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It can buckle the knees of the mightiest opponents, can end up costing millions to deal with, and can frustrate a case into premature settlement. Electronic discovery — or e-discovery — has become much more complicated than simply pulling deleted e-mail messages off a hard drive. With the retrieval of electronic information sometimes exceeding six figures in large-scale litigation costs, motions, subpoenas and orders for e-discovery can push clients into settling to avoid the crippling cost of compliance, defense attorneys say. But with corporations that stay in the game, there is good news, at least for a growing number of tech-savvy niche practices, whose sole job in high-dollar cases is to help discern relevant electronic information from rubbish. Particularly in complex commercial cases, litigators (often plaintiffs) are increasingly making demands against their opponents for electronic documents generated in the regular course of business. As a result, more and more in-house and outside counsel are relying on specialized law firms spawned by the e-discovery market to figure out what information is needed and where to get it. “Cases used to involve a couple of boxes; now it’s a couple of rooms,” said Michael K. Brown, a partner at Reed Smith. Brown, whose law firm has represented major pharmaceutical companies including Bristol-Myers Squibb Co., said that he works with e-discovery firms when complying with such motions threatens to sap significant energy from his own team. Brown said that, in many cases, primary counsel cannot devote the resources to comb through a client’s unwieldy amounts of electronic information, often stored without sorting or indexing for disaster-recovery purposes. That’s when the e-discovery firm is called in. “We can keep them more than busy while the rest of the litigation team operates on the front burner,” he said. One such firm is Socha Consulting in St. Paul, Minn. A few years ago, attorney George Socha, 47, began wondering how he could blend his technology know-how with his legal career. Working as a litigator for 16 years, most recently with Minneapolis-based Halleland Lewis Nilan Sipkins & Johnson, Socha said he couldn’t come up with a working solution to suit both his interests. Practicing with a firm and concentrating solely on e-discovery wasn’t the right fit, nor was working for service providers that handle the nuts and bolts of actually retrieving the information from corporations. Last summer, Socha launched his own firm that works with litigators and service providers to manage e-discovery matters. “I drew my last real paycheck at the end of June 2003,” he said. Still, Socha said he is busy. Besides working with service providers, law firms and as an expert witness for a major pharmaceutical company in a class action, Socha is one of three special masters in an initial public offering securities litigation in the Southern District of New York, captioned In re Initial Public Offering Securities Litigation, No. 21 MC 92. Socha estimates that expenditures for e-discovery preservation, collection and production in U.S. commercial litigation for 2004 will total about $700 million. He anticipates that by 2006, that number will increase to $1.8 billion. His numbers were derived from a survey, the Socha-Gelbmann Electronic Discovery Survey, conducted this year by his firm and Gelbmann Associates, a technology investment firm in Roseville, Minn. While he cautions that his numbers are predictions, he is willing to bet his livelihood on the opportunities in the e-discovery market, given the burden on parties that increasingly are called upon to produce e-discovery. “It’s the electronic equivalent of finding a piece of paper buried in a warehouse,” he said. Judge Shira Scheindlin, a federal judge in New York’s southern district, knows the weight that e-discovery requests carry in complex litigation. In Zubulake v. UBS Warburg, No. 02 CIV 1243, she has written a series of decisions establishing a standard for e-discovery cost-shifting and addressing the consequences of noncompliance. In May 2003, Scheindlin ruled that a woman suing an investment bank for gender discrimination had to pay 25 percent of the cost of restoring, searching and producing the bank’s back-up e-mail tapes. The plaintiff’s share was $41,000. Scheindlin’s decisions in Zubulake call for a seven-factor test. Under the test, a determination of whether production of documents is unduly burdensome or expensive primarily turns on whether the information sought is in an accessible or inaccessible format. Even though shifting the cost may take some of the sting out of e-discovery, retrieving the information can be staggering, said attorney Larry Johnson, founder of the E-Discovery Law Group in Seattle. Johnson and partner Tom Howe two years ago launched their business after they saw the need for a liaison between law firms, which know the legal aspect of discovery, and tech firms that sometimes have “no clue” what lawyers want, Johnson said. “The two worlds don’t talk to each other very well,” explained Johnson. Johnson has worked with top-tier firms such as Jones Day; Paul, Hastings, Janofsky & Walker; and Latham & Watkins. He said he has noticed what he calls a “tectonic shift” in the e-discovery field since he started. “It used to be ‘give me everything you’ve got,’” Johnson said. He added that now the parties requesting the information realize that even though they may gain some advantage from broad discovery requests, they still have to review it all. He said litigants have become “much more sophisticated” in their requests and attributes Scheindlin’s decisions as pivotal in that change. About 90 percent of the E-Discovery Law Group’s work is consulting with service providers about what information they should retrieve. The two attorneys also have testified as expert witnesses and hope to expand the practice to work directly with lawyers. A BIT OF FRICTION But friction can emerge between a litigation team and an e-discovery unit, said attorney Robert Rowe, senior vice president and chief operating officer of Nextra Litigation Solutions. Based in Columbia, S.C., Nextra employs five attorneys and is a wholly owned subsidiary of Nexsen Pruet, a law firm in Charleston, S.C. The e-discovery subsidiary was created 10 months ago. Litigation teams can get “a little nervous” if corporate counsel brings in an e-discovery firm, Rowe said. As the client’s national firm, it may feel that the need to hire special e-discovery lawyers shows signs of the big firm’s weakness. He added, however, that e-discovery firms are “pretty welcome” once the litigation team realizes the enormity of an e-discovery job. Brown, with Reed Smith, said critical to cooperation between the two firms is establishing who is in charge. “The whole idea of national counsel is having one firm. That means they oversee the case. You still want to funnel [e-discovery matters] through whoever is running the case,” he said.

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