Xerox E-Discovery Talk

A federal district court’s recent granting of $3.2 million in attorneys’ fees to cover e-discovery costs, including technology-assisted review, to a prevailing party’s request, shows that the court sees technology-assisted review as a reasonable e-discovery expense and part of a balanced strategy for managing modern document reviews.

In Gabriel Technologies Corp. v. Qualcomm, Inc. (S.D. Cal. Feb. 1, 2013), a $1 billion patent-infringement and trade-secret misappropriation lawsuit, the court dismissed the plaintiffs’ claims. Subsequently, the defendants asked the court to award reasonable attorneys’ fees under 35 U.S.C. § 285, which allows prevailing parties to recover fees in “exceptional cases.” The court found this case “exceptional” because the plaintiffs’ claims were “objectively baseless” and filed in “subjective bad faith.”

In the memorandum supporting their motion for fees, the defendants asked for discovery costs and explained their document review process. First, the parties agreed to search terms to eliminate non-responsive documents. Then, instead of performing manual review over the full set of remaining documents, the defendants retained a company to create an algorithm to perform a first-pass review for responsiveness. Finally, the defendants’ law firm retained a managed review service to perform manual review for privilege, confidentiality, and relevance issues.

The court approved the defendants’ request for $2.8 million for a third-party vendor to construct the technology-assisted review algorithm, consult on search terms, and perform other related activities—all of which decreased the review workload downstream. The court found the “decision to undertake a more efficient and less time-consuming method of document review to be reasonable under the circumstances.” Similarly, the court awarded nearly $400,000 for managed review, based on 7,000 hours at rates ranging from $55 to $67 per hour, because the fees would have “been exponentially higher” had the law firm reviewed the documents.

Not only does this decision reaffirm the reasonableness of using efficient means (for example, technology-assisted review coupled with managed review) to reduce the e-discovery costs, but it also suggests a way to recover costs recently ruled as non-taxable under 28 U.S.C. § 1920. (Interestingly, the court had rejected the defendants’ request to include e-discovery consultant fees in a bond because they constituted “intellectual effort” rather than “‘the physical preparation and duplication of documents’” under Section 1920. Gabriel Technologies Corp. v. Qualcomm Inc., (S.D. Cal. Sept. 20, 2010).)

Stuart LaRosa is a senior search consultant with Xerox Litigation Services. He can be reached at slarosa@xls.xerox.com.

A clawback agreement should be a top priority for counsel handling any case involving e-discovery. Clawback agreements prevent waiver of the privilege in the event that a party inadvertently produces privileged documents — a risk that increases substantially with the increased volume of electronically stored information involved in today’s e-discovery matters.

The case of Brookfield Asset Management, Inc. v. AIG Financial Products Corp. (S.D.N.Y. Jan. 7, 2013) demonstrates how beneficial clawback agreements can be. The parties had entered into a Federal Rule of Evidence 502(d) agreement that included a stipulation that the “production of any documents in this proceeding shall not, for the purposes of this proceeding or any other proceeding in any other court, constitute a waiver by Defendants of any privilege applicable to those documents, including the attorney-client privilege.” Subsequently, AIG inadvertently produced privileged draft board minutes for which the redacted text was visible to the adversary. In finding that the minutes were still covered by the privilege, U.S. Magistrate Judge Frank Maas relied upon the “clear answer” provided by the parties’ Rule 502(d) stipulation that had been entered as a court order.

The case provides two nuggets of practical guidance for litigants:

1. Negotiate a clawback agreement and have the court enter it as an order.

During the meet and confer session at the outset of a case, negotiate an agreement governing the inadvertent production of privileged information with opposing counsel. The clawback agreement should then be tendered to the court for entry as an order.

Importantly, under Rule 502(d), a federal court order concerning preservation, privilege or waiver governs in other federal or state proceedings, thus extending the protections to third parties in unrelated litigation.

2. Monitor the work of e-discovery vendors.

In resolving the dispute over AIG’s inadvertently accessible redacted text, Judge Maas wrote that “this emphasizes the need for counsel for a producing party to keep a watchful eye over their e-discovery vendors.” Hiring a third-party e-discovery provider does not mean that a litigant can abdicate responsibility for a document production. Instead, counsel must find an e-discovery provider that it can partner closely with; forming this symbiosis will show the court the party took reasonable precautions against the inadvertent disclosure of protected documents. The party should also assess the provider’s experience with protecting privileged and redacted documents, and inquire about the QA / QC steps undertaken prior to a production going out the door.

Gabriela P. Baron is Vice President of Business Development at Xerox Litigation Services. She can be reached at info@xls.xerox.com.

Managing e-discovery costs was a salient topic at last week’s Carmel Valley eDiscovery Retreat in Half Moon Bay, CA, with a number of panels offering insights into how to align financial interests among clients, law firms and e-discovery providers.

In many cases, one way to do so is managed review. When a matter involves an extensive data collection, corporate legal departments must decide which parts of the e-discovery process to insource and which to outsource for the sake of efficiency. Since many clients choose to outsource the document review phase, the next question becomes whether to delegate the responsibility to outside counsel or to contract attorneys managed by an e-discovery services provider.

In the most efficient outsourcing models, corporate law departments retain control of broad issues such as case strategy but delegate day-to-day oversight of legal matters to outside counsel. Then, either the law firm or the legal department sends the time-intensive aspects of the work, such as document review, to a service provider. Of course, managed review should not be mistaken as an invitation to abdicate complete control over the review process: in fact, in Peerless Industries, Inc. v. Crimson AV, LLC (N.D. Ill. Jan. 8, 2013), the court sanctioned a party that failed to supervise its vendor’s e-discovery process, ruling that the “hands-off” approach to the document production was insufficient.

Outsourcing document review to a provider has a number of advantages. By outsourcing document review to a single provider, instead of various law firms, in-house counsel can reduce the likelihood of inconsistency and the chances of errors, omissions, and sanctions. And if an e-discovery service provider with end-to-end e-discovery services conducts the review, information is not continuously shuffled, which can prevent the inadvertent destruction of data. In addition, when a law department relies on the same vendor for multiple matters, its review team members develop institutional knowledge of the client’s preferences and best practices protocols and procedures, allowing for optimal results.

Managed review teams can also leverage cutting-edge technology to minimize review time, such as technology-assisted review, without the legal department (or law firm) having to invest in technology they might not have in-house. They can also offer predictable pricing models to control costs. And, as one court recently remarked in allowing a party to recover nearly $400,000 to cover the costs of document review performed by a vendor’s contract attorneys, managed review can minimize the exorbitant costs of e-discovery. (As part of its award in Gabriel Technologies Corp. v. Qualcomm, Inc., (S.D. Cal. Feb. 1, 2013), the court acknowledged that had the defendant not outsourced document review, its attorneys’ fees would have been substantially higher.)

Rachel Teisch is senior director of marketing at Xerox Litigation Services. She can be reached at info@xls.xerox.com.

Reasonableness and proportionality in technology-assisted review, with a nod to cooperation, won the day in the multi-district products liability dispute In re: Biomet M2a Magnum Hip Implants Products Liability Litigation. In this case, Judge Robert L. Miller, Jr. of the United States District Court for the Northern District of Indiana refused to order the defendant to “virtually start[] over” as the plaintiffs’ Steering Committee had sought, sparing the company from an additional e-discovery spend in the “low seven-figures.”

This opinion will have important implications for anyone seeking to utilize technology-assisted review to manage discovery costs and deadlines. Why? In his opinion, Judge Miller eschewed the technical nitty-gritty that has filled previous rulings on technology-assisted review, instead choosing to focus on questions of reasonableness and equitability.

The ruling has a number of significant implications. First, it sets a precedent for allowing search term culling to be used in conjunction with technology-assisted review. Second, it emphasizes process efficacy over algorithmic technicalities. Third, it shows an openness to cost-shifting on the part of the courts when a plaintiff attempts to push beyond the boundaries of reasonableness using technology-assisted review.

In this medical devices products liability case, the defendant faced the daunting task of managing a responsive review of over 19.5 million documents. To meet this challenge, they employed a range of discovery methods to meet their objectives. First, they applied keyword culling to remove non-responsive documents from the collection, reducing the review set to 3.9 million documents. They then applied deduplication to the culled set. From there, they used technology-assisted review to bring the documents most likely to be responsive to the forefront. Following a contract attorney review for privilege, confidentiality, and responsiveness, the documents were produced.

The plaintiffs in Biomet objected to the defendant’s use of keyword culling, despite the defendant’s offer to let the plaintiffs propose keywords of their own, calling it a “less accurate” approach. Judge Miller, however, cast serious doubts on the plaintiffs’ claims regarding accuracy, ruling that the defendants have so far satisfied their discovery obligations in full compliance with Federal Rules 26(b) and 34(b)(2), the Seventh Circuit Principles Relating to the Discovery of electronically stored information (ESI), and the Sedona Conference principles. Judge Miller’s caveat: the defendants must “remain open to meeting and conferring on additional reasonably-targeted search terms” and conducting additional review on any new document hits added to the review set following that process.

Beyond endorsing this multimodal approach, Judge Miller sympathized with the defendant’s position that throwing out their use of keyword culling and the technology-assisted review process and “virtually starting over would cost it millions [of dollars] more than the millions it already has spent in document production.” Judge Miller highlighted the proportionality standard in Rule 26(b)(2)(C) in reaching that decision, noting that even if it happened to be the case that using only technology-assisted review from the outset in lieu of keyword culling in conjunction with technology-assisted review would have unearthed additional responsive documents, it would cost the defendants “a million, or millions, of dollars to test” that theory.

Based on this precedent, litigants should be able to argue that a reasonable discovery process should not be second-guessed, especially when the costs of an alternative process are unlikely to deliver any additional benefits to the requesting party. And, when a requesting party tries to push the boundaries of reasonableness when technology-assisted review is leveraged, litigants should consider asking the court to shift the costs to that party.

Stuart LaRosa is a senior search consultant with Xerox Litigation Services. He can be reached at slarosa@xls.xerox.com.

If you’re reading this, you may now be considered a “business associate” or subcontractor under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The 2013 HIPAA Omnibus Rule, which took effect on March 26, expands the definition of a “business associate” of covered entities, makes such “business associates” directly liable for compliance with the HIPAA privacy and security rules’ stringent requirements.

Specifically, the expanded definition of “business associate” creates new obligations for subcontractors and those previously excluded business associates who, many of which, previously have not had to deal directly with HIPAA obligations but now are expected to agree to the same restrictions and conditions as the “business associate.” Now, both will need to re-examine their internal policies and practices, as well as rigorously enforce information security protocols, to protect their clients’ protected health information (PHI), control employee access to such information and monitor compliance.

The Omnibus Rule raises an interesting issue for the electronic discovery ecosystem: Does the expanded definition of “business associate” put new affirmative responsibility on law firms and e-discovery providers, shifting the liability of potential inappropriate disclosure of PHI, even if it is done at the direction of the covered entity or as a subcontractor to the “business associate”?

“Business associates” of covered entities, including any entity that receives, maintains or transmits PHI, will have increased exposure. This means that compliance will be required downstream from the covered entity, thereby creating potential liability for entities with more attenuated relationships with covered entities. Compliance in the context of e-discovery proceedings is already complicated, and now there will be an expansion in the application of the law and a more heightened scrutiny of entities providing legal services and those providing electronic discovery services.

Thus, there are a number of possible implications for law firms and e-discovery providers alike:

• For the first time, it appears that lawyers will be (and their e-discovery providers may be) held responsible for ensuring that in e-discovery, data is not collected that might be applicable to HIPAA privacy rules. They will have to limit the uses, disclosures of, requests for, and productions of PHI to the “minimum necessary.” This means lawyers must curtail requests for PHI to data needed for a matter. When PHI is part of a data collection, parties must avoid producing more data than required and redact nonresponsive PHI and may need to pursue protective orders when needed.

• In the event of a breach, the business associate must notify the covered client within 60 days of discovering a security breach affecting PHI. The Rule expands the definition of “breach” from a use or disclosure that caused a “significant risk of financial, reputational or other harm” to any impermissible acquisition, access, use, or disclosure of PHI. A breach is presumed to have occurred unless the business associate can show a low probability that PHI was compromised.

• The Omnibus Rule also points to the need for “business associates” to adopt security and privacy controls that address access to PHI and security breaches, as well as implement the HIPAA Security Rule (which includes designating a security official and installing access-control software).

We have yet to see how the obligations of e-discovery providers may shake out with this new rule, as affected entities have 180 days to figure it out. Stay tuned.

Chris O’Brien is chief operating officer at Xerox Litigation Services. He can be reached at cobrien@xls.xerox.com.

This blog typically focuses on issues related to the practice of e-discovery, but I wanted to take a brief break to share some life-related insights that Xerox Chairman and CEO Ursula Burns, in conversation with ABC News Legal Analyst Dan Abrams at a Xerox Litigation Services event last Thursday evening in New York, shared with our clients.

Our guests were warned beforehand that the talk would be light on legal matters, and deep on leadership, management, innovation and even a bit on work/life balance. During the course of the evening, Ursula offered candid advice in all of these areas. What resonated most with me came from her personal stories.

Ursula began her career at Xerox as a summer intern, working her way through “every nook and cranny of the company,” from product development and manufacturing to supply chain operations, before making her way to the top in 2010. As a wife and mother of two children, the demands of her career forced her to get comfortable with the idea that finding a balance between her personal and professional life would happen over time, and not throughout the course of a day, week or month.

Here’s what Ursula told our clients:

First, remember what matters most. As an example, Ursula reflected back to a time when a family member was sick. She knew that, despite the demands of her job, she needed to be by his side at the hospital. After returning to the office, Ursula realized that nothing had fallen apart. In fact, everything had been moving forward without her. She attributed to her ability to take the time she needed to the competence of her solid senior leadership team.

Second, for working women in particular, take a step back and understand that running a household and family IS a full-time job. Pile onto that a career, and quickly it becomes impossible to manage both without the right partnerships in place. She advises that women, and men, should select a partner that is interested in supporting the other’s career and life choices. Each will be much better for it. And if not, “You should think about choosing another partner.”

Third, advice we can all benefit from: stay grounded, don’t take life too seriously. “Ninety percent of this stuff is just not this serious,” she said. But “we get crazy about it.” Her advice is to stick to the basics. “Enjoy it,” she said. Ursula says this is something her mother always emphasized to her growing up, and that she still lives by these words every day.

Ursula’s approach to balancing her own personal and professional life is one we can all learn from, and her insights are an inspiration to so many of us navigating our careers and busy lives forward.

Now, back to e-discovery….

Serena McNally is marketing manager at Xerox Litigation Services. She can be reached at info@xls.xerox.com.

Given the risk of data breaches and the duty to maintain client confidences, is it ethical for lawyers to use cloud computing? Among the state bar associations that have considered the issue, the consensus is yes—with a catch.

The New Hampshire Bar Association is the latest to address cloud computing in the practice of law. Its Advisory Opinion #2012-13/4 allows lawyers to use cloud computing consistent with their ethical obligations, so long as they take “reasonable steps to ensure that sensitive client information remains confidential.”

To comply, lawyers don’t have to become IT experts; instead, following the latest revisions to the ABA Model Rules of Professional Conduct, which require an awareness of technology’s risks and benefits, they must “have a basic understanding of the technologies they use.”

According to the New Hampshire Bar Association, lawyers must also consider the following questions when choosing a cloud provider (note that the italics below summarize clarifications made by the Bar):

1.    Is the provider of cloud computing services a reputable organization?

2.    Does the provider offer robust security measures?

The minimum required security measures are “password protections or other verification procedures limiting access to the data; safeguards such as data backup and restoration, a firewall, or encryption; periodic audits by third parties of the provider’s security; and notification procedures in case of a breach.”

3.    Is the data stored in a format that renders it retrievable as well as secure?

4.    Does the provider commingle data belonging to different clients and/or different practitioners such that retrieval may result in inadvertent disclosure?

5.    Do the terms of service state that the provider merely holds a license to the store data?

The cloud provider cannot “own” data stored in the cloud: data must be identified as the client’s property.

6.    Does the provider have an enforceable obligation to keep the data confidential?

7.    Where are the provider’s servers located and what are the privacy laws in effect at that location regarding unauthorized access, retrieval, and destruction of compromised data?

8.    Will the provider retain the data—and if so, for how long—when the representation ends or the agreement between the lawyer and provider is terminated for another reason?

9.    Do the terms of service obligate the provider to warn the lawyer if information is subject to a third-party subpoena?

10.    What is the provider’s disaster recovery plan with respect [to] stored data?

So before sending data to the cloud, scrutinize the cloud provider’s terms of service. Then stay up-to-date on technology and data privacy laws to ensure that sensitive client information remains confidential.

Paul Matthews is chief technology officer at Xerox Litigation Services. He can be reached at info@xls.xerox.com.

Sweeping amendments to the UK’s Civil Procedure Rules are now in effect. These amendments, which are designed to control the scope and expense of litigation, have significant implications for e-disclosure. Chris Dale, Founder of the E-Disclosure Information Project and a member of Senior Master Whitaker’s Working Party that drafted the new Practice Direction and ESI Questionnaire recently shared the following insights in a podcast with us.

With the reforms, judges will be taking a much more proactive role in ensuring the costs of disclosure remain proportionate. Two of the most salient aspects designed to reign in costs include costs management and the menu option.

Costs Management

When judges elect to follow the “costs management” provisions, parties must set and exchange a budget at a matter’s inception and keep track of the budget throughout the case. The budget must forecast not only disclosure costs but also costs for every stage of litigation. Even when formal costs management procedures are not applied, parties still must estimate the cost of disclosure. Either way, parties are required to try to agree on projected costs and then submit their budget to the judge. During the matter, the judge will monitor expenditures to ensure the costs of disclosure—and the case as a whole—remain proportionate.

As part of the budgeting exercise, parties must undertake in-depth disclosure planning. Lawyers will have to meet with IT and other client representatives early in the process to determine the scope of potentially relevant data. By the time the case management conference takes place, parties must be prepared to exchange information regarding the budget and about the proper scope of disclosure, the types of electronically stored information at issue, and any anticipated difficulties.

Menu of Options

The amendments also replace the standard disclosure that was the default for most cases with a menu of six options. Now, the parties must choose from among a variety of alternatives that include no disclosure, standard disclosure, and highly detailed disclosure. Parties should try to reach an agreement on the method of disclosure; if they do not, judges may be required to become more involved in the process and may even direct the parties’ choice of search queries, tools, and technology.

Based on the new rules, organizations will need to decide what disclosure functions to keep in house, what functions to outsource, and what technology to apply very early in a matter. Dale suggests that law departments begin to develop metrics now that will assist them in choosing the right approach. For instance, if parties examine their annual legal spend, they will be able to determine the most cost-effective approaches to disclosure in different types of matters. As the new disclosure model matures, Dale expects parties to turn increasingly to alternative fee arrangements, such as fixed fees, to improve predictability in the budgeting process.

With these reforms, compliance with the CPR is no longer optional. To expedite the early case assessment and budgeting process the amendments require, organizations will likely need to find a long-term disclosure partner that can help them set a realistic budget and choose the most reasonable tools and technology to achieve optimal results.

Listen to the short podcast with Chris Dale.

Rachel Teisch is senior director of marketing at Xerox Litigation Services. She can be reached at info@xls.xerox.com.

Recently, we held a webinar on “Analytics in E-Discovery: Addressing Big Data Challenges,” in which we discussed how (and which) advanced analytical tools can help address issues caused by Big Data – including unnecessary time and money spent on managing non-relevant information, the need to adjust processes and workflow challenges, as well as the technological limitations in finding and assessing information.

Big Data is the buzzword du jour—but it has been around long enough to create some misunderstanding in the e-discovery industry. Big Data is much more than a large collection of data. According to Wikipedia, Big Data is “a collection of data sets so large and complex that it becomes difficult to process using on-hand database management tools or traditional data processing applications.”

Big Data is also an opportunity to find insights in new and emerging data types and content to answer questions previously considered unanswerable, as there was no practical way to harvest that data. Given a host of new technologies and strategies, organizations can mine and analyze Big Data for market research and trending, pricing optimization, sales forecasting, portfolio risk mitigation, and a host of other use cases to support a particular business decision – enter a new market, leave an existing market, etc.

In an e-discovery context, Big Data should be treated no differently; the key is finding cost-effective ways to extract valuable information from the subsets of potentially useful data buried among the morass of bits and bytes – turning Big Data into an asset, not a liability. Advanced analytical tools, ranging from email threading and analysis to technology-assisted review (TAR)  can help organizations analyze the content of and extract value from Big Data. The most obvious deployment of these tools in e-discovery is to identify and code documents that are responsive to discovery requests.

Big Data has a number of other legal applications as well. Organizations can use TAR and other analytical tools to mine Big Data to gather insights early in a matter to help perform early case assessment, allowing parties to develop a case strategy and determine the appropriate settlement posture. These tools can also be used proactively, well before litigation or a regulatory investigation are initiated, to sort through an organization’s data store, organize it, and code it on an ongoing basis, preparing it for more facile retrieval and defensible deletion as part of an information management strategy. In addition, Big Data can be analyzed for risk management purposes, spotting potential issues and risks based upon the analytics gleaned from the data. For example, advanced analytics can be used to identify patterns or correlations in data that may indicate a violation of law that might otherwise go unnoticed.

In short, Big Data should not be thought of in terms of zettabytes and terabytes; rather, it should be conceived of as a treasure trove of useful information, replete with seemingly limitless insights and innovation to help organizations comply with their legal obligations. In this context, perhaps a better name for Big Data would be Big Opportunity.

Dean Kuhlmann is vice president, business development at Lateral Data, a Xerox company. He can be reached at kuhlmannd@lateraldata.com.

In analyzing motions to compel production of social media content, courts generally agree that there is no justification to treat this evidence differently from any other form of electronically stored information. Despite this seeming consensus, the standards of relevance vary among jurisdictions. One admissibility standard seems to be emerging, however: when a party’s public social media information seems to undermine the party’s allegations, the courts will allow the discovery. See, e.g., Keller v. Nat’l Farmers Union Property & Casualty Co., (D. Mont. Jan. 2, 2013).

But even when deemed potentially relevant, social media evidence is still not freely discoverable in many jurisdictions due to privacy considerations. To prevent parties from engaging in fishing expeditions, some courts have asked the producing party to gather the evidence from the social media account and provide it to the receiving party directly. However, this raises the concern that a party may not produce the full panoply of responsive information as well as the specter of spoliation.

Therefore, courts are exploring diverse approaches that balance a party’s right to privacy with the opposing party’s right to discovery. For example, one court ordered a plaintiff to share her Facebook login information with the defendant but limited the defendant’s access to the account to 21 days. Largent v. Reed (Pa. Ct. C.P. Nov. 8, 2011). Other courts have entered a protective order to prevent the dissemination of social media content outside the confines of the matter. See, e.g., EEOC v. Simply Storage (S.D. Ind. 2010).

To prevent fishing expeditions and safeguard privacy, some courts have appointed neutral experts to supervise the collection of social media evidence. For instance, after granting a broad request for social media account usernames and passwords, one court appointed a special master to review the evidence in camera for relevancy. EEOC v. Original Honeybaked Ham Co. of Georgia (D. Colo. Nov. 7, 2012). Before producing the relevant evidence to the defendant, the court allowed the EEOC to review the information for privilege. The court split the cost of the forensic examination between the parties, with the possibility of relieving the plaintiffs of monetary responsibility if the effort produced little or no relevant information. Although this method achieves the twin goals of ensuring objectivity and preserving privacy, it is not without its drawbacks: it is time-consuming and increases the costs of discovery.

Regardless of the approach, one thing is abundantly clear: parties cannot hide behind the shield of privacy when it comes to discovery of their social media content. Therefore, counsel should speak to their clients early and often throughout a matter to confirm what social media evidence exists and remind clients to preserve this evidence for the duration of the litigation. Counsel should also consult with collection experts on the best way to acquire and produce any relevant information from social media accounts. Moreover, well before any litigation or investigations are on the horizon, counsel should encourage corporations to incorporate social media into their e-discovery strategy and information management programs (see CMS’ What You Need to Know About Incorporating Social Media Into Your E-Discovery Strategy) to ensure that they do not retain more information than is necessary for business or compliance purposes.

Rachel Teisch is senior director of marketing at Xerox Litigation Services. She can be reached at info@xls.xerox.com.