Roundtable Discussion

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Electronic Discovery

As computers have become the focal point for information storage, creation of documents and communication, litigators have had to turn their attention to the handling of electronic discovery. Courts are beginning to issue decisions explaining how this emerging area of discovery should be handled. Wisconsin Law Journal editor Tony Anderson sat down recently with a panel of people who have followed the development of electronic discovery. What follows is part one of their roundtable discussion.

(Front) Ross L. Kodner, Founder, MicroLaw, Inc.; Shawn R. Olley, Owner, Midwest Paralegal Services, Inc.; (Back) Stephen C. Odenthal, Founder, Odenthal Investigations, LLC; Stephen E. Kravit, Founder, Kravit, Hovel, Krawczyk & Leverson, s.c.,; William J. Mulligan, Shareholder, Davis & Kuelthau, S.C.

WISCONSIN LAW JOURNAL: Is the format of the information that you’re going to be seeking during discovery something that can be worked out during initial conferences with opposing counsel?

WILLIAM J. MULLIGAN: It certainly is one of the things that ought to be discussed. There are a number of things that should be discussed between counsel at the start: what the scope of the discovery demand is going to be, who are the relevant custodians of the electronic documents, who’s going to bear the cost of producing the documents, the review for privilege — not only attorney/client, but trade secret information and other things of that sort — whether the scope of the discovery is just the active electronic files or whether it includes archived files, the files that were created by past software that is no longer being used, and backup tapes.

These things need to be hashed out and discussed between counsel to see if you can reach an agreement.

STEPHEN C. ODENTHAL: Unfortunately … those discussions take forever. And the length of time that can pass during those discussions can just absolutely decimate your electronic evidence.

MULLIGAN: Well, it shouldn’t if the claimant … sends out a preservation letter.

ODENTHAL: That’s what I was going to get at — the need for preservation of evidence.

SHAWN R. OLLEY: I think this gets back to the sophistication of the attorneys involved. If they know what they’re talking about, setting up a standard protocol of how things are being produced to each other literally involves just the transfer of letters, one to the other.

ROSS L. KODNER: New definitions are required regarding what constitutes a “document” and what “preservation” actually means in the electronic context. It’s different than putting aside a paper file. Right now, one of the hottest areas of ethical debate is this … intersection of technology ethics and procedure in practice.

We are dealing with discovery situations where we’re representing parties who have been accumulating all this stuff because nobody counseled them not to. We’re reacting to that situation. Lawyers acting as counselors in representing corporate clientele need to be educated enough to proactively guide their clients, before there ever is litigation, to make sure that there isn’t metadata in the first place. Metadata isn’t discoverable if it doesn’t exist. Lawyers should be advising their clients to have a policy that says, “You have to remove this stuff.”

Thus, if metadata is actually offered in documents, shouldn’t it be presumed that it’s voluntarily offered with the intention that someone will see it? Couldn’t the failure to counsel clients to remove that metadata from documents constitute malpractice? That’s where one school of thought is going.

STEPHEN E. KRAVIT: That’s an interesting philosophical point. But in the litigation world — where Bill and I live — we take things after the fact, once some case or controversy has erupted. At that point, it is specifically too late to tell your client to destroy the metadata.

So what we’re talking about here are courts, who are not necessarily techno-savvy people, trying to make reasonable judgments on the same basis that they made any other reasonable judgment, whether it’s regarding other intrusive things. This is really just another intrusive thing that can occur in litigation.

KODNER: When the party that you’re representing in litigation is an ongoing business client of yours and the client … ends up having metadata disclosed as part of discovery, what happens when they ask, “Steve, why didn’t you warn us about this? Why didn’t you tell us that we had this risk in the first place?”

MULLIGAN: That’s a significant problem. Typically the advice is not being given by litigators to those clients. It’s being given by a corporate lawyer.

KODNER: Okay. Why didn’t your corporate guy who you were working with warn us about this issue?

MULLIGAN: They should be, but a lot of corporate lawyers have their heads in the sand as well. They’re saying, “You have to preserve this because the tax code requires this, SEC requirements are this, CERCLA requires this, these are the time periods you need to preserve.” And they never even think of electronic data.

KODNER: That’s what I was saying earlier, many traditional lawyers, even young lawyers … view that as a technology thing. But, it’s like not advising a client what they need to do to be compliant with HIPAA or Sarbanes-Oxley. It has to do with running their business, and it’s a legal issue that affects them.

WLJ: Steve, you mentioned that the courts are not very techno-savvy when it comes to
this. When you’re approaching the courts in these types of matters, what do you need to keep in mind?

KRAVIT: You need to know the power of a good analogy. Telling stories is what moves human existence forward and it’s what is persuasive in the context of getting what you want out of a court or a jury.

I can read you a decision of a court here in the Rowe Entertainment [v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002)] case in the Southern District of New York. Listen to the common sense approach the court takes.

“Just as a party would not be required to sort through its trash to resurrect discarded paper documents, so it should not be obligated to pay the cost of retrieving deleted e-mails.”

Somebody thought of an analogy that this judge could understand, and he ruled accordingly. Lawyers, even small lawyers who are not with big firms, are very familiar with such things as Boolean search terms and the ability to use Westlaw and Lexis and their own systems searching for lost things…

They are capable, in a discovery planning session or in talking to a judge, of telling them that we can find certain things based on the knowledge we have of how the law works and how search terms work. I think that’s where the cases are coming out.

Yes, you have 100,000 documents; it’s okay to search them and produce them based on agreed search terminology, but not produce all 100,000 documents in a row where someone has to look at them all.

So you’ve narrowed the field of documents. Now they need to be looked at for other purposes such as relevance and privilege. Somebody has to actually look at them. Who’s going to pay for that? These are practical court-type questions.

KODNER: There’s a thing that really scares me in this process. I’ve been a Special Master in a number of cases when software products, like nCase and others, have been used to search through someone’s data when they were specifically approved and agreed upon search queries.

The problem is that, when searching across someone’s hard drive looking for information that matches the party-approved or court-approved series of limited queries, you would inevitably find and see other things that are outside the scope of that search.

What if it’s trade secret information? Now, you might say, “Of course,we don’t have legal access to that information.” But the cat’s out of the bag. Somebody sees that information. The search goes across somebody’s accounting system data file as part of its search because … data can be in all sorts of different places.

ODENTHAL: It also hits deleted items as well.

KODNER: It hits deleted items. It’s an ugly practical reality that there’s information that should never be legitimately discoverable that is seen. While there may not be legal effect, there’s a very practical effect.

KRAVIT: You’re talking about a case where you’re a Special Master.

KODNER: Without a Special Master, people would be looking at information they shouldn’t see.

KRAVIT: Correct. But that’s the point you’re trying to make. There has to be some intermediary to really look at these things first if the parties can’t agree to do it themselves.

MULLIGAN: Steve, you mentioned the Rowe case in response to a question in terms of what you should be doing with a court. Magistrate Judge James C. Francis IV, who wrote the Rowe decision in the Southern District of New York, is probably one of the most technologically adept and knowledgeable judges that there is. His decision is a landmark decision in regard to cost shifting, that and the Zubulake v. UBS Warburg case also out of the Southern District of New York. Lawyers need to know the distinctions between the two cases and how they impact their situation.

I think it’s critical for lawyers to realize that, when they’re dealing with judges on these issues, that you start with many judges who take the view that it’s sort of a plague on all parties… This is the last thing in the world that they want to have presented to them in a motion, let alone the fact that you need to educate the judge with regard to what is being requested, how computers work, how data is stored, why what is being requested is or is not an intrusion, whether it can be readily done, whether cost estimates are reasonable in doing these things, or whether somebody has escalated the costs beyond all reality in terms of trying to get cost shift.

KODNER: The power of analogy is that it applies for those of us in the technology side just as much as lawyers presenting their cases to juries to help people understand complicated things by equating them to things that they understand in everyday life. The way I look at that piece of paper in the garbage can, if that piece of paper is merely thrown in the can, I think it should be subject to being produced in discovery. If somebody didn’t want it to be producible, they should shred it.

KRAVIT: What if it was shredded? Is it your obligation to put it back together just because it exists?

KODNER: I don’t know the answer to that.

KRAVIT: That’s the power of analogy.

KODNER: But when the analogy is, from an electronic document perspective, if you didn’t want someone to see it, there are tools to effectively shred that document.

Whether shredded information is producible or not is another question.

There are easy, accessible, well-known tools to do this as part of an overall document retention policy. So if somebody doesn’t do that, can they claim it’s unreasonable to have that information produced? Clearly, if you shred paper, there’s intent to destroy the information as part of a normal policy.

ODENTHAL: I’ve heard a couple of judges say … in general, you cannot dispossess yourself of a document on a computer because there are tools and utilities that you can go out and get to retrieve those documents. It’s an interesting concept to think of.

KODNER: Depending on how much money somebody wants to spend and the level of technical expertise, documents that people have attempted to electronically delete can still be recovered to some degree. So the question becomes, what’s reasonable when counseling somebody as to electronic document destruction policy.

Do you protect against the one-tenth of 1 percent of the people who are at the top end of the ability to recover that? Or do you target the middle of the electronic destruction or recovery marketplace?

MULLIGAN: To follow Steve Kravit’s suggestion that we use an analogy, a computer is much like a library that has a card index file. When you delete something from the computer, it’s like going to the card index file and eliminating the card… But the book is still on the shelf there. If you have the energy and the ability and the time and the money to look through all the books in the library, you’ll be able to find it. Technically, that can be achieved very fast with the software that’s available now in the forensics field.

OLLEY: We’ve also found the volume is just staggering. It used to be that getting a million-page case was once in a lifetime. Now it’s not that unusual.

KRAVIT: But, I’m back to the question, just because it can be done … should it be done.

OLLEY: The common-sense attorneys we work with can really dice it down to a much smaller amount. They don’t … produce it just for the sake of producing it. As Bill said before, you have e-mail. In the olden days, a letter went to a recipient. Maybe you CC’d a couple of people. The way e-mails are now, it’s not uncommon for a listserv to go out to 20, 30, 40, 50 people. The e-mail is multiplied that many more times. It’s not providing any more information. It’s just one more record that has to be maintained for the life of the case.

KRAVIT: When I was a young prosecutor under the tutelage of U.S. Attorney William J. Mulligan, we conducted a search by subpoena of a brewery which is no longer in existence. They had a well-documented document retention policy that kept their documents to two years. Therefore, they were glad to invite us in to look at things because I think they knew … that there would be nothing older than two years.

In the process of doing that work over a long period of time, I was allowed to actually sit in the offices of some of these people. I would go to their lower right-hand drawer. In the lower right-hand drawer were all the documents they really wanted to keep that had nothing to do with the document retention system.

As a federal prosecutor, we were able to get those documents and use them to great effect. Let’s take the analogy to civil litigation today. We’re looking for electronic documents, and we’re going against a company that has a well-defined document retention policy that appears to be followed in most instances. … But on somebody’s specific unit it’s not followed.

The question to me isn’t that it could be discoverable, because it could be, obviously. It’s whether it ought to be. This company took every step it could to make sure its policy was complied with, that documents over several years old or in some subject matter ought to be gone. And it turns out they’re not because some employee didn’t follow the policy or didn’t understand that the drive on their personal computer was different than the network drive.

MULLIGAN: Steve, you point out the past practices with paper. I think it’s clear that, whether you’re talking about paper, or whether you’re talking about electronic documents, most document retention policies are not followed. If they are followed, they are followed just before somebody thinks that they’ve got a problem.

The document retention policies are helpful. And I urge corporations to think of what they should be doing in that area. But once you get wind of potential litigation, you’ve got to suspend that document retention policy and take steps to make sure that you are not destroying evidence. It is a mistake to focus entirely on a document retention policy as the solution to this problem for most corporations, because, typically, document retention policies aren’t followed…

KODNER: Often they’re simply lip service, because there are some compliance issues in a certain area of running a business. But the question still is that tension between “can” versus “should.” Part of it in discovery is dependent on what side of the coin you’re on. If you’re the discoverer, you want everything. If you’re the discoveree, you want to produce nothing. But the question is establishing a reasonable balance point, so that the burden isn’t too great or unreasonable on either side in litigation.

WLJ: One of the things you’ve brought up was how much information was available, if you were willing to spend the money. That raises a cost issue. How do those costs get handled in the case of electronic discovery, and what are ways to make it equitable?

MULLIGAN: The typical, black-letter rule is the producing party bears the cost in responding to discovery. However, the Federal Rules of Civil Procedure and the state procedural rules, which typically are based on those Federal Rules, provide for protections to parties and balancing of costs related to it. Rule one says that litigation is to be resolved, and speedy and cost-efficient bases are factors.

Decisions have come out, like the Rowe Entertainment case, that have established factors that can be considered. In Rowe, the court established eight factors to analyze and see what occurred and whether there should be a shifting of the cost burden related to responding to the discovery… That’s been modified slightly in the Zubulake factors. Depending on what your case is, you can argue whether one or the other decision is more beneficial for you.

But the clear indication is that, in appropriate cases, courts are going to shift the cost of the discovering
part. The request that you see typically coming out of paper discovery is somebody wants any and all copies.

That may work in the paper field, but when it comes to both the Rowe and Zubulake decisions, one of the prime considerations is how clearly narrow the scope of the request is. If you want everything, you better have a big checkbook to handle it because you’re going to be bearing those costs. … Courts have typically been saying, unless you can show that somebody has deleted, destroyed or shredded, you’d better be able to pay extensive sums of money to do so.

KODNER: Otherwise, what you end up with is a situation where a company fearing the cost and of producing electronic information and the disruption of their business becomes as much a negotiating edge as the merits of the case.

KRAVIT: I think it’s instructive to look at how Judge Shira Scheindlin in Zubulake phrased some of the factors. It’s the functional, reasonable analysis that judges always do. So when some factors are “the total cost of production compared to the amount in controversy.” That’s just common sense.

“The total cost of production compared to the resources available to each party.” Well, that would be very important. If you are the fired, squashed employee who thinks they were discriminated against and now doesn’t have a job or any money and a lawyer on a contingent fee, they can’t bear any of the burden of discovery of the thousands of e-mails and bad jokes and the like that are relevant to that case.

Whereas, if you are one company suing another on a patent issue and those kinds of cases where millions of dollars are sometimes nuisance value, then the plaintiff can bear the burden and, in many cases, would willingly bear the burden of getting in the pants of the defendant’s computer system to find whatever they could.

“The relative ability of each party to control costs and its incentives to do so.” That is a very functional kind of thing. “The importance of the issues at stake.” These are the kinds of things courts do. That’s why I said earlier that I don’t think this is so wild and out of the realm of what lawyers, even ones who aren’t as skilled in technology, and judges who typically aren’t skilled in technology can accommodate.

OLLEY: We’ve also found the insurance companies that are often footing the bill for a lot of the litigation are getting very smart. They understand that the costs can be shared if people are organized in the beginning. When you have it electronic, it’s so much easier to dispense the information. If you get some sort of cost-sharing situation put together in the beginning, it can go a long way toward disseminating the volume that you’re doing with some of these cases.

KODNER: I can see managing that process of agreed-upon, stipulated-to discovery approaches. Parties stipulate to … a limited range of search, specific queries.

OLLEY: We’ve had cost sharing come forward many times in the last two years, and we never had it before.

KODNER: How do you know that that’s actually what’s being done? Steve and Bill, do you two see more reliance and project more use of Special Masters, who are electronic evidence experts, to monitor the process and make sure that the actual mechanical method of data acquisition is compliant with the agreed-upon discovery approach?

MULLIGAN: Yes. It’s becoming a more frequent practice to have referees or Special Masters appointed to oversee electronic discovery, particularly where a request is being made to have a forensic expert come in and actually look at the opposing party’s computer hard drives and do mirror images of them.

In some other discovery disputes, parties are able to negotiate these things. … They know that they need to make reasonable agreements or it becomes a terribly costly proposition.

KODNER: What do you generally see in terms of parties covering that additional layer of cost of the Special Master?

MULLIGAN: The most common practice that I see is typically the cost is divided evenly among the parties. If there are multiple parties, there may be a splitting in variation depending on where their interests are. But a division of the costs is what’s typically agreed upon.

KRAVIT: In one major litigation that I’m in now, the court has appointed a Special Master. Nobody asked for it, but the court did it. Of course, that person is paid … and the costs may be allocated at the end of the action to whoever is victorious. As they go, they have to be paid, so they’re paid half and half.

Electronic discovery and the issues involved in it vastly increase the cost of litigation. It isn’t just the cost of you guys being Special Masters or experts. Be careful what you ask for. You might get it. I’ve advised clients that the opposing party asked for it; give it to them.

Now there’s thousands and thousands and thousands of documents not really organized in any way other than Boolean search terms. And who knows what’s in there. Of course, we always look at them before we send them. But I’ve been the recipient of it too. Now, what do I do?

MULLIGAN: You use artificial-intelligence software to search the results or other proprietary software. Millions of documents can be frequently searched in a matter of seconds to find things. If you get the data in an electronic form, it is so much better for you than to have an army of associates trying to read things until their eyes glaze over to find some needle in a haystack. The artificial intelligence will pop it up in a matter of seconds.

KRAVIT: Yeah. But, Bill, don’t you — as an old-fashioned aggressive litigator, like we both are — don’t you sit there and wonder if I could only look at all that stuff, I could find the smoking gun and my computer search terms may not pick that up?

KODNER: What Bill is referring to is that there is a whole new generation of search tools that have come out. They’re certainly no substitute for a sharp lawyer staring at a piece of paper and finding s
omething that a computer couldn’t figure out. But what’s happened is the search is not just a matter of your ability to artfully structure a Boolean query… There’s a whole new generation of conceptual search engines that will essentially read and begin to understand the context related to a search. They tend to have narrower searches, so you can have much more pointed searches.

KRAVIT: But you never have the serendipity that I do.

KODNER: It’s no substitute for you looking at a document. But what it can reduce the burden to wade through. If you don’t have to analyze the results of 300,000 hits, instead you have 300 that are … on point.

KRAVIT: If I had the smoking gun delivered to me, but my search terms didn’t pick it up, have I committed malpractice?

KODNER: That’s an interesting question. Were the tools selected reasonably? Then in defending the malpractice action, you’re going to cross-claim against the software company for making a defective product. You can shift the burden that way.

MULLIGAN: I can just see you, Steve. You look forward to walking into a warehouse of millions of documents and spending the next five to 10 years reading through them to find that needle in the haystack.

KRAVIT: Says the man who sent me to do just that in the ’70s.

WLJ: One of the things to help you through this process is to find the right person who’s going to handle the technical side of things. What do you look for when you’re trying to find somebody to handle that aspect?

MULLIGAN: Unfortunately, right now anybody could advertise that they are an expert who can help you do this stuff. But you really need to look for a forensic computer expert who is certified. The certification that I think is most respected now is the one that’s given by the producer of nCase software.

You don’t want to deal with geeks who can’t speak anything but geek language. Ultimately, the person doing this work needs to be able to come into court and talk to human beings and judges and lawyers and explain to them and explain to juries what they did and how they did it in terms that people can understand. So you need a person who can articulate in an understandable fashion what’s involved and how they did it.

KODNER: There’s a funny little piece of criteria somebody once said. How do you determine, when choosing between equally certified forensic examiners, who you’d actually want to use? Ask them how old they are. The guy that answers in hexadecimal is not the guy that you want to put on the stand.

But there’s an important point here. Experienced investigators like Steve [Odenthal] are a whole different world than somebody who’s just gone out for an nCase certification because they saw it on a matchbook cover as a new way to make a living, who have no clue what the concepts are of evidentiary handling, chain of custody issues, preservation issues. That only comes with experience. It’s like choosing any other professional. You need references, and you need to look at experience. Certification is a threshold element today that’s become essential.

MULLIGAN: You’re absolutely right. You do not want to have the doctor perform his first brain surgery on you.

WLJ: I want to go around the room to see if you’ve got any final thoughts as we wrap things up.

MULLIGAN: I think it is critical for lawyers — not only trial lawyers, but whatever their area of practice, corporate or labor, securities — that they be conscious of what has developed in the area of electronic discovery. Be aware of what is involved, know about things such as metadata, be alert to them and realize that there has been a sea of change in the way documents are prepared and what is now becoming involved in potential litigation and arbitrations. They need to keep abreast of these changes as much as they would keep abreast of substantive law changes in their areas of practice.

KRAVIT: I came across a study by two admitted geeks from the University of California at Berkeley that studied the amount of information that’s out there today.

They concluded that print, film, magnetic, and optical storage media produced about 5 exabytes of new information in 2002, 92 percent of which was stored on hard disks.

How big is 5 exabytes? If digitized, the 19 million books and other print collections in the Library of Congress would contain 10 terabytes. Five exabytes would be equivalent in size to the information contained in half a million new libraries the size of the Library of Congress. They conclude that every year, for every person in the world, 800 megabytes of recorded information is produced.

We are rapidly approaching the point where it’s technologically possible to record every moment of every person’s life in some form of media or digital format for their entire lifetime. To be able to sort out that information in the context of litigation, which is what we’re talking about today, is going to be an ever-increasing challenge.

The tools that we’re talking about using now are reasonable, and they’re functional, and they are within the dimension of the brains of lawyers today and judges today. But they are going to be challenged in the future by the amount of information that’s out there to be mined.

ODENTHAL: I agree with what both Bill and Steve have said. In the last year and a half, my caseload has increased tremendously as attorneys discover that the electronic discovery area is something that applies to their cases, where they never considered it before. Every time a new attorney contacts me on a case, from domestic to criminal, I have to go through a learning curve with them and a training process to tell them how it all works.

It is just exploding right now. This kind of forum and other educational venues for teaching attorneys what this is all about are very important.

KODNER: For lawyers, these are increasingly scary times from a malpractice-avoidance perspective. Because the body of knowledge necessary to practice law and adequately represent a client has now become completely intertwined with technology concepts. The two are inseparable. Whether a lawyer is 25 or 75, the level of knowledge that’s required at least of the concepts, if not the bit and byte level of detail, has increased dramatically. This is never going to change. This is only going to get more and more complicated.

	Related Links Roundtable – Part I

The other side of this is that bar associations across the board — from city level, to county level, to state bars, to national bar associations — are doing their members a tremendous injustice by not educating enough on these topics, by compartmentalizing technology as just technology and not intermingling the technology education with substantive legal education. So there are lawyers everywhere who have a severe gap in knowledge. The awakening will come from being a defendant in a malpractice action or losing a client.

OLLEY: From a paralegal’s standpoint, as far as the support we provide to the attorneys once the electronic data comes in, the attorneys just need to sit down and get some thoughtful plans in place. There are some amazing canned software tools out there that are available. Cost is not that bad. That would go a long way in managing all this information once it comes into the office. There’s no point in getting it if you don’t know what you’ve got.