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»	Help Your Clients Help You: Be Proactive About E-Discovery

Until recently, law firms have primarily approached electronic discovery reactively. Most e-discovery dollars have been spent cleaning up a mess instead of preventing one. But it's painfully obvious to anyone who has conducted discovery of electronic evidence that a proactive approach is cheaper and easier for everyone involved. It also makes you much more likely to win your case.

In 2008, we began to hear more talk about corporate policies, e-discovery planning, and other proactive measures. This paradigm shift—coupled with today's economy—has created an interesting litigation landscape, and corporate clients aren't letting outside counsel run the show. But e-discovery has also created an opportunity for law firms to provide new and innovative services to their clients.

Despite some attorneys' aversion to technology, electronic evidence is a fact of life. Companies generate an immense amount of electronically stored information (ESI), and much of it is relevant to litigation. Even as early as 2002, only 0.01 percent of new information originated on paper. Increasingly, most of the relevant information available about any legal matter is stored electronically.

Yet, in a recent study conducted by Osterman Research, nearly 70 percent of large and medium-sized companies surveyed indicated that they are not ready to address e-discovery issues.

And it's no surprise: collecting electronic evidence from large, disparate information technology systems can't be accomplished with the push of a button. Electronic data can be stored in many different formats, on a variety of different systems. Most ESI is never printed, and files can be saved, modified, or deleted with the click of a mouse.

E-discovery can be a high-cost, high-risk activity, especially if your clients are not prepared to handle the barrage of discovery requests that inevitably land on their lawyer's desk. In addition to making litigation much more expensive, e-discovery also introduces other risks:

Winning is about proving good faith, not about the evidence presented. In many cases, data retention policies and preservation efforts are more important than the evidence itself. If an organization doesn't have adequate controls in place, there's no way to meet its preservation obligations. Famous e-discovery cases like Zubulake v. UBS Warburg LLC clearly set this precedent.¹

Giving up can be the best business decision. Sometimes, settling a case (regardless of fault or responsibility) is cheaper and easier than dealing with e-discovery. The exorbitant cost of a poorly planned e-discovery effort often makes settlement the only viable option.

E-discovery sanctions are increasingly prevalent. Because of the complexity associated with electronic data, it's easy to make costly mistakes. As recent case law illustrates, courts have become increasingly demanding when it comes to e-discovery, even going as far as referring attorneys to the state bar for disciplinary action.²

Instead of reacting to e-discovery when litigation occurs, you should be proactive in addressing these risks with your clients.

For starters, developing an e-discovery strategy allows you to generate revenue on the front-end instead of waiting for clients to get sued. Being proactive about litigation also builds tremendous goodwill with clients. E-discovery planning has a tangible return on investment, so a strong litigation strategy will directly increase your clients' profitability. And, you'll win more cases when your clients are prepared for discovery. Planning ahead will help demonstrate good faith, a critical requirement of the Federal Rules of Civil Procedure (FRCP) and many state court rules governing e-discovery.

Most significantly, corporate clients expect their outside counsel to have a skilled e-discovery practice group. Attacking e-discovery proactively gives litigators a deeper in-house perspective, helping to build a stronger understanding of the unique challenges that e-discovery presents to their clients. And, helping to implement a discovery strategy will make your firm an easy choice for future litigation work.

Guidance from the Federal Rules of Civil Procedure

So how do you help clients develop a proactive e-discovery strategy? Most organizations don't extract the substantive compliance requirements implied by the FRCP. If we look closely, the FRCP and supporting case law give us clear guidelines for e-discovery preparedness:

Prepare an adequate legal hold process. Ensure that proper hold triggers are identified and that swift, appropriate action is taken in response. Provide training to employees so they know how to react when a hold is issued. Draft hold message templates that address a variety of common scenarios, based on the client's litigation history.

Know where and how data is stored. Work with IT to generate a "data map" or similar documentation that shows how the IT system is organized. Quickly identifying sources of potentially responsive ESI will put you one step ahead during discovery.

Plan for collection and analysis. Make sure your clients have an e-discovery plan that covers the collection, processing, and review of potentially responsive ESI. There are several elements:

• Address the storage and retrieval of e-mail, file shares ("network drives"), databases, and any other electronic information (e.g., voice mail, text messages).
• Evaluate technical systems that are used to archive and retain data, such as e-mail archiving appliances and document management systems. Make sure these systems are equipped to handle automated legal holds.
• Select software tools and vendors to collect and process electronic evidence stored on the company's system. Depending on the size and complexity of the organization, it may be more cost-effective to outsource or to purchase in-house tools.
• Develop a comprehensive review strategy. This may include hiring contract attorneys or other legal support staff to keep costs down.

Build a good faith showing. In addition to a strong legal hold policy, it is critical to demonstrate that the company has control over its electronic records. The only way to establish good faith is to craft excellent policies that are well-implemented, properly enforced, and consistently followed. Effective policies are clear and concise, and they avoid legalese as much as possible. But every organization is different; IT policies should be tailored to fit your client's culture and business practices. Policies may also address acceptable use, employee privacy, intellectual property issues, internal and external communication, and data security practices.

Keep only what you need. Retaining unnecessary records significantly increases the cost of litigation, because there is more data to search, collect, and process in response to an e-discovery request. Retaining less data also decreases the organization's storage costs and increases efficiency.

Tip: There are only three reasons to retain an electronic record:

1. There is an ongoing business need to keep it;
2. A regulatory compliance obligation exists; or
3. There is a legal hold on the record.

Test and learn—then test again. Be sure to test the company's processes regularly to ensure that all technical and procedural controls work as expected. Tweak policies and plans based on changing business needs, changes in the law, and the organization's own litigation experience. Most importantly: communicate with stakeholders very early in the planning process and solicit feedback. This will create management buy-in throughout the organization.

Corporate policies should also be reviewed annually or semiannually to ensure that they adequately address current risks. Effective policies are communicated to employees, reviewed and discussed regularly, and updated as a matter of habit. New employee orientation should always include a discussion about corporate IT policies.

Ensure the Best Outcome

In the electronic age, we cannot ignore the risks and challenges introduced by new technologies. The right litigation preparedness strategy will make e-discovery cheaper, easier, and less painful for everyone involved. But it's vital that you work with skilled technologists who have experience addressing e-discovery proactively. With the right team, taking a proactive approach ensures the best possible outcome for your clients.

Sources

1. Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004)

2. Qualcomm, Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal. Jan. 7, 2008)

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