July 2007

Wake-Up Call on Electronic Discovery

by C. Dean Little and Eric P. Blank

The Federal Rules of Civil Procedure were amended effective December 1, 2006, to deal with discovery of electronically stored information. These new Rules should be a wake-up call to lawyers to pay attention to electronic discovery.

The new Civil Rules essentially codify case law that has been developing over the last 10 years. Many of the cases record the failure of clients and attorneys to preserve and produce electronic information due to inadvertence, inadequate procedures, and ignorance. The cases demonstrate that electronic discovery obligations require both legal and technical know-how.

Both Trial Counsel and Client Are Responsible for Electronic Discovery
The law is clear that trial counsel is responsible for instructing clients on the reasonable steps necessary to preserve, access, and produce discoverable electronic information. Trial counsel is also accountable for monitoring their clients' compliance with instructions.1 Counsel's obligation to competently oversee electronic discovery is not only a duty that is imposed by the court, but also a duty that counsel owes to the client.

The new Civil Rules require that, early in a case, trial counsel for all parties discuss specific efforts to comply with electronic-discovery obligations and be prepared to account to the court.2 Judges, both federal and state, seem to find electronic issues fascinating and have the benefit of continuing education on technological capacities.3 They will not easily be bluffed by techno-sounding "rigmarole."4

Two helpful sources for preliminary guidance on the new Civil Rules and discovery law are Notes of the Advisory Committee on the Rules and Electronic Discovery Primer For Judges, by David K. Isom, 2005 Fed. Cts. L. Rev. 1. Although these sources discuss legal standards, they do not go into detail on the technical aspects of electronic discovery; however, whether a lawsuit is large or small in scale, technical knowledge and experience are critical to ensuring consistent, thorough, and cost-effective compliance with electronic-discovery responsibilities.

Most law firms and most clients do not have the necessary in-house expertise to competently perform discovery duties — whether the lawsuit is large or small. Some larger law firms have concluded that electronic discovery is best left to outside experts. See "Don't Try This at Home," March 2005 ABA Journal, p. 59. This article discusses why engagement of an e-discovery "expert" is a wise decision.

E-mail Represents 80 Percent of Discoverable Communication

The effect of electronic communication on discovery has been and will continue to be staggering. More than 99 percent of information is now being created electronically. Most e-mails, other electronic documents, and associated metadata are never printed to a hard copy. E-mail alone represents 80 percent of discoverable communications in civil litigation.5

Newspaper accounts of notorious lawsuits and reported case decisions demonstrate the evidentiary impact of electronic documents. The vast bulk of this electronic data is stored in electronic storage devices (e-stores), which include hard disk drives (HDDs) in PCs, servers, laptops, and PDAs; tapes and disks; and dozens of other e-stores, like the devices listed in the Primer for Judges article. E-stores are numerous and e-information is voluminous.

Electronic Documents Are Not Like Paper Documents

Electronic documents are not like paper documents and cannot be treated as such in the course of discovery. The many differences between paper and electronic media have been outlined in numerous published articles. One big difference is that e-stores are small and numerous. Therefore, e-stores are easy to overlook as a source of potential evidence.6

A second major difference is that electronic documents and data are easy to unintentionally alter or destroy by normal use of a computer. Therefore, preservation of electronic information requires prompt action to avoid possible spoliation.7 Another difference is that fake, bogus, and deceptive electronic documents are easy to create.8 A fourth difference between paper and electronic discovery is the fact that failures to preserve and produce electronic documents, whether intentional or unintentional, are more likely to be visible and easily spotted by experienced opposing parties. For these reasons, electronic information gives rise to unique issues relating to authenticity, admissibility, and evidentiary weight.

A trial attorney's comfortable attitudes and habits for handling paper discovery cannot be applied to electronic information without risking dire consequences. Adverse consequences include: (1) spoliation sanctions for violation of the duty to preserve and produce documents; (2) loss of electronic information that would benefit the client's case; (3) inability to authenticate and admit the client's electronic documents at trial9; and (4) unnecessarily high cost for electronic discovery that is undertaken without suitable technical-legal experience and without coordination of attorney and client personnel.10

As the Electronic Discovery Primer for Judges concludes:

The moral is clear: judges and lawyers must be conscious of the risks and benefits of electronic discovery and actively manage electronic discovery from the beginning of the case. The duties of lawyers to raise, negotiate and resolve discovery issues, and the need for courts to manage discovery actively, are more important for electronic discovery than they were for paper discovery.

More Spoliation Cases in Last 10 Years than in Previous 200

In the 10 years from 1994 to 2004, more spoliation cases were reported than in the previous 200 years.11 Spoliation of electronic evidence need not be intentional and may be due to negligence, ignorance, or mere inadvertence. Sanctions in reported cases have included fees and cost awards, fines, contempt orders, adverse inference jury instructions, and default judgments. Sanctions for unintentional spoliation have been awarded against clients, managers, in-house attorneys, and trial counsel.12 As yet, statistics are not available on the number of malpractice claims by clients against counsel relating to electronic discovery.

Why so many spoliation cases in the last 10 years? Because destruction or alteration of electronic information is relatively easy to discover. A technically skilled person can quickly find evidence of failures to preserve evidence. For example, if a creator of an e-mail deletes it, a copy of the e-mail will likely still exist in other locations, including in the free space or file slack of the HDDs used by the creator, by each recipient, or by the Internet service provider, and/or in HDDs, CDs, or tapes used to back up the creators' or receivers' networks.13 In short, discovery errors are likely to be visible and detectable.

Basic Distinction Between Preserving and Accessing Electronic Data

Trial counsel must recognize the basic difference between preserving and accessing electronic information. The Catch-22 is this: Data is destroyed when accessed in a forensically improper way.

Preserving data is accomplished by finding and securing all e-stores containing discoverable information. Preserving all data on a HDD that is in current use requires forensically transferring all the data to another HDD called a "mirror image." Accessing the electronic information in an e-store is accomplished by forensically "opening" the e-store to examine its content without destroying or altering any data.

The new Civil Rules acknowledge that electronic information in some types of e-stores, such as back-up tapes, may not be "readily accessible." Such e-stores may not need to be accessed, depending on the issues and circumstances of the case. Nevertheless, such e-stores must be preserved.

Additionally, to be safe rather than sorry, it is a wise general rule to be comprehensive in decisions to preserve e-stores. Although data in an e-store may not be accessed initially, a preserved e-store is available for accessing in the future as developments occur in the evolution of the case. But, as case law demonstrates, an unpreserved e-store threatens risk of spoliation.

As case law also demonstrates, non-forensic accessing of electronic information in e-stores similarly threatens risk of spoliation. Moreover, poor decision-making guarantees an increase in cost of discovery.

Trial Counsel and Client Must Account for Their Electronic Discovery

Trial counsel and their clients must be prepared to give an accounting of answers to questions like the ones listed below. Such accounting may occur in pre-trial conferences mandated by the FRCP provisions, in answering interrogatories, in Rule 30(b)(6) depositions,14 in response to motions by the opposing party, and/or in argument over evidentiary issues at trial.15 These questions are illustrative, are not exhaustive, and do not convey the legal/technical know-how required to answer each query.

• What are the capabilities of the computers and IT systems of the client? Of the opposing party? Of third-party service providers?
• Was an investigation made to find all e-stores as soon as practical?
• Were all e-stores divided into likely and unlikely depositories of discoverable information? Criteria?
• Were the e-stores of likely and unlikely "key players" found? Criteria?
• What were reasonable instructions delivered to the client's personnel to establish a litigation hold to preserve information?
• Were specific instructions given to client's personnel on steps required to avoid destruction of metadata when using a computer?
• What was done to monitor compliance by personnel with the instructions?
• Was any auto-delete software turned off or left on? Deliberately? Criteria?
• Were computers allowed to continue in routine use? Deliberately? Criteria?
• If e-stores were left on or in-use, what burden/cost outweighs the benefit in relation to the needs of the case?
• Were any in-use e-stores (1) taken out-of-use, (2) left in-use and mirror imaged for preservation of data, or (3) left in-use? Deliberately? Criteria?
• Was mirror imaging performed forensically by a trained technician with proper hardware and software so that electronic information was not altered or destroyed?
• If e-stores were left in-use, what burden/cost outweighs the benefit in relation to the needs of the case?
• Were e-stores that were not in-use and were not mirror-imaged delivered to a retention custodian?
• Is chain of custody unbroken for mirror images and non-in-use e-stores?
• Was electronic information from specific e-stores not accessed for review?
• If not accessed, was the information not readily accessible? Other criteria?
• If not accessed, what burden/cost outweighs the benefit in relation to the needs of the case?
• If not accessed, have such specific -
e-stores been identified to the opposing party?
• Should non-accessed e-stores be sampled? When? Criteria? Consequences?
• Was cost minimized by conversion of all electronic information into a single native format or other cost-saving review format?
• Was extraneous electronic information filtered out? Criteria?
• What were the search terms, dates, file types, etc. used to identify possibly discoverable electronic information? Criteria?
• Was cost minimized by use of document-management software requiring no scanning?
• Were privileged e-docs efficiently removed before production to the other party?
• Are discovery request specifically tailored based on technical knowledge of opposing party's computers and IT systems? Or are requests objectionable as overly broad?
• For each question above: Who? How? What? Why? When?
• Was each step of the process documented in order to thoroughly account for preservation and production, and to assure authenticity, admissibility, and evidentiary weight?
• Who is prepared to testify about the process?

Cost-Effective Electronic Discovery Requires Legal and Technical Knowledge

Trial counsel cannot blindly rely on a client's executives, IT personnel, or in-house counsel to know how to preserve, assess, and produce electronic information — as clearly shown by reported cases over the last 10 years.

Electronic discovery need not be intimidating, risky, inefficient, or overly expensive. But, to be thorough and cost-effective, it requires both legal acumen and technical knowledge of all aspects of electronic discovery. As the Electronic Discovery Primer for Judges points out:

Not only does effective electronic discovery present novel and sometimes difficult technical issues, the cost and complexity of electronic discovery can vary significantly depending on the issues and evidence, and upon the effectiveness of the court, the lawyers, and parties.

A poorly conceived, unorganized, or haphazard approach to electronic discovery not only involves increased risk of problems, but can cost many times as much as efficient discovery orchestrated by a proficient professional. This is true for both "big" and "small" cases.

Consider an Expert as E-Discovery Liaison or Special Master

Courts recognize the need for skill, experience, and coordination in electronic discovery. The U.S. District Court for the District of Delaware has endorsed an E-Discovery Policy that includes the following provision (in material part):

E-discovery liaison. . . . [E]ach party to a case shall designate a single individual through which all e-discovery requests and responses are made (the e-discovery liaison). Regardless of whether the e-discovery liaison is an attorney (in-house or outside counsel), a third-party consultant, or an employee of the party, he or she must be:

– Familiar with the party's electronic systems and capabilities in order to explain these systems and answer relevant questions.

– Knowledgeable about the technical aspects of e-discovery, including electronic document storage, organization, and format issues.

– Prepared to participate in e-discovery dispute resolutions.

The court notes that, at all times, the attorneys of record shall be responsible for compliance with e-discovery requests. However, e-discovery liaisons shall be responsible for organizing each party's e-discovery to insure consistency and thoroughness and, generally, to facilitate the e-discovery process.16

In addition to a policy statement like the foregoing, federal courts and litigants are encouraged by FRCP 53, Federal Rule of Evidence 706, and the ABA Civil Discovery Standards to appoint a special master for managing e-discovery, for assisting with privilege review, for dealing with technical issues, and for handling other pre-trial matters.

In appointing such an e-discovery liaison, there are a number of critical factors to consider, including technical and legal understanding, administrative skill, and good witness qualities such as credibility and ability to explain things — since the liaison's testimony may become necessary. A non-attorney liaison, such as a client's employee, may not be covered by the attorney-client or work-product privileges. If trial counsel or in-house counsel is e-discovery liaison, they risk becoming a witness in the litigation and risk loss of attorney-client and work-product privileges.

The alternative is to appoint an outside "expert" as e-discovery liaison. A prudently selected "expert" liaison can take the responsibility for e-discovery compliance off of the shoulders of both trial counsel and client. An outside liaison who is an attorney assures that the attorney-client privilege is maintained — at least until testimony is necessary. If testimony is needed, then the outside liaison can function like any other expert witness to explain and justify the e-discovery decisions made to comply with federal rules and related preservation and discovery duties.17

Cost-Effective Preservation, Access, Assessment, and Production 

An e-discovery policy statement like that of the Delaware Federal Court is not just for "large" cases. For example, whether a party has five or 5,000 PCs, servers, and other e-stores, it is unnecessarily expensive and imprudent to mirror-image all of these e-stores and transfer the data therein to TIFF images for review purposes. Unfortunately, as the case law shows, unnecessary expense and imprudence often occurs.18

Consistent, thorough, and cost-effective preservation of discoverable electronic information requires that trial counsel recognize the need for technical-legal savvy:

• To properly instruct client personnel on electronic-preservation duties.
• To identify the few particular e-stores with discoverable information.
• To secure all such information from deletion or alternation (including by forensic mirror imaging).
• To assure an indisputable chain of custody.
• To document each decision and action.
• To be prepared to account to the court, the opposing party, and the client for each step in meeting the duty to preserve electronic information.

Consistent, thorough, and cost-effective access, assessment, and production of the information contained in the selected e-stores require technical-legal savvy:

• To access information from only selected e-stores.
• To filter data not possibly relevant (such as spam and operating system files) and to filter multiple duplicate copies.
• To eliminate additional data unlikely to be discoverable.
• To perform macro keyword searches of the remaining data for information that is likely discoverable.19
• To present the remaining small subset information for detailed eyes-on review in order to extract the discoverable documents and to screen them for privileged content.20
• To produce electronic information requested by the opposing party.
• To document each decision and action.
• To be prepared to account to the court, opposing party, and client for each step in meeting the duty to produce electronic information.

Summary: The Keys to Effective and Efficient Electronic Discovery

The keys to efficient e-discovery may be summarized as follows:

(1) Immediately preserve all e-stores reasonably expected to contain discoverable information.

(2) Reduce information volume in order to minimize time-consuming, expensive eyes-on review by attorneys and paralegals.

(3) Appoint a single skilled person to coordinate, document, and account for each step, and consider an outside "expert" as e-discovery liaison.

Judges have had the benefit of continuing education on electronic discovery for several years. It is a topic that has judicial attention and interest. Some lawyers are "waking up" to electronic obligations and opportunities faster than other attorneys. Inadvertent or negligent errors are relatively easy to detect and have dire consequences.

The moral: All trial counsel must "wake up." Old paper-discovery dogs, like one of the authors of this article, can learn new e-discovery tricks. It takes commitment and the assistance of technically savvy professionals. 

C. Dean Little and Eric P. Blank are principals in Blank Law & Technology P.S.  Mr. Little has more than 35 years of experience as an advocate in complex securities and other commercial disputes. Mr. Blank has extensive experience as an intellectual property litigator with particular knowledge of computer and Internet technology.

NOTES
 1.  In Zubulake v. UBS Warburg (Zubulake V), 2004 WL 1620866, 229 F.R.D. 422, 432 (S.D.N.Y. 2004), the court clearly stated trial counsel's obligation: "Counsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched." Because of defendant's failure to preserve and produce electronic documents, the court issued a negative inference jury instruction.
 2.  In Peskoff v. Faber, 2006 WL 1933483 (D.D.C. 2006), defendant failed to produce e-mails of an ex-employee claiming that it could not find them on its server. However, the court noted that there were many other e-storage locations where e-mail copies might be found. The court ordered defendant to diligently investigate and file an affidavit detailing the search. See also In re Livent, Inc. Noteholders Securities Litigation, 2002 U.S. Dist. LEXIS (S.D.N.Y. 2003).
 3.  Ken Withers is an instructor to federal judges and magistrates at the Federal Judicial Center. He advises: "Any lawyer who goes before a federal judge without understanding their client's technological capabilities is asking for trouble. The Wal-Mart and Dell cases are illustrative of that." Quote from the Applied Discovery Orange Pages Newsletter at p. 7 (February 2000). See GTFM, Inc. v. Wal-Mart Stores, Inc., 2000 U.S. Dist. LEXIS 3804 (S.D.N.Y. 2000) and Tulip Computers Int'l B.V. v. Dell Computer Corp., 2002 WL 818061 (D. Del 2002).
 4.  In Trimble v. Holmes Harbor Sewer District, Island County Superior Court for the State of Washington, No. 01-2-00751-8 (Oct. 2005), a defendant made representations to the court about its failure to produce electronic documents, but the court found defendant's explanations to be "essentially a bunch of rigmarole" that was "unacceptable."
 5.  David K. Isom, Electronic Discovery Primer for Judges, 2005 Fed. Cts. L. Rev. 1 (citations omitted); Paul R. Rice, Electronic Evidence: Law & Practice 3 (2005).
 6.  See Note 1, above.
 7.  In United States v. Phillip Morris, USA Inc., 1004 WL 1627252, 327 F. Supp. 2d 21 (D.D.C. 2004), the defendant company failed to stop its computer system's automatic deletion of e-mails more than 60 days old. The court sanctioned the company by precluding calling of key witnesses, by awarding attorney fees to the opposing party, and by imposing a fine of $2.75 million. See also MasterCard Int'l, Inc. v. Moulton, 2004 WL 1393992 (S.D.N.Y. 2004).
 8.  In People v. Superior Court, 2004 WL 1468698 (Cal. Ct. App. 2004), defendant produced letters that bore specific dates, but a forensic witness testified that examination of defendant's computer showed that the letters were created after the date on the letters.
 9.  In Shank v. Kitsap County, 2005 WL 2099793 (W.D. Wash. 2005), plaintiff sought admission at trial of electronic documents that plaintiff represented it failed to produce during pretrial discovery due to technical difficulties, but the court denied admission, holding: "Parties have a duty to comply with rules of discovery and court orders despite technical difficulties" which are a "wholly unacceptable basis for failing to comply with discovery." In National American Ins. Co. v. G&G Fire Sprinklers, Inc., 2003 Cal. App. Unpub. Lexis 264 (Cal. App. Ct. 2003), the court not only denied admission at trial of electronic documents that had not been produced during discovery, but also issued a negative inference jury instruction. See also, Tracy v. Financial Ins. Management Corp., 2005 WL 2100261 (S.D. Ind. 2005).
 10. In Danis v. USN Communications, 2000 WL 1694325 (N.D. Ill. 2000), trial counsel instructed the CEO on the duty to preserve electronic documents of the company and the CEO delegated the duty to an in-house attorney. Due to inadequate cooperation and organization, documents were destroyed. See also, Note 1, above, and Note 12, below.
 11. David K. Isom, Electronic Discovery Primer for Judges, 2005 Fed. Cts. L. Rev. 1 (citations omitted), based on analysis of Lexis "Federal & State, Combined" library.
 12. In Phoenix Four, Inc. v. Strategic Resources Corp., 2006 WL 1409413 (S.D.N.Y. 2006), trial counsel instructed defendants to find and preserve all electronic documents and defendants' personnel represented to counsel that they had complied. The representations were wrong. When it was discovered that documents had been destroyed, the court sanctioned trial counsel for gross negligence in failing to make an independent inquiry to verify defendant's compliance. In GTFM, Inc. v. Wal-Mart Stores, Inc., 2000 U.S. Dist. Lexis 3804 (S.D.N.Y. 2000), trial counsel relied on a senior executive for facts about company's computer system and did not directly query IT personnel. The representations were wrong, documents were destroyed, and the court fined the executive $10,000. See also Metropolitan Opera Ass'n, Inc. v. Local 100, Hotel Employees (212 F.R.D. 178 (S.D.N.Y. 2003); Invision Media v. Federal Ins. Co., 2004 WL 396037 (S.D.N.Y. 2004); and the Wal-Mart and Dell cases in Note 3.
 13. In United States v. Arthur Andersen, LLP, 2004 WL 1344957 (5th Cir. 2004), defendant deleted e-mails after notice of start of a government investigation and, in a related case, an individual was prosecuted for destruction of evidence, but copies of these e-mails existed in other e-storage devices.
 14. See Steven Caplow, The Art of the CR 30(b)(6) Deposition, Washington State Bar News (October 2005).
 15. See Mark D. Robins, Evidence at the Computer Frontier: Introducing E-mail at Trial in Commercial Litigation, 29 Rutgers Computer & Law Tech. L.J. 219 (2003).
16. The Delaware District Court's E-Discovery Policy is available at: www.ded.uscourt.gov/Announce/Policies/Policy01.htm.
 17. In Jones v. Goord, 2002 WL 1007614 (S.D.N.Y. 2002), the court noted that electronic information is easily manipulated, and opined a preference for custodians and forensic witnesses who are attorneys rather than nonlawyer technicians "who [are] neither subject to licensing [nor to] ethical constraints imposed on members of the bar."
 18. In Hagenbuch v. 3B6 Sistemi Elettronici Industriali S.R.L., 2006 WL 665005 (N.D. Ill. 2006), defendant converted and produced electronic data in TIFF images over plaintiff's objection that such conversion would result in loss of clarity, metadata, and storage location information and also an inability to conduct quick and efficient keyword and other searches. The court ordered production in native format for the forgoing reasons and because the TIFF production was not in the "usual course of business." See also Williams v. Sprint/United Management Co., 2005 WL 2401626 (D. Kan. 2005); Treppel v. Biovail Corp., 2006 WL 278170 (S.D.N.Y. 2006); Nova Measuring Instruments Ltd. v. Nanomethrics, Inc., 2006 WL 524708 (N.D. Cal 2006); Bergersen v. Shelter Mut. Ins. Co., 2006 WL 334675 (D. Kan. 2006).
 19. In In re CV Therapeutics, Inc., 2006 WL 2458720 (N.D. Cal. 2006), defendant objected to plaintiff's use of de-duplication filter software to reduce 423,000 electronic documents to 125,000, and objected to plaintiff's use of specific keyword terms to reduce this number to the 4,000 electronic documents actually produced. The court found plaintiff's de-duplication filter and search terms to be a reasonable way to comply with duties to produce, but ordered plaintiff to specify its filter and search criteria.
 20. In Henry v. IAC/Interactive Group, 2006 WL 354971 (W.D. Wash. 2006), the court suggested that a party's concerns about removal of privileged documents could be handled by a neutral computer forensics expert. See also Playboy Enterprises, Inc. v. Wells, 60 F. Supp. 2d 1050 (S.D. Cal. 1999).