Sedona Provides New Much Needed Guidance on ESI Preservation

The Sedona Conference has once again written a helpful guide, this time on preservation and inaccessible data, entitled: Commentary on Preservation, Management and Identification of Sources of Information that are Not Reasonably Accessible.  As usual, you can download a copy for individual use for free at The Sedona Conference’s website. For me, the most valuable idea in this commentary is the five-step analysis they call the Decision Tree for Determining ESI Preservation Obligations. It is designed to help you decide what types of ESI you need to preserve upon notice of litigation or likely litigation.  My version of their decision flow chart is shown below. It is worthwhile to take a few minutes to study it.

The editors of this new Sedona publication are, Thomas Y. Allman, whom I quoted two weeks ago in my blog on Teams and the Zubulake Duty, William P. Butterfield, Matthew Hagarty, Cecil A. Lynn III, Jon A. Neiditz, Maureen O’Neill, Ira P. Rothken, and Peter B. Sloan. I highly recommend that you read this new publication and, more importantly, consult it when faced with tricky preservation issues. Although this Sedona working group is focused on ESI that is difficult to access, they rightfully claim that the five step approach they developed for preservation decisions is equally applicable to all sources of information, whether accessible or inaccessible.

In addition to the fivefold decision process shown above, this Sedona working group has devised six guidelines to help make preservation decisions. Here is their summary of the six guidelines:

Guideline 1. Where litigation is anticipated but no plaintiff has emerged or other considerations make it impossible to initiate a dialogue, the producing party should make preservation decisions by a process conforming to that set forth in the Decision Tree in Figure 1.

Guideline 2. As soon as feasible, preservation issues should be openly and cooperatively discussed in sufficient detail so the parties can reach mutually satisfactory accommodation and also evaluate the need, if any, to seek court intervention or assistance.

Guideline 3. In conjunction with the initial discussions or where appropriate in the response to discovery requests, parties should clearly identify the inaccessible sources reasonably related to the discovery or claims which are not being searched or preserved.

Guideline 4. A party should exercise caution when it decides for business reasons to move potentially discoverable information subject to a preservation duty from accessible to less accessible data stores.

Guideline 5. It is acceptable practice, in the absence of an applicable preservation duty, for entities to manage their information in a way that minimizes accumulations of inaccessible data, provided that adequate provisions are made to accommodate preservation imperatives.  

Guideline 6. An entity should encourage appropriate cooperation among legal and other functions and business units within the organization to help ensure that preservation obligations are met and that resources are effectively utilized.

The bulk of this commentary is devoted to explaining the six guidelines and preservation decision process. This is a much needed work. All e-discovery teams are now struggling with the issue of how much and what ESI needs to be preserved upon notice of a dispute. These decisions are necessarily fraught with vagaries and danger. Anyone who works in this area knows that the preservation selection process is more of an art than a science. For this reason, judges should be slow to impose sanctions for good faith mistakes. 

If parties follow the five-step flow chart and make a good faith effort, they should not be subject to Monday morning quarter-backing and sanctions if they guessed wrong. The ESI universe of most companies is so large and complicated that most of the decisions in this process require some educated guesses. For instance, it is often little more than an educated guess to try to determine what ESI might be relevant to a dispute when it first surfaces. This is especially true when a company does not know much about a dispute aside from what is stated in a poorly plead, vague, or boilerplate complaint.

About my only criticism of  Sedona Preservation Commentary is the graphic this group created to illustrate the Decision Tree (shown below). I found their graphic too wordy and busy looking. That is why I went to the trouble to create my own. My graphic follows the same logic flow as the original, but with fewer words and a different layout. Still, this is a matter of personal taste and you may prefer their version. The Sedona Preservation Commentary provides a good explanation of this decision process, and so the chart is just a handy reminder. Here is the original graphic included in the Sedona commentary.

Aside from my minor aesthetics criticism, I think this group pretty much nailed the preservation decision process. It looks both accurate and complete to me. I would be curious to know what you think, so please answer the quick poll below.

A New Opinion by Judge Grimm Makes the Legal Case for Cooperative Discovery

Magistrate Judge Paul W. Grimm has written yet another “must read” case for all lawyers concerned with discovery. Mancia v. Mayflower Textile Services Co., Civ. No. 1:08-CV-00273-CCB (D. Md. October 15, 2008). His 30 page opinion contains an excellent overview of the federal rules and other law that require a cooperative approach to discovery. The opinion thus establishes a solid legal foundation for the new Sedona Conference Cooperation Proclamation, which I discussed at length in Hospital Defendants Martyred in the Cause of Cooperative e-Discovery. Mayflower shows that far from being a Utopian ideal, the cooperative approach to discovery promoted by Sedona is already mandated by the law. 

Although I agree with Judge Grimm and his conclusions in Mayflower, I contend that for e-discovery there are additional practical, economic grounds for cooperation not applicable to other types of discovery. These additional grounds pertain to the unique nature of digital data, especially its overwhelming volume and complexity. Even if the law did not require cooperative e-discovery, and Judge Grimm shows here that it does for all types of discovery, the parties would still be well advised to adopt this approach. The alternative simply does not work for e-discovery, and even if it did, it would be too risky and expensive to carry out. Judge Grimm did not explore these additional digital specific issues in Mayflower, but that is to be expected because the underlying issues in this case were all paper-centric, and this was, after all, an opinion in a real law suit, not a law review article (although it certainly reads like one, and I mean that as a compliment!).

Is Rule 26(g) the Least Understood, Most Violated Discovery Rule?

Judge Grimm starts with a detailed examination of Rule 26(g), Fed. R. Civ. P., which requires every discovery disclosure, request, response or objection be signed by an attorney of record. The signature “certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry,” the request is reasonable and the disclosure is complete and correct. In Judge Grimm’s experience, Rule 26(g) is “the least understood or followed of the discovery rules.” 

I agree. What do you think? Respond to this anonymous poll (a new feature of this blog) and let us know. You can also view the results, which are instantly tallied.

Rule 26(g) and Judge Scheindlin’s Zubulake Duty

This common misunderstanding and common violation also explains why the Zubulake duty I wrote about last week is so frequently breached by attorneys. The requirement in Rule 26(g) for outside counsel to make a reasonable inquiry is one of the primary legal grounds for Judge Scheindlin’s Zubulake duty. As I wrote about last week in e-Discovery Teams Can Meet the Challenges of the “Zubulake Duty” and Control Excessive Costs, Judge Scheindlin, and most other federal judges, specifically require outside counsel to interview custodians and IT personnel to understand where ESI is stored. They have in effect determined that this is a minimum reasonable inquiry required whenever electronic evidence is involved in a case, and counsel of record cannot sign a discovery response without having first done so.

Rule 26(g) Requires Investigation, Restraint and Collaboration

The facts and circumstances in Mayflower do not really matter that much; suffice it to say that the attorneys on both sides did not understand or follow Rule 26(g) and instead engaged in knee-jerk discovery requests and objections. They did not make reasonable inquiries of the facts before promulgating or responding to discovery and did not make an adequate effort to collaborate. The opinion points out what they did wrong, including the plaintiff’s unrestrained, over-broad requests and the defendants meaningless boiler-plate responses. It also told them what they had to do now to correct the situation. But Mayflower was written as a message and instruction for the entire Bar, not just the two law firms involved in this case. That is why this is an important opinion. The conduct of the attorneys in Mayflower, as Judge Grimm takes pains to point out, is quite typical and in no way unique to this case.

Before I go into more detail on Judge Grimm’s analysis of Rule 26(g), here is a full quote of the rule itself:

26(g) Signing Disclosures and Discovery Requests, Responses, and Objections.

(1) Signature Required; Effect of Signature.

Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery request, response, or objection must be signed by at least one attorney of record in the attorney’s own name – or by the party personally, if unrepresented – and must state the signer’s address, e-mail address, and telephone number. By signing, an attorney or party certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry:

(A) with respect to a disclosure, it is complete and correct as of the time it is made; and

(B) with respect to a discovery request, response, or objection, it is:

(i) consistent with these rules and warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law, or for establishing new law;

(ii) not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; and

(iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.

(2) Failure to Sign.

Other parties have no duty to act on an unsigned disclosure, request, response, or objection until it is signed, and the court must strike it unless a signature is promptly supplied after the omission is called to the attorney’s or party’s attention.

(3) Sanction for Improper Certification.

If a certification violates this rule without substantial justification, the court, on motion or on its own, must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The sanction may include an order to pay the reasonable expenses, including attorney’s fees, caused by the violation.

As you can see, the rule not only requires the attorney of record to certify after a reasonable inquiry that the disclosure is complete and correct, but also that the discovery is not made for an improper purpose such as to needlessly increase the cost of litigation and is not unduly burdensome or expensive considering the value of the case. The last requirement of proportionality mirrors the requirements of Rule 26(b)(2)(C) and is a key provision to e-discovery.

Rule 26(g) goes on to make the imposition of sanctions mandatory when there is a violation of the rule without substantial justification, even allowing it sua sponte by the judge with no motion for sanctions by either side. The Advisory Committee Notes to Rule 26(g) explains that:

Rule 26(g) is designed to curb discovery abuse by explicitly encouraging the imposition of sanctions. The subdivision provides a deterrent to both excessive discovery and evasion by imposing a certification requirement that obliges each attorney to stop and think about the legitimacy of a discovery request, a response thereto, or an objection. … 

Rule 26(g) Contemplates an Active Judiciary

Judge Grimm takes the Bar to task for not understanding or following either the letter or spirit of this rule, and I agree with him. But he stops short of an open examination of the role of the judiciary and is, of course, somewhat constrained by his position from overt criticism of his fellow judges. Still, the implication seems clear that judges are part of the problem too. Rule 26(g) was written and designed for mandatory enforcement by the imposition of sanctions. Yet, in reality, as Judge Grimm himself says, Rule 26(g) is the least followed of discovery rules. This is because sanctions have not been automatically and consistently imposed by the judiciary as the rule intended. If they had, the Bar would not have ignored the rule. The imposition of sanctions has, for the most part, been reserved for extreme cases, and indeed, even in Mayflower, Judge Grimm did not impose monetary sanctions.

I have addressed this issue before in Hospital Defendants Martyred in the Cause of Cooperative e-Discovery. Cooperative discovery will not work unless judges buy into the program and play their part. It is not a passive role. The Advisory Committee Notes to the 1983 amendments which enacted subsection (g) clearly envisioned an active role by judges to enforce this rule:

Concern about discovery abuse has led to widespread recognition that there is a need for more aggressive judicial control and supervision. ACF Industries, Inc. v. EEOC, 439 U.S. 1081 (1979) (certiorari denied) (Powell, J., dissenting). Sanctions to deter discovery abuse would be more effective if they were diligently applied “not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a deterrent.” National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 643 (1976). See also Note, The Emerging Deterrence Orientation in the Imposition of Discovery Sanctions, 91 Harv. L. Rev. 1033 (1978). Thus the premise of Rule 26(g) is that imposing sanctions on attorneys who fail to meet the rule’s standards will significantly reduce abuse by imposing disadvantages therefor.

Because of the asserted reluctance to impose sanctions on attorneys who abuse the discovery rules, see Brazil, Civil Discovery: Lawyers’ Views of its Effectiveness, Principal Problems and Abuses, American Bar Foundation (1980); Ellington, A Study of Sanctions for Discovery Abuse, Department of Justice (1979), Rule 26(g) makes explicit the authority judges now have to impose appropriate sanctions and requires them to use it. This authority derives from Rule 37, 28 U.S.C. § 1927, and the court’s inherent power. See Roadway Express, Inc., v. Piper, 447 U.S. 752 (1980); Martin v. Bell Helicopter Co., 85 F.R.D. 654, 661-62 (D. Col. 1980); Note, Sanctions Imposed by Courts on Attorneys Who Abuse the Judicial Process, 44 U.Chi.L.Rev. 619 (1977). The new rule mandates that sanctions be imposed on attorneys who fail to meet the standards established in the first portion of Rule 26(g).

The kind of aggressive judicial control and supervision contemplated in 1983 has never materialized. Instead, a laissez-faire bench has let discovery-mad litigators run wild. It has reached the point that Rule 26(g) is not only ignored, but our very system of justice is on the verge of collapse. As Judge Grimm correctly observes:

The failure to engage in discovery as required by Rule 26(g) is one reason why the cost of discovery is so widely criticized as being excessive-to the point of pricing litigants out of court. (extensive citations omitted)

Education of attorneys as Judge Grimm has done in Mayflower is only part of the solution. The stick of sanctions must also be imposed for the words to be credible. Here is another poll to tell us what you think and, by viewing the live tallied results, find out what others are thinking.

Cooperative discovery as Judge Grimm and The Sedona Conference propose will not work unless the litigants, the lawyers, and the judges all play their part. If the judiciary does not enforce Rule 26(g) with the routine imposition of sanctions for its violation as the rule contemplated, including especially monetary sanctions, then cooperative discovery will be slow to be adopted. As Judge Grimm states at page 18 of Mayflower:

Rule 26(g) charges those responsible for the success or failure of pretrial discovery-the trial judge and the lawyers for the adverse parties-with approaching the process properly: discovery must be initiated and responded to responsibly, in accordance with the letter and spirit of the discovery rules, to achieve a proper purpose (i.e., not to harass, unnecessarily delay, or impose needless expense), and be proportional to what is at issue in the litigation, and if it is not, the judge is expected to impose appropriate sanctions to punish and deter.

Ethics Do Not Forbid Cooperation
in our Adversarial System of Justice

Judge Grimm also considered the argument that Rule 26(g) and cooperative discovery are doomed to failure, and should not be enforced by the judiciary, because it is contrary to our basic adversarial system of dispute resolution.  I have also considered this ethical issue in Lawyers Behaving Badly: Understanding Unprofessional Conduct in e-Discovery where I noted the imbalance between ABA Model Rule of Professional Conduct 1.3 on diligence, and Rules 3.2, 3.3, and 3.4 on expediting litigation, candor, and fairness. 

Judge Grimm correctly notes that the objection is based on a misunderstanding of the basic nature of our adversarial system of justice. At pages 20-21 of Mayflower, Judge Grimm quotes celebrated Harvard Professor Lon L. Fuller on the subject:

Thus, partisan advocacy is a form of public service so long as it aids the process of adjudication; it ceases to be when it hinders that process, when it misleads, distorts and obfuscates, when it renders the task of the deciding tribunal not easier, but more difficult. … 

The lawyer’s highest loyalty is at the same time the most tangible. It is loyalty that runs, not to persons, but to procedures and institutions. The lawyer’s role imposes on him a trusteeship for the integrity of those fundamental processes of government and self-government upon which the successful functioning of our society depends. …

A lawyer recreant to his responsibilities can so disrupt the hearing of a cause as to undermine those rational foundations without which an adversary proceeding loses its meaning and its
justification. Everywhere democratic and constitutional government is tragically dependant on
voluntary and understanding co-operation in the maintenance of its fundamental processes and forms.

It is the lawyer’s duty to preserve and advance this indispensable co-operation by keeping alive the willingness to engage in it and by imparting the understanding necessary to give it direction and effectiveness. … 

It is chiefly for the lawyer that the term “due process” takes on tangible meaning, for whom it indicates what is allowable and what is not, who realizes what a ruinous cost is incurred when its demands are disregarded. For the lawyer the insidious dangers contained in the notion that “the end justifies the means” is not a matter of abstract philosophic conviction, but of direct professional experience.

Amen, Professor Fuller! As a lawyer with numerous direct professional experiences with uncooperative opposing counsel, I can vouch for his assertion. Anyone who has been in the business for decades will tell the same tale. When opposing counsel ignores the rules and plays hide the ball, due process is lost and the price of justice skyrockets.

Here are Judge Grimm’s wise words on the subject from pages 21-22:

A lawyer who seeks excessive discovery given what is at stake in the litigation, or who makes boilerplate objections to discovery requests without particularizing their basis, or who is evasive or incomplete in responding to discovery, or pursues discovery in order to make the cost for his or her adversary so great that the case settles to avoid the transaction costs, or who delays the completion of discovery to prolong the litigation in order to achieve a tactical advantage, or who engages in any of the myriad forms of discovery abuse that are so commonplace is, as Professor Fuller observes, hindering the adjudication process, and making the task of the “deciding tribunal not easier, but more difficult,” and violating his or her duty of loyalty to the “procedures and institutions” the adversary system is intended to serve.

Additional Law Supporting Cooperative Discovery

Judge Grimm then refers to other rules of civil procedure, in addition to Rule 26(g), that mandate a cooperative approach to discovery. Among them is Rule 26(f), which requires counsel to confer to “consider the nature and basis of their claims and defenses,” the possibility of settlement, and to develop and agree on a proposed discovery plan to submit to the court. Judge Grimm also mentioned Rules 26(c)(1) and 37(a)(1), which prohibit the filing of discovery motions without first certifying that the moving party has conferred in good faith with the adverse party in an effort to resolve the dispute without court action. Although not mentioned, I would also add Rule 1. It starts the Federal Rules of Civil Procedure with the admonition that the rules ”be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.”

Judge Grimm also refers to the ABA Model Rules of Professional Conduct, Rule 3.4(d), which states that:

[A lawyer shall not,] in pretrial procedure, make a frivolous discovery request or fail to make reasonably diligent effort to comply with a legally proper discovery request by an opposing party.

He also notes a federal statute restraining dilatory tactics in litigation, including discovery, by imposing personal liability on offending attorneys. 28 U.S.C. § 1927 (2008). It states that:

Any attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.

Judge Grimm also includes an extensive list of case law from multiple jurisdictions supporting cooperative discovery. They are all included in footnote three of Mayflower, which I reproduce here in full as a valuable reference. (I have added paragraph breaks to make this interesting recitation of cases easier to read.)

Courts repeatedly have noted the need for attorneys to work cooperatively to conduct discovery, and sanctioned lawyers and parties for failing to do so. See, e.g., Board of Regents of the Univ. of Nebraska v. BASF Corp., 2007 WL 3342423, at *5 (D. Neb. Nov. 5, 2007) (“The overriding theme of recent amendments to the discovery rules has been open and forthright sharing of information by all parties to a case with the aim of expediting case progress, minimizing burden and expense, and removing contentiousness as much as practicable.”);

Network Computing Servs. Corp. v. CISCO Sys., Inc., 223 F.R.D. 392 (D.S.C. 2004). In Network Computing Servs., the court discussed problems caused by failures of counsel and parties to approach discovery more cooperatively and professionally, stating, “The discovery beast has yet to be tamed,” 223 F.R.D. at 395 (quoting Patrick E. Higginbotham, So Why Do We Call Them Trial Courts?, 55 SMU L. Rev. 1405, 1417 (2002)), and taking note of United States District Judge Wayne Alley’s caustic observation that “[i]f there is a hell to which disputatious, uncivil, vituperative lawyers go, let it be one in which the damned are eternally locked in discovery disputes with other lawyers of equally repugnant attributes.” Id. (quoting Krueger v. Pelican Prod. Corp., C/A No. 87-2385-A, slip op. (W.D. Okla. Feb. 24, 1989)). The district court judge affirmed the recommendation of a magistrate judge that sanctions for discovery abuse were appropriate, and instead of imposing a monetary sanction, ordered that the jury would be informed of the misconduct. Id. at 395-401.

See also, e.g., Buss v. Western Airlines, Inc. 738 F. 2d 1053, 1053-54 (9th Cir. 1984) (“The voluminous file in this case reveals that a vast amount of lawyer time on both sides was expended in largely unnecessary paper shuffling as the parties battled over discovery and preliminary matters. . . . It is not the purpose of this decision to assess fault. The trial judge, however, was not at fault. A judge with a caseload to manage must depend upon counsel meeting each other and the court halfway in moving a case toward trial.”);

Flanagan v. Benicia Unified Sch. Dist., 2008 WL 2073952, at *10 (E.D. Ca. 2008) (“The abusiveness of plaintiff’s discovery responses indicate a lack of cooperative spirit. . . . [P]laintiff’s wilful disregard of the Federal Rules, and her lack of communication and cooperation with defense counsel in regard to all discovery, undermine the judicial process plaintiff herself has invoked.”);

Marion v. State Farm Fire and Casualty Co., 2008 WL 723976, at *3-4 (S.D. Miss. Mar. 17, 2008) (“[T]he gravest ‘error’ committed by the Magistrate [Judge] was thinking that ‘the parties [could] meet and confer to discuss any outstanding discovery requests,’ because after this ‘meet and confer’ it was ‘clear that the parties had done little to resolve their perceived differences on document production.’. . . This Court demands the mutual cooperation of the parties. It hopes that some agreement can be reached . . . . Neither [the Magistrate Judge] nor this Court will hesitate to impose sanctions on any one–party or counsel or both–who engages in any conduct that causes unnecessary delay or needless increase in the costs of litigation.” (citing Fed. R. Civ. P. 26(g));

Malot v. Dorado Beach Cottages Assocs., 478 F. 3d 40, 45 (1st Cir. 2007) (sustaining certain sanctions imposed by district court for discovery violations and noting with disapproval the lack of cooperation and responsiveness of defendants to plaintiff’s attempts to comply with the discovery schedule);

In re Spoonemore, 370 B.R. 833, 844 (Bkrtcy. D. Kan. 2007) (“Discovery should not be a sporting contest or a test of wills, particularly in a bankruptcy case where the parties’ resources are limited and the dollar value of the stakes is often low. When a party and its counsel are as intransigent and uncooperative in discovery as [the parties] have been in this matter, the Court has no choice but to impose sanctions that, hopefully, emphasize that the conduct sanctioned is both unprofessional and unacceptable.”);

Sweat v. Peabody Coal Co., 94 F.3d 301, 306 (7th Cir. 1996) (“This Court cannot determine where the fault in this latest breakdown of attempted discovery lies. The Court is therefore assuming that both attorneys have failed in this regard. This Court is not happy with the progress, or should say lack of progress, relating to getting this case ready for trial. It is apparent that the attorneys involved in this case do not like each other, do not get along, and will not cooperate in the discovery process. The people who suffer when this happens are the parties.”)

Conclusion

Mayflower is the first of what I hope will be many opinions of judges around the country supporting the Sedona Cooperation Proclamation. Our system of justice can no longer afford to continue to play with the pursuit of truth in civil discovery as if it were a game of hide and seek. The discovery aspects of litigation should be removed entirely from the adversarial game model. It is not only required by the rules and the code of ethics, but in the realm of electronic discovery at least, the alternative is extreme costs that could bankrupt any company.

Lawyers need to better understand the processes to realize how it is in their clients’ best interests to cooperate on discovery, especially expensive e-discovery. We should save the contentious arguments for interpretation of the facts, what the law is, and how the law applies to these facts. Take the hand you are dealt and make the most of it.

Judges need to get with the program too. They not only need to encourage cooperation, but punish violation of the rules. For a start, they should routinely impose sanctions for violations of Rule 26(g) as the rule intended. (The rule says “must” impose sanctions, not “may.”) For twenty five years, they have not done so, such that now Judge Grimm calls it the most commonly violated of all discovery rules. The rule has not been followed because it has not been enforced. Lawyers listen primarily to what judges do, not what they say. The ruling is what counts, the rest is just “yada yada.”

This means we need a much more active judiciary than we have had in the past. It is not enough to simply tell lawyers to go away and work things out by yourself. This has been tried now for decades and has not worked, to the point that many are ready to leave the civil system entirely and embrace alternative dispute resolution.

The over-zealous advocates continue to take advantage of the lax judicial attitude. When out of sight of the judges, they push the edge as far as they dare, which is pretty far when they know that even intentional rule violations seldom result in hard cash sanctions. If called to task, they obfuscate, come up with a million excuses, blame the other guy, and sometimes just plain lie. Take a hard look at Qualcomm v. Broadcom for one very public example. These kind of lawyers make it difficult for judges to figure out the truth, and so all too often, nothing happens, and they get away with it. All this does is encourage more bad behavior. Judges need to take the time to figure it out. Discovery is important and needs an active bench to function properly. If judges do not enforce the rules and punish violations with sanctions, a large number of attorneys will see this as a green light for business as usual. We can no longer afford that.

e-Discovery Teams Can Meet the Challenges of the “Zubulake Duty” and Control Excessive Costs

United States District Court Judge Shira A. Scheindlin, one of the leading jurists in the field of electronic discovery, is credited with first establishing what has become known as the Zubulake duty. Judge Scheindlin (shown right) contends that all attorneys who litigate have an affirmative duty to understand their clients’ computer systems sufficiently to know where all of the potential electronic evidence is stored. Judge Scheindlin even specifies how she expects outside counsel to fulfill that duty. She requires them to speak directly with the key players in a lawsuit about their computer files and other electronic documents. She also requires them to speak directly with their clients’ IT personnel about their data retention architecture, policies, and practices. This duty presents a challenge of epic proportions to most attorneys litigating cases today.

Judge Scheindlin stated this principle in the most famous e-discovery case of all, Zubulake v. UBS, 229 F.R.D. 422 (S.D.N.Y. 2004) (Zubulake V). Here are Judge Scheindlin’s actual words on the subject in Zubulake V:

Counsel must become fully familiar with her client’s document retention policies, as well as the client’s data retention architecture.  This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures in the actual (as opposed to theoretical) implementation of the firm’s recycling policy.  It will also involve communicating with the “key players” in the litigation, in order to understand how they stored information.

Zubulake Duty Started in New Jersey

We refer to this obligation as the “Zubulake duty” because it first became widely known in this decision. See:  E-Discovery: Current Trends and Cases (ABA 2008) at pgs. 55-65. Also see: E-Discovery Team Blog – Duties Page. But the truth is, it could probably also be called the “New Jersey duty” because it was required by local rule in New Jersey district courts even before Judge Scheindlin’s Zubulake opinions. L.Civ.R. 26.1(d) of the Local Rules of the U.S. District Court, District of New Jersey. The New  Jersey local rules states:

Prior to a Fed.R.Civ.P. 26(f) conference, counsel shall review with the client the client’s information management systems including computer-based and other digital systems, in order to understand how information is stored and how it can be retrieved … including currently maintained computer files as well as historical, archival, backup and legacy computer files.

The New Jersey rule also requires counsel to locate an “IT witness”:

Counsel shall also identify a person or persons with knowledge about the client’s information management systems, including computer-based and other digital systems, with the ability to facilitate, through counsel, reasonably anticipated discovery.

Locating a good IT witness can be more difficult than you might think. Beware of the Mr. Wiggles type expert shown in the You Tube video below, compliments of Iron Mountain and John Cleese.

The federal courts in the rest of the country have uniformly followed the lead of New Jersey and Judge Scheindlin on these requirements. In most district courts today, and a growing number of state courts, attorneys are not permitted to just rely on the assurances of senior management and in-house counsel concerning e-discovery compliance. They are supposed to personally verify that all discoverable electronic information has been identified, preserved, gathered, and produced. This requirement is a natural outgrowth of Rule 26(g), Fed. R. Civ. P., which requires outside counsel to make a reasonable inquiry of the facts before signing a discovery pleading.

The district court judges and magistrates today demand that the attorneys who appear before them have enough technical competence, somewhere on their litigation team, to know where the electronic evidence is located and how to preserve, collect, and present it in court in a forensically sound manner. Attorneys, especially outside counsel of record, are required to understand their client’s computer architecture, policies, and actual practices, both company-wide and user-by-user. That is part of their duties of reasonable inquiry under Rule 26(g). Ignorance of the technology is no defense. Martin v. Northwestern Mutual Life Insurance Company, 2006 WL 148991 (M.D Fla. Jan. 19, 2006). (Magistrate rejected the attorney’s excuse of “computer illiteracy” as “frankly ludicrous.”) This is a huge challenge for most attorneys; but especially for experienced litigation attorneys who have been trained in the “paper chase,” and typically have little, if any, specialized computer skills.

Trial Lawyers Unprepared to Fulfill the Zubulake Duty

Most trial lawyers lack the necessary skills and knowledge to fulfill the Zubulake duty. They do not have a clue what data retention architecture even means, much less how to speak the “heavy geek” needed to talk to their client’s IT. As a result, in today’s world one of three things generally happens:

1. Trial lawyers ignore the Zubulake duty, putting themselves or their clients at risk when e-discovery problems develop, and it is revealed that they have not done their job. See Eg.: Phoenix Four, Inc. v. Strategic Resources Corp., No. 05-CIV-4837, 2006 WL 1409413; 2006 U.S. Dist. LEXIS 32211 (S.D.N.Y. May 22, 2006) (Defendant and its lawyers each sanctioned and ordered to pay $22,581 a piece for breaching the Zubulake duty and failing to find “hidden server partitions” containing crucial evidence, a failure which the judge described as “gross negligence,” but which I contend, most trial lawyers do not even begin to understand); Louis Vuitton Malletier v. Dooney & Bourke, Inc., 2006 U.S. Dist. LEXIS 87096 (S.D.N.Y. Nov. 30, 2006) (Attorneys depend on the client’s IT personnel to collect evidence from a database, and they do not supervise nor understand; the corporate IT staff is untrained in e-discovery and they mess it up, fail to produce relevant email, and the result is sanctions).

2. They go through the motions of trying to fulfill that duty, and do a poor job, usually by assigning the tasks to the youngest associates in the blind hope that kids who grew up with computers might innately know how to do this (they don’t). When e-discovery problems develop, and they often do, the results are only slightly better than when the duty is ignored altogether. Diabetes Centers of America, Inc. v. Healthpia America, Inc., 2008 U.S. Dist. LEXIS 8362, 2008 WL 336382 (S.D. Tex. Feb. 5, 2008) (“Plaintiff’s counsel conceded at the hearing that the task of searching Plaintiff’s records for relevant emails in response to Defendants’ discovery request was entrusted to a junior associate. It is apparent that the associate worked with little or no direction or supervision. The search terms used by the associate were inadequate — they did not even include the term “phone” — and, as a result, she failed to locate or perceive the significance of the emails about which Defendants now complain.”); Danis v. USN Communications, Inc., 2000 WL 1694325 (N.D. Ill. 2000) ($10,000 fine imposed against CEO personally when the young general counsel he hired to supervise ESI preservation was grossly negligent).

3. They delegate the duty to others who claim expertise in this area and hope for the best. Typically this means they either bring in specialized co-counsel to handle the e-discovery aspects of a case (although very few such attorneys exist today, and so this “gold-standard” option is now limited), or they hire consultants or e-discovery vendors to help them with the technical facts, and sometimes also the strategies, and try to handle the legal issues themselves (since by law consultants and vendors are not permitted to provide legal advice).

Recipe for Crushing e-Discovery Expenses

Today, the situation of marginal competence and over-delegation leads to two things. First, an unnecessarily adversarial approach to e-discovery; and second, excessive vendor input and control over the amount of Electronically Stored Information (“ESI”) that needs to be reviewed in any one case. These two factors, in turn, significantly increase the costs of e-discovery to the point that the costs are turning parties away from the courts. Defendants are forced into extortion type settlements and plaintiffs are forced into ADR (alternate dispute resolution) systems, such as arbitration, where all discovery is prohibited or severely limited.

Marginal Competence Works Against New Cooperation Paradigm

When a trial lawyer does not fulfill the duty, or just delegates it without real understanding of the processes involved in the overall e-discovery work, in other words, all nine steps of the standard EDRM model, he or she will not understand that the “business as usual” adversarial model is counter-productive in e-discovery. They will focus only on ABA Model Rule of Professional Conduct 1.3 on diligence, and ignore Rules 3.2, 3.3, and 3.4 on expediting litigation, candor, and fairness. (I recently discussed this at length in Lawyers Behaving Badly.) They will not appreciate or understand how cooperation and transparency can significantly reduce e-discovery costs and are thus in their clients’ best interest. This is something that the Sedona Conference is now focusing on. I recommend that readers look further into their important new work in this area: The Sedona Conferenc® Cooperation Proclamation which I have discussed before in Hospital Defendants Martyred in the Cause of Cooperative e-Discovery.

Over-delegation to Vendors Drives Up the Costs

Another factor impacting e-discovery costs is the natural tendency of e-discovery vendors to increase the amount of ESI collected and processed for review in a case. When inexperienced trial attorneys hire vendors to help them, they typically buy these services as uninformed, or at least under-informed consumers. They do not know the right questions to ask, much less strategies, to minimize data review. They are easy to doubletalk and dazzle with technical lingo. Often, they fall for hype and over-promises. Typically this leads to dissatisfaction at the end of a project and so the trial lawyers chooses a different vendor for the next project. Also, they tend to blame the vendor for any mistakes that happen in the e-discovery process. This explains why law firms usually do not work together with the same vendor on multiple projects as part of a team.

Most trial lawyers today do not understand the technical processes involved in e-discovery, nor even the specialized law of e-discovery. As a result, they are easily convinced to err on the side of over-collection and review of too many computer files. This poor strategy is also profitable for law firms, so you do not see much push-back. After all, this over-review generates very profitable work for teams of law firm associates or contract lawyers. No one complains, except for the clients who pay the bills. The trial lawyers then blame the judges and the new rules, saying they, not them, are to blame for the excessive costs. This is a common practice that is totally inappropriate. I have written about this before in Trial Lawyers Turn a Blind Eye to the True Cause of the e-Discovery Morass. The truth is, the bills are too high because the lawyers are untrained and working without the proper support of IT.

This uninformed-consumer, over-collection, excessive review model prevalent today suits the typical vendor’s pricing model. They typically charge on a per gigabyte basis. For that reason, some vendors encourage this kind of overuse of their services, or at least, they do not direct uninformed consumers to a more reasonable model. After all, they sometimes convincingly argue, it is safer to review too much than to risk sanctions for missing key evidence. Also, the vendors would have to stray too far into the area of legal advice and legal strategies to forcibly redirect the trial lawyers. They are not permitted to do that. This provides them with a perfect cover to stand back and get paid for the over-conservative, over-collection of ESI.

Some vendors even exploit the fears, inexperience, and lack of knowledge of their customers to fulfill their duties to their shareholders to maximize profits. To date, e-discovery vendors have no code of ethics, and, unlike lawyers, they are not subject to professional regulation or oversight. It should be pointed out, however, that the EDRM group is working on developing a voluntary code of ethics, and, of course, most vendors are honorable people.

Call For a Change to Avoid Crushing Expenses

The situation described has to change. We can no longer afford to continue with the same paradigm. We must begin to envision and implement a different model.

Analysis of the problem suggests the answer. The only viable solution is the team approach where technology savvy lawyers, e-discovery technicians, trial lawyers, clients, records managers, and vendors all work together to fulfill the Zubulake duty.  This is an interdisciplinary model where the technical fields of law, information technology, and information management each contribute. At a minimum, a person from each of these three fields must be included on a good e-discovery team. Then, they must all be taught a base level of competence in the other two fields. Finally, all three have to be taught the specific issues of law and technology that are unique to e-discovery.

I will elaborate on the team solution later in this article, but first I will address two “beg the question” type “avoidance-solutions” to the problem.

The Duty Will Not Just Go Away
and Should Not Be Shifted to the Parties

The first avoidance type solution to this fundamental problem is to simply get rid of the duty altogether. Under this argument, New Jersey, Judge Scheindlin and the dozens, if not hundreds, of judges who have adopted this doctrine are simply wrong and appeals courts should reject the tenet. They argue that it is unfair to impose such duties on attorneys. The parties who own the data should be solely responsible.

That argument is not likely to be accepted by the courts because discovery has traditionally been the joint responsibility of the parties and their lawyers. In fact, some e-discovery issues have always been the sole responsibility of attorneys as officers of the court, for example legal objections to discovery. Further, as mentioned, Rule 26(g)requires every discovery disclosure, request, response or objection to be signed by an attorney of record. The signature “certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry,” the disclosure is complete and correct. See: Mancia v. Mayflower Textile Services Co., Civ. No. 1:08-CV-00273-CCB (D. Md. October 15, 2008).  That is also why it is well established that both litigants and their attorneys can be sanctioned for the failure to supervise discovery. Metro. Opera Ass’n Inc. v. Local 100, Hotel Employees and Restaurant Employees Int’l Union, 212 F.R.D. 178, 218-219 (S.D.N.Y. 2003). This is based upon the practical reality that “discovery is run largely by attorneys, and the court and the judicial process depend upon honesty and fair dealing among attorneys.” In re September 11th Liability Insurance Coverage Cases, 2007 WL 1739666 (S.D.N.Y. June 18, 2007). 

To date, no judge (to my knowledge) has rejected the imposition of the Zubulake duty upon the counsel of record, nor listened favorably to an argument by an attorney that he or she just assumed that their client did the right thing without asking, much less counseling them about it. The logic behind the duty is too compelling. It makes sense for lawyers to be responsible to search out and find the evidence. That is, after all, the job of trial lawyers, not the parties, unless they are unrepresented. It makes sense to have a party’s lawyer take reasonable steps to try and prevent their client’s destruction of evidence.

On the other hand, I will concede that there are situations where a lawyer has made reasonable efforts, and has thereby fulfilled the Zubulake duty, but the client was untruthful or grossly negligent. In these circumstances, when ESI is lost or withheld, the client alone should be sanctioned. Lawyers are not insurers of their clients’ actions, nor should they be. Parties to litigation must be responsible to meet the Zubulake duties too. It is their data and their lawsuit.

Another slightly different argument is to accept the duty of lawyers to make reasonable efforts to satisfy Zubulake duties, but try to handoff the duties from outside counsel to in-house counsel. This is an attempt to shift the duty from the officers of the court, the trial lawyers who appear of record to represent parties in litigation, to in-house lawyers. Of course, this argument only applies when the parties are big enough to have their own law departments. But when they do, some argue that the duty should not still be imposed on outside counsel.

One such commentator is Thomas Y. Allman, who was himself an in-house attorney for many years. He thinks that outside counsel should be able to rely upon the representations of their clients that e-discovery has been handled properly. He contends it should be sufficient for in-house counsel to speak to the IT personnel, and relay pertinent points to outside counsel. Many in-house counsel agree with Tom on this point, and certainly it has merit and can reduce costs. But in my view, this proposed modification to the Zubulake duty is unlikely to be accepted by the courts.

Judges want the attorney with these important evidence preservation and collection responsibilities to appear before them; in other words, to be a counsel of record in a case. By doing so, they subject themselves to the ethical obligations and duties of an officer of the court, not to mention personal jurisdiction of the court to sanction them for misconduct, including violation of the Zubulake duty. In-house counsel do not appear of record in cases and so they do not assume the same ethical duties and responsibilities. Also, the court lacks personal jurisdiction over in-house counsel. They only have jurisdiction over the company. This means the judge can only sanction the corporation, not the in-house counsel personally. Finally, in-house counsel do not sign discovery pleadings, only counsel of record do that. For that reason, the duty of reasonable inquiry under Rule 26(g) applies solely to outside counsel, and cannot be delegated to the party or the parties in-house attorneys.

Tom has written a short article on this subject, arguing that outside counsel should be excused of these duties and instead be allowed to rely on their clients’ in-house counsel do it for them. The article was recently published in Law Technology News. Pandora’s Box: Compliance Quagmires Can Alienate Legal Teams, 15 Law Technology News No. 8 at pg. 26 (August 8, 2008).  Here is an excerpt from Tom’s interesting article:

The implication — when applied literally to clients with significant in-house e-discovery capability — is that retained counsel may not rely upon the reasonable assurances by a client about discovery compliance.  However, entities that can afford to do so are increasingly responding to electronic data discovery demands by designating in-house teams to be responsible for accomplishing the task of EDD management in a cost-effective and compliant manner.  …

The quest for a single best practices rule, focusing on a duty to supervise by retained counsel, is understandable, but misplaced.

Aside from the anticipated opposition to this proposal from the judiciary, I think the timing of this proposed shift is all-wrong. It goes against the grain of recent experience in e-discovery where parties to litigation have often shown a need for independent outside counsel to act as a guardian of proper conduct. Many people, even large corporations, can get caught up in the turbulence of litigation. One of the important roles of outside counsel is to serve as a kind of ethical gatekeeper and restrain the impulses of some clients to win a case at all costs, even if it means bending the law, or even lying to opposing counsel or the court. That is one of the reasons that Rule 26(g) requires counsel of record to personally sign every discovery pleadings to certify that a reasonable inquiry has been made and the disclosure is complete and correct.

The Qualcomm v. Broadcom case, which is still in progress in San Diego federal court, shows the importance of ethical outside counsel and the wisdom behind Rule 26(g). It shows how bad it can get when outside counsel do not fulfill the Zubulake duties and instead rely on in-house counsel to do it. Qualcomm, Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal. Jan. 7, 2008); Qualcomm Inc. v. Broadcom Corp, No. 05-CV-1958-B(BLM) Doc. 593 (S.D. Cal. Aug. 6, 2007) (two of several relevant orders entered in this case). Qualcomm is an unfortunate situation where outside counsel’s over-reliance on in-house counsel led to unethical behavior and outright fraud-on-the-court. They signed numerous discovery pleadings certifying the absence of key email, when in fact thousands of such emails existed, and any reasonable inquiry would have discovered that.

Although Tom Allman’s position may someday prevail, to date there is no court decision criticizing Judge Scheindlin’s ruling, nor even an order allowing the handoff of the duty to in-house counsel. In view of the chilling lessons of Qualcomm, none are likely soon – no handoffs, no passes, no punts. For the time being, the placement of the Zubulake duty remains squarely on the shoulders of outside counsel, and then secondarily upon the litigants themselves.

The Team Solution to the Zubulake Duty

The days of a lone trial lawyer preparing for trial by himself, with perhaps a few trusty associates to assist, are over for all but small cases. That was the Nineteenth Century model followed by Abraham Lincoln and his associate, William Herndon. It worked well enough through most of the Twentieth Century too, although the numbers of lawyers involved in bigger cases began to increase steadily in the second half of the last century, as did the addition of private investigators to the lawyer team a la the Perry Mason model. But this limited team started to become inadequate in the 1990s when clients started to switch to computers for creating and storing documents and other evidence.

By now, in late 2008, the old solo trial lawyer or unidimensional small team model is obsolete in most cases of any significant size. The only viable model to meet the Zubulake duty is through larger scale teams that incorporate computer and other technical specialists as key members of the team. I call this new paradigm the “CSI” type team, after the popular television program, where technical specialists encompassing a wide variety of disciplines are used for forensic investigation to solve crimes.

The trial lawyer today needs to be a part of a larger team, a key part to be sure, but not a one-man team as in Lincoln’s day. Trial lawyers need to retain and rely upon lawyers specializing in e-discovery, their own computer science specialists (i.e. – law firm techs), their own favored e-discovery vendors and consultants, and ideally their client’s own multidisciplinary litigation readiness team. This CSI/ESI-type team model frees trial counsel to do what they do best — try cases, and not mess around with computers.

Also, and somewhat unexpectedly, the larger multidimensional team reduces the total cost of litigation by maximizing efficiencies and driving down e-discovery expenses. Although there are more individual professionals billing time on a case, they require less time overall to do the work. They are specialists in niche areas and can do the work much more quickly and effectively. Most importantly, the team is an informed consumer of e-discovery services and as such is well positioned to control costs.

Although there is some territorial type of resistance by the trial bar to this proposal, once they try it (or it is forced upon them by the client), they see how well it can work and are pleased. It alleviates them of the burden to try to learn IT systems, and pretend like they know what they are doing in this new area of the law. The truth is, the IT systems of most large companies are so complicated, that only an attorney who specializes in this area of law can do it properly, and even then he needs the support and contributions of other non-lawyer team members who are specialists in various technologies. This is a highly arcane area, and lawyer dabblers, as well as IT dabblers, often get themselves (and their clients) into deep trouble before they even realize what happened. The curing of mistakes is a very expensive process, not to mention a way to lose an otherwise winning case.

The e-discovery teams in law firms, and in companies often subject to litigation, can act together to efficiently meet the Zubulake duties and thus significantly reduce the costs and risks of e-discovery. The efficiency is maximized for larger companies when they have their own internal e-discovery team that works with the team of their outside counsel. When there is an internal corporate team in place, outside counsel can then more efficiently discharge their duties, and focus on their specialty skills of supervision and  communication to the court and opposing counsel.

The efficiencies are further maximized when corporate counsel uses national or regional discovery counsel to coordinate the activities of local counsel and appear where necessary to discharge the Zubulake duties. Specialty discovery counsel become familiar over multiple cases with their clients’ ESI storage architecture, employee practices, and the data itself. The learning curve for any one case becomes far less. The same holds true with the corporate utilization of national or regional e-discovery vendors. Just like specialty legal counsel, the vendors can act more efficiently in any particular case when they already know the client’s systems and practices from multiple past cases.

Where possible, the outside specialty legal counsel and select vendors can also serve directly on the corporate readiness and response teams. This dual role improves knowledge and communication, and thus maximizes cost reduction and risk management. Although this is ideal, in truth, very few vendors and even fewer attorneys are qualified to serve on both teams in an effective and impartial manner. That takes not only extensive knowledge and experience in both law and technology, but also maturity and leadership skills to operate effectively in the two types of teams, both law firm and corporate.

Long Term Impact of the Team Approach

The multi-specialty team approach to e-discovery, an approach which includes vendors and their products where needed, will, in time, overcome the situation prevalent today of marginal competence and over-delegation to vendors and consultants. As the law firm teams and corporate teams train and become skilled players, they will come to understand that the only way to win this game is through the Sedona approach of cooperative and transparent e-discovery. Experience shows that this move from an unnecessarily adversarial approach to e-discovery will, in itself, lead to significant cost reductions.

The second factor driving excessive e-discovery costs, which is seldom spoken about but well known to industry insiders, is the unsophisticated e-discovery buyer. The naive lawyer or naive corporation purchaser of e-discovery vendor services often not only pays too much, but also usually over delegates to vendors. Without an expert team, it is typical for parties in litigation and their attorneys to rely too much on vendor input and control as to the amount of ESI that needs to be reviewed and produced. The new teams will not only know how to control that, but when vendors are a part of the team, and better assured of longer lasting relationships, they will be less likely to fall for this temptation.

Over time, different types of e-discovery vendors are likely to participate on e-discovery teams. At first, especially when larger projects and cases are involved, the full service type A-Z vendors will predominate. As the teams mature and begin to take more of the functions of e-discovery in-house, they will rely less and less on service vendors to do the work for them. They will not only handle the preparation and enforcement of litigation holds, which is the first and most basic function of any e-discovery team, but also move on to collection and processing the ESI themselves. Some internal corporate teams will mature to the point where they even conduct their own ESI review. This requires a lot of time, experience, and commitment. They will then transmit the culled data set to the outside counsel members of their team for final analysis and preparation of privilege logs and productions. Of course, since outside counsel is still responsible for supervision of discovery, including signing discovery responses, and the Zubulake duty, this must be done with their close supervision and fully integrated teams.

As the teams mature, they will, I predict, redirect their vendor purchases from e-discovery service companies, who typically charge on a project by project per gigabyte basis, to e-discovery software companies. The software companies license a product that can be used by the team, typically without limits or regard to the number of gigabytes or terabytes of data involved.

All educated teams know that the highest costs in e-discovery are from review. They also know that the best ways to control these costs are by: (1) reducing the amount of ESI to be reviewed, which is done by aggressive culling and advanced search techniques; and, (2) faster and better review tools. This means that products that search and process ESI so as to reduce volume, coupled with products that speed up the actual review process itself, will be in high demand by tomorrow’s review teams. 

It seems to me that the winners in the vendor circle of tomorrow will be the companies that provide software and other tools to empower e-discovery teams to play the game better. Aside from the processing and review types of software mentioned above, other types of software that will be in high demand for teams are litigation hold and collection type software. These are the tools that e-discovery teams need and want.

There will still be a place for A-Z service providers, especially for big cases where a team does not feel up to it because of the complexity and risks. Also, non-team players, lone trial lawyers, and novices will still need their care and assistance in every case. But the trend is clear. The direction for both law firms and corporations is towards self-sufficient, well-trained, interdisciplinary teams. It is a good move. When done properly, with the role of counsel of record preserved, the teams will not only satisfy Judge Scheindlin’s Zubulake duty, but also realize significant cost savings.