Key Issues for E-Discovery and Legal Compliance

An Osterman Research White Paper

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Executive Summary

Good electronic discovery (eDiscovery) practices and the technologies that support them are an essential best practice for any organization because they:
  • Enable organizations to preserve content, place content on litigation hold, and prevent this information from being deleted prematurely.
  • Enable the retention, protection, search and production of relevant content in support of an organization’s litigation efforts.
  • Minimize risk by significantly reducing the likelihood that an organization cannot satisfy a court or regulator request for information in the appropriate form and timeframe. Without good eDiscovery, organizations that encounter court orders or regulatory obligations to produce information run the risk of sanctions, fines or other penalties.
  • Allow organizations to index, classify, search for and produce business records and other information for reasons other than an eDiscovery order. Records may be used to satisfy a regulatory requirement to produce information, help managers perform an early case assessment, or gather information for a Freedom of Information Act (FOIA) request.

Implementing best practices around eDiscovery should be a high priority for every organization.

Key Takeaways

  • Managers in mid-sized and large companies are often worried their organizations will be sued at some point, but most aren’t adequately prepared to deal with eDiscovery issues.
  • The volume of electronic content that organizations generate, receive and store is growing rapidly. As new content types become part of the discoverable content that organizations must manage, coupled with the rapid growth in data from “Internet of Things” devices, the rate at which the volume of electronic content increases in the typical organization will accelerate.
  • At least 70 percent of organizations can retain, find and produce email that is up to six months old. However, for other content types that are increasingly the subject of eDiscovery, this percentage decreases dramatically.
  • Most organizations are not adequately prepared to address key requirements included in the Electronic Discovery Reference Model.
  • There are best practices that decision makers can implement to help their organizations satisfy eDiscovery requirements and significantly reduce their corporate risk.

About This White Paper

This white paper presents an overview of key eDiscovery issues, and presents some of the results from an in-depth survey of decision makers and influencers at mid-sized and large organizations, primarily in North America. This white paper was sponsored by Barracuda; information about the company is provided at the end of this paper.

Why Focus on eDiscovery

eDiscovery and legal compliance are top-of-mind issues for business and IT decision makers for two key reasons: organizations are frequently involved in litigation, either as defendants or as involved third parties; and most decision makers are worried about the potential for being sued. For example, the research conducted for this white paper found the organizations surveyed received a mean of 75 eDiscovery requests during the past 12 months. Also, more than three in five decision makers are “somewhat”, “fairly” or “very” worried about their organization’s potential for being sued, as shown in Figure 1. We found that 40 percent of organizations anticipate an increase in the number of eDiscovery requests they will receive during the next 12 months and 45 percent anticipate no decrease.

How to View Discovery

The overall process of “discovery” can be viewed in a couple of different ways:
  • As a strict set of legal obligations focused on searching for and producing content that might be relevant for use as evidence during a trial or in prelitigation activities. Viewed this way, discovery can include the search for and production of any sort of document or other data that might be useful to prove a plaintiff’s or defendant’s case in a civil action or, in some cases, a criminal action.
  • In a broader context, “discovery” can be viewed as the ability to search for and produce content not only for court-ordered discovery activities, but to find information that might be relevant for any sort of litigation or compliance-related activity. These activities might include senior managers performing an informal early case assessment to determine if a potential lawsuit has merit, a compliance manager satisfying a FOIA request, a sales director searching for information about customer in a particular geography, or line-of-business managers looking for social relationships within a company.

eDiscovery Basics

eDiscovery is the application of well-defined discovery processes to any Electronically Stored Information (ESI) that an organization has available, such as email messages, CRM data, presentations, social media posts, voicemails, word processing files, spreadsheets, and any other relevant communication or information that might be useful in a legal action. eDiscovery can occur on any platform where ESI is stored: desktop computers, laptop computers, file servers, smartphones, tablets, backup tapes, and even employees’ home computers and other personally owned devices.

The ability to find, hold and produce information when requested by a court or regulator is a critical responsibility present in one form or another in every jurisdiction. It is also a responsibility that, if not performed adequately, can cost an organization in the form of fines, sanctions, penalties, lost revenue, or higher legal costs. An effective and compliant eDiscovery or compliance process is dependent on a well-managed information governance capability. The costs and risks of eDiscovery and compliance skyrocket when an organization does not have control of its enterprise data and cannot find the information requested for a legal action within the timeframe allowed by the court. eDiscovery and other legal costs are also impacted by over- or under-collecting data.

Electronic Content Volumes are Growing Rapidly

ESI is accumulating rapidly. An Osterman Research survey conducted during 2016 found that organizations store a mean of 49.3 gigabytes of email data per user, and that total messaging-related storage during the previous 12 months increased a mean of 18 percent. Based on this rate of growth, 49.3 gigabytes per user in 2016 will increase to 133 gigabytes per user by 2022, an increase of 354 percent in just six years. Even small organizations are experiencing rapid growth in their storage of ESI if they retain it as they should.

Although email is the most common type of ESI called upon for eDiscovery and related purposes today, other types of ESI are becoming more relevant and will increasingly be relevant in the context of eDiscovery and litigation holds. For example, electronic files stored on file shares and other endpoints, content in SharePoint repositories, social media posts, structured data (e.g., content stored in databases), CRM data, text messages, voicemails and other content types will need to be retained and stored in archiving systems for litigation support purposes.

The research conducted for this white paper found that most of the key groups in an organization, besides IT, are not adequately prepared to deal with eDiscovery issues. As shown in Figure 2, only IT management’s preparedness meets or exceeds the importance that it places on eDiscovery.

Part of the reason many decision makers may perceive their organizations are underprepared for eDiscovery is that they are unable to produce potentially discoverable content. For example, as shown in Figure 3, the majority of organizations surveyed can preserve, find and produce email that is up to six months old in response to an eDiscovery request. However, for older email and other data types, this capability decreases dramatically.

What is Driving the Growing Importance of eDiscovery

There are several drivers for eDiscovery, although the importance of these drivers will depend on an organization’s size, industry, its regulatory environment, its management tolerance for risk, and other factors.

The Federal Rules of Civil Procedure

The Federal Rules of Civil Procedure (FRCP), established in 1938, are a set of rules that constitute the basic guidelines for civil litigation in the United States. The FRCP was updated significantly in 2006, most notably to codify the concept of ESI, and again in 2015. The primary impacts of the 2015 changes to the FRCP, among others, are shorter and more limited discovery periods, the requirement for litigants to be better prepared for eDiscovery quickly once the litigation process starts, and a requirement for attorneys’ readiness to address claims and proportionality issues in the context of eDiscovery.

Key changes to the rules in 2015 include the following:

  • While the changes to the FRCP in 2006 focused on the provision of ESI, the 2015 changes adapt the focus to preservation of ESI. The FRCP now imposes “curative” measures when ESI is lost or absent [FRCP Rule 37(e)(1)], which might make an inability to produce requested content during eDiscovery more expensive and consequential.
  • The discovery process is now more limited than it was so that the pain it imposes on all parties to litigation can be minimized.
  • Under the previous FRCP rules, parties involved in litigation could simply object to a request to produce content. However, the new rules require the objecting party to state the specific reasons for any objection and the party “must state whether any responsive materials are being withheld on the basis of that objection.”

Obligations That all Organizations Must Satisfy

Any sound eDiscovery strategy should include several elements to ensure an organization can satisfy its litigation obligations and lessen the risk of difficulties during legal actions. While this applies specifically to eDiscovery, the principles involved also apply to regulatory obligations, including:
  • Relevant data must be preserved All organizations must preserve their relevant ESI, even those that are not in heavily regulated industries such as financial services, healthcare, energy or life sciences. These records include interactions with clients, purchase orders, contracts, employee records, policy statements and any other content that might be relevant for litigation, regulatory compliance, or simply any best practices that management or legal determines necessary.
  • Litigation holds are a critical requirement A litigation hold requires an organization to suspend any content deletion processes or practices for relevant data before a legal action commences if it can be reasonably determined that litigation is probable. Because organizations must retain all relevant data for a litigation hold, continuing to delete content can result in serious consequences. Courts have the discretion to impose a variety of sanctions on organizations that fail to implement proper litigation holds, including adverse inference instructions, fines, additional costs for third parties to review or search for data and, in some cases, criminal charges. At a minimum, an organization that deletes data improperly may suffer harm to its corporate reputation.
  • Content that can and cannot be accessed must be identified The parties to civil litigation must determine the information that it can and cannot reasonably produce. If an evaluation finds that specific ESI cannot be produced because it is not accessible or would be too expensive to produce, Rule 26(b)(2)(B) of the FRCP still requires that information about this information must be made available. For example, a party that has potentially relevant data on backup tapes that is in a format that is no longer supported may have to report this fact.
  • Information requests must be addressed quickly FRCP Rule 26(a)(1) obligates litigants to have a good understanding of their data assets. Moreover, they must be able to discuss these issues in advance of the initial pre-trial discovery meeting. FRCP Rule 16(b) requires that this meeting occur within 99 days (sometimes sooner) from the commencement of a legal action, and so all parties should have solid eDiscovery capabilities in place prior to litigation.
  • More data types must be managed for eDiscovery As noted above, the eDiscovery process is becoming more complicated because of the need to produce new data types from a growing number of platforms where that data may be stored. For example, social media content from official, corporate accounts and personal accounts that contain business records that might be relevant during litigation must be produced. Corporate information stored on employee-owned devices must also be produced even though it resides on devices that often are not under direct (or any) corporate control.

eDiscovery Requirements and Common Mistakes

Decision makers are advised to learn from court decisions about proper management of the eDiscovery process. Here are a few cases that illustrate best and worst practices:
  • Emails and attachments must be produced In Skepnek v. Roper & Twardowsky, LLCi , the defendant was ordered to produce relevant emails, but did so in PDF format without the attachments that were part of the original emails. The defendants argued the plaintiffs never stated in their original request the form of the emails to be produced, but the judge in the case did not agree, stating “…defendants were required under Rule 34(b)(2)(E)(ii) either to produce the emails and attachments in the form (1) in which they are ordinarily maintained, or (2) ‘in a reasonably usable form.’ Defendants failed to produce the attachments at all. Defendants also failed to show PDF format is the form in which their e-mails and attachments are ordinarily maintained.” The judge ordered the production of the missing email attachments.
  • Litigation holds must be implemented promptly In Stinson v. City of New Yorkii, a case involving an accusation of police officers issuing summonses in violation of five amendments to the US Constitution, a litigation hold was implemented by the City – three years after the initial complaint had been filed. Not only was the litigation hold issued long after it should have been, but the Court determined that it had not been communicated effectively to the relevant parties. Moreover, the New York Police Department allowed individual officers to delete email that should be subject to litigation holds. The Court determined that no effort was made to preserve relevant text messages between officers, relevant emails had been deleted, and that “records were destroyed with a culpable state of mind.”
  • eDiscovery should be specific Parties requesting content should be specific in their requests for information. For example, in the case Tompkins v. Detroit Metroiii, the defendant sought the plaintiff’s entire profile on Facebook. The court denied the request, ruling that “…the Defendant does not have a generalized right to rummage at will through information that Plaintiff has limited from public view. Rather, consistent with Rule 26(b) and with the cases cited by both Plaintiff and Defendant, there must be a threshold showing that the requested information is reasonably calculated to lead to the discovery of admissible evidence.”
    In contrast, the requesting party in Wilkinson v. Greater Dayton Regional Transit Authorityiv asked for “[A]ny notes, diaries, logs, journals, letters, electronic mail, text messages, calendars, Facebook postings, tweets, or other social media messages that relate or refer to your employment with the GDRTA, your alleged serious health condition, or your activities on days when you requested FMLA leave.” In this case, the Court granted the request because it defined specific information that was relevant to the case.
  • Backups are generally not appropriate for eDiscovery Backups are a poor method for preserving discoverable content because the search and production of relevant content from backups is much more timeconsuming and expensive than when using an archiving system. Backups may not produce the necessary information. In the case of Johnson v. Neimanv , the defendant argued that it should not be required to produce emails that were stored on 5,880 backup tapes because accessing this information would allegedly have required 14,700 person-hours to catalog and restore, and that an additional 46.7 days would have been needed for the creation of .PST files. Further, the defendant argued this data was not reasonably accessible, a position with which the Court ultimately agreed and did not require production of the data, luckily for the defendant. However, many parties to litigation in similar circumstances were not as fortunate and have had to undergo the significant expense of producing content from backup tapes.
    In short, an appropriate archiving capability can make the search for data during early case assessments, eDiscovery, regulatory audits, or even informal searches dramatically easier than if this content is stored on backup tapes.
  • Coming to an agreement about discoverable content is essential In Digicel v. Cable & Wireless PLC, the defendant defined the keyword search terms it would use for a search of discoverable content without first discussing this with the plaintiff. Further, the defendant decided not to search through their backup tapes. The result was that some relevant records of former employees had not been discovered. The judge in the case determined that the defendant had not fulfilled their duty to conduct a “reasonable search” and ordered them to restore employee emails that were stored on backup tapes, as well as add additional terms for the keyword search, both of which added significantly to the cost of the eDiscovery effort.vi
  • Only appropriate material should be used Many employers use social media from prospective employees in the recruiting and candidate evaluation process. However, there are limits about the types of content they can evaluate. For example, an employer must not consider a candidate’s race, religion, sexuality or certain other types of information. If an employer uses social media as part of the candidate evaluation process, the organization should archive the content used about candidates to demonstrate it did not evaluate material that should not be considered. A failure to do so – and an employer’s failure to demonstrate its good faith evaluation of this information during eDiscovery – could result in damaging consequences. Relevant regulations in this regard include the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Civil Rights Act of 1964 and Executive Order. No. 11,246vii.

Non-Legal Drivers for eDiscovery

While eDiscovery is most often associated with satisfying specific legal obligations, such as court orders to produce ESI, there are applications for eDiscovery outside the context of litigation.

The same eDiscovery capabilities that can help an organization satisfy a court order can help decision makers address the non-legal use cases identified below.

  • The European Union’s (EU) General Data Protection Regulation (GDPR) is applicable to almost every organization around the world that collects or processes data on residents within the EU, including permanent residents, visitors and expatriates. Compliance is thus predicated on the geographical location of the individuals about whom an organization holds personal data, not the domicile of registration for the organization. An organization that violates the provisions of the GDPR, which goes into effect in May 2018, may be subject to a fine of up to €20 million or four percent of their annual revenue.
  • Strict regulatory obligations to search for and produce information exist in a wide range of industries. For example:
    • Financial services firms governed by the Financial Industry Regulatory Authority (FINRA) must preserve various types of information and perform supervision of broker-dealers and certain others to ensure that these individuals’ communications comply with Securities and Exchange Commission (SEC) requirements.
    • Insurance providers are subject to a range of regulations, including the Health Insurance Portability and Accountability Act (HIPAA), the GrammLeach-Bliley Act (GLBA), and the Health Information Technology Act (HITECH), among other federal and state requirements. These regulations impose a variety of obligations on insurance companies, including records preservation, auditing and immutability of content.
    • Healthcare providers must satisfy a growing array of obligations, including HIPAA’s Privacy and Security Rules and HITECH, requiring them to preserve and produce information of various types.
    • Energy providers subject to Federal Energy Regulatory Commission (FERC) rules must preserve and periodically produce information of various types, such as email, instant messages, CRM systems, and Voice-over-IP systems.
    • Most government agencies are subject to FOIA, open-records or “sunshine” laws that obligate them to search for and produce information they possess in response to requests from press organizations, individuals or other government agencies.
  • As discussed elsewhere in this report, managers, legal teams and others should perform early case assessments to determine their organization’s position before litigation begins or when litigation is even remotely suspected.
  • Of growing importance is the need for decision makers to understand what takes place in an organization through unofficial or informal channels, what may be called internal investigations. For example, the ability to search for information that will enable decision makers to find abusive managers, employees who are contemplating leaving the company, or individuals who are sending content to competitors can be useful in discovering and remediating problems as early as possible.

How Will eDiscovery Change?

One of the more fundamental changes in the eDiscovery market will be the sheer volume of the market and its substantial rate of growth. For example, IDC noted the combined eDiscovery services and software market is now more than $10 billion worldwide and will grow at nearly 10 percent per year through 2019viii. Zion Market Research has an even more aggressive forecast, predicting that the worldwide eDiscovery market will grow at the rate of nearly 16 percent per year between 2016 and 2021, to $18.5 billion by 2021ix.

Another fundamental change in eDiscovery, as noted earlier, will be the expansion of the practice and process of eDiscovery to virtually all types of ESI. While many firms today are not yet even archiving email – the most commonly discoverable electronic content in litigation – they will be required to archive, search for and produce a wide range of data types, including text messages, social media posts, files, data in collaboration tools, voicemails and other information. Any electronic information that contains a business record, regardless of the tool that was used to create it or the venue in which it is stored, will potentially be subject to eDiscovery. The amendments to the FRCP in 2006 and 2015 have, for all intents and purposes, made anything from any source potentially subject to eDiscovery.

As a corollary to the point above, data generated by Internet of Things (IoT) devices will increasingly be subject to eDiscovery. For example, content from an Alexaenabled Amazon Echo device has been sought in a 2015 murder investigationx . At least five US states now use data from automobiles’ vehicle event data recorders to determine the speed at which cars were traveling when they were involved in an accidentxi. Vendors of communication and collaboration solutions are increasingly integrating their solutions with tools like Alexa, Apple’s Siri, Microsoft’s Cortana and Google’s Assistant. As the proportion of electronic content shifts primarily from documents created by humans to data generated by things, we anticipate a growing proportion of discoverable content will come from the latter.

Another important trend will be the use of machine-learning assistants, such as IBM Watson, in conjunction with visual analytics to assist in the eDiscovery process. For example, as noted by David Horrigan of kCuraxii, email threading in conjunction with analytics visualization will help paralegals and attorneys dramatically reduce the time required to review email content in their effort to discover the most relevant content.

Finally, the cloud will have a significant impact on eDiscovery in two ways:

  • First, a growing proportion of discoverable content will be stored in the cloud, such as in Microsoft OneDrive and SharePoint repositories for the growing number of Microsoft Office 365 customers; in the Google Cloud for customers of G Suite; in the myriad other cloud-based communications and collaboration tools that are replacing on-premises solutions; and in cloud-based archiving and storage systems that are replacing on-premises solutions. While Office 365 and G Suite are widely used, there are hundreds of other communication and collaboration tools that contain information subject to eDiscovery – decision makers must focus on the entirety of their cloud-based information stores for purposes of eDiscovery.
    eDiscovery capabilities will need to adapt not only to the shift in venues where data may be found, but also to any limitations that may be imposed by the cloud on eDiscovery efforts, such as the speed of search from cloud-based data repositories that are accessed from Internet connections that may not always be adequate to the task at hand.
  • Second, there are a growing number of cloud-only vendors that offer eDiscovery, archiving and other capabilities. These solutions have the potential to change eDiscovery practices by enabling easier access to discoverable information by a larger number of parties.

It is important to note that organizations continue to bear the complete responsibility for their compliance, eDiscovery and related obligations for their data even when stored in the cloud, despite whatever compliance capabilities a cloud provider might offer. Information owners that store content in the cloud are not absolved of their responsibilities to store data securely, apply litigation holds when necessary, or satisfy their eDiscovery or regulatory compliance obligations simply because their data is stored with a third party.

Important eDiscovery Issues and Their Impact

The Electronic Discovery Reference Model (EDRM)

Placed into the public domain in May 2006, the Electronic Discovery Reference Model (EDRM) was developed as a response to the relatively few standards and lack of generally accepted guidelines for the process of eDiscovery that was the norm prior to its development. George Socha (Socha Consulting LLC) and Tom Gelbmann (Gelbmann & Associates) facilitated the team that developed the EDRM, which included 62 organizations, among which were law firms, software developers, consulting firms, professional organizations and large corporations.

The EDRM Model is shown in Figure 4.

The EDRM is important because it represents a useful tool for the standardization of the eDiscovery process. Because of the growth in the quantity of ESI, the growing number of data types subject to eDiscovery, and the large number of entities that need to process data during the normal course of eDiscovery, standardization in the process is essential.

There are nine sections in the EDRM that focus on the process of managing an entire eDiscovery effort:

  • Information Governance
    This section focuses on managing electronic content in such a way that an organization can prepare for eDiscovery if it should become necessary. The goal of information governance, which includes preservation of ESI, is to minimize the risk and cost associated with the entire process of eDiscovery. Managed properly, this step can dramatically reduce the effort required in the subsequent phases of the EDRM process.
  • Identification
    Understanding the ESI that might be relevant in a particular case and that might have to be presented during discovery is critical. At this point in the process, discovery demands, disclosure obligations and other relevant claims and demands are reviewed and considered. The goal is to understand the totality of information that might be required to respond to appropriate eDiscovery requests and then determine the subset of information that will be relevant for further processing. Archiving solutions are an essential tool in this process as the primary enabler of proper data retention.
  • Preservation
    Preservation is an essential step that ensures that ESI is protected from spoliation and modification, such as through the imposition and enforcement of a litigation hold on all relevant ESI. If spoliation occurs, the consequences can be damaging. For example, in the case of Hart v. Dillonxiv, the plaintiff was terminated by the defendant and a recording of a secret interview with the former employer was used as part of the grounds for her dismissal from the company. However, the defendant failed to preserve the recording after the litigation hold went into effect, resulting in the Court’s decision to set a hearing to determine sanctions to be levied against the defendant.
  • Collection
    All relevant ESI must be collected from the various sources that contain it, such as email archives, desktops, laptops, backup tapes, file servers, employees’ home computers, smartphones and other sources.
  • Processing
    Collected data is then indexed and, thus, made searchable. The data should also be de-duplicated so that the overall volume can be reduced to make review during subsequent phases of the discovery process more efficient and less expensive. Collected data should also be prioritized into a) content that will likely be relevant later in the process and b) content that will likely not be relevant. At this point, decision makers may want to convert ESI into a format that will permit the most efficient and thorough review of its contents.
  • Review
    This phase includes evaluating the content for its relevance, determining if specific items are subject to attorney-client privilege, and redacting ESI as appropriate, among other activities.
  • Analysis
    Analysis involves a variety of activities, such as determining exactly what the ESI means in the context of the legal action at hand, determining the key issues on which to focus, developing summaries of relevant information, etc.
  • Production
    The phase involves delivering the relevant ESI to any parties or systems that will need it. It also includes the activities focused on delivering ESI in the appropriate formats (e.g., in native or image format) and form(s), including DVDs, CD-ROMs, paper, etc.
  • Presentation
    The presentation of ESI is an important consideration at various points of the eDiscovery process as information is reviewed, analyzed, produced, etc. The specific forms of presentation for ESI will vary widely depending on the content; how, where and by whom the content will be presented; and other factors.

The research conducted for this white paper asked about six key elements of the EDRM model in the context of how well prepared organizations are to satisfy them. We found that most organizations simply are not adequately prepared to deal with these issues, as shown in Figure 5.

Federal Rules of Evidence

Put into place in 1975, the Federal Rules of Evidence (FRE) are a set of requirements that focus on evidence presentation during trial in the US federal courts. Individual US states may employ these rules as the basis for their own rules of evidence, or they can implement a different set of requirements for presenting evidence during trial. For purposes of presenting evidence, a printed or otherwise human-readable version of electronic evidence is considered to be an original and can be presented at trial according to FRE Rule 1001(3).

Authentication is a key component of the eDiscovery process because it is focused on demonstrating that a document is what its presenter claims it to be – an actual and verifiable representation of an electronic document. However, authentication for electronic content is more critical than for paper documents because ESI is more easily altered. For example, the process of copying data from one location to another can alter metadata and can call into question its authenticity. When the authenticity of evidence is challenged, this can create a number of problems and can add to the expense of a legal action. For reference, Atkinson-Baker has developed a good overview of the authentication requirements for electronic recordsxv.

State Requirements

There are a number of changes occurring at the state level that are placing more focus on eDiscovery, proper management of ESI, and improved education around technology-related issues in the context of discovery. A couple of examples:
  • Florida is the first state that requires technology-focused Continuing Legal Education (CLE) credit hours for attorneys. The Supreme Court of Florida and the Florida Bar Association in late 2016 amended their CLE requirements “to change the required number of continuing legal education credit hours over a three-year period from 30 to 33, with three hours in an approved technology program.”
  • In June 2015, the US District Court for the District of Colorado published Checklist for Rule 26(f) Meet-and-Confer Regarding Electronically Stored Information (ESI) and Guidelines Addressing the Discovery of Electronically Stored Information to update attorneys’ understanding of ESI and related matters.

Laws Outside of North America

eDiscovery practices in the United States are arguably more advanced and requirements more specific than in other nations because of the more litigious nature of US society relative to other countries. This is evidenced by the relatively large number of attorneys per capita in the United States: for example, the United States has 265 residents per attorney compared to the United Kingdom with 401xvi.

eDiscovery (often referred to as “e-disclosure” outside of the United States) in US legal proceedings can be onerous and expensive, but requirements in other parts of the world can present their own challenges. For example:

  • English and Welsh courts can require standard disclosure – namely, the disclosure that a document “exists or has existed.” The recipient of the disclosure has a right to inspection of the content, but subject to a variety of restrictionsxvii. However, in April 2013 the UK Civil Procedure Rule 31.5 went into effect, permitting courts more latitude when ordering disclosure. Some of the rules in England and Wales are similar to the FRCP in the United States, such as the requirement to disclose relevant documents and the applicability of the rule to electronic contentxviii.
  • Litigants in most European nations are not required to produce content that runs counter to the claims they make in a legal action. Obligations in the UK, however, can compel organizations to produce damaging content, but only after a court orderxix.
  • In 2010, Ontario amended its rules of civil procedure so that it could accommodate the growth of electronic information as part of the discovery process. Rule 29.1.03(4) now reads “In preparing the discovery plan, the parties shall consult and have regard to the document titled 'The Sedona Canada Principles Addressing Electronic Discovery' developed by and available from The Sedona Conference.”
  • In Practice Note No. 1 of 2007 (February 2007), Australia’s Supreme Court of Victoria strongly suggested that the parties to a legal action should consider using technology to improve the efficiency of legal proceedings, including eDiscovery tools. The Federal Court of Australia has developed eDiscovery rules similar to those contained in the 2006 amendments to the FRCP. Further, in 2009 the Australian Federal Court ruled that all cases meeting minimum requirements must be managed only with digital content and not via paper documents.
  • Various statutes designed to block discovery proceedings have been in place for many years in a number of countries. These statutes exist in Federal Canada (Business Records Protection Act), Ontario, the United Kingdom (The Shipping and Commercial Documents Act) and the Netherlands (Economic Competition Act). The key issue with regard to blocking statutes is that even though data has been found, it may not necessarily be usable.

Other Issues to Consider

To minimize the cost and improve the efficiency of eDiscovery, there are three basic principles that decision makers should follow:
  • Retain only what is necessary Organizations should capture information at the right point, classify it for retention, and store each form of data in a tamper-proof archive, in a searchready state, for as long as necessary. When records can be safely deleted, the deletion process should occur quickly with a carefully prescribed plan for “defensible deletion.” Employees should be trained to know what they should and should not do to remain in compliance, and should follow the policies, procedures, and system requirements correctly.
  • Rapidly identify suspect or non-compliant content The organization should demonstrate appropriate actions that have been taken to address this type of content. This should be performed in a proactive sense to minimize downstream harm, or in response to a request for information from an external body.
  • Manage content with the goal of minimizing risk Organizations should employ systems, policies, and training to minimize the legal compliance risks they face, such as inaccurate identification of content for retention, systematic failures to delete appropriate content, and insufficient care by employees in following corporate policies. Increasingly, analytics capabilities are being applied to archived content to identify information that could pose security, compliance or legal risks. These capabilities can proactively surface content that might put the organization at risk, and to enable the organization to address any problems before they become significant.

Best Practices and Recommendations

Osterman Research recommends best practices, and offers some useful recommendations, for organizations that are either planning their eDiscovery strategy or wish to fine-tune their current processes:

Establish a Meet-and-Greet

It is essential to start with a meeting among relevant internal parties, including senior IT management, key legal decision makers, executives and all other relevant individuals and teams inside and outside of an organization. In many organizations, internal legal teams do not have in place the processes and visibility to track eDiscovery tasks, so these teams need to reassess their relationships and protocols with other teams.

Key questions to ask include:

  • Do your organization’s CIO and IT managers know your organization’s chief legal counsel and/or external legal counsel well enough to have a discussion with them about important issues?
  • Does legal counsel know who the IT decision makers are in the context of archiving or eDiscovery technologies?
  • Are the IT and legal stakeholders aware of who else would potentially be involved in eDiscovery planning?

The establishment of this ‘legal-IT handshake’ is a key step in developing an effective eDiscovery strategy. If each group understands the key requirements of the other groups, it will go a long way toward developing an effective eDiscovery plan.

Focus on Employee Involvement

Policies, practices, procedures and technologies are essential components of a robust eDiscovery strategy. However, it is important to provide adequate education for all employees, consultants and others about the critical importance of retaining important content, using corporate communication and collaboration resources in accordance with corporate policies, taking care not to delete important documents, and the like. Using employees as the initial line of defense can significantly improve eDiscovery and reduce the likelihood of evidence spoliation and violation of litigation holds.

Implement Archiving (Not Backup) for eDiscovery

Litigation is clearly more efficient if the right solutions are in place for eDiscovery and litigation hold. This begins with good archiving technology that will capture, index and retain business records for the appropriate length of time, ensuring these records cannot be deleted or modified after the fact, and enabling archives to be searched quickly, efficiently and at scale. EDiscovery tools will help define content that is and is not available, and make the entire process much more efficient. Archive search capabilities are often the front line for eDiscovery requests – these solutions enable IT and legal teams to initiate searches directly from the archive and ingest this content directly into eDiscovery tools. Surprisingly, many organizations still rely on backup tapes as their litigation ‘archive,’ a role that backups were never intended to fulfill and one at which they fail miserably.

It is essential to acknowledge that backups and archives are not interchangeable. While both are important best practices for any organization to follow, backups are designed for tactical, short-term preservation of content to restore servers after a crash or system fault. Archives are strategic tools designed to preserve information for long periods.

There are a number of problems associated with using backups as an archive, including the fact that backups include unprocessed content and lack any sort of indexing. The integrity of backup tapes is not guaranteed, and because backups capture a snapshot of data, information generated and deleted between backups will not be captured. Searching through backup tapes for eDiscovery purposes can be extremely expensive. For example, in the case of Radian Asset Assurance, Inc. v. College of the Christian Brothers of New Mexicoxx, the defendant estimated that the cost to search through 50.5 backup tapes would be $420,315, or an average of $8,323 per tape.

Deploy the Right eDiscovery Tools

While archiving is essential to deal with much of the left side of the EDRM model, other tools are necessary to deal with the right side of the model for purposes of reducing the cost of these processes and to make them more efficient. According to the RAND Institute for Civil Justice in their reportxxi entitled Where the Money Goes, the document review process constitutes more than 70 percent of eDiscovery costs. This is important when discussing eDiscovery in the context of overall information governance (or the lack of it), since organizations create, receive and stockpile so much digital data that the amount of reviewable content for even a single lawsuit can easily reach into the millions or billions of pages of reviewable content. A respected US Magistrate, Judge Andrew J. Peck, stated in a video interview on February 4, 2013:

“Part of the reason eDiscovery is so expensive is because companies have so much data that serves no business need. Companies are going to realize that it’s important to get their information governance under control to get rid of all the data that has no business need…in ways that will improve the company’s bottom line….”

Decision makers should evaluate and implement new technologies that can enable legal teams to learn more about the cases presented to them and to do so sooner in the litigation process. For example, in-place preservation/search tools can empower legal teams to search for data without collecting it, enabling them to make decisions earlier in the litigation process. Legal project management tools are important to better manage the multiple technologies and teams involved to create a uniform, consistent and repeatable process that will ensure defensibility and greater efficiency in the eDiscovery process. Predictive coding, which employs machine-learning technologies, can analyze data sources and help to cull data during eDiscovery. Advanced sampling capabilities can significantly reduce the amount of content presented for review, making eDiscovery more efficient and less expensive.

Legal and other teams can implement various processes that will drive down the cost of eDiscovery, such as targeted collections, non-forensic collections, and early case assessments that will enable legal teams to identify potentially responsive data before it is collected.

Appropriate eDiscovery tools that help organizations deal with the complete EDRM model are essential.

Become Proactive, Not Reactive

It is essential for decision makers to acknowledge the importance of eDiscovery in the context of the information it manages and to give it the appropriate priority for budgeting, staffing and planning purposes. EDiscovery for email is a relatively high priority for decision makers, but eDiscovery for other content is not viewed as priority. eDiscovery must be a high priority for all managers within an organization and should be a key consideration for employees who are charged with creating, storing and managing information. As a growing proportion of business records become discoverable, decision makers will need to implement capabilities to capture this information for long-term retention and retrieval. For example:
  • As part of good eDiscovery practices, early case assessments and the tools to support them will help decision makers understand an organization’s legal position early in the litigation process, potentially saving it the cost of going to trial or pursuing a case for too long a period.
  • Doing more work in the preservation, identification and processing stages can reduce the amount of data sent to review, which can substantially reduce the amount spent on eDiscovery activities. This can enable legal teams to ascertain the facts of a case more quickly, an important benefit.
  • Good eDiscovery helps decision makers understand if compliance with corporate policies is taking place and helps them adjust these policies over time.
  • Good eDiscovery minimizes the amount of time required for information to be recovered to make the process more efficient.
  • Finally, good eDiscovery helps decision makers make better-informed decisions and minimize the risk of legal actions, legal costs and disruption to normal business processes.

Reduce the Costs of Email and Besiness Management

Good eDiscovery tools and processes can reduce the cost of content and business management by streamlining the litigation support processes involved in eDiscovery. This will result in hard cost savings by reducing the amount of internal staff time devoted to eDiscovery, reducing external legal counsel expenses, and reducing the risk of damaging consequences like adverse inference instructions or sanctions.

Implement Litigation Holds Properly

Litigation that is “reasonably anticipated” [FRCP Rule 37(e)] requires identification and retention of all data that might be considered relevant for the duration of the litigation. For example, a claim for a breached contract with a contractor might require retention of emails and other electronic documents between employees and the contractor, as well as between employees talking about the contract or the contractor’s performance. A properly configured eDiscovery and data archiving capability will enable organizations to immediately place a hold on data when requested by a court or regulator or on the advice of legal counsel, suspend deletion policies and practices, and retain it for as long as necessary. One element of the litigation hold process that is commonly missed, and that creates spoliation concerns, is not tracking employee movements and protecting data on litigation hold from being accidentally deleted when an employee departs, changes roles, or when computers are automatically wiped by IT.

Parties to litigation that do not preserve or hold ESI adequately are subject to a variety of consequences. These might include harm to the organization’s reputation, added costs for third parties to review or search for data, court fines or other sanctions, directed verdicts or adverse inference instructions.

Establish Key Best Practices

Establishing data retention and deletion schedules is essential for all content types, a practice that many organizations do not pursue with sufficient urgency, if they address this issue at all. It is important for any organization to retain all of the ESI that it will need for current and anticipated eDiscovery and other retention requirements, including social media, text messages, voicemails, files and other data types that need to be captured. Specifically, key best practices should include establishing data retention schedules for various types of content and continually monitoring and updating these schedules based on changes in the law and recent court decisions.

Deploy the Appropriate Solutions

It is essential to deploy the appropriate capabilities – archiving, storage, predictive coding, etc. – that will enable an organization to fully satisfy its eDiscovery obligations. These capabilities will ensure that all necessary data is accessible and reviewable early in a legal case. An adequate technology platform will help an organization classify data as it is created and then discover content wherever it exists, regardless of location or platform. The eDiscovery technologies implemented should ensure that all required data is accessible, can be properly classified as it is created, can be discovered on every platform on which it exists, and can be deduplicated to streamline the eDiscovery process.

Understand Changes the Cloud Affords eDiscovery

Finally, it is important to understand how the cloud affords changes in current eDiscovery processes. Many organizations are replacing legacy, on-premises storage solutions with lower cost cloud storage, such as Amazon Web Services, Microsoft Azure or Google Cloud. A growing number of cloud-based archiving solutions offer performance that rivals or is better than on-premises solutions in terms of search performance and content extraction. There is a growing number of other eDiscovery capabilities offered either with a cloud component or as cloud-only capabilities. In short, the cloud will figure prominently into future eDiscovery and should be seriously considered by any decision maker focused on improving eDiscovery practices.

Summary

eDiscovery is an essential set of best practices and technology choices that will enable organizations to retain business information, search this information quickly and efficiently, produce the required content, and prevent the spoliation of information that should be retained. While good eDiscovery capabilities have always been important, they are becoming more so because of the increasing volume of ESI that organizations possess, changing legal requirements to preserve information, and the increasing level of risk that can result from a failure to retain and produce information adequately.

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