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Affymetrix Inc., is a successful biotechnology company, making tools that help scientists analyze genes. Unlike most of its rivals, it made money last year. Like many of its rivals in this IP-intensive industry, Affymetrix is constantly defending itself in patent cases. As a young company, Affymetrix does not have as many paper documents as old industrial giants. But it has electronic documents — all forms of scientific papers, e-mail, lab notebooks and other material. Producing them in discovery is not easy. Michael Malecek, head of Affymetrix’s in-house litigation group, deadpans, “It’s sort of like calling Safeway and saying, ‘Your sale of groceries is illegal, and we need all documents related to the sale of groceries.’ That’s quite a large volume of documents.” Fortunately for Affymetrix, executive vice president and general counsel Barbara Caulfield has been mulling over the implications of electronic discovery, or e-discovery, since her days as a federal judge in California’s Northern District in the early 1990s. She believes the best way to handle requests for electronic evidence is to be prepared for litigation, rather than hope it won’t happen. Many companies wait until they get sued to try to make sense of their electronic evidence, and then rely largely on outside counsel and vendors to do the work. Not Affymetrix. Rather than letting documents pile up, the company has strict rules that govern how long any document can stick around before it’s destroyed. Everyone at the company, from the top to the bottom, follows these rules, especially the one requiring all documents to be archived electronically — even if they existed originally in paper form. The company also has a team of in-house lawyers who handle discovery, so they are familiar with the corporation’s collection of documents. When Affymetrix is sued, these lawyers already have a good idea where to look for relevant material and what they are likely to find. Between her time on the bench and at Affymetrix, Caulfield headed the litigation departments at Latham & Watkins and Orrick, Herrington & Sutcliffe. She is in the rare position of seeing litigation from three sides: as a lawyer, client and judge. Her experience led her to conclude, when she went in-house, that she needed to know what evidence would be involved in a suit as soon as possible. She could quickly settle defense cases where smoking-gun evidence existed. When the evidence exonerated Affymetrix, she wanted to be able to let the other side bow out early, before both sides rang up huge bills. Even at a relatively small company like Affymetrix, which was founded in 1992 and has fewer than 1,000 employees, it was not easy to organize the corporate documents. After her arrival at Affymetrix in 2001, Caulfield sat down with the rest of the in-house lawyers and listed laws and regulations that required Affymetrix to keep certain documents and for how long. Tax documents, for example, should be held seven years. Affymetrix’s lawyers created a grid lining up Affymetrix departments with their respective legal responsibilities. Caulfield conferred with the technology staff about what they’d done in the past to keep those documents and other ones the company decided to hang on to, like marketing materials. Armed with that knowledge, Caulfield started visiting each Affymetrix department to make sure they were keeping the required documents — and eliminating unwanted ones. Each group named one person as data manager who was in charge of ensuring document retention and destruction. Even a relatively young company like Affymetrix produces reams of paper documents. Some employees prefer to work with paper, and some departments were storing paper versions of documents. Caulfield wanted everything archived electronically. Besides taking up less space, electronic documents are much easier to search. She eventually won this debate — even if it meant getting the technology department to scan in paper documents. Malecek joined Affymetrix in August 2002 from the U.S. attorney’s office in California’s Northern District to lead Caulfield’s litigation team. Unlike litigators in private practice, assistant U.S. attorneys don’t have scores of associates and paralegals to do the grunt work. Malecek didn’t mind scrolling through documents himself. He has since hired two lawyers and a paralegal, from Morrison & Foerster and Orrick, Herrington, to assist him, as well as another assistant U.S. attorney. Caulfield and Malecek are reluctant to talk in great detail about the cases they have handled internally and how the review of evidence has helped Affymetrix’s chances in court. According to documents filed with the Securities and Exchange Commission, in 2003 the company was named in a shareholder class action suit. In 2003 Affymetrix also sued or was sued by, depending on the jurisdiction, Multilyte Ltd., a British company, for patent litigation in Germany, Great Britain and the United States. Malecek estimates that the group has saved about $1 million on each case in which it handles the document collection, review, and production. Saving money was not the only motivation. Malecek says that a dedicated team of lawyers knows where the documents are buried; these in-house lawyers are quicker and better than outside lawyers too. Malecek admits that “doing document discovery is not the most glamorous part of being a lawyer.” But he says that his staff likes to see how their discovery work has a direct impact on the company’s fate, as they are much more directly involved with the case than they were as associates at large firms. Caulfield understands that her approach may not work at all companies. Still, she says, “the thing that everybody has to ask themselves is, ‘What is more efficient and less expensive in the long run — keeping up as you go along … or waiting until you get a discovery request that’s nine feet long, and then trying to dig through everything?’” Raytheon Co. and Exxon Mobil Corp. are two companies that haven’t let their size discourage them from trying to get a grip on e-discovery. While neither company has gone as far as Affymetrix, Raytheon has taken innovative steps to control its collection of documents, and Exxon Mobil proves that even behemoths can take small steps. Woods Abbott had just been promoted to senior manager of legal operations at Raytheon when suits started flooding in in 1999 over the sale of a construction division. Staring down shareholder suits, an SEC investigation, and other court battles, Abbott concluded that the discovery burdens would grow unmanageable. There were just too many outside firms and too many documents involved in the cases. He remembers telling his colleagues, “Guys, we’re going to lose control of this.” Within a matter of weeks, Abbott had persuaded general counsel Thomas Hyde (now at Wal-Mart Stores, Inc.) that they’d save time and money doing discovery in-house. Abbott put together a document management center near the company’s headquarters in Waltham, Massachusetts. Today, the center has more than 3 million electronic images of documents — both paper and electronic — that Raytheon has had to produce in various suits. Raytheon creates images of the electronic documents rather than store them in native form so that they cannot be altered. The same documents tend to be produced in discovery over and over. As requests for new paper documents come in, they are scanned, bar-coded, and added to the database. Raytheon, however, has not converted all its paper documents into electronic form, like Affymetrix, only those reviewed in discovery. The center has one large file server and ten workstations. There are hookups for up to 50 laptops, so that lawyers, both in-house and outside counsel, can review documents. But all document review is done at the center. Abbott says he is uncomfortable losing any control, including letting outside lawyers access the documents remotely through an extranet. A paralegal and consultant staff the 6,000-square-foot document center and oversee outside lawyers when they do their work. The litigation database keeps track of who accesses a file and when. Occasionally, when Raytheon needs more flexibility, it will make a select group of files available on an extranet run by CaseCentral, Inc., in San Francisco, a litigation support vendor. Abbott explains that these measures provide Raytheon with a defense against document tampering. According to Abbott, Raytheon’s general counsel, Jay Stephens, who has held several high-level posts in the U.S. Department of Justice, including associate attorney general, is sensitive to chain of custody issues involving evidence. Exxon Mobil’s Chuck Beach, coordinator of corporate litigation at Exxon Mobil, faced a different sort of discovery crisis in 2000, shortly after the merger that brought two energy giants together. The issue was backup tapes, a form of disaster recovery protection that plaintiffs lawyers have discovered can be fertile ground for discovery. A spike in gas prices prompted a class action suit in Illinois and various state and federal investigations. Exxon Mobil had already voluntarily agreed to stop reusing tapes that might be relevant to the investigations. The state suit added a whole new wrinkle. The suit’s merits were overshadowed by whether or not the company — still in the process of combining operations — could stop recycling tapes on a dime. Ultimately, the company’s ability to stop recording over backup tapes became moot because the suit was dismissed. But the experience forced Beach to realize that a company the size of Exxon Mobil, whose sales exceed the gross domestic product of Turkey, needs to get its electronic house in order. “It’s not that we’re worried they are going to find documents that say bad things,” says Beach. “The issue is that with the vastness of the electronic systems, I don’t think that there is a way that you could possibly preserve every copy of every document when you’re ordered to do that.” Corporations the size of Exxon Mobil are not necessarily fleet of foot on these issues. The immediate demands of ongoing litigation often trump longer-range goals. Nearly four years later, Beach is still working on standardizing backup policies across departments. Once a corporate policy is in place, Beach hopes to work with outside counsel on ways to limit the ability of plaintiffs counsel to request that Exxon stop recycling tapes whenever it is sued. Fortunately, new technologies are coming out to help aggressive companies face their e-discovery demons before litigation is filed. For example, Renew Data Corp. of Austin is developing software that can store and search up to ten terabytes of data. The software — ActiveVault — is able to hold so much data because it suppresses duplicate information, like multiple versions of the same e-mail and attachments. Given the capacity of ActiveVault, president Bob Gomes says, companies ought to be able to recycle backup tapes much more quickly. If a discovery request comes in for older e-mail, he says, clients will search in ActiveVault rather than backup tapes. Other vendors are also starting to recognize that they need to help corporations prepare for litigation rather than simply help vendors defend litigation. Fios Inc., of Portland, Ore., an electronic evidence vendor, has its Litigation Readiness Service to counsel corporations on how to deal with court cases as a business process rather than as a crisis. Likewise, CaseCentral, the vendor used by Raytheon, is also adding features that let companies flag documents so that they will be easy to use again in subsequent cases. Affymetrix’s Caulfield acknowledges that many people don’t share her enthusiasm for preparation. When you mention e-discovery, these people “run as far as they can in the other direction,” she says. Caulfield has won over her colleagues at Affymetrix. Now it’s time to see if the rest of the in-house world will follow.

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