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The Basics of E-Discovery , Chapter 1: Process

In the early days of e-discovery, companies typically outsourced most activities to third parties, namely service providers (who actually did the e-discovery work) and law firms. A significant legal trend in recent years has been a dramatic increase in the number of companies attempting to bring more of the e-discovery process in house.

Why the shift? Money is a big reason. Following the severe recession in the late 2000s, many corporate law departments were forced to tighten their belts and look for ways to cut spending. E-discovery quickly rose to that top of the list. A 2012 study by Rand Corporation, “Where the Money Goes," found that outside counsel typically consumed about 70 percent of total e-discovery expenditures, with vendors and service providers accounting for another 26 percent. Companies realized they could control these costs more easily if they performed more of the activities themselves. And there was another big benefit as well.

Besides simply saving money, there is growing acceptance among the legal community that e-discovery is as much a business process as it is a legal procedure. (Check out this E-Discovery Maturity Model as a handy visual reference). When you apply the discipline of process orchestration, you gain the benefit of more transparency, predictability and defensibility of your actions.

It's important to remember that there will never be one correct way to handle e-discovery. Companies face different challenges and conditions that impact how they approach these tasks. A few of the factors that influence the e-discovery process include:

E-Discovery Process Influencers

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Size and nature of company

Larger companies tend to deal with a lot of litigation, often many hundreds of lawsuits every year! Not surprisingly, these companies tend to have more formal processes around e-discovery since demands are more routine than a company that only deals with a handful of lawsuits a year.

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Industry

E-Discovery isn't just all about litigation. Companies, especially those in highly regulated industries such as finance or energy, are frequently compelled to turn over ESI as part of government investigations or audits and will likely need processes for handling such requests. Government agencies face e-discovery challenges as well (see our recent webcast on the influx of Freedom of Information Act (FOIA) requests).

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Data Infrastructure

A company's e-discovery process is inherently tied to the nature of its corporate systems and data repositories. Is data centralized or widely dispersed? What are the data retention policies and how are they enforced? Are there dedicated internal IT resources to handle e-discovery tasks? Answers to these questions will help define the ultimate e-discovery process. We will address questions in the context of specific e-discovery tasks throughout this guide.

Electronic Discovery Reference Model (EDRM)

Any discussion of the e-discovery process has to start with the Electronic Discovery Reference Model (EDRM). The model is so ubiquitous it practically functions as a logo for the entire e-discovery industry. Created in 2005 by e-discovery experts and consultants, George Socha and Tom Gelbmann, to address the lack of standards in the e-discovery market, the EDRM provides a visual framework for the e-discovery process.

The EDRM features nine distinct e-discovery "stages" connected by arrows to indicate the sequential and iterative nature of e-discovery activities. People often describe the EDRM as having two distinct sides - the left side, process-centric stages which include information governance, identification, preservation, and collection; the right side, data-centric phases which include processing, review, analysis, production, and presentation.

Below is a quick summary of the EDRM stages (we dive into these in much greater detail later in the guide).

EDRM

InformationGovernance Identification Preservation Collection Processing Review Analysis Production Presentation
InformationGovernance Identification Preservation Collection Processing Review Analysis Production Presentation
Below is a quick summary of the EDRM stages. We dive into these in much greater detail later in the guide.
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Information Governance (IG)

IG refers to the set of multi-structures, policies, procedures, processes, and controls implemented to manage a company's information. It's a bit misleading that information governance (IG) is included as an individual stage in the e-discovery process. In reality, e-discovery is part of IG, not the other way around (it even has its own Information Governance Reference Model (IGRM)). That being said, IG serves as a good foundation for the e-discovery process, because it fundamentally drives all the other stages.

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Identification

As soon as litigation becomes reasonably foreseeable, parties are under a legal duty to preserve relevant ESI (more on that in the Rules and Case Law sections below). But before they can preserve anything, they have to determine what's relevant. E-Discovery teams use a variety of methods to identify sources of potentially relevant ESI, including reviewing case facts, interviewing key players, and assessing the data environment.

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Preservation

After relevant ESI is identified, it needs to be protected from "spoliation" – the fancy legal term for any destruction or alteration of evidence. While there are different ways to preserve ESI, the most common is through a legal hold process. A legal hold is a formal communication sent from the legal team to relevant data owners (known as "custodians") instructing them not to delete certain ESI.

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Collection

Relevant ESI ultimately must be gathered and centralized. We won't get into the host of collection methods and technologies here, but the important thing to know is that whatever approach is taken must be legally defensible, meaning it must ensure that the contents and metadata (key attributes of the data such as date created and file size) weren't altered as a result of the collection process.

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Processing

The processing phase involves preparing collected ESI for attorney analysis and review. Typically performed by specialized software, processing might entail extracting files from folders, deleting meaningless system data, or converting certain file formats in preparation for attorney review.

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Review

By far the most expensive of the e-discovery stages, review involves evaluating ESI for relevance and attorney/client privilege (this ESI is exempt from e-discovery). Organizations typically outsource review to law firms. However, emerging technologies that allow users to "train" software to distinguish between relevant and non-relevant documents (typically known as predictive coding, or technology assisted review) are making internal review much more viable (learn much more about this in the Review section of this guide).

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Analysis

At the highest level, analysis deals with evaluating ESI for content and context, including key patterns, topics, people, and discussion. You may be thinking, "shouldn't we do that in many stages?" If so, you'd be right, and the experts at EDRM would agree with you. In fact, they write, "while Analysis may appear on the EDRM Framework after Review, it is really deployed in many phases of discovery as well as pre-discovery.

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Production

ESI determined to be relevant must be produced for use as potential evidence. E-Discovery rules address how documents must be produced. For the purposes of this guide, we have combined review, analysis, and production.

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Presentation

This involves how electronic evidence is ultimately displayed as evidence. The whole presentation process has changed dramatically since the shift from paper to predominantly electronic evidence. However, because presentation mainly applies post-discovery we won't go over it in much detail in the guide.

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While the EDRM is widely used and referenced, it's not without its shortcomings. Thus, we believe it's important to keep EDRM in its proper context and remember these important points:

EDRM Limitations

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The EDRM is a framework, not a workflow or process

Sorry to burst the bubble of anyone who planned to print up a giant picture of the EDRM and proclaim to the rest of the company that the e-discovery riddle has been solved. Don't get us wrong, the EDRM is a great starting point for any company looking to define an internal process. But its utility is very limited, given the complexities, sub-tasks, and resource demands that comprise each individual stage. That's where the real fun begins.

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Technology advancements have rendered the EDRM somewhat outdated

2005 doesn't seem like that long ago, but, in e-discovery years, that's an eternity. From a technology standpoint, the EDRM reflects an era of e-discovery 'point tools,' systems that served very limited, specialized purposes. Times have changed. Today, there are single software systems that address all the functions addressed by the EDRM in a more consolidated, streamlined fashion, effectively challenging the sequential nature of the EDRM (hence why we combined certain stages in the structuring of this guide and also included an entire section dedicated to e-discovery software).

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There are important e-discovery processes that are left out of the EDRM

Another example of the EDRM's limitations is its exclusion of several key e-discovery processes. For example, the concept of early case assessment (ECA), whereby an abbreviated analysis of the ESI is made in the early stages of a matter, is not represented in the model (fear not, we have an entire section devoted to the ECA process). Legal holds, while clearly a component of the preservation stage, are also conspicuously absent from the model, even though they are, for all intents and purposes, an e-discovery requirement.

E-Discovery as a Unified Business Process

With the explosive growth in the amount of ESI that companies retain, organizations are finding they can no longer deal with e-discovery on a case-by-case basis or think of the process as a series of disconnected phases. There is growing acceptance among the legal community that e-discovery is as much a business process as it is a legal procedure. Accordingly, many corporate legal teams are making a concerted effort to move beyond reactive, ad hoc e-discovery procedures to more standardized, repeatable, and defensible processes.

In practice, this means approaching e-discovery in a more holistic fashion with a greater emphasis on connecting the various steps. While not usually associated with legal practices, fundamental project management principles can and should be applied in the e-discovery arena. Creating much cleaner handoffs between team members as the project advances is among the ways project management promotes e-discovery success. For example, the team members that designate custodians and ask that their data sources be analyzed are typically different from the members who index or collect the ESI, who are typically different from those who conduct the analysis and make recommendations to counsel. Each of these handoffs presents the opportunity for miscommunication, missteps, and missing important ESI.

As discussed in Exterro's recent white paper, "Why E-Discovery Should Be Managed as a Business Process," here are five key steps to applying a project management discipline to e-discovery:

​Define roles

Many, if not most, project mistakes can be traced back to a misunderstanding or miscommunication. Formally defining roles and responsibilities, and building them into the e-discovery workflow showing what, how, when, and by whom things will be delivered, will prevent mistaken assumptions that are ultimately proven wrong and cause project delays or failures.

Review current state/gap analysis

A thorough analysis of the e-discovery team's capability in meeting project demands and comparing it to what should be expected, given the demands placed upon it by the organization, is the next step. Once complete, this gap analysis will drive the list of improvements needed (technology, staffing, and training).

Develop a remediation plan

Essentially, this is the operations plan for "re-launching" the e-discovery team and making improvements over time. The most important part of this step is obtaining the necessary approvals from sponsors and stakeholders; those bodies will undoubtedly want to examine the plan and identify any weaknesses before giving their approval.

Develop e-discovery guidelines

Create a set of business guidelines that describe step-by-step the actions taken and roles and responsibilities of all stakeholders — legal, IT, records management — that detail how your organization treats e-discovery.

Execute the plan

The final step is to execute the plan for new projects and then begin measuring and improving the quality of project outcomes. Start with a test drive, (a legal hold, perhaps) , then adjust the process, and roll out to other phases of the process.

A final note here is that technology can also play an important role in promoting e-discovery project efficiency. Traditional project management systems can be serviceable but are designed more for traditional projects that are less nuanced and have more defined inputs, outputs, and timelines than the typical e-discovery project. You are better served looking into project management technologies that are specifically designed for e-discovery, such as Exterro's E-Discovery Project Management application.

E-Discovery Rules

For many years, it was essentially the Wild West as far as e-discovery rules and standards were concerned. The Federal Rules of Civil Procedure (FRCP), which govern all elements of civil litigation processes, addressed legal discovery in the broader sense but had nothing specifically related to e-discovery or ESI. The absence of any specific language created a great deal of uncertainty and, frankly, led to a lot of chaos as cases evolved to exclusively involve electronic information.


That changed in 2005 when the FRCP were amended to address e-discovery as a distinct element of civil procedure. The "e-discovery amendments" as they're often referred are spread across different areas of the FRCP. As you might well imagine, the FRCP itself is a wordy, highly formal legal document that would challenge the attention span of even the most ardent legal scholars. That's why we're here! Here is a brief rundown – in layman's terms – of some of the key changes:

FRCP 16

In a nutshell, this rule basically requires that attorneys come into pretrial conferences with at least some knowledge of the client's IT and data environment, so they can begin to discuss the scope of discoverable ESI.

FRCP 26

This one covers a lot of ground, much more than we'll get into here. One of the primary changes was intended to protect parties from the growing expense of e-discovery. This rule essentially enables parties to argue for proportional e-discovery parameters in regards to the needs of the case. To determine this the court will conduct a cost-benefit analysis, assessing the burden of obtaining requested information compared to the benefit the information would have to the requesting party.

FRCP 34

In recognition of the often contentious nature of e-discovery, this section of the FRCP was modified to establish a more structured way to prevent and resolve disputes. For example, the rule establishes that the requesting party gets to request the form of production (the format of the documents that are actually sent from one party to another).

FRCP 37

This final one is a biggy. It gives judges the power to sanction parties for failing to produce relevant documents. It also establishes circumstances by which a party cannot be punished for failing to produce ESI.

More FRCP Changes Ahead

Results from the 2005 FRCP e-discovery amendments have been somewhat mixed. Many practitioners feel that, while the changes helped add some much needed clarity, they didn't go far enough in addressing the issues that are driving up e-discovery costs. Those issues have also become more pronounced as ESI has grown in both volume and complexity, further exposing the limitations of the 2005 FRCP changes.


Accordingly, another batch of rule amendments took effect in December, 2015. These new e-discovery rules attempt to further clarify some of the FRCP e-discovery rules and further promote Rule 1, “the just, speedy, and inexpensive determination of every action and proceeding," when accounting for new technological considerations (i.e. big data). These latest rule changes focus on two key areas:

Proportionality

The term 'proportionality' has become something of battle cry for defense attorneys throughout the country. At its core is the notion that costs for producing ESI should be proportional to the size of the case. Many practitioners have long wanted stronger limitations on expensive e-discovery requests that in some cases exceed the value of the case. The new rules attempt to rectify this by incorporating new language into Rule 26 that expands the proportionality limitation to preservation decisions, beyond just production.

Culpability

One of the common complaints about e-discovery is that culpability standards differ across the federal circuits. Corporations have suggested that, as a consequence, they have pursued a policy of broad preservation (owing to the cross-jurisdictional nature of litigation) and such measures have resulted in excessive costs. The new FRCP rules, relating specifically to Rule 37, attempt to clarify and create a clearer standard, establishing that spoliation sanctions should only be imposed on a finding that the party acted with the intent to deprive another party of the information.

Expert Perspective

You Have to Know How to Use the New Rules

The new rules are a tool but so is a chainsaw. You have to know how to use it. The key is, as always, having sufficient technical competence to assess what is proportionate to the case, a question that cannot be answered unless you know how to use the available technology to get what you need at the least possible cost.

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John M. Facciola
Retired U.S. Magistrate Judge,
Adjunct Professor of Law, Georgetown University

Learn more about the FRCP amendments

For much more about proposed FRCP e-discovery amendments watch Exterro's recent webcast, "Judicial Perspectives on the Proposed FRCP Amendments," and read our white paper, "The Future of E-Discovery Under the Updated FRCP."

One final note on e-discovery rules, in addition to the FRCP, the Federal Rules of Evidence (FRE) also address e-discovery. FRE 502 protects attorney-client privilege and provides some protection against inadvertent disclosure of ESI in the following ways.

FRE 502(b)

If attorney-client privileged or work product protected material is inadvertently disclosed, you might be able to get it back if you took reasonable steps to prevent the error and responded promptly to fix the error.

FRE 502(d)

Allows parties to enter "claw back" agreements during discovery so that if privileged information is unintentionally revealed during e-discovery, it cannot be used against either party. It also prevents both sides from having to engage in filing motions to get privileged information returned. Believe it or not, FRE 502(d) agreements were cited as the number one way parties can reduce e-discovery costs in Exterro's recent "Federal Judges Survey on E-Discovery Best Practices and Trends."

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Important subsections of overarching rule

E-Discovery Case Law

Rules help address fundamental issues around e-discovery, but they carry inherent limitations when it comes to guiding specific e-discovery processes. For example, the FRCP doesn't even explicitly address data preservation leading up to trial.

E-discovery practices are still largely dictated by judicial precedent rather than by statutes or rules. There are some terrific resources that look specifically at e-discovery case law, including K&L Gates' Electronic Discovery Law, Gibbons' E-Discovery Law Alert, and Exterro's Simplified E-Discovery Case Law Library. You can also read past Exterro white papers that have focused on e-discovery case law trends.

Below are five important federal cases involving e-discovery issues and why they are worth knowing. We won't dive into the actual facts of each case, just the e-discovery takeaways. You can click on the linked case names for access to the rulings themselves:

Case One, Zubulake v. UBS Warburg (S.D.N.Y. 2003)

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Groundbreaking case that addresses destruction of electronic data.

For all intents and purposes, the rulings in Zubulake put e-discovery on the map (read a great summary of the case from ABA Journal marking its 10 year anniversary). On its surface, Zubulake was an unexceptional employment discrimination case. Then it was discovered that the defendants deliberately destroyed electronic evidence and demonstrated little care in preserving potentially relevant documents. In a series of groundbreaking and somewhat unexpected rulings, U.S. District Judge Shira Scheindlin levied heavy sanctions for the destruction of evidence, fundamentally changing the way lawyers and organizations look at e-discovery. The Zubulake decisions (there were five separate ones in total) tackled a host of issues that hadn't previously been addressed by any federal court, establishing important new standards that precipitated the 2005 FRCP e-discovery amendments, including:

  • The scope of a party's duty to preserve electronic evidence during the course of litigation
  • Lawyers' duty to monitor their clients' compliance with electronic data preservation and production
  • The ability for the disclosing party to shift the costs of restoring "inaccessible" ESI to the requesting party
  • The imposition of sanctions for the spoliation (destruction) of electronic evidence

Case Two, The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities LLC, et al. (S.D.N.Y. 2010)

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On bad faith or gross negligence in identification, preservation, and collection of ESI

Six years after her rulings in Zubulake, Judge Scheindlin made waves again with her ruling in Pension Committee (she even captioned her 83-page ruling, "Zubulake Revisited: Six Years Later.") In this complex contract dispute, Judge Scheindlin sanctioned 13 plaintiffs for negligence or gross negligence in their identification, preservation, and collection of ESI. The controversial ruling built on many of the standards set forth in Zubulake, establishing:

  • The failure to issue a written litigation hold when litigation is reasonably anticipated is gross negligence.
  • If a party can show that spoliation was the result of bad faith or gross negligence, it can be presumed that the destroyed ESI was unfavorable, which shifts the burden to the spoliating party to disprove that presumption.
  • Spoliation sanctions may include further discovery, cost shifting, fines, special jury instructions, preclusion, and the entry of default judgment or dismissal (terminating sanctions).

Case Three, Wilson v. Thorn Energy, LLC (S.D.N.Y. 2011)

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New types of data and preservation requirements

In this case, the defendants discarded a flash drive, which had held financial documents that were relevant to the case after determining that data stored on the drive could not be read. The judge ruled that the defendants' failure to preserve and produce documents in a timely manner constituted gross negligence. The case reaffirmed the preservation standards established by Zubulake and Pension Committee and also exposed the challenges and complexities associated with preserving certain types of ESI, an issue that continues to resonate today.

Case Four, Mt. Hawley Ins. Co. v. Felman Prod., Inc. (S.D. W. Va. 2010)

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Technology helps the E-Discovery process but it isn't a shield

The aforementioned cases mainly centered on preservation issues, Mt. Hawley exposed the emerging risks using technology to search through vast amounts of data. After a software indexing issue contributed to Nearly 400 privileged emails being produced, the judge ruled that the error resulted from the plaintiff's failure to "perform critical quality control sampling." This ruling allowed documents containing particularly damaging attorney-client privileged information to be entered as evidence. It continues to serve as an important reminder that while technology has an invaluable role in the e-discovery process, it can't be used as a shield against e-discovery mistakes.

Case Five, Da Silva Moore v. Publicis Group (S.D.N.Y. 2012)

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The introduction of predictive coding makes traditional review look very slow.

Another case involving e-discovery technology, U.S. District Judge Andrew Peck's decision in Da Silva Moore was the first to formally approve the use of technology-assisted review (commonly referred to as predictive coding) software that takes information entered by people and applies it to a larger group of documents, making the review process much quicker, not to mention more accurate. Since the Da Siva Moore ruling, predictive coding has been used in a number of cases and is widely viewed as a highly effective means for reducing the cost of review. The technology is also increasingly being applied to earlier e-discovery stages, which we will discuss later in the guide.

Expert Perspective

eDiscovery is a Two Way Funnel

The eDiscovery process is like a funnel. At the top, the preserved data set's size is larger than the collected set, which is bigger than the reviewed set and so on. One big difference, though: in a typical eDiscovery matter/investigation, one often goes back up before sliding downward.

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Robert D. Brownstone
Technology & eDiscovery Counsel,
Fenwick & West LLP
Blog - http://www.itlawtoday.com/
Twitter - https://twitter.com/ediscoveryguru

So that was a lot of information, and your head may be spinning a bit. The single most important thing to take away from this section is that while every case is different, there is commonality in your e-discovery responsibilities. The best way to achieve both positive case outcomes and protect your company against sanctions is to have a defined process for how you conduct your e-discovery activities.

Overview Chapter 2
Information Governance