The Basics of Electronic Discovery
This chapter describes and defines electronic discovery, eDiscovery, or e-Discovery, for anyone involved in the processes of litigation or investigations. It should provide an introduction and overview of the basic concepts and terms you will need to begin any conversation around the practice of electronic discovery. Following chapters will dive into more nuanced and specific issues within the process of managing electronic evidence in litigation.
What is eDiscovery?
The purpose of this guide is to describe the fundamentals of eDiscovery. If you are involved in modern litigation or investigations, you will almost certainly encounter eDiscovery. However, we should note that while the legal profession now recognizes eDiscovery as a distinct practice area, the word is really an artificial construct.
eDiscovery is really just another way to describe discovery, the process of obtaining and exchanging evidence, or information that might potentially become evidence, in litigation. But as the world has moved almost exclusively to electronic communications, some legal professionals began adding the “e” to make it clear that electronic records were now involved. So at a basic level, eDiscovery describes the process of discovery, updated to address the challenges and complications of collecting, reviewing, and producing evidence in the modern, digital world.
Discovery is the legal process governing the right to obtain and the obligation to produce non-privileged matter relevant to any party's claims or defenses in litigation. In other words, it is the legal procedure by which parties are required to exchange information and evidence with one another in state and federal courts. While we primarily describe discovery in the context of litigation, the process is also essential to investigations, arbitrations and, generally, other forms of dispute resolution whereby parties must gather facts.
Most discovery still comes in the form of testimony or recorded interrogations. Discovery can also involve physical items, like medical exams or a defective product. But increasingly, discovery is focused on electronically stored information (ESI), which is why lawyers often use the term eDiscovery to distinguish the discovery of electronic records from other forms of discovery.
In years past, parties exchanged paper documents—often hundreds and hundreds of boxes of them. Over time, paper documents have been largely replaced with computer generated content, and the process of discovery was forever fundamentally changed. ESI can now be email, social media, cell phone data, digital audio or video recordings, global databases, apps, global positioning data, data stored in a household appliance, onboard computers in a car, or any of the thousands of digital records produced by an average person on an average day.
Common eDiscovery Challenges
This section could easily be titled "Why eDiscovery Is So Hard—And Why It Doesn't Need to Be."
Until recently, discovery was a relatively pro forma affair, involving written requests for production in which a party to a lawsuit asked another party or a third party to furnish information. To do this, they described the documents or records of interest or particular types of information they needed to support the claims of a case. The party responding to the request was expected to locate responsive and produce the evidence or copies of the evidence.
The responding party could withhold or redact items containing privileged information, such as confidential communications between lawyer and client, but was obliged to furnish a log describing what had been withheld. The court served as a referee, assessing when a request was unduly burdensome or compelling production when responses proved insufficient.
But with the mass adoption of personal computing and the internet in the 1990's, the processes and practices that had worked well for paper documents began to break down. A flood of digital records greatly complicated a once simpler system. Some responded by printing everything out, reviewing and redacting by hand. Others embraced early eDiscovery software—systems that allowed legal teams to review electronic files electronically, but often required entire teams and specialized expertise to maintain. Indeed, some of these legacy eDiscovery software systems are still in use today—and many of their modern equivalents are just as complicated.
The growing number of documents available in discovery is a challenge that's unlikely to go away anytime soon. The United States has a long tradition of broad discovery, which allows litigants to request a wide range of information and document types for almost any matter—and new sources of valuable information are constantly emerging.
To help you understand the scope of the problem, consider the volume of evidence now available for litigation. For example, in one recent patent dispute, Samsung collected and processed about 3.6 terabytes of data, or 11,108,653 documents in a case against Apple Computers. The cost to process that evidence during a 20-month period was over $13 million dollars.
Of course, this case is an extreme example, but eDiscovery is a fact in matters of all sizes. In fact, digital evidence is playing an increasingly important role in even family law and criminal cases. As we all live increasingly digital lives, we are all leaving a daily trail of electronic evidence that often tracks our every move. And it is all available for discovery.
The growth of discoverable data is unlikely to slow down in the future. But innovative legal teams are finding new ways to bring simplicity and cost savings to their discovery process.
Simplifying the Discovery Process With Technology
Before the digital era, an attorney conducting document discovery could simply meet with her client, gather physical documents, and begin reviewing them.
Yes, it involved bankers’ boxes. Yes, sometimes redactions needed to be made by hand, with a giant marker, and Bates stamps required actual stamps. Yes, it might not have been the most speedy or efficient practice. But the process was simple. It was straightforward. It made sense.
Fast forward thirty-five years later and the typical discovery process is anything but simple. For large corporations and other data-rich organizations, discovery can trigger a byzantine labyrinth of processes, as litigation holds are placed, custodians and repositories identified, vendors evaluated and procured, data analysis and culling procedures performed, etc.
This approach to discovery is great for vendors and experts, who’ve leveraged this complexity into a billion-dollar industry. For most legal professionals, though, it’s frustrating at best.
Ironically, while discovery has grown more and more expensive and complex, many other daily tasks have become ever simpler.
Take, for example, finding information on the internet. In the earlier days of the web, it could be incredibly frustrating to discover websites. Early web search engines were cluttered, confusing imitations of the Yellow Pages, websites that made navigating the internet much harder than it needed to be.
Google’s primary innovation was stripping out all that extraneous and distracting noise—by focusing on the problem the user was trying to solve when they use Google: just getting information. Not building a website, not signing up for a forum, not shopping for a new computer. Just getting answers to your questions.
Innovative legal teams are pursuing a similar goal, using software that strips away complexity to make difficult processes seem simple. That's the goal of modern instant discovery software: to strip away overly complex processes; to remove the need for downtime, slow processing, and expert services; to create an interface that makes finding, organizing, and reviewing documents incredibly easy; to make discovery as easy as upload, search, download—and at speeds that are virtually instant.
Logikcull is the #1-ranked eDiscovery software. See why thousands of legal professionals have embraced its simplicity and ease of use.
A History of eDiscovery
Many people may claim not to have heard of eDiscovery, but in fact, eDiscovery has played a starring role in many of the most famous legal battles of the past few decades.
Lawyers have known for almost 30 years that digital documents—especially email—are a key to winning many types of cases. eDiscovery is the art and science of collecting, preserving, reviewing, and presenting digital evidence for litigation. Though it may seem like an exotic practice area, eDiscovery has a long and important history.
Iran Contra: eDiscovery's history arguably begins in February of 1989, when Oliver North stood trial on twelve counts related to lying to Congress about his role in the Iran-Contra Affair. One of the most damning pieces of evidence that led to North's trial was his own email. Specifically, emails that North had deleted from his computers at the National Security Council. The email server in the White House kept archives of all sent and received email and the deleted emails became evidence for the committee investigating the Iran-Contra affair and subsequent trial.
Microsoft Trial: eDiscovery again played a starring role in the 1998 Microsoft monopoly trial. In that case, Bill Gates became defensive on the stand as his own emails were read back to him. In these emails, recovered from Microsoft's email servers, Bill Gates asked his subordinates to think of creative ways to sabotage the company's rivals.
Deflategate: eDiscovery has played a starring role in the world of sports as well. In 2015, New England Patriot's quarterback Tom Brady instructed his assistant to destroy the cellphone that he had been using. Brady's act was judged to be willful obstruction of justice and, "a deliberate effort to ensure that investigators would never have access to information that he had been asked to produce," leading to a four-game suspension for the star.
Clinton Email Controversy: More recently, former Secretary of State Hillary Clinton's legal team deleted emails from her personal email server, most of which were later recovered and reviewed by Congressional investigators. The handling of Clinton's emails and controversy around the review process became a central point of contention in the 2016 Presidential Election.
Discovery and the Federal Rules of Civil Procedure
Understanding eDiscovery begins with understanding the Federal Rules of Civil Procedure. Don't worry—we're not going to make you take a Civil Procedure class. However, it is important to understand that the Federal Rules of Civil Procedure describe and define the discovery of electronic information. In fact, the rules have been updated twice already to address the specific concerns of electronic discovery.
At the federal level, the Federal Rules of Civil Procedure (FRCP) govern the procedure for civil lawsuits in United States district courts. At the state level, each state has their own set of statutes and rules that govern the procedure for civil lawsuits in state court. However, we mainly refer to the FRCP, which most jurisdictions model their own rules after.
In December 2006, significant amendments to the FRCP shaped the landscape for how eDiscovery works today. Among other changes, the 2006 amendments redefined discoverable material; encouraged early attention to issues relating to eDiscovery; introduced the concept of “reasonably accessible”; provided a procedure for asserting claims of privilege and work product after production; and provide a mechanism for "safe harbor" limits on sanctions related to loss of ESI as a result of routine operation of computer systems.
Arguably, the most important 2006 amendment was simply to include the words “electronically stored information” on the list of information that is discoverable throughout the discovery process. Specifically, FRCP Rule 34 dictated disclosure and discovery related to “producing documents, electronically stored information, and tangible things or entering onto land, for inspection and other purposes.” The phrase “electronically stored information” is broad enough to cover all current types of computer-based information and intended to be flexible enough to encompass future changes and technological developments.
The Rules were amended again in December of 2015. These more recent changes were less sweeping but no less important. The amendments were aimed primarily at addressing a few outstanding issues not adequately addressed in the 2006 changes.
The rule change that got the most attention was Rule 37. The amended Rule 37(e) allows sanctions for failure to preserve ESI, but limits sanctions for failure to preserve so that negligence, even gross negligence, will not be sufficient for imposition of most severe penalties.
Perhaps the most sweeping change was to FRCP 26(b)(1) regarding proportionality and the scope of discovery. Rule 26(b)(1) was rewritten to limit discovery to that which is “proportional to the needs of the case” and provided five factors for courts to consider. This Amendment redefined the scope of discovery so that parties must address concerns about whether the amount of discovery is reasonably necessary to resolve the case fairly.
Federal Rules of Civil Procedure Central to the Discovery Process
The old rule 26(b)(2)(C)(iii) was clear that a court could limit discovery when the burden outweighed benefit. However, new Rule 26(b)(1), implemented by the December 1, 2015 amendments, takes the factors in these old requirements and puts them at the heart of any discussion about the scope of discovery.
Don't let opposing counsel or judges impose a set pattern on the process. Just because one approach has worked for them in the past, doesn't mean it's always the right way to proceed. In addition, don't let the other party's timeline get in the way of what you need to do. The rules clearly state that, “methods of discovery may be used in any sequence,“ and “discovery by one party does not require any other party to delay its discovery.”
The actual negotiation will begin with what is known as a 26(f) Conference, which happens before any discovery can occur. The courts have made it clear these conferences should happen as early as possible and parties should agree on foundational principles like the forms of production. If parties can't agree within two weeks, they face the judge for what is known as the Rule 16 Conference. Once an actual discovery request is issued, the responding party may object, under Rule 26(c) and 37(a).
The Federal Rules of Civil Procedure mandates a standard of care, including “that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry: with respect to a disclosure, [the response] is complete and correct as of the time it is made.” However, “reasonable” is a matter for the court to decide on the totality of the circumstances.
Rule 34(b) allows the requesting party to decide how it wants information to be produced and lets the responding party object if impractical. Note that if the requesting party fails to specify the form for producing data, the producing party has the option to either produce the information in a form in which it is ordinarily maintained, or in an electronically search-able form. Courts have rebuked parties that produce data in printed or other non-native formats. (When in doubt, get the native format. It retains potentially useful metadata and is usually easier to access.)
Rule 37(f) used to be known as the “safe harbor” provision. However, few legal teams used this provision. The amended Rule 37(e) allows sanctions for failure to preserve ESI, but limits sanctions for failure to preserve so that negligence, even gross negligence, will not be sufficient for imposition of the most severe penalties. Under the amended rule, courts may only sanction parties if one party is found to have “intent to deprive another party” of information and if that information cannot be recovered or produced from another source. If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court may impose sanctions.
Webinar: The End of Sanctions? Join experts Mira Edelman and Craig Ball as they review case law trends, discuss their implications, and debate the end of sanctions.
Understanding the EDRM
In 2005, two consultants, George Socha and Tom Gelbmann created the Electronic Discovery Reference Model. The name is clunky, and the model is by no means perfect, but it is the best and most commonly accepted description of the eDiscovery process. Not all litigation will follow all of the steps described (and new steps have been added over the years), but it remains a useful guide.
The EDRM consists of nine stages, which we will describe in more detail throughout this book. The process begins with information governance, identification, preservation, and collection. The data management functions include processing, review, analysis, production, and presentation.
Information governance is a more recent addition to the EDRM. In recent years, large organizations have begun looking for ways to reduce eDiscovery costs before litigation happens, which means managing ESI from its initial creation through its final disposition.
Locating potential sources of ESI, the volume of data that might be discoverable, the custodians and locations of discoverable evidence. The key is not only identifying the evidence but addressing the potential scope and technical issues of the project at hand.
Parties must ensure that ESI that is discoverable for litigation is not altered or destroyed. ESI is often deleted in the course of routine business, but when potentially discoverable information is deleted, that can be considered spoliation, a sanctionable offense in some cases.
Collecting ESI is a significant challenge. Data must be collected in a forensically sound manner so that evidence is not altered or changed.
In order to review evidence in a forensically secure manner, ESI is often converted to forms more suitable for review and analysis, often an image file. The original, native document is preserved as well for more detailed, forensic analysis.
The heart of the process. Attorneys must review documents and evidence for relevant information while protecting privileged information from being accidentally produced to opposing counsel.
Attorneys must review ESI for content and context, identifying key custodians, subjects, patterns, and discussions.
Delivering ESI to others in appropriate forms. Parties still often produce evidence on hard drives or disks, although electronic production is also employed.
Once ESI has been reviewed for relevance, a few key pieces or passages may actually be presented at a deposition, hearing, or trial. Evidence is presented to help witness testimony, demonstrate key facts, or persuade a jury or audience.
eDiscovery Terms to Know
As you move through this guide, there will be some terminology that is specific to the eDiscovery practice. Here are some of the essential terms to know:
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Foundational eDiscovery Caselaw
U.S. District Court, Southern District of New York
Zubulake is the mother of eDiscovery case law. This was not the first case to mandate parties make a reasonable inquiry to identify likely custodians or sources of information. However, Judge Shira Scheindlin wrote a series of long, detailed opinions with detailed balancing tests that were so thoughtful, complete, and persuasive that the issue was no longer possible to ignore. The defendants initially argued that recovering and reviewing ESI from backup tapes would be too expensive. Judge Scheindlin's seven-factor test compelled the defendants to produce the evidence, although the costs of recovery and review of the emails were shared by both parties.
U.S. District Court, District of Maryland
Victor Stanley sued Creative Pipe for copyright and patent infringement over the design of an end frame for a park bench. U.S. Magistrate Judge Paul Grimm ruled Creative Pipe had waived attorney-client privilege when it inadvertently produced several electronic documents. Grimm found Creative Pipe waived the privilege because it had failed to work out a privilege search protocol with the opposition, it had declined to use a “clawback” agreement, and it had not proven that its search process for privileged documents was reasonable. As such, Grimm deemed the documents to have been voluntarily disclosed. Victor Stanley prevailed at trial in September 2011, winning more than $2 million in damages and more than $1 million in a monetary sanction against Creative Pipe for destroying electronic evidence. The verdict was upheld on appeal in February 2013.
U.S. District Court, District of Maryland
Once again, Grimm made his mark in eDiscovery in this wage-and-hour case brought by several Mayflower employees. Grimm held that the failure of opposing counsel to cooperate and work out disputes on their own was the biggest reason why eDiscovery costs were skyrocketing. He strongly advised counsel from both sides to work together and make the eDiscovery phase move more smoothly. The parties settled in November 2009. Many judges have followed Grimm by advising attorneys before them to cooperate and hold regular conferences before even setting foot into court. Amendments to the Federal Rules of Civil Procedure also added a duty to cooperate.
U.S. District Court, Southern District of New York
Judge Scheindlin dealt with the question of spoliation of electronic evidence and found herself reiterating many of the points she had made in Zubulake. (She even called the case “Zubulake Revisited: Six Years Later.”) Investors in the pension plan had filed suit to recover lost funds. Several investors were accused of failing to preserve evidence, and Scheindlin focused heavily on the duties of counsel. She ruled that attorneys were obligated to issue written litigation holds in order to preserve electronic and paper records, and that failure to do so would be considered gross negligence. Scheindlin also reinforced the idea that sanctions should be mild, but that parties behaving recklessly, negligently and knowingly could be sanctioned, depending on the level of harm experienced by the other party. In this case, Scheindlin handed down monetary sanctions and the dreaded adverse inference. The parties eventually settled out of court.
U.S. District Court, Southern District of Texas
One month after Pension Committee, U.S. District Judge Lee Rosenthal refused to follow Scheindlin's jurisprudence in a case where a consulting group was trying to enforce a noncompete agreement with a group of former employees. Rimkus accused its ex-employees of intentionally deleting relevant emails and asked for sanctions. Rosenthal ruled sanctions were only appropriate in instances like this where a party behaves in bad faith. Rosenthal's opinion also highlighted a major split among federal circuits as to when sanctions were appropriate—a split that could only be resolved by the U.S. Supreme Court or the proposed new federal rules. In June 2010, the case was resolved when Rosenthal imposed a permanent injunction preventing the ex-employees from using certain facts and methods they had obtained while working at Rimkus.
U.S. District Court, Southern District of New York
U.S. Magistrate Judge Andrew Peck approved protocols to allow for both sides to use predictive coding in conducting eDiscovery. However, the case soon got bogged down as attorneys representing Da Silva Moore filed a petition for Peck to recuse himself from the case, accusing him of being biased as a result of his previous public comments in favor of using predictive coding. The appellate courts backed Peck, and the U.S. Supreme Court declined to intervene in October 2013.
United States Supreme Court
In the conclusion to the famous criminal action against the Arthur Andersen accounting firm stemming from the collapse of Enron, the Supreme Court overturned Arthur Andersen's conviction for criminal obstruction of justice for shredding documents prior to receiving a subpoena from the SEC. The Supreme Court determined that the trial court's instruction to the jury omitted the essential element of scienter—actual knowledge of a proceeding (in contrast to the “reasonable anticipation of litigation” standard in civil actions) and the intent to obstruct that proceeding.
U.S. District Court, Florida
In a lawsuit alleging accounting fraud and misrepresentation in the sale of stock, the plaintiff filed a motion for sanctions, including an adverse inference jury instruction for the defendant's destruction of emails. The defendant had a practice of overwriting emails after twelve months, although it was required by the SEC to retain emails for two years. The court had ordered the defendant to review backup tapes, conduct searches, produce e-mails and a privilege log, and certify compliance with discovery obligations. The defendant certified discovery as complete despite having failed to review more than 1,400 backup tapes. In its order on March 23, 2005, the court revoked the pro hoc vice license of the defendant's trial lawyer and disqualified the law firm, forcing the defendant to seek substitute counsel two weeks before trial. Sanctions in the case were ultimately reversed, but the threat of punishment in this suit scared many lawyers straight when it comes to eDiscovery.
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