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The End of Sanctions? New Report Details Dramatic Decline in Spoliation Penalties

March 21, 2019  |  7 min read

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Are we seeing the end of eDiscovery sanctions? The data indicates a powerful trend in that direction. In the three years since the amendment of Rule 37(e) of the Federal Rules of Civil Procedure in December 2015, the number of federal cases involving spoliation sanctions has plummeted.

End of Sanctions Report

Download the report for exclusive new research, plus a comprehensive index of Rule 37(e) case law over the past three years.


Exhaustive new research conducted by Logikcull shows that court issuance of spoliation sanctions has decreased by 35 percent from their height in 2014. Since 2016, more than three out of every four 37(e) sanctions motions have been denied. Such motions are, on average, denied in whole or in part in 76 percent of cases. When the stakes are the highest and the most severe sanctions are at issue, those motions were denied in whole or in part in 82 percent of cases in 2018.

The easing of the sanctions regime -- a specter of fear that has long hovered over legal professionals -- is among a handful of factors driving a profound shift in the way U.S. litigants approach discovery. 

This decline in sanctions, combined with a small, but significant growth in the bar’s technology expertise overall and the emergence of easier-to-use discovery tools, is leading to broad adoption of “do it yourself” discovery practices. Whereas performing discovery in house was once thought to be risky, these trends have largely alleviated any lingering concerns, emboldening corporate legal teams under mandate to do more with less and increasingly reluctant to send out discovery work to high-priced firms and vendors as data volumes soar. 

Mira-Edelman
“When the amendments were approved, in-house lawyers were ecstatic. It gave us the legal authority to make decisions that weren’t driven by uncertainty, to focus on creating defensible workflows, and to begin thinking about corporate information governance. It was freeing.”
     - Mira Edelman

The end result, we posit, is a “de-risking” of eDiscovery, allowing practitioners, whether corporate legal departments, small firms, or their Big Law counterparts, to bring more of the discovery process in house, without the fear that has long accompanied eDiscovery practice. This change, too, has allowed corporate legal departments to focus on other imperatives, from cybersecurity to GDPR, while realizing significant cost savings. In one example, one of the world’s largest companies was able to realize millions in savings by in-housing much of their eDiscovery work and subsequently reducing data reviewed by outside counsel by up to 98 percent.

The implications of this change have not been lost on innovation-focused practitioners. “When the amendments were approved, in-house lawyers were ecstatic,” says Mira Edelman, former Associate General Counsel of eDiscovery and Information Governance at Facebook and Senior Counsel and Discovery Manager at Google at the time of the 2015 amendments. “The new Rule gave us power to influence outside counsel who were more conservative in their approach to preservation. It gave in-house lawyers the legal authority to make decisions that weren’t driven by uncertainty, to focus on creating defensible workflows, and to begin thinking about corporate information governance. It was freeing.”

Key Findings in Post-2015 Spoliation Case Law

The 2015 amendments to Federal Rule of Civil Procedure 37(e) have brought significant change to how courts are treating spoliation sanctions and a significant reduction in such sanctions’ availability. A survey of recent spoliation case law issued between 2016 and 2018 leaves no question that such sanctions are hard to come by—and getting harder.

Key Statistics:

  • Spoliation sanctions have declined by 35% from their 2014 peak

  • Rule 37(e) sanctions were denied in whole or in part in 76% of cases from 2016 to 2018

  • The severest sanctions, those reserved to subsection (e)(2), are denied in 4 out of 5 cases

  • Only one in every 8,000 federal civil court cases involves motions for spoliation

sanctions

Decline of Sanctions Graph

These trends, identified for the first time in Logikcull’s new report, show that, since the amendments went into effect, courts’ treatment of sanctions motions has radically shifted. Sanctions are not just more difficult to obtain when compared to pre-amendment years, however. Rule 37(e) sanctions have become increasingly difficult to obtain over the three years as well. And when it comes to Rule 37(e) remedies, the harshest sanctions are the most elusive and more than 30 percent less likely to be granted in full than Rule 37(e)(1)’s corrective measures.

Why the Decline in Sanctions Matters

Sanctions percentages over time

Since the emergence of eDiscovery as a significant practice area and an inextricable part of litigation in the early 2000s, adoption of discovery best practices has been motivated by both the carrot of evidentiary insights and the stick of sanctions.

In many practitioners’ minds, the stick has loomed much larger than the carrot. That is likely the result of severe and highly publicized judgments like those in Zubulake v. UBS, Coleman v. Morgan Stanley, and Qualcomm v. Broadcom, in which offending parties suffered heavy monetary and evidentiary sanctions.

As a result, fear of sanctions motivated many lawyers to take the most conservative possible approach. Corporations, too, sought to distance themselves from eDiscovery sanctions risks, through over-preservation and outsourcing all eDiscovery work to well-heeled law firms, firms whose deep pockets could satisfy whatever penalty a judge imposed for wrongdoing—whether via a malpractice suit, disgorgement of fees, or other means.

But, as Logikcull’s new research shows, those fears are increasingly unjustified.

Francis
"Too often, judicial policy is based on what is, at best, 'anecdata.'  Solid empirical research like this is too rare, and often gets drowned out by the special interest lobbying."
     - Judge Jay C. Francis (Ret.)

If this is not the end of sanctions, it may be the beginning of the “de-risking” of discovery—and this change is already impacting lawyers’ approaches to discovery and litigation. In a recent webinar on spoliation sanctions trends, 30 percent of attendees said that they have changed their approach to discovery in response to changes to Rule 37(e), while another 44% were planning to change.

End of Sanctions Webinar Flash Poll Results

For years legal professionals have been told, over and over and over, that the biggest thing to fear in eDiscovery is not fear itself, but sanctions. For many, that fear has held them back from recognizing the true costs of eDiscovery: overly-expensive technology and under-efficient processes. For attorneys in private practice, this fear has led them to outsource their discovery processes to expensive vendors, or avoid eDiscovery altogether. For in-house counsel, fear over sanctions has been a barrier to streamlining processes, internalizing expertise, and reducing costs. It has created conflict with more risk-averse outside counsel and led to bloated processes and the proliferation of over preservation. This is why corporate legal leaders like Edelman have praised the 2015 Rules revisions as “freeing.”

“I always found that the fear of sanctions was an unreasonable motive that drove preservation standards that were self-defeating. The more one served, the more expensive it was to find anything. We can hope that technology will end that, but we are still imprisoned in many ways by our own fears.”
     - Judge John M. Facciola (Ret.)

Whereas the fear of eDiscovery sanctions has held back innovative legal professionals in the past, the changes instituted by the new rules may now allow us to move beyond fear and to begin finding new solutions to the many discovery problems that remain.

Sanctions Report Graphic CTA-1