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PLI: Electronic Discovery Guidance 2009: What Corporate and Outside Counsel Need to Know

Michael Gold’s article "Efficient E-Discovery for the Smaller Case," which was published in the course handbook for the recent PLI program, Electronic Discovery Guidance 2009: What Corporate and Outside Counsel Need to Know, was republished in PLI’s November 5 All-Star Briefing newsletter.

Efficient E-Discovery for the Smaller Case

PLI: Electronic Discovery has presented both cost and efficiency challenges. How do you approach this dual issue?

MICHAEL GOLD: We have lived with e discovery for some time now and the one reality that all practitioners can agree on is that it is expensive, no matter the size of the lawsuit or what is at stake. We are bombarded with emails from law firms and vendors telling us what the e discovery best practices are and the doomsday scenarios that will ensue if the appropriate protocols are not followed. Whenever we encounter these communications, we automatically think about the tremendous expense that will be involved and how difficult it will be to persuade a client in a smaller case to follow the rules. Some of us even devote serious thought to strategies that can reduce the slope of e discovery so that the merits of a smaller case will not be swamped by the e discovery costs. Of course, we then encounter an opposing counsel who believes that the scope of e discovery should have no rational limits, regardless of the size of the case. Our commitment to efficiency then gets derailed as we spend our time battling the opposing counsel who demands "everything."

An increasing number of articles and vendor email blasts address making e discovery more efficient, and hopefully less costly, in the smaller case. But no such piece that I have read starts with a practical reality that we have all encountered at least once – the smaller case itself. Let’s start with a hypothetical.

Your client has been sued in federal court. The plaintiff is seeking a few million dollars in damages. Your client is not a large company but like almost all businesses, it creates and stores most of its information electronically and there is a lot of it. The client has no real retention plan for its electronically stored information ("ESI") and there is no "data map" which reveals where and how all of the ESI is stored. The client has no significant IT staff, and if it does, they know little or nothing about litigation readiness. There are lots of back-up tapes or drives that the client routinely uses as a source of ESI that cannot be found among its active data. Worse yet, you note from her web bio that the plaintiff’s lawyer wrote an article for the local bar association a while back about e discovery. The good news (maybe) is that you actually know something about e discovery. The written discovery requests start to roll in, each with the ominous request for all of your client’s ESI.

In the face of this, what do you do? Do you advise your client that there is only one way to conduct e discovery, and unfortunately, it is outrageously expensive and the ultimate e discovery expense will be out of all proportion to the issues and amounts in controversy? You might. But there is perhaps a better way to manage e discovery in the smaller case. And there is no better time than now to start considering what I would call the "Small Case E discovery Approach." Because if you have not been through the e discovery process in a smaller case, you or one of your colleagues undoubtedly will be before too long.

One: You Must Have a Sound Grasp of E Discovery Laws and Principles: Professional competence in e discovery is the essential prerequisite for conducting e discovery efficiently in a smaller case. The litigation budget may not be large enough to accommodate a dedicated e discovery person on your litigation team. You may not have the resources to hire an outside vendor. In a modest budget environment, knowledge of the e discovery laws is critical so that you know what you can and cannot do under prevailing case authority and be able to explain your approach to opposing counsel and perhaps the court. Similarly, you need a sound grasp of the available data gathering, production and management technologies and solutions. Otherwise, you may default to a solution that does not fit your case and you could be confronted with the nightmare scenario of realizing that you selected the wrong "off the rack" technology when it is too late to do anything about it.

It will not be acceptable for you to simply editorialize to your opposing counsel that the case is small and hence e discovery should be limited for that reason alone. You might want to take a close look at materials developed by the Sedona Conference and get a sense of the e discovery "environmental" factors that will apply to your case. It might also be wise to periodically look at some of the numerous e-discovery websites and blogs. You’ll need to be constantly on guard for the opposing counsel who has learned enough of the vocabulary of e discovery to sound proficient but in reality is not too competent. Many of us have experienced an opposing counsel who knows all of the e-discovery buzzwords but never seems able to reach a binding agreement with you.

Two: You Must Craft an Overall E discovery Strategy That Fits the Case: Sound bites will not carry the day in the small case. Particularly with the small case, the governing strategic consideration will be "proportionality." A recent American College of Trial Lawyers report observed that "parties and counsel should attempt in good faith to agree on proportional discovery at the outset of a case but failing [such] agreement, courts should become involved." (See Final Report of the American College of Trial Lawyers and the Institute for Advancement in the American Legal System, March 2009, at p. 17.) The concept of proportionality is consistent with Rule 26(b)(2)(C), which requires the court to consider "the needs of the case, the amount in controversy, the parties’ resources, the importance of the issue at stake in the action and the importance of the discovery in resolving the issues."

Your strategy also should be mindful of the Sedona Conference® Cooperation Proclamation. While you need to be prepared to deal with an overzealous opposing counsel, your best weapon in all circumstances will be a well developed sense of what realistically is at issue and the extent of the e discovery reasonably warranted by the case.

You should consult the Electronic Discovery Reference Manual ("EDRM") as well. You can see it and many other helpful resources at The EDRM is extremely useful as a starting point to begin thinking about your overall strategy. Lawyers and their clients can go sideways in e-discovery if they fail to think systematically about all stages of the e-discovery process. The EDRM, among other things, is a great tool for disciplining your thinking.

Three: You Must Effectively Manage Your Client’s Expectations and Enlist Your Client’s Direct Participation in the E Discovery Process: Bigger companies tend to have a better sense of the sheer magnitude and cost of e discovery and many larger companies have in-house litigation staff to support or even conduct the e discovery effort. This is seldom the case with smaller companies. Educating your client about the realities of e discovery and convincing the client that you are equipped to handle the task is essential for a smooth e discovery process.
And "process" is what it’s really all about. This process works best in the small case when your client understands what the e discovery process entails, why it cannot be ignored and who will be the point person at the client level.
When your client is not a large entity, it can be maddening to find an appropriate e discovery point person – the lawyer thinks it needs to be a general counsel type or a high-caliber IT person. But the problem is usually not the client – it is the lawyer. Once you move away from the rigid belief that only a high level in-house person (and there may not be such a person in any event) is equipped to be the point person, you can then think rationally about what you really need – and in most cases it is a reasonably intelligent employee who can work with you to identify the ESI and where it is located and help you retrieve it and produce it.

Four: You Must Exercise Extreme Care in Hiring An Outside Vendor: In the early days of e discovery, lawyers were frequently challenged in making the right outside vendor selections. Vendor track records were not lengthy and the vendor sales pitches were often not matched by performance levels.
Today, with many vendors consolidating and the seeming array of smaller vendors growing, you must use care in selecting an outside vendor. In fact, you should think about not hiring a vendor at all when the volume of ESI is modest. There are several search engines and on-line back up tools that are free or modestly priced, and you should take advantage of these resources in a smaller case. You should not just default to one of the larger vendors, whose pricing may be way out of line with the economics of your case, or to a small vendor without an established track record. You and your opposing counsel can reach agreement on the search, collection and production protocols and your client’s IT staff can execute the protocols.

Five: You Must Know When to Enlist the Court’s Aid: Many judges and magistrate judges have developed a keen grasp of e discovery, including the concept of proportionality. The courts are becoming increasingly aware that the cost of e discovery, significant in large cases, can literally swamp the economics of a smaller case. When you cannot reach a reasonable solution with your opposing counsel, you must move quickly to enlist the court’s assistance. The federal rules, state laws, and the case authorities furnish plenty of guidance on when it is appropriate to seek judicial involvement and what the court is likely to do in a particular case.

The pressures of e discovery are most acute in the smaller case. Efficient e discovery in smaller cases requires a great deal of thought at the outset, not just about the production of ESI but the production of ESI in a manner warranted by the magnitude of the case. E discovery, by its very nature, can inspire some truly extreme and preposterous actions by the parties, lawyers and vendors. The Small Case E Discovery Approach should nevertheless assist practitioners in thinking about the modest case in a way that does not inevitably lead to the e discovery tail wagging the litigation dog.