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In the swiftly evolving field of electronic discovery, courts are moving away from harsh sanctions and toward more creative and proportional solutions to what has become a very costly problem for many companies.

That’s the view of several experts at Gibson, Dunn & Crutcher who took part Thursday in a webcast on e-discovery hot topics. The session was based on the law firm’s lengthy publication "2012 Year-End Electronic Discovery Update: Moving Beyond Sanctions and Toward Solutions to Difficult Problems."

"The e-discovery playing field continues to shift rapidly, and general counsel need to be aware of the developments and how [the changes] impact their companies’ strategies," Gareth Evans told CorpCounsel.com before the webcast. Evans, who is based in Los Angeles, co-chairs the firm’s e-discovery law practice group.

The continuing changes can impact a company’s obligations in discovery, added the other co-chair, New York-based Jennifer Rearden. "And the courts’ receptivity to new approaches to document review may significantly reduce the general counsel’s legal spend," Rearden noted.

Kicking off the webcast, litigation associate Heather Richardson said two key topics of change were the courts’ imposing fewer major sanctions, such as terminating a case in the other party’s favor as a measure against companies for faulty e-discovery efforts; and the courts’ growing acceptance of parties using predictive coding.

While sanctions are still a threat, "many courts are looking to pragmatic solutions rather than punitive sanctions," explained litigation associate Jenna Yott of Gibson Dunn’s San Francisco office.

Yott said the highpoint in the number of e-discovery sanctions granted came in 2011, but last year saw a downward shift that she expects to continue this year.

Of 69 reported cases in which sanctions were granted last year, 44 of them awarded monetary sanctions; 20 gave adverse inferences against the faulty party; 10 precluded evidence; and only 5 sanctions granted termination. (The total number exceeds 69 because some of the cases involved multiple sanctions.)

"That’s one of the more interesting numbers," Yott said of the 5 terminations. "It’s similar to 2011, but significantly lower than 2010."

Instead, she said courts are seeking more creative solutions to make the other party whole, such as reopening discovery, ordering an independent expert to search for spoiliated data, and generally trying to match a sanction with the harm caused by the alleged misbehavior.

Monetary awards are still the most common sanction, she said, with a few large awards last year, including one punitive award of $600,000.

She explained that termination sanctions are still being used for especially egregious conduct, such as in one case where a party "destroyed a computer with a sledgehammer."

The group discussed several proposed reforms to the federal civil rules of procedure, including one that seeks to limit the most serious sanctions for preservation failures. If changed, sanctions like termination, preclusion of evidence, and adverse inference instructions would be limited to instances where the court finds that the failure to preserve evidence was willful or in bad faith, or that it caused irreparable harm to the opposing party.

If rules changes are made, the process may take months or even into 2014 to complete.

As for predictive coding — that is, the use of sophisticated computer software that statistically analyzes documents — 2012 "was a banner year," said Colin Davis, a litigation associate in Orange County, California.

Last year was the first where courts finally recognized and endorsed the use of such software, he explained, and the shift has the potential to drastically ease both the costs and the time burdens of e-discovery for many companies.

Davis hastened to add that it’s not an "absolute replacement for traditional manual review. And whether it’s appropriate depends on the facts of case."

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