Electronic Document Storage And E-Discovery: A Way Forward

Sunday, March 1, 2009 - 00:00

The Editor interviews Mike Lehoux, Vice President, Product and Program Management, Daticon EED.

Editor: Could you describe to our readers what Daticon EED is, its business and your role there?

Lehoux: Daticon EED is a global provider of integrated e-discovery services and technology. Our experience spans over 1,700 cases during more than 20 years. Our expert staff, proven methodology and Discovery Partner integrated processing, analytics, review and production platform help our clients significantly reduce the overall cost, time and risk of e-discovery.

We offer pre-litigation process design consulting for corporations, as well as services for both large and small cases including early case assessment, case strategy, pre-review analytics, review optimization, as well as processing, hosted review and production. Daticon EED is a full service provider of e-discovery services to law firms and Fortune 1000 clients such as DuPont, for whom Daticon EED is a preferred provider. We have been awarded numerous awards from DuPont for our quality of service.

Daticon EED is the result of a merger of two organizations, Electronic Evidence Discovery, based in Kirkland, Washington, and Daticon, based in Connecticut, which occurred in July, 2008. As Vice President of Product and Program Management, I am responsible for setting our strategic technology direction and focus.

Editor: When you refer to process design, does that mean you work with companies to set up their document retention capability as well as consult with them once litigation and e-discovery have begun?

Lehoux: That is exactly right. Daticon EED provides proactive consulting services in the areas of litigation preparedness and risk assessment. These services address pre-litigation concerns and include assisting corporations to set up their retention programs, analyze the electronically stored information and map it as well - all in terms of litigation readiness.

Editor: Given the economy, what are your corporate clients telling you about their projected legal expenses for 2009?

Lehoux: Corporate legal budgets are being cut anywhere from 15-25 percent, but we anticipate litigation will increase. Corporations are being forced to take a hard look at how they manage and reduce their e-discovery costs as well as mitigate and reduce their e-discovery risks. Then they need to leverage existing technology and implement new technologies to help them achieve their corporate objectives.

Editor: At the same time, cases like Zubulake seem to have increased corporate exposure to liability for failure to produce electronically stored evidence so that corporations must be assiduous in overseeing this process.

Lehoux: There is certainly increasing judicial intolerance for poor e-discovery processes, raising the bar for corporations in terms of their preparedness for litigation. Zubulake was decided prior to the FRCP amendments, which obviously heightened the need for corporations to take a look at how they handle electronically stored information. The Qualcomm and Morgan Stanley cases also demonstrate the need for corporations to take a hard look at their practices.

Editor: With restricted budgets, how can corporate legal departments prepare for the challenges the year will bring without implementing expensive new solutions?

Lehoux: Corporations need to look at improving their overall electronic information storage processes. Good process design will better prepare them in the event of litigation. The e-discovery challenge for most corporations is information chaos since information is stored in many varying forms over which there is no control. High operational costs are associated with high information risks. Although many corporations have retention and disposition policies, they are not necessarily enforced.

There is also an increasingly critical need of producing trustworthy information in the event of a litigation-hold notification. Having a defined protocol for responding to an e-discovery request requires finding the right balance of process for responding to each corporate docket.

Corporations need to analyze their litigation dockets for recurring and most likely case types and custodians, and establish a data base line with a targeted data map so they can identify and document likely custodians and the ESI formats that they will have to deal with. They need to catalogue the key ESI sources and their managers, map their custodians to those data sources and then use Rule 26 disclosures and Rule 30b-6 depositions for hold orders and preservation notices. By getting their house in order they will be better prepared for the challenges this year and in the long run.

Editor: How is the role of the corporate legal department changing in the e-discovery vendor selection process?

Lehoux: Corporations are becoming more proactive. A number of them develop a short list of preferred e-discovery providers that will adhere to a single process working in conjunction with their corporate policies. Their law firms must use those preferred providers and processes. Although some work in preparation for what needs to go into review in the event of litigation can be dealt with on an in-house basis, outsourcing a portion of that work is necessary. Streamlining the number of vendors and having them adhere to the one defined process on an end-to-end basis is the more effective practice. A number of corporations have gone to a dual source model which gives them the comfort of having multiple vendors with a limited number of providers who adhere to their particular policies.

Editor: What is the relationship between corporate counsel and their law firms in the context of e-discovery?

Lehoux: Corporate legal departments are beginning to or already have established litigation protocols that must be adhered to by their preferred law firms.

Editor: There has been a trend for large corporations to do more in-sourcing of e-discovery technology and processes. Given the need to reduce costs, how can GCs balance this need?

Lehoux: There are three camps among the Fortune 1,000 corporations. There are those that try to in-source everything, which is a very expensive proposition. At the other end of the spectrum, some companies that do not frequently litigate and who most likely have a small in-house legal group tend to outsource almost everything. There are also corporate legal departments that take more of a hybrid approach. The hybrid approach is a best practice approach to e-discovery, which entails taking control of a certain portion of the e-discovery life cycle and thereby ultimately controlling the cost of e-discovery.

For example, in addition to having gone through a process design in litigation preparedness, thus putting their electronic house in order by centralizing the capture of information in an ECM type of an environment, they can then do some of the early case assessment work in-house to identify the more relevant materials that would be sent to an outside vendor for processing. At some point the data does have to be reviewed. It still makes the most sense for that review to take place through an outsourcing vendor that has the capacity to be able to process that information and host it effectively for review. But by taking part of the front-end of the process, these corporations will ultimately send less information to their vendors for review, thus reducing the cost of processing.

Editor: At the front end, is there a concern about identifying and distinguishing confidential information, trade secrets and such?

Lehoux: The corporation, with its law firm, will take part in identifying the corpus of documents that will be collected for a first pass relevancy and subsequent responsive review. The review of information for privilege will be handled by attorneys during a second level privilege review. Moving to an outsourcing provider, the attorneys' second pass identification of this information will be applied.

Editor: What should a GC look at when selecting a preferred e-discovery provider?

Lehoux: It is critical for the provider to have a national presence because a corporation may be involved in multiple litigations and multiple jurisdictions. Also, the collection of data may potentially take place at multiple locations. It is important to have a provider that can provide one-stop shopping from consulting and collection, to processing, analysis, review and production. It is imperative that the provider have an integrated platform for processing analytics review and production. This helps to control the flow of information and ensures a better chain of custody of the data, which is always a concern once the data leaves the corporation. This streamlined process will ultimately effectively reduce cost.

Editor: The cost of e-discovery is a factor in the decision by a GC in whether to settle or litigate a matter. How can GCs get an accurate estimate of e-discovery costs?

Lehoux: We find that the cost of the cost of e-discovery processing is less than generally perceived. We utilize a case category model that employs statistical analysis of cost by case type that we have built over a period of time. That is very helpful in deciding when to settle or litigate. There may be certain case categories such as antitrust cases which have very high volumes of documents and entail high risk, whereas a commercial dispute may entail a small volume with lower risk. Depending on the category of the case, the corporation can employ different types of statistical analysis based on that case-type to determine what their exposure is from a cost and risk stand point.

Editor: Can you cite an example of an e-discovery project that cost more than it should have?

Lehoux: We work with a Fortune 10 corporation where there was a lack of proactive ESI management. Because of this lack of control, large volumes of irrelevant or expired information ended up in the review process, translating into unneeded discovery costs. In this project, there were about 75 million total pages that ended up being reviewed, and there were about 11 million responsive pages. Retrospectively, the total number of pages that extended past the retention period was about 50 percent of the corpus of documents reviewed, which equated to unnecessary review fees of close to $12 million. Clearly having a crisp proactive program in place would have addressed that situation more effectively. In addition to cost in such a purely reactive e-discovery mode, there is excessive risk of overlooking key evidence resulting in sanctions, fines and negative public exposure. Reactive e-discovery delays getting to potential evidence, which has an impact on the ability to set the proper case strategy. A case-in-point was the Qualcomm matter where thousands of damaging emails were overlooked during the e-discovery process.

Editor: Are there document review protocols that are designed to avoid missing key documents?

Lehoux: Optimized review is critical not only to reduce cost but to minimize risk. Applying technology that can better organize documents by grouping documents together based on their content or identifying near-duplicates of documents is very useful. A key to organizing documents is to organize them in such a way as to allow attorneys to review the information not only faster but more consistently to make sure all documents are caught. Other helpful technologies include features such as term-highlighting of potentially privileged terms, thus identifying potentially privileged documents to the reviewer. Effective use of technology during review streamlines the process and makes the review more accurate and consistent.

Editor: What if the e-discovery process is challenged in court?

Lehoux: Risk mitigation obviously requires an effective process. The courts are looking for documented, repeatable and actively managed processes. Having an expert witness available to testify that you have in fact effectively created a documented, repeatable and actively managed e-discovery process is extremely important. A number of corporations identify individuals within the corporate legal group who work very closely with IT to ensure that their processes are in place and can testify to that effect. John Jessen, our founder, and others in our company frequently offer expert testimony. Courts also look for the imposition of an effective and timely litigation hold upon reasonable expectation of litigation or an investigation.

Editor: Do the same principles apply to ongoing systemic document management as they do with litigation?

Lehoux: Ongoing document management really is a means of organizing information and instilling the appropriate retention policies so that information is not kept longer then is needed or is required by law. Some corporations keep all of their information. When information exceeds its useful or required life, it can become a liability. Not only should a company have a good retention policy in place, but they need to make sure that those retention policies are enforced. Overall, organizing and controlling ESI on an ongoing basis is a vital business activity.

Please email the interviewee at mlehoux@daticon-eed.com with questions about this interview.