This month’s featured expert:
Jason B. Fliegel, Esq.
Associate | Mayer Brown Rowe & Maw LLP
Member, DRI – The Voice of the Defense Bar
Background:
Jason Fliegel practices in the areas of corporate litigation and antitrust. He is a member of Mayer, Brown, Rowe & Maw’s Electronic Discovery and Records Management Group and has represented clients on a wide range electronic discovery issues, including the proper preservation of electronic documents, review of electronic documents and production of electronic documents. Fliegel is the Publication Chair of DRI’s Electronic Discovery Committee and was the senior editor of The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Production.
Fliegel is the author of several articles on electronic discovery and has conducted seminars on electronic discovery issues. He graduated in 1999 from the University of Chicago Law School as a Juris Doctor and graduate with distinction from the University of Virginia in 1996 as a Bachelor of Arts.
Interview Focus:
Controlling the Costs of E-Discovery
Featured Interview:
What are some ways companies can better control the costs of e-discovery?
The key to successfully controlling the costs of electronic discovery is to get in front of the issue. The longer you and your client wait to tackle tough electronic discovery issues, the more expensive they will become. Nowhere is the old adage that “an ounce of prevention is worth a pound of cure” truer than in the realm of electronic discovery.
The first opportunity to control the costs of electronic discovery in tomorrow’s lawsuit is today – before a suit is filed or even anticipated – by implementing an electronic records management program, or ERMP. An ERMP allows a corporation to treat its electronic documents in an organized and consistent manner and to make decisions about document retention in a setting removed from any particular case or controversy (and consequently, in a setting that will invite less incredulity from courts and opposing parties). As a result, when the corporation is required to engage in electronic discovery, it will have already eliminated a large swath of irrelevant material from its collection of electronic documents, and it will not have to spend a single cent to preserve, collect, review, and produce those documents.
Once litigation begins, preparedness is still the key to controlling electronic discovery costs. Developing and implementing a careful plan for the preservation, collection, review, and production of electronic documents can ensure that you minimize the burdens of electronic discovery. For example, a comprehensive effort to collect potentially relevant electronic documents at the outset of a case can prevent you from having to go back to document custodians multiple times to check for more documents – and thus save money. Similarly, formulating a comprehensive plan prior to beginning a document review can prevent you from having to review the same documents more than once.
Finally, communication is an important tool to limit e-discovery costs. Many of the costs associated with electronic discovery stem from disputes between the parties over whether electronic documents have been treated appropriately during the discovery process. Often these disputes can be minimized or avoided altogether through a robust meet-and-confer process. This is not to suggest, of course, that every decision regarding electronic discovery should be fronted to the opposing party; however, keeping the opposing party appropriately informed can help you and your client avoid being surprised with motions to compel or motions for spoliation sanctions.
How will the new amendments to the FRCP impact this ability?
The Federal Judicial Conference has approved several proposed amendments to the Federal Rules of Civil Procedure designed to address issues unique to electronic discovery. These Proposed Rules were crafted in 2004 and 2005 by the Civil Rules Advisory Committee to the Federal Judicial Conference and its Discovery Subcommittee, and were approved by the Federal Judicial Conference in September 2005. Assuming – as is probable – that they are promulgated by the Supreme Court and not blocked by Congress, they will go into effect on December 1, 2006.
The Proposed Rules will make a number of key changes to electronic discovery that will further enable producing parties to better control costs. Foremost among these is a new limitation in FRCP 26, which will provide that a party “need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost.” Instead, discovery from such sources will be allowed only on a showing of good cause by the party seeking the information. Under this Proposed Rule, parties should see a significant increase in their ability to control discovery costs.
Producing parties will also benefit from the proposed amendment to Rule 33, which specifies that a party need only produce electronic information in a single form. Under this rule, a requesting party will not be able to request that particular electronic documents be produced in multiple different formats. While it is relatively rare for a requesting party to seek such production, on those occasions on which it does happen, such requests increase the cost of production.
Finally, producing parties will be able to avail themselves of the “safe harbor” in FRCP 37, thereby avoiding potentially ruinous sanctions. Under the safe harbor, courts will be barred from imposing Rule 37 sanctions on parties who fail to produce electronically stored information “lost as the result of routine, good-faith operation of an electronic information system.” Under this rule, parties will not ordinarily be subject to sanctions from the operation of their backup tape rotation systems or from the use of dynamic databases. This harbor from sanctions will enable corporations to avoid expensive backup tape freeze policies and similar actions designed to preserve information solely for the sake of avoiding sanctions.
Are there steps companies can take to shift costs to the requesting party if discovery requests are deemed unreasonable?
Several judges have confronted the issue of cost-shifting. The first noteworthy opinion to do so was issued in 2002 by Magistrate Judge Francis of the Southern District of New York. In that case – Rowe Entertainment v. The William Morris Agency, 205 F.R.D. 421 (S.D. N.Y. 2002) – Judge Francis identified eight factors to be considered in assessing whether discovery costs should be shifted to the requesting party. Those factors were 1) the specificity of the requests; 2) the likelihood of a successful search; 3) the availability of the requested data from other sources; 4) the purpose for which the data was originally retained; 5) the benefit to the parties; 6) the total costs of the requested discovery; 7) the ability of the parties to control costs; and 
the parties resources. In that particular case, Judge Francis found that the factors weighed in favor of shifting the discovery costs to the requesting party. The Rowe test was subsequently cited and followed by several courts.
In 2003, Judge Scheindlin refined the Rowe test in a case called Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309 (S.D. N.Y. 2003). Judge Scheindlin described the Rowe test as “the gold standard,” but noted that it was in some ways inconsistent with Rule 26. Accordingly, she set forth a seven-factor test: 1) the extent to which the request is specifically tailored to discover relevant information; 2) the availability of the information from other sources; 3) the total cost of production, compared to the amount in controversy; 4) the total cost of production, compared to the resources available to each party; 5) the relative ability of each party to control costs and its incentive to do so; 6) the importance of the issues at stake in the litigation; and 7) the relative benefits to the parties of obtaining the information. Judge Scheindlin also noted that these factors should be weighted in order – that is, the first factor given more weight than the seventh.
Courts have continued to apply the Zubulake test in the years since its formulation, and a producing party seeking to shift the costs of electronic discovery to the opposing side would be well-advised to frame his arguments in terms of the Zubulake factors.
Will a “save-everything” approach work to help control costs – especially in the initial evidence gathering/preservation phase?
Given the potentially disastrous consequences of spoliation sanctions – ranging from fines to adverse jury instructions to default judgments – there is a strong temptation to employ a “save everything” approach under the theory that if everything is saved, there can be no spoliation. While such an approach may be proper in certain cases, in general, saving every electronic document inflates the costs of electronic discovery without providing a commensurate benefit. Certainly, a party is under no obligation to preserve every electronic document in its possession. In civil litigation, it only must preserve those documents which are discoverable – that is, which are relevant to a claim or defense in the litigation. Each document that is preserved costs the party money – not only the money related directly to the preservation of the document (the money associated with storing the document on a server), but also money related to reviewing the document for production. With a “save everything” approach, lawyers will necessarily spend time collecting and reviewing many documents that are unrelated to the underlying litigation.
The better approach, therefore, is to save only those documents that are relevant to the litigation. Such an approach requires more thought and expenditure at the beginning of the litigation, but it quickly pays for itself by ensuring that the party is not needlessly spending money to manage documents it need never have saved in the first place.
Filed under From the Experts.