Cost control continues to dominate corporate counsel’s extensive list of issues and priorities. Although cost concerns go beyond just electronic discovery, discussions of litigation costs today routinely include assessments of and ideas for reining in e-discovery spend. This is no wonder, as recent estimates project the amount of electronically stored information to double or triple every 18-24 months. Counsel must identify and implement effective strategies to curb costs related to this ever-proliferating data.
Here are nine suggestions:
1. Implement a sound records-management policy. One of the most effective ways to cut e-discovery costs is to shrink the amount of data that potentially is discoverable and, thus, has to be searched, collected, processed, reviewed and produced. As a rule of thumb, keep only the data (1) you must, pursuant to law or regulation, or (2) needed for business purposes. In doing so, it is important to develop, enforce and comply with a companywide written records-management policy. As an added bonus, a thorough and carefully followed records-management policy should help avoid spoliation sanctions.
2. Tackle discovery in phases. Conducting discovery in phases is an effective way to reduce costs by focusing the parties’ time and effort on the most critical discovery at the outset, thereby — potentially — reducing or eliminating more peripheral discovery that becomes unnecessary as the parties learn more about the key facts of the matter. Discovery can be phased around: key custodians, important dates, the most relevant data, the most likely locations of data, and parties/nonparties. And courts have endorsed phased discovery, including in Tamburo v. Dworkin (N.D. Ill. 2010), in which the court denied the defendant’s motion to stay all discovery but ordered a phased approach, limiting the initial phase to the named parties.
3. Keep discovery proportional. When seeking or resisting discovery, litigants should keep the Federal Rule of Civil Procedure’s proportionality principle in mind. FRCP 26(b)(2)(C)(iii) provides that the court must limit discovery if “the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.” Indeed, courts have relied on this proportionality standard to deny requested discovery. For example, in Conn. Gen. Life Ins. Co. v. Earl Scheib, Inc. (S.D. Cal. 2013), the court conducted a cost-benefit analysis, applying the Rule 26 factors, and determined that the defendants were not required to spend $120,000 (which was roughly the amount at stake in the litigation) to search, index, filter and process 219 gigabytes of data. In addition, the Sedona Conference has issued a “Commentary on Proportionality in Electronic Discovery,” and Seventh Circuit Pilot Program Principle 1.03 makes clear that the proportionality standard of Rule 26(b)(2)(C) should be applied when formulating a discovery plan.
4. Remember cumulative/duplicative and alternative source arguments. Although attorneys focus primarily on proportionality, remember that a court must limit the frequency or extent of proposed discovery if it is “unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive.” FRCP 26(b)(2)(C)(i). For example, these may be good arguments to avoid having to search and produce data housed only on back-up tapes.
5. Employ early case assessment tools. According to a 2012 RAND Corporation study, 73 percent of electronic document production costs relate to review (with 8 percent related to collection and 19 percent to processing). In order to reduce the amount of review time and, as important, inform an intelligent and efficient collection, processing and review plan, consider various early case assessment (ECA) strategies and tools. (The marketplace is filled with ECA software suites.) Depending on the case, you might employ keyword searches, including more sophisticated variation and fuzzy searches; concept clustering; threading of email strings; data deduplication; and filters for domains, file types, dates or senders/recipients.
6. Use technology assisted review/predictive coding. The hottest topic in e-discovery right now is predictive coding, by which an attorney familiar with the case’s issues identifies a seed set of documents that the software, employing sophisticated algorithms, uses to identify relevant documents. A full explanation of predictive coding is beyond the scope of this article, but there is no denying the potential review time (i.e., costs) it can save. Some parties have resisted using predictive coding for fear of the “black box” and the dearth of judicial opinions accepting the technology. That, however, changed in 2012 and has continued into 2013 with a series of decisions approving — and even encouraging — parties to use predictive coding under certain circumstances. In fact, the U.S. Department of Justice’s Antitrust Division recently approved the use of predictive coding by a company from which the department sought documents in connection with a proposed merger.
7. Use Federal Rule of Evidence 502. In my experience, parties are not taking advantage of the opportunity for cost savings FRE 502 affords. Under 502(d), a court can enter an order permitting quick peeks and clawbacks without waiver in other federal or state proceedings. Although quick peeks and clawbacks certainly are not appropriate in every case, parties at least should consider them for documents that likely will not have privilege issues.
For example, rather than doing a document-by-document privilege review of all financial documents you have no reason to believe are subject to a privilege, consider producing them pursuant to a 502(d) order that allows you to claw back any subsequently identified privileged document. To be safe (but still not have to lay eyes on every document), you could review samples or run key name/domain searches before production.
However, it is important to have the court enter a 502(d) order, rather than rely on the language of 502(b), as courts are all over the map as to “inadvertent” and “reasonable steps.” With a broad 502(d) order, the producing party would not have to establish inadvertent disclosure or reasonable efforts. Rajala v. McGuire Woods, LLP (D. Kan. 2013); Brookfield Asset Mgmt., Inc. v. AIG Fin. Prods. Corp. (S.D.N.Y. 2013).
8. Reconsider privilege logging. As most litigators can attest, privilege logs are time-consuming, expensive and, usually worthless, often spinning off motion practice over deficiencies. Because of the tremendous burden and expense, parties should discuss alternatives to traditional privilege logging. In particular, parties should consider the so-called Facciola-Redgrave Framework (Federal Courts Law Review ). Among other things, under this logging protocol, parties identify categories of information that, because they are so obviously privileged, are excluded from privilege review altogether and then provide objective indices for the disputed categories, working cooperatively to narrow genuine disputes for judicial resolution. In addition, the Seventh Circuit Electronic Discovery Pilot Program Committee has issued an exemplar case management order that includes an “Alternative Privilege Logging Protocol” intended to streamline the logging process (available at discoverypilot.com).
9. Recover e-discovery costs. Even if reduced through some of the strategies explained above, litigants are going to incur e-discovery costs. It is important to consider that you may be able to recoup some or all of them. Under FRCP 54, prevailing parties can recover discovery costs that fall within 28 U.S.C. § 1920(4). But courts have reached conflicting decisions on which types of costs are recoverable. In general, recent decisions distinguish between basic electronic copying costs, which are recoverable, and costs for more complex activities, such as coding, that are more like traditional attorney work and not recoverable. That said, taxing of costs varies by jurisdiction, so it is important to know the law of the forum. •