-house, as opposed to the more traditional solution of outsourcing everything to lawfirms and vendors.

Ross begins by noting that most corporations are just starting to realize the magnitude of the e-discovery problems they face from runaway electronic records mismanagement. This presents in-house counsel with a question of how to go about solving that problem:

Corporate counsel first must decide whether to deal with these growing demands in-house, to outsource the function — or to use some combination of internal and external resources.

Many companies still outsource everything, but a few are now doing at least some of the work themselves. They refer out less and less to outside vendors by building a strong, internal e-discovery team to do the work.

The article quotes Thomas Avery, with the e-discovery team of Aon Corp., as recommending that “legal departments establish as much as possible of the ESI-management function in-house as swiftly as they can.” The senior manager of legal operations for Raytheon Co., Woods Abbott, is said to strongly agree. So too does Patrick Oot, director of electronic discovery and senior litigation counsel for Verizon Communications. Patrick is quoted as saying, “it’s difficult to trust a third party with your mission-critical case information.” That is one reason Verizon is moving more of its e-discovery process in-house, even including many ESI review tasks. Another factor is the company’s projected savings of several million dollars a year.

Another blogger, Jerry Bull, a young e-discovery specialist and consultant in Los Angeles with an IT background, has already written about Buss’ article. See his tech oriented blog E-Discovery in the Trenches. Bull notes the trend to taking it in-house, but also correctly points out a few of the dangers and difficulties in this path:

IT departments aren’t equipped to deal with the high stakes nature of e-discovery work; and the personnel aren’t suited at all to deal with attorneys and attorney requests. I used to be an IT guy and I can tell you that we are bred with a troubleshooting mindset. Everything is up for experimentation and subject to trial and error (we deal primarily with Microsoft tools, after all). This approach simply doesn’t work in litigation.

Still, Bull appears to think it can be done with sufficient support, including full funding and staffing. As he puts it:

Planning for an in-house staff of e-discovery professionals and a handful of reliable, independent consultants will go a long way in easing the transition.

I completely agree. An e-discovery team needs dedicated, trained players, and plenty of time to practice. This is the only way to play competitively in the professional litigation leagues.

Eric Friedberg’s Article

This nine page article by Eric Friedberg, entitled New Electronic Discovery Teams, Roles, and Functions, is written in the opposite style to Ross’ work. It is based on experience and analysis, rather than interviews. It is harder to read, but well worth the effort. Although I disagree with one minor legal statement in the article concerning preservation of “not reasonably accessible” ESI, I agree with everything else, including the meat of the article, his analysis, and insights into e-discovery teams.

The article starts with the observation that many of the mistakes made in e-discovery originate from problems in communication between IT and Legal. I call this the “Who’s On First” phenomena of lawyer/tech miscommunication. Friedberg refers to Judge Scheindlin’s famous quote of the Cool Hand Luke movie in Zubulake: “What we’ve got here is a failure to communicate.” Zubulake v. U.B.S., 229 F.R.D. 422, 424 (S.D.N.Y. 2004).

He sees the best solution to this problem, as do I, in the formation of interdisciplinary corporate e-discovery teams:

Compliance with emerging electronic discovery obligations, and conducting electronic discovery in a consistent and efficient manner, requires new cross-disciplinary teams (hereinafter “New Teams”), with updated organizational roles (hereinafter “New Roles”) and functions (hereinafter “New Functions”). These New Teams often draw representatives from an organization’s in-house legal, IT, compliance, records management, and human resources departments at the corporate and business unit levels, as well as from the outside counsel and the forensic/electronic discovery vendor to whom the company looks for strategic advice.

The article points out a fundamental problem that sometimes dooms new teams to amateur status, insufficient buy-in and funding by upper management. The article points out that differing levels of support by team owners can have a dramatic impact on team effectiveness and morale:

At one end of the spectrum, senior management and the board back and fund a broad mandate to improve records management and electronic discovery processes, and support the requisite change management. In other cases, the New Team members do what they can to coordinate their respective functions but have little budget and less staffing, and struggle in tackling larger initiatives. In such cases, senior management seems to have little understanding of how records management and electronic discovery are increasingly interwoven with corporate governance, ethics, and compliance. While senior management is ultimately responsible for the increased risk inherent in failing robustly to support New Teams, the individual team members on the front lines often feel exposed in attempting to do more with less in an era of rising obligations and multimillion dollar sanctions.

The above quote demonstrates one of the strong points of this article, which I recommend you read in full; it combines strong theoretical insights with good practical observations.

The article goes on to describe the work of the team, but without the sports analogies I employed in my last article, What Game Does an e-Discovery Team Play? Friedberg focuses on the teamwork needed to create effective litigation hold procedures, new ESI archiving platforms, consistent positions in court, data mapping, and the collection and search of ESI. On these last key functions, which my article refers to as finding and picking up the ball, Friedberg points out a valid issue, or problem, which all teams must face, when and at what point to outsource:

The key consideration in establishing these New Functions is to determine where the internal IT function leaves off and when outside vendors should be utilized. Even highly-competent in-house forensic teams can not handle spikes in collections required by large civil or regulatory matters, short deadlines, or a confluence of cases. In addition, it is much more difficult to search data effectively than to collect it. There is less external training available for electronic discovery search technologies and methodologies. As a result, in-house personnel typically rely on off-the-shelf software, which may fail to properly search data or to convert data to searchable form. . . . .

Many in-house IT personnel, for example, use the Outlook client to search Outlook mail. That client, however, does not search attachments or flag items that it can not search. New Teams can address these risks by receiving outside consulting advice on acceptable protocols for searching electronic data. Determining where to draw the line between in-house and external resources is not only a technical issue. Cases that are high-profile or in which the prior role of IT has already been criticized may call for the use of independent resources.

True, true. For a good example of this, see Louis Vuitton Malletier v. Dooney & Bourke, Inc., 2006 U.S. Dist. LEXIS 87096 (S.D.N.Y. Nov. 30, 2006). I previously wrote about this case showing incompetence by corporate IT in Louis Vuitton Sanctioned for Sand-Bagging.

Friedberg’s article concludes with a discussion of outside electronic discovery counsel, whom he calls “one of the most important New Team members.” Not surprisingly, I agree with that. I think all e-discovery teams, even experienced, well established ones, should include an outside attorney on the team. Since experienced outside counsel typically associates with and represents a number of different corporate teams, they can provide unique perspective and advice to each team they represent. Their independence can also serve an important function. It not only allows them to appear in court to represent the team, but also puts them in the best position to steer the team away from any Qualcomm-like disasters. Good outside counsel can make sure the Team plays by the rules, even in the big ticket, high pressure games where employee players may come under a lot of pressure to win, no matter what the cost. An outside attorney on the team can help keep the games clean, and steer team members away from the kind of temptations that cost Qualcomm its patent, and its GC his job. Further, this kind of high-road team participation puts outside counsel in a strong position to protest any questionable calls made by the umpire.

The article also points out the many ways outside counsel can assist a team, including important training functions:

The right counsel can facilitate the entire New Teams process, providing stewardship and key strategic advice to achieve compliance and help avoid sanctions. Indeed, New Teams are using outside counsel to train in-house Team members on emerging case law and the obligations under the New Rules. Not only does the substantive advice help the New Team, but in the event of an electronic discovery mishap, the training itself demonstrates the organization’s good faith, which is a key to avoiding sanctions.

Friedberg also notes a danger in the use of outside counsel that are also trial counsel. Personally, I do not serve as trial counsel anymore. If I appear of record in a case, it is solely to handle electronic discovery related issues. Apparently some attorneys still do both, and I admire their genius, but frankly I do not have enough time or talent for both roles. This limitation removes me from conflicts inherent in the dual role, and allows me to provide independent advice in the area of my core competency. Friedberg correctly advises a company who uses the same attorney as trial counsel and e-discovery lawyer to beware of possible conflicts of interest inherent in such a dual role:

First and foremost, a company’s outside counsel must have deep expertise in electronic discovery law and strategy. When outside electronic discovery counsel is also trial counsel, the in-house team members should closely consider whether outside counsel’s electronic discovery advice will be adversely affected by its role as trial counsel. Such an affect can take the form of over-preserving data so as to avoid any arguments that might, in trial counsel’s view, “distract” from the merits of the case. This might be the right strategy in a particular case, but it can also cost the company substantial sums of money and create stockpiles of data that are difficult to manage thereafter.

The article also points out that the e-discovery lawyer may sometimes be called upon to testify in court, and explain to a judge what happened when the team’s procedures are challenged. Here the credibility of your e-discovery lawyer becomes very important. Moreover, if a waiver of privilege is required to defend the team, it is easier to limit the scope of the waiver if the e-discovery lawyer played only a limited role in the case.

This is a balanced and well thought out article, and not simply a white paper pitch for services. Eric Friedberg also points out a problem with separate e-discovery counsel.

On the other hand, there are clearly inefficiencies in having multiple counsel, and separate electronic discovery counsel can struggle to become fully integrated in the matter so as to render their best advice.

This is very true, which is why it is important to have experienced counsel, capable of working closely with trial counsel to quickly understand the issues in the case.

Another problem which the article does not point out, is the simple fact that using multiple counsel can be very costly, and may not be practical in smaller or even mid-size cases. The services of specialty e-discovery attorneys, especially ones with sufficient knowledge and skills to serve on an internal corporate e-discovery team, can be expensive. There are not that many attorneys with these specialty skills, and all the ones I know carry a high hourly rate. Some cases are simply not worth the expense. Unfortunately, these smaller dollar value cases can still have very complex ESI collection and e-discovery issues. The proportionality limits of Rule 26(b)(2)(C) can help, but even so, costly mistakes leading to sanctions can still be made.

Here a company could help itself with retainer agreements and other alternative billing arrangements. See Eg. the Law.com Article on Mark Chandler, General Counsel for Cisco, who champions alternative fee arrangements. That way a company could always get good “off the clock” advice on complex issues whenever it is needed, regardless of the size or economics of the case. Otherwise, it is all too easy for a stupid, nothing case to explode into a nightmare, and, if your company is the defendant, force a settlement for far more money than a case is worth. We have all seen it happen, even with pro se cases, where the courts tend to lean over backwards to allow a case to go forward. Having a technology attorney on call with some kind of creative retainer agreement as Mark Chandler recommends might be a good way to avoid that trap.

What Game Does an e-Discovery Team Play?

Hide the ball is certainly not the game for an e-Discovery Team to play. Some people think that is what discovery is all about, and in the world of paper discovery, years ago, there was some truth to that. But not today, and certainly not in electronic discovery. It may be tempting to some, but if you play hide the ball in e-discovery, and get caught, you may not only lose the case, but you may lose your job, and maybe even your license. It is never worth it, just ask Qualcomm’s lawyers. Instead, an e-Discovery Team plays a series of games that culminates in throwing the ball to the other side, not hiding it.

Before you can get to the final throwing step of production of electronically stored information (”ESI”), there are a series of preliminary games to be played. Here is how I summarize the e-Discovery team playbook:

Find the Ball

Save the Ball

Pick up the Ball

Shrink the Ball

Clean the Ball

Aim the Ball

Throw the Ball

The first game of find the ball is called the Identification step in the standard industry language of the Electronic Discovery Reference Model(”EDRM”). By looking at the standard EDRM model below you can quickly see how each game represents a basic step in the EDRM.

Find the Ball

Finding the ball is far easier said then done. For most companies, the problem derives from storing terabytes of data. Imagine a string of warehouses storing a billion basketballs, and you have to search through and find the one ball among them autographed by Michael Jordan. Unless the Team is well established, you probably do not have an accurate, detailed, up-to-date map of all of the warehouses. You probably have only a vague idea where this one basketball might be located. It might be somewhere in a centralized bin, or in any one of dozens of other locations, including closets in employee homes, or off-site Internet storage lockers. It might even exist only in a shrunk down version, hiding in the pocket of one of a thousand employees; perhaps in their thumb-drive, or iPhone. Moreover, ever day a thousand basketballs are destroyed (hopefully not the one with Jordan’s autograph), and twelve hundred new ones are added. Yes, it is a very challenging game indeed

To make matters worse, you are never sure exactly what balls you are looking for, especially when the game first begins. You may have to guess, from a vague complaint, what balls are relevant. As I have written before, this is one of Anne Kershaw’s pet peeves, and rightfully so. Under federal notice pleading rules, very few details are required in a complaint to state a cause of action. So defense counsel is often left speculating what ESI will be discoverable and relevant in a new case. Still, you have to start making educated guesses to try to find the right batch of balls. From the large selection first identified, you will eventually throw a few to the other side.

The way most teams do this is to analyze the dispute to try to determine what the issues will be in the case. This gives you a general idea of the types of balls that may come into play. Then you start to determine a general time line; hopefully the potentially relevant balls will be constrained by time. You may be able to know, with some certainty, that balls made before or after a certain time are not relevant and need not be searched. An e-Discovery Team will also try to limit the search to balls made or stored by certain key players. These are the people in your company that are likely to be involved as witnesses in the lawsuit. The Team’s search should be focused on the storage bins of these key players.

Save the Ball

After playing find the ball, the next game is save the ball. Here the Team devises ways to preserve most of the balls identified as potential evidence in the last game. Again, this can be a very challenging game, especially when your company has many different auto-destruct routines in place (and most companies do).

If you think it is easy to stop all of these programs, just ask Intel. They thought they had stopped deletion of excess email for all the key players in the anti-trust case against AMD, but in fact the janitor programs remained in place for the most important players, including the top officers of the company. Their email was deleted for years after the case was filed. They tried to play a very complicated game of save the ball, but failed. For a better idea of just how difficult this game can be, check out Intel’s report to the supervising district court judge on their failed attempts to preserve evidence. This mistake has supposedly already cost Intel millions of dollars to correct by forcing them to go to their backup tapes to find the deleted emails, and the meter is still running. AMD is, of course, claiming that the error was intentional. They would like the court to enter sanctions for spoliation and turn this mistake into an outright win of the whole case.

So make no mistake about it, save the ball is one of the most important games an e-Discovery Team plays. As I have discussed before, that is why most e-Discovery Teams focus on this game as soon as the Team is formed, and look for ways to improve their company’s litigation hold procedures.

Pick Up the Ball

Again, this game sounds easy enough, you just collect the relevant ESI from the data you have identified and preserved. Seems easy, but it is not. There are tricks and traps here aplenty. If you are not careful, you could collect too much or too little. Generally you do not want to simply pick up all of the balls you have saved. That will make the next games too expensive. You want to screen out the ones that are unlikely to be needed, and probably are not relevant at all, but were preserved just in case. You want to preserve more broadly than collect because you never want to play save the ball twice in the same case. Not only is that kind of do-over expensive, but it may be futile because, in the meantime, routine processes may have deleted many balls not saved in the first pass.

You also do not want to pick up too few balls, and leave behind many that are directly relevant and should later be thrown to the other side. That kind of careless collection can also be expensive. It can force you into an expensive do-over, and open you to charges of hiding the ball. See Eg. Court Disapproves Defendant’s “Hide the Ball” Discovery Gamesmanship.

Careless collection often occurs if the Team simply delegates this function to the key witnesses, and does not properly supervise or follow-up on their ball-picking efforts. The same comment holds true to the two prior games of ball identification and preservation. The Team cannot over-delegate its responsibility to key players and then just hope for the best. These are their games, and the Team must take responsibility to see they are played correctly. That is the whole purpose of an e-Discovery Team.

For that reason, in most cases it will not suffice to simply send out a preservation letter to the key players which describes the dispute, and then leaves it to them to find the relevant balls for themselves, save them, and pick them up. Without help and supervision from the Team, the key players may not know which of their computer files are relevant, they may not know how to properly preserve this ESI, nor how to collect it. They are sure to make mistakes. Thus, when the key players in a company are called upon to take part in the games, which in itself makes a lot of sense, since they should know their own information better than anyone else, they should be given expert help and advice from the e-Discovery Team. In other words, it is perfectly all right for the Team to delegate some of this work to the key players in the litigation, but the Team must still supervise and follow-up. Ultimately the Team should be responsible, since they are trained and more experienced in collection than the key players. The Team should have personal meetings with the key players and closely monitor their activities. In many cases, the Team should also implement certain safeguarding mechanisms to supplement the key players’ efforts, such as automated copying and keyword searches.

Another common mistake made in pick up the ball is to carelessly change the ball in the very process of picking it up. You could, for instance, change the metadata of a file, such as information as to when it was last viewed, saved, or revised. This is an especially high risk when the Team attempts to rely upon key players to pick up the ball for them. Although this probably will not matter in most cases, in some cases, such as stock backdating cases, this might be very important. As a general rule, the Team tries not to change the ball too much by the act of picking it up. The Team may later strip a file of all or part of its metadata on purpose, if that facilitates later cleaning or throwing, especially if the metadata is not important in the case, or not wanted, but they never want to do it accidentally.

A final common mistake, one of my pet peeves, is to neglect to hash the ball when you collect it, and properly preserve and tie the hash into each ball thereafter. I have described the process of using hash mathematics to authenticate ESI at length in my law review article, HASH: The New Bates Stamp, 12 Journal of Technology Law & Policy 1 (June 2007). I also provide an overview of the subject in this blog. The Team may already have hashed files as part of the preservation game; but if not, it is essential that they now be hashed at the collection stage. Hashing provides a unique identifying alphanumeric value for each computer file collected. This hash value can be later checked to prove that the file has not been altered since it was collected. This is a key step in ESI authentication to allow for admission into evidence at a hearing or trial. In most cases, hashing should be a normal part of ball pickup.

Shrink the Ball

Shrink the ballis the game where the Team can save the company a lot of money. Thus, from a financial perspective, it is the most important game of all. In this culling step, you process the ESI to eliminate as much duplicate and irrelevant information as possible. Here good software and automated process are critical; so too is careful strategic thinking,

The goal is to significantly reduce the amount of ESI that must be reviewed and cleaned in the next steps. Thus, for instance, at the end of the last game you may have identified and preserved 1,000 gigabytes (1 terabyte) of ESI, and collected 500 gigabytes. To give you some idea of the amount of information we are speaking about, in some circumstances the 500 gigabytes may be equivalent to 500 truckloads of paper. It would cost a small fortune for teams of lawyers to read that much paper. We are talking about years of billable lawyer time to read that much data. It would also be a colossal waste of time because they would end up reading the same document dozens, if not hundreds of times. So it is critical to aggressively eliminate the redundant and immaterial ESI in this processing stage. In many cases the 500 gigs can be cut down to 100 or 50 gigs, resulting in tremendous savings in the expensive review games to come.

Clean the Ball

Here is where the big bucks come in, the cost to review the data for privileged, confidential, and irrelevant material. Still, most internal corporate e-Discovery Teams will not clean their own ball, they will hand it off to their caddy to do it for them, typically their outside legal counsel. A few of the more mature and well organized Teams have started to review their own data, and clean them the ESI themselves. They have teams of contract attorneys they employ to do this work at reduced rates, some even send the data to lawyers in India for review. But for most Teams, this is advanced play that they do not have the time or skill to attempt.

This is a very important and risky step in the EDRM process and companies want to be sure it is done right. You review the truckloads of email and documents that have not already been culled out in the prior games so that you can remove the files that do not have to be produced. The last thing you want to do is produce privileged materials to your adversary. You need to clean your production of these secret files and produce a log of them instead. Even with a clawback agreement, an accidental disclosure can still result in waiver of your privilege to third parties. You also want to be sure the ESI review catches all confidential materials, and that they are produced with appropriate markings and confidentiality agreements. Trade secrets can be lost forever if they become a public record by filing with a court.

Aim the Ball

Now we come to the lawyerly game of aim the ballwhere the ESI is analyzed to see how it fits into the case at hand. Here lawyers and paralegals tag each file to an issue, typically using review software. They also make final decisions as to whether and how information is responsive to discovery requests, or otherwise must be produced (or not). The files are categorized and rated for importance. Is this email a smoking gun that could kill your case, or is it merely of marginal relevance to a secondary issue? You had better find this out, and fast, as to each computer file you are about to disclose to the other side. If your analysis of the information to be produced shows you have a strong case, you will approach the case far differently than if your analysis shows you will surely lose when all of the cards are put on the table.

Obviously this analysis stage requires the sure hand and steady aim of trusted outside counsel assigned to defend or prosecute the case. Still, the legal members of the Team should assist and be involved in the analysis and evaluation of the merits of the case. This game concludes with final decisions by legal counsel on what should be produced and what should be withheld. These decisions must be rational and made in good faith.

If analysis shows you have a losing hand, you had better fold early before the other side realizes your position. You cannot do like Qualcomm and decide to withhold evidence just because you don’t like it. You can see where hiding the ball got them - they lost the patent they sued to enforce, they paid over eight million dollars in fees to the other side, their general counsel resigned in disgrace, and their outside counsel are now fighting to retain their licenses. When you are a plaintiff and find yourself in this position, you do not file the suit to begin with or, if you discover it in midstream, you should dismiss and cut your losses. The same applies when you are in a defense position. It is not an option to try and hide the evidence that will hurt your defense. You must instead try and make the most of it and settle as best as you can. That is how the American system of justice works and all Teams have to play by these same fundamental rules. Voluntary disclosure may not be the rule in the rest of the world, especially the civil law countries in Europe, but that is how the game is played here. If you are defending or prosecuting a case in the U.S., you are going to have to reveal your data to your adversary, even if that kills your case.

Throw the Ball

The last game is the culmination of all the rest. The analysis game resulted in final decisions on what files to be produced. Now you actually make the production. Throwing the ball is not really all that hard, so long as you enlist the aid of WORMs. No, not the creepy crawly kind, but the “Write Once, Read Many” times kind, such as optical discs, CDs or DVDs. The ESI on these media cannot be altered after written onto the discs, thus providing you, and the receiving party, with a certain amount of protection that the files will not be accidentally altered. Worms help the parties maintain a permanent record of the ESI produced.

Another tricky aspect of production is deciding the form of production. Do you produce in native format with full internal metadata retained, or do you produce in a TIFF or JPEG format with a load file ready for import into review software? This should have already been worked out with opposing counsel as part of the Rule 26(f) conference, or the original production request; but if not, you have to make these decisions now.

Take the time to clearly mark and label the production media. One thing I hate is a CD production with no writing on it, or just indecipherable handwriting. Write out a full description of the CD and the date of production and name of the case. Think of chain of custody issues and do not forget to make multiple copies. Another thing I have noticed lately is the use of paper labels on CDs. That’s ok, but beware of labels that peel off. As a safeguard, it is better to use ink jet printers that print directly on the CD, instead of glue on labels. If you must use adhesive labels, put some kind of writing directly on the CD itself, just in case it peels off somewhere down the line.

Finally, if you use TIFF or other image type files where you affix Bates stamp type markings to identify individual ESI files, please consider adding a truncated hash value to the file ID. As discussed in HASH: The New Bates Stamp, this will facilitate both identification and authentication, and allow for easier comparison with the native originals.

Concluding Thoughts

These games are difficult. Much like golf, it is not a game of perfect. Mistakes are inevitable. Even Tiger Woods messes up from time to time, and does not win them all, so why should you be any different? Document your efforts, play it safe, and use redundant systems whenever economically feasible. Thus, when a mistake is later discovered, you may be able to cover it with a backup system. Or, if that is not possible, you can at least show to the supervising judge that you made good faith, reasonable efforts. The judge should understand and cut you a break, maybe even give you a mulligan. If the judge does not realize that mistakes are inevitable, he or she simply does not understand the game. Then it is up to you to explain it to them, or hire an expert who can.

Declaratory Judgment Approach to Burdensome Pre-Litigation Preservation Demand Tried and Rejected: Is this a Case of “No Good Deed Goes Unpunished”?

Guest Blog: by Michael Simon

In the final paragraph of last week’s post Ralph made the following suggestion on a potential way to deal with an onerous pre-litigation hold demand:

If all else fails, and the potential dollar exposure justifies the expense, a preemptive suit for a declaratory judgment may even be appropriate. You will be breaking new ground to be sure, but as the landscape of litigation changes, new strategies such as this should be considered to cope with the new challenges these changes present.

Unbeknownst to Ralph, at the very time he was writing those prophetic words, the United States District Court for the Eastern District of Texas was giving a thumbs down to that very idea. The case is Texas v. City of Frisco, 2008 WL 828055 (E.D. Tex. Mar. 27, 2008). In reality, as I will explain below, this may be a case where two rights make a wrong: The plaintiff did such a good job of complying with the litigation hold that the Court could not understand plaintiff’s problem.

In Frisco, the State of Texas was faced with the following dilemma: The Texas Department of Transportation (”TxDot“) was planning to convert portions of State Highway 121 from a freeway to a toll road. Apparently a portion to be converted went through the City of Frisco. The City seemingly did not want the pleasure of paying tolls and was (and perhaps still is) considering filing a challenge to the Environmental Re-Evaluation of the State Highway pursuant to the National Environmental Policy Act (”NEPA”), 42 U.S.C. §§4331-4347. As a kick-off to this potential litigation, on April 13, 2007 the City sent TxDot a letter entitled Notice Regarding Preservation of Electronic Data.

This preservation demand does (perhaps intentionally) a poor job of specifying the subject matter of the demand. It broadly states that TxDot should preserve “electronic data associated with SH 121 and its conversion from a freeway to either a privatized or public tollway.” As to the types of ESI to be preserved, the demand is fairly well drafted and imposes a heavy burden on TxDot:

• The demand explicitly instructs TxDot to “immediately preserve potentially relevant Electronic Data including, without limitation information with the earlier of a Created or Last Modified date on or after January 1, 2004 through the date of this demand.
• The demand identifies a relatively comprehensive and quite burdensome list of potential ESI file types to be preserved, including items such as “deleted files,” “computer system activity logs,” “all file fragments and back-up files containing Electronic Data,” and “all backup tapes or other storage media.”
• The demand instructs TxDot to “preserve and retain all Electronic Data” which “relates to, mentions and/or is received or generated by TxDot… in connection with the plan and/or project to convert SH 121 into a tollway or any subsequent related work/project.” The demand specifically states that this includes all communications with: the contractor and other bidders for the project; the City of Frisco; any of numerous Texas government departments and the Legislature and the Governor.
• The demand even reminds TxDot that “you must intervene to prevent the loss of information as a result of routine operations, protocols and/or destruction policies.”

Perhaps with tongue slightly planted in cheek, the demand offers that “It is not our intent to obstruct TxDot’s everyday operation,” but then goes on to remind TxDot that “your diligent and good faith compliance of this request should also include modification or suspension of features of your information system, which in routine operation may cause the loss of relevant information….”

As with any litigation hold demand, TxDot had to make a decision: did it need to comply with the demand? If so, what is the scope of the preservation duty?

Is There an Obligation to Preserve Pre-Litigation?

The Federal Rules do not actually require the implementation of a pre-litigation hold. See Committee Note, Rule 37(f). As explained by footnote 13 in The Sedona Conference Commentary on Legal Holds (the “Commentary”):

The Advisory Committee on Civil Rules debated whether it could specify preservation obligations in the Federal Rules of Civil Procedure but ultimately decided it could not do so. Rather, the Committee opted to temper the impact of preservation obligations by protecting parties from the imposition of sanctions under the Rules for the failure to preserve certain materials in limited circumstances.

But under the circumstances here, with the City putting TxDot on notice that it was contemplating what would obviously be massive litigation and making an express demand for preservation, there really is little question that TxDot would have been taking a massive risk to ignore the City’s demand. As the Commentary puts it, The duty to preserve relevant information arises when litigation is “reasonably anticipated.” And the City’s preservation demand meets most every one of the factors listed under the Commentary’s Guideline 4, entitled, The determination of whether litigation is reasonably anticipated should be based on a good faith and reasonable evaluation of relevant facts and circumstances. These factors include:

• The nature and specificity of the complaint or threat;
• The position of the party making the claim;
• Whether the threat is direct, implied or inferred;
• The strength, scope, or value of a potential claim; and
• Press and or industry coverage of the issue either directly pertaining to the client, or of complaints brought against someone similarly situated in the industry.

Given that it would have been difficult to impossible for TxDot to treat the City’s letter as anything but putting it on notice that litigation was “reasonably anticipated,” TxDot really had no choice but to implement a litigation hold. Not so clear is what the scope of that hold should have been, and this is where TxDot, in trying to do everything right, may have shot itself in the foot.

TxDot’s Dilemma: How to Resolve an Overbroad Pre-Litigation Hold Demand

The City’s demand for all ESI “associated with SH 121” and “its conversion from a freeway,” including to and from every possible party and from many sources (such as backup tapes) that were likely inaccessible, was unquestionably burdensome for an agency as massive as TxDot. Further, according to the complaint TxDot ultimately filed, most of that information was irrelevant since (according to TxDot) the City’s claim must be brought under the Federal Administrative Procedure Act (”APA”). According to TxDot, Under NEPA and the APA plaintiffs are generally not entitled to discovery because “courts limit their review to the agency record specifically compiled for the Environmental Re-evaluation.”

Clearly this left TxDot in a quandary: if the City had initiated litigation, then TxDot could have tried to resolve these issues at the mandatory Rule 26(f) conference and, if necessary, brought a motion for protective order under Rules 26 and 34. But because this was pre-litigation TxDot did not have a clearly defined path. The path that TxDot chose is certainly hard to criticize but, as discussed below, that choice may have ultimately contributed to its failure in court.

Even though the City Refused to Clarify or Limit its Demands, TxDot Took Extraordinary Steps to Comply before It Ever Filed It’s Plea with the Court

TxDot’s initial approach was twofold: (1) TxDot made repeated pleas to the City to clarify and narrow the subject matter of the City’s demands; and (2) TxDot immediately initiated a very thorough and aggressive effort to preserve everything. Whether out of spite or an inability to clearly articulate what it really wanted, the City refused to provide any clarification and did not even respond to several of TxDot’s letters. TxDot’s exhibits to its ultimate court filing show a huge (and certainly costly) effort to preserve all ESI. For example, within three days of receipt of the City’s demand, TxDot sent an e-mail preservation notice to approximately 200 “key players”. That notice warned the key players in part that:

TxDot has an affirmative obligation to comply with the request for preservation…. This obligation requires initiation of a litigation hold to ensure relevant documents are preserved… A ‘litigation hold’ requires intervention in the routine operation…to prevent loss of information…. Please preserve any electronic edata described in the attached letter, including all backup tapes or other storage media, whether online or offline, and refrain from overwriting or deleting information that may contain the electronic data…. This includes turning off any auto delete function on Groupwise.

Shortly after, TxDot informed the key players that the preservation should include:

[I]nformation stored not only on servers, desktop computers, and laptops, but also on a personal digital assistant (PDA - i.e. iPAQ, Blackberry, Treo), flash drive or other media storage devices. Information that is stored in more than one, or even all, of these transient media must be preserved in a secure and recoverable electronic environment. If you perform official state business related to SH 121 on a home computer or any other device, that information is also subject to the litigation hold.

A short time later, TxDot published a more formal protocol for the litigation hold and sent its key players and each of its many offices detailed instructions for the preservation of e-mails and other ESI in a segregated protected network storage area as well as procedures for the restoration of documents from backup tapes. These instructions made clear that the process was being standardized and implemented in every office in the State.

Too Little Too Late: TxDot Gets Fed Up andFinally Seeks the Court’s Assistance

After about three months of this circus, TxDot apparently came to appreciate just how massive and expensive this unfettered preservation task was going to be (according to its papers, it had already spent hundreds of hours in compliance). Finally, TxDot hit on the strategy that Ralph posited last week: On August 14, 2007, TxDot filed its Plaintiff’s Original Complaint and Request for Declaratory Relief and Protective Order in the Sherman Division of the United States District Court for the Eastern District of Texas. TxDot explained the requested relief this way:

TxDot requests the court to enter a declaratory judgment ruling that the City’s letter violates the Federal Rules of Civil Procedure and is contrary to rules governing a NEPA/APA claim in federal court. TxDot requests this court’s protection from … the broad scope and undue burden of the litigation hold and requests a declaratory judgment releasing TxDot from the litigation hold as it violates the Federal Rules….

Even though the exhibits TxDot attached certainly show the burden to someone experienced in e-Discovery for all of the reasons discussed above, TxDot’s complaint did a poor job of quantifying or otherwise explaining this burden to the court. Perhaps this is part of what led the court to take a pass on this one.

The Court Dismisses TxDot’s Complaint as “Unripe”

Magistrate Don D. Bush did not treat the City’s plea kindly. Citing to Shields v. Norton, 289 F.3d 832, 835 (5^th Cir. 2002) Judge Bush noted:

A suit for declaratory relief, while allowing a party to anticipate a suit and seek a judicial resolution, must nevertheless meet this keystone limitation. In hornbook form, a declaratory action must be ripe in order to be justiciable, and is ripe only where an actual controversy exists. An actual controversy exists where a substantial controversy of sufficient immediacy and reality exists between parties having adverse legal interests. Ordinarily whether particular facts are sufficiently immediate to establish an actual controversy yields answers on a case-by-case basis. Whether a declaratory action is ripe, by its very structure, pushes against our insistence upon mature disputes. That is, it contemplates an ex ante determination of rights that exists in some tension with traditional notions of ripeness.

Judge Bush immediately hit upon the fact that it was not TxDot’s rights in the underlying environmental dispute that were at issue, but the much more amorphous concept of the scope of potential future discovery:

Notably, it is not the City’s potential claims regarding the tollway project that forms the basis of the State’s declaratory judgment action. Rather, the State seeks a declaratory judgment as to how rules of discovery and procedure might be applied by the Court to its preservation of documents in that potential suit…. As a result of the City’s litigation hold letter, the State asks this Court to determine “[w]hether it is a violation of Rules 26(f) and 34 to require an entity to broadly preserve and retain any and all electronic documents based on a required [sic] made before suit is filed.

Citing to Orix Credit Alliance, Inc., 212 F.3d at 896, 897, Judge Bush did note that a threat of litigation can indeed establish a controversy upon which declaratory judgment can be based, but he did not find that TxDot had presented such a threat since he found that the City’s letter “only states that potential exists for litigation” and not an actual threat. However, perhaps TxDot’s true failure is explained by the court’s very next paragraph:

Moreover, even if the Court were to insert itself into the pre-litigation discovery process (which it declines to do), the correspondence attached to Plaintiff’s Complaint does not evidence any concrete or developed disagreement by the parties as to the preservation of documents. A pre-enforcement action like Plaintiff’s is only ripe “if any remaining questions are purely legal … [and] further factual development” is not required for effective judicial review. The facts here are not fully developed. The dispute is abstract, “hypothetical and not suited for judicial determination.” (citations omitted)

This may be the indication of two rights making a wrong: What is Judge Bush is really saying here is that, after reviewing the exhibits, he sees: (1) a demand made by the City; (2) TxDot asking for clarification (right #1); but (2) TxDot fully complying anyway! (right #2). Since he sees a demand and the clear appearance of the ability to comply, what is the controversy? As mentioned above, TxDot does not quantify in any way the cost of its compliance efforts. All the court sees is demand and compliance, hardly the subject of a ripe dispute.

What Else Could TxDot have Done? Limited Itself to “Good Faith” Compliance.

Does this mean that Ralph’s original thesis of using a declaratory relief action to avoid an overburdensome pre-litigation demand is doomed to failure? Perhaps not. In fact, the bromide that Judge Bush offers at the very end of his decision may shed some light on the better initial course TxDot should have taken to set up the issue:

Further, while they do not specifically address pre-suit litigation hold requests, the Rules of Civil Procedure contemplate that the parties will act in good faith in the preservation and production of documents. Fed. R. Civ. P. 37. The Court encourages both parties to handle the preservation of documents in response to their respective litigation holds in such good faith. The Court declines, however, to intervene now and issue an advisory opinion as to what actions by the State would constitute good faith as to the City’s request. (emphasis added)

The court is reminding the partie