Communications of the ACM

Virtual extension

Using ESI Discovery Teams to Manage Electronic Data Discovery

By John C. Ruhnka, John W. Bagby
Communications of the ACM, July 2010, Vol. 53 No. 7, Pages 142-144
10.1145/1785414.1785453
Comments

The importance of electronically stored information (ESI) in litigation has increased greatly over the past decade. Responding to the "discovery" requests made by all litigating parties has become a significant management function and cost center for organizations engaged in litigation. Today, over 92% of all business records and data are created and stored electronically; most are never reduced to hard copy.² After civil litigation is filed, a pre-trial "discovery" phase occurs during which courts require litigants to identify and produce potentially relevant information to their adversaries. Settlements often occur before a trial is held, making ESI produced during the discovery phase and evaluated by the parties often determinative of litigation outcomes. Managing discovery of electronic information requires close coordination among managers with widely diverse technical IT expertise, litigation experience and operational authority. Multi-disciplinary "ESI Discovery Teams" are a key mechanism that can be used to achieve the necessary coordination and continuing oversight over enterprise discovery activities, particularly in larger organizations.

A 2007 litigation survey of 253 U.S. corporations reveals that 83% had new lawsuits filed against them in 2006 implicating e-discovery management.1 The most common subject of these law-suits was labor/employment, contract enforcement and personal injuries. Litigation was also significant at smaller companies surveyed, 17% had at least one lawsuit claiming $20 million or more, and at mid-sized companies, 98% reported one or more lawsuits of $20 million or larger. Costs of litigation are high, 71% of the companies reported litigation costs exceeding $1 million per year and 40% had litigation costs over $5 million per year, excluding settlements or judgment amounts. Over half the U.S. firms surveyed use outside e-discovery IT vendors to collect, identify, verify, recover and produce ESI and 30% reported using outside legal counsel with special expertise in e-discovery. These e-discovery vendors had revenues of $1.95 billion in 2006, a 50% increase over 2005, and $130 million was spent for forensic software, data recovery and production.³

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Duties of an ESI Discovery Team

An ESI discovery team implements action plans for all discovery activities of an enterprise and includes the key actors who need to be involved in managing the on-going e-discovery process. This typically includes the CIO, information system managers, in-house legal counsel, representatives from the administrative units involved in litigation (such as, the director of HR in the event of a wrongful termination lawsuit), and outside e-discovery IT vendors and legal experts if they will be involved. The ESI discovery team designs an organization's "litigation hold" procedures and deploys "litigation holds" often involving multiple and overlapping litigation, over all enterprise locations. Secondly, the ESI discovery team manages and is responsible for oversight of all enterprise e-discovery activities. Third, the ESI discovery team is responsible for periodically assessing the operational and cost implications of proposed and on-going discovery activities. When an organization's legal counsel negotiates with litigation opponents over the scope and format of potentially relevant information to be demanded and produced by each side, they need to know the personnel/costs, IT resource/costs and strategic/liability implications of the specific information demands made by each side in order to negotiate intelligently.

Preparing for litigation holds. A "litigation hold" triggers a legal duty by an organization to preserve all evidence under its control which is potentially relevant to a lawsuit or governmental investigation to which it is a party, and arises once a lawsuit has been filed or a party has been served with a document preservation request by an opposing party. In some circumstances litigation hold obligations can arise even before a lawsuit is filed. The watershed 2003 Zubulake ruling imposed legal duties to preserve potentially relevant evidence as soon as litigation is "reasonably anticipated."⁴ Accordingly "reasonably anticipated" lawsuits must be monitored by the ESI Discovery Team as well. This is accomplished by reviewing a company's litigation experience to assess the frequency, types, and size of legal claims which each operational unit experiences, identifying specific triggering events likely to result in lawsuits, such as formal EEOC complaints which are a precursor to several types of employment lawsuits, or notifications of product injuries or fatalities. This data are then used to develop "anticipated litigation guidelines" for various types of litigation the business normally encounters. These guidelines are used to solicit operational units for immediate notification of triggering events which are likely to result in litigation and to identify "reasonably anticipated litigation," and can be used to counter claims that a company purposively destroyed evidence in anticipation of litigation.

After a litigation hold attaches. Once a litigation hold arises, the ESI Discovery Team must prepare a written "preservation plan" that identifies and preserves all information potentially relevant to a lawsuit across all enterprise locations. To do this, detailed information on the IT systems in the various units of the organization is necessary. Are user files and email stored on servers or user workstations? Is instant messaging or voice mail logged or retained? Are users' file server activities logged, and how often are email messages purged? The 2006 Federal Rules of Civil Procedure (FRCP) require both accessible and "inaccessible" ESI, such as back-up tapes, to be preserved so over-writing or reuse of back-up tapes must be halted. An "email switch" or similar function incorporated in electronic records management systems should be used to immediately halt automatic deletion or overwriting of email storage. A preservation plan will include "identification" of potentially relevant files to be preserved using key words describing the subject matter of the litigation, identifying specific users whose emails, instant messaging and voice mails must be preserved, and notify the identified users to preserve all data on desktop PCs, laptops and messaging devices. Severe judicial sanctions can be imposed for intentional or even inadvertent overwriting of potentially relevant files, and organizations are much less at risk for such sanctions if comprehensive preservation plans are effectively deployed and monitored following a litigation hold.

Identification and collection of relevant ESI. The 2006 amendments to the Federal Rules of Civil Procedure (FRCP) require a "meet-and-confer" process between the parties to litigation to negotiate discovery protocols by and for each side including the scope of discovery - what files are to be collected, reviewed for relevance and produced - as well as the timetable for discovery. All parties must identify potentially relevant ESI repositories by category and physical location, including both reasonably accessible and inaccessible sources. To do this the ESI Discovery Team must prepare a "collection plan" which identifies all information responsive to discovery requests, including locations and contact information for personnel in charge of such data. Once potentially relevant data sources are identified, the files are collected and screened for relevance using search criteria such as sender/recipients, subject lines and message content, key word searches within specified date ranges or other tagging methods.

Records should be maintained in native file formats to preserve all content and metadata unaltered. Parties producing requested files need to be able to show an unbroken "chain of custody" to assure admissibility as evidence and to avoid judicial sanctions for altering or tampering with document files, so the ESI Discovery Team needs to establish procedures to assure acceptability during the multiple steps involved in collection and relevance review of files. Tagged files are reviewed for relevance and privilege by legal counsel and company personnel familiar with the subject matter before "production" or delivery to the opposition.

Withholding privileged and trade secret information. Privileged communications, including attorney-client communications and attorney work product, as well as trade secrets may be withheld from disclosure to opponents. Claims of privilege must be supported by a "privilege log" containing data on withheld files listing author, recipients, subject matter, and date. This log enables opposing parties to review and challenge privilege claims. The 2006 FRCP amendments impose a faster pace for discovery which increases the risk of accidental disclosure of privileged documents. The rules permit "clawback" or mandatory return of inadvertently produced "privileged" files or trade secrets. Litigants may also request the court to issue protective orders that prohibit the disclosure of proprietary, confidential, or private information accessed by an adversary or its experts.

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Conclusion

The discovery process associated with most litigation today contains significant cost and liability implications for enterprises. Using multi-functional ESI Discovery Teams to implement litigation holds and to monitor on-going e-discovery activities can add significant value to this process.

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