Fix E-Discovery: Speak Out About The Facts

David Lender is co-chair of the firm's 160-lawyer Complex Commercial Litigation practice and a member of the firm's 15-person Management Committee. He specializes in complex commercial litigation, with particular emphasis on patent and intellectual property law. Over the past several years, he has successfully tried numerous cases in both federal and state courts.

Mr. Lender is a recognized expert, author and frequent lecturer on electronic discovery issues. He is the co-author of the leading treatise on the subject, entitled Electronic Discovery: Law and Practice , originally published by Aspen Publishers in 2003; author of Privilege Issues in the Age of Electronic Discovery , originally published by BNA Books in 2008; and is head of the firm's E-Discovery Task Force.

On the cover of our March issue, Paul Saunders, chair of the American College of Trial Lawyers (ACTL) Task Force on Discovery and Civil Justice, mentions a few of the important Principles (Principles) set forth in the Final Report of the Joint Project of the ACTL and the Institute for the Advancement of the American Legal System (IAALS). In the following interview the interviewee discusses how application of the Principles would address concerns arising from cases with which the interviewee is familiar.

Editor: Describe cases in which extensive e-discovery was threatened but which were settled in order to avoid discovery costs.

Lender: In some cases that I have worked on, the spread between the bid and the ask to settle a matter before the lawsuit really gets going is in the neighborhood of $10 million. In such a case, because of the legal costs, including the e-discovery costs, the client feels compelled to settle closer to the asking price. If you assume the legal fee would be around $2-3 million, and the e-discovery costs could add as much as $2-3 million more, depending on how aggressive the plaintiff is, the plaintiff could use e-discovery as a vehicle to maximize pressure and increase the costs to force a settlement closer to their number.

In certain cases because of the cost of e-discovery, the defendant will elect to settle, even if it feels that it has a good case. The legal cost and the e-discovery costs may be so great that it is not worth proceeding. I know of cases where plaintiffs have called and said something along the lines of "Look, it will take $2 million to settle this case and I will go away. If the case proceeds, it will cost you more than that to defend taking into consideration e-discovery costs."

The plaintiff's leverage is not as great in billion-dollar claims because when somebody submits a billion-dollar claim, you are not going to settle for several hundred million dollars to save a few million dollars in e-discovery costs.

When people talk about proportionality regarding discovery costs they usually mean in terms of the cost of e-discovery vs. the amount in dispute rather than in relation to the complexity of the issues that are at stake in the litigation. I don't think that is really the right analysis. Just because somebody sues you for a billion dollars in a case you believe has little merit, you shouldn't be expected to spend $5 million to get rid of it. Proportionality should be based on an analysis of the circumstances of each case.

Editor: Describe cases in which extensive discovery took place and whether or not the information developed affected the outcome.

Lender: I recently tried a case where our adversary took 30 depositions and used none of them during the trial. E-discovery in that case involved millions of pages of documents and only a hundred of them were used at the trial. This is what happens in every case if you think about it. No trial ever results in using more than a couple of hundred documents.

My point is that in trial very few documents are actually used. So you spend an inordinate amount of money discovering millions of pages of documents to find that extra one percent that usually is not case dispositive. It seems to be a great waste. To spend a lot of money to get that one percent extra just isn't worth the effort. The focus should be on the core documents, not every email that could arguably be relevant to the dispute.

Editor: People tend to view e-discovery in terms of the direct costs involved. What about the consumption of senior management and employee time?

Lender: Because much of the preservation work is still done on a custodian level and an individual employee level, there are a lot of employees who spend a fair amount of time just trying to keep track of all the different preservation obligations they have, and these preservation obligations could go on for years.

I talk to general counsel all the time about the time and distraction involved in being sure their company is complying with litigation holds. The greatest concern that senior people have is exposing their companies to sanctions for spoliation. Therefore, a great deal of time is spent on over-preserving because of a concern that if you delete any potentially or arguably relevant emails the lawyer on the other side is going to play the gotcha game and try to nail you for spoliation.

The ACTL and IAALS approach really has it right because it puts limits on the scope of preservation. It puts limits on the endless bounds of discovery and really tries to focus the effort on finding the core documents, not every potentially relevant document. This would do much to relieve the current burden on employees and senior management.

Editor: Is shifting from notice-based pleading to fact-based pleading the keystone of the proposals made by the ACTL ?

Lender: That is one part of it, but the greatest improvement embodied in the ACTL and IAALS approach is that the plaintiff produces whatever it has that supports its claim, and the defense then produces whatever it has that supports its defense followed by a second phase of limited discovery bounded by proportionality, where the plaintiff, subject to the court's consent, gets to ask for some limited discovery from the defense to support the plaintiffs' claim.

This approach limits the frolicking detours into the discovery of tangential issues that run up the cost of e-discovery. So fact-based pleading alone is not a complete answer unless it is tied to the process contemplated by the ACTL and IAALS approach.

Editor: Proportionality is said to be at the heart of the ACTL and IAALS approach. What is your take on this?

Lender: Proportionality as contemplated by the ACTL and IAALS approach focuses not only on the amount in controversy, but also on the complexity and importance of the issues. The only way this will work and start to bring down the costs of e-discovery is for courts and litigants to start getting more comfortable with the notion that getting the core documents is good enough.

There may be a hundred people who were involved, but the reality is that in most cases only 20 of those are really core people. If you limit discovery (and preservation) to the 20 core people, you're going to get most of the stuff that matters. So the ACTL and IAALS approach encourages courts to focus on the core of the case rather than everything under the sun .

Editor: That I guess all goes back to judicial resources.

Lender: Yes. The ACTL and IAALS approach requires that the court actively manages the case from beginning to end. Today, some parties are disincentivized from working together to place reasonable limits on discovery because increasing the burden of e-discovery can work to their advantage. Recent decisions mandating cooperation and proportionality are welcome news. Limiting the scope of discovery will only happen if litigants are willing to cooperate or if judges have the time and resources to actively manage the case.

Editor: What about sanctions? The ACTL and IAALS approach provides for sanctions only where there is a showing of intent to destroy evidence or recklessness.

Lender : In the world of e-discovery there are really two types of sanctions. There are the lighter ones - where you pay a fine or the costs of the motion. Then there are the more problematic ones - such as adverse inference instructions. When it's a mandatory instruction, the jury is told that they can presume that the missing documents would have helped the other party's case or the jury is told in essence that one of the parties had a duty to preserve documents and didn't preserve them, which invites the other party to argue to the jury that the documents were not preserved because the offending party thought they were bad for their case.

It's nearly impossible to overcome that burden, which forces settlements in cases that should have been decided on the merits. Therefore, I'm in favor of the ACTL and IAALS notion of limiting more serious sanctions to situations where there has been reckless or intentional behavior. A heightened standard is already required in some jurisdictions for adverse inference instructions.

Editor: Based on the concerns you expressed, do you feel it would be useful for our corporate counsel readers and their law firms to supply anecdotal evidence and hard data in connection with the Duke Conference in May being sponsored by the Federal Rules Advisory Committee?

Lender: I was at a conference at Georgetown Law School on e-discovery where Justice Breyer was the keynote speaker. He was just amazed to hear how much money people are spending on electronic discovery. He had not realized that it could cost millions of dollars for just one case, and that there are companies that are spending tens of millions of dollars a year just producing documents in litigation. If courts had a better sense of how much this is costing companies, they would look for ways to address the problem.

The Duke Conference provides corporations with an opportunity to provide that data to the Federal Rules Advisory Committee. It is most important that the Federal Rules Advisory Committee appreciate that e-discovery reform is vital to carrying out the mission of the courts, which is to achieve a just outcome in every civil action, and that outcomes should not be warped by the burden of e-discovery.

It is also necessary that data be provided that puts the importance to the judicial system of resolving the issues surrounding e-discovery in the proper perspective. Although the numbers of cases involving complex commercial litigation are relatively small in relation to other cases, the demands these cases make on judicial resources are major. They require far more judicial attention and take far longer than other types of cases.

The most important element in persuading the Federal Rules Advisory Committee to go forward with changes in the current rules is anecdotal evidence and data reflecting the burden placed on corporations by those rules. Therefore it is critical that corporations and their law firms submit this information to Lawyers for Civil Justice for incorporation in the white paper that it is preparing for submission at the Duke Conference.

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