A Hybrid Approach to E-Discovery
Combining In-Sourced Software and Out-Sourced Services to Lower Cost and Risk
The risks and costs for corporations faced with requests for electronic discovery have never been higher. These realities are forcing most corporate counsel to look for alternatives to the model of outsourcing the management and execution of e-discovery to outside counsel and third-party service providers. Today, corporations are considering which aspects of discovery can be credibly in-sourced in order to reduce risk and cost. Due to the complexity, however, in-sourcing the entire process isn’t a realistic or effective option for most organizations. In order to create and maintain the most effective and efficient e-discovery process, corporations need to consider which cases and which specific parts of the overall process make the most sense to bring in-house and which they will continue to outsource.
The variety of factors involved in any particular litigation make it difficult to create a one-size-fits-all recommendation, but for the majority of cases, corporations can in-source early-stage components of discovery. For example, once litigation has begun (or is reasonably likely to begin), corporate counsel must first identify and notify all potential corporate witnesses and/or systems administrators to preserve evidence. This custodian notification process must be auditable so that it can be defended if challenged in court.
Once custodians have been notified, corporate counsel must implement the legal hold process in order to preserve all potentially responsive paper and electronically stored information. This is a complex challenge because the overwhelming majority of today’s corporate content, and specifically corporate communications, are conducted electronically.
By deploying an in-house application that is either built on an existing enterprise content management (ECM) platform or a standalone system, corporate counsel can efficiently and effectively in-source custodian hold notification, identification of data sources, automated hold and preservation notices, tracking of acknowledgement of hold notifications, audit trails to measure compliance and retention of notification processes. The strategic alignment of e-discovery software on existing ECM investments enables corporate legal departments to effectively preserve electronic content for compliance, investigation and potential litigation needs, while saving IT from having to support additional applications. Moreover, the use of these systems is a significant improvement to any manual (typically spreadsheet-based) process and should be found by the court as eminently reasonable for litigation response.
Scope and Subject Matter
Once corporate counsel has identified and preserved all potentially relevant information, the next step is to collect the information. In general, for small cases and minor litigation, in-house technology is effective for the document collection process, and some of the more advanced ECM systems offer this capability. The scope and subject matter in larger cases, however, brings greater risk of challenge and error and therefore corporations will most likely continue to rely on third-party consultants who specialize in the collection and management of large amounts of data.
With so much information at hand, failing to collect potentially responsive content or accidentally destroying content are common mistakes made by corporations trying to in-source the data collection process for large cases. Incomplete collection of electronic evidence has resulted in major sanctions and fines in recent cases and can adversely affect the defense of the merits. For example, judgments handed down against corporate defendants in highly publicized cases—$29 million against UBS in the Zubalake case and $1.45 billion in Ronald Perelman’s lawsuit against Morgan Stanley in the Coleman case—were largely driven by e-discovery missteps (although the Coleman case was later reversed for reasons unrelated to the e-discovery issues). These two cases alone were large enough to attract the attention of most corporate counsel, but e-discovery-related issues continue to plague corporate litigants. In Qualcomm v. Broadcom, the court sounded an even stronger warning. On August 13, 2007, the court issued an "Order to Show Cause" against 14 attorneys for the plaintiff, Qualcomm, plus "any and all other attorneys who signed discovery responses, signed pleadings and pre-trial motions, and/or appeared at trial on behalf of Qualcomm," based upon Qualcomm’s failure to produce more than 200,000 pages of relevant emails, memoranda and other company documents until four months after the patent infringement jury trial had concluded (and which plaintiff Qualcomm lost).
Indeed, for matters that represent significant financial exposure or involve an allegation of fraud among key employees, it is recommended to hire an outside data expert—with experience in testifying—to oversee and/or execute data collection. Most companies recognize the risks inherent in these high-exposure matters and are eager to avoid having to call their own employees as witnesses to the collection process.
Limiting the Reach of Discovery
Finally, corporations can cut costs by minimizing the number of documents reviewed—outsourcing the legal document review process to outside counsel is, on average, 70% of the cost of the total e-discovery process. Many top-tier e-discovery vendors offer consulting services and strategies to help corporate counsel reduce the data set before review. These strategies may include maximizing the use of in-sourced culling technology or the initial culling of data by the e-discovery provider using sophisticated search technology. Search technology, specifically, can reduce the number of documents sent to outside counsel by using advanced analytics to group documents by relationship, which enables duplicate documents to be eliminated much earlier in the process.
While the litigation process can be costly and complex for any organization, the best way to minimize the costs and risks of litigation for the corporation is to create a well-documented, enforceable e-discovery strategy and response plan that incorporates: 1. an early assessment of the severity and exposure in the case; 2. a process for effecting custodian notification of a litigation hold for those cases that require such action; 3. a plan for whether to collect data internally or whether to contact outside experts and; 4. a consistent plan to cull data to limit the amount of data that requires review. Having these best practices in place, combined with the appropriate balance of in-sourcing and outsourcing, will advance your efforts to create and maintain the most effective and efficient e-discovery process for your organization.
Electronic Evidence Discovery (EED) provides full-service legal discovery solutions to help our clients significantly reduce legal exposure and gain control over e-discovery processes. Visit www.eedinc.com
for more information.