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Electronic Discovery

Here’s an Opportunity to Learn More About On-Premise and Off-Premise Solutions and Where CloudNine Fits in Both: eDiscovery Trends

Many say that the cloud is revolutionizing eDiscovery as we know it, while others still prefer the control of the on-premise eDiscovery solutions they’re used to using.  So, what factors should you consider when selecting your own eDiscovery solution?  Thanks to our friends at ACEDS, you can learn more about the different approaches and how CloudNine supports both of those environments.

Today’s ACEDS webinar at noon CT (1pm ET, 10am PT) is titled On-Premise, Off-Premise or Both?  This is a one-hour session that I will be conducting that is part presentation and part demonstration, including a couple of new modules we’ve recently introduced at CloudNine.

Presentation Highlights:

  • Drivers for eDiscovery Technology Solution Decisions Today
  • The Cloud vs. No Cloud Debate
  • A Comparative Approach to eDiscovery Technology
  • Key Components of an eDiscovery Technology Solution

Demonstration Highlights:

  • CloudNine eDiscovery Platform (Upload/Process/Review/Produce)
  • NEW: Outpost from CloudNine: Data Transfer into Relativity
  • NEW: CloudNine Automated Data Collection

If you want an opportunity to learn a lot more about CloudNine and how we address today’s challenges with both on-premise and off-premise technology, this webinar is for you!  To sign up for today’s webcast, click here.  Hope to see you there!

So, what do you think?  Do you feel overwhelmed by the eDiscovery solution choices that exist today?  If so, please feel free to join us!  And, as always, please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Here’s a Chance to Keep What Could Go Wrong from Going Wrong: eDiscovery Best Practices

Today, I’m in Orlando, at The Master’s Conference Orlando event, which is a full day of educational sessions covering a wide range of topics.  Here is a link with more information about today’s conference and our panel discussion due up at 10:00 am today local time.  If you’re in the Orlando area, come check it out!

As data complexity, discovery costs, and regulatory challenges increase in volume and impact, the pulse rate of publicly highlighted eDiscovery mistakes continues to build. While these mistakes are unfortunate for those who experienced them, they can be beneficial to the rest of us in highlighting mistakes you can avoid in your own cases.  Here’s your chance to learn from their mistakes and keep what could go wrong from going wrong.

On the third annual E-Discovery Day, Friday, December 1 at noon CST (1:00pm EST, 10:00am PST), CloudNine will conduct the webcast Murphy’s eDiscovery Law: How to Keep What Could Go Wrong From Going Wrong. In this one-hour webcast that’s CLE-approved in selected states, we will discuss examples of recent eDiscovery disasters and highlight the common characteristics of those disasters and what can be done to avoid them in your own cases.  Topics include:

  • Attorney Duty of Competence
  • Avoiding the Mistake in Assuming that Discovery Begins When the Case is Filed
  • How to Proactively Address Inadvertent Privilege Productions
  • Up Front Planning to Reduce Review Costs
  • How to Avoid Getting Stuck with a Bad Production from Opposing Counsel
  • Understanding Your Data to Drive Discovery Decisions
  • Minimizing Potential ESI Spoliation Opportunities
  • How to Avoid Processing Mistakes that Can Slow You Down
  • Common Searching and Redaction Mistakes and How to Avoid Them
  • Checklist of Items to Ensure a Smooth and Accurate Production
  • Managing Communications: Attorney and Vendor Responsibilities

I’ll be presenting the webcast, along with Tom O’Connor, who is now a Special Consultant to CloudNine!  If you follow our blog, you’re undoubtedly familiar with Tom as a leading eDiscovery thought leader (who we’ve interviewed several times over the years) and I’m excited to have Tom as a participant in this webcast!  To register for it, click here.  Even if you can’t make it, go ahead and register to get a link to the slides and to the recording of the webcast (if you want to check it out later).  This is your opportunity to avoid mistakes that others have made.

So, what do you think?  What do you do when things go wrong?  Scream?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Does this Ring a Bell? Court Orders Plaintiff’s Quick Peek Over Defendant’s Objections: eDiscovery Case Law

In Fairholme Funds, Inc. v. United States, No. 13-456C, (Fed. Cl. Oct. 23, 2017), Judge Margaret M. Sweeney, despite the defendant’s strong objection, granted the plaintiffs’ motion to compel a “quick peek” production of approximately 1,500 documents withheld as privileged pursuant to the bank authorization and deliberative process privileges.

Case Background

In this case where the plaintiffs sought just compensation under the Fifth Amendment, contending that the defendant engaged in taking their property without just compensation, the defendant produced additional documents multiple times during the course of discovery when challenged.  After their most recent status report filed on June 30, the parties indicated that defendant produced an additional 3,500 documents in response to the court’s March 7 order, and as a result of that production, plaintiffs identified thirty-eight documents they contended should not be withheld for privilege.

Following its review of the thirty-eight documents, the defendant produced an additional twenty-two documents.  In response to the release of these additional documents, plaintiffs proposed that the parties use the quick peek procedure authorized by FRE 502(d).  In response, the defendant objected, quoting a note published by The Sedona Conference (in its Commentary on Protection of Privileged ESI covered by us here), as follows:

“[FRE] 502(d) does not authorize a court to require parties to engage in ‘quick peek’ … productions and should not be used directly or indirectly to do so. … Rule 502 was designed to protect producing parties, not to be used as a weapon impeding a producing parties’ right to protect privileged material. Compelled disclosure of privileged information, even with a right to later claw back the information, forces a producing party to ring a bell that cannot be un-rung.”

After the defendant did not agree to the use of the procedure, the plaintiffs filed a motion to compel.

Judge’s Ruling

Judge Sweeney began with an analysis of [FRE] 502(d) and noted that the “general purpose” of the rule was to resolve longstanding disputes regarding inadvertent production and subject matter waiver and to address complaints about the cost of protecting privileged materials, which she noted were “two issues not relevant to the current dispute.”  Judge Sweeney also indicated (as the plaintiffs pointed out in their argument) that the advisory committee note to [FRE] 502(d) specifically stated that “a confidentiality order is enforceable whether or not it memorializes an agreement among the parties to the litigation”.

As a result, Judge Sweeney, noting the defendant’s “piecemeal” production and the desire to “facilitate the speedy and efficient conclusion of jurisdictional discovery”, granted the plaintiffs’ motion, partially because she had “every reason to believe” that the plaintiffs would seek in camera review of the documents.  Judge Sweeney stated: “Given the court’s heavy caseload and limited resources, the use of the quick peek procedure is a much more viable and attractive option. Not only will the court not have to expend its time and resources on a task that should be performed by the parties, but both parties will benefit from the prompt (or at least more prompt) resolution of outstanding discovery disputes. Thus, even though defendant has already reviewed the subject material multiple times, plaintiffs will continue to seek production of these materials, which will, in turn, continue to place a burden on the court—one which could be alleviated through the parties’ use of the quick peek procedure.”

So, what do you think?  Was the court wrong in going against The Sedona Conference recommendations?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Addressing the Inconsistent Email Address: eDiscovery Best Practices

I recently had a client who was trying to search a fairly sizable archive in CloudNine (about 2.75 TB comprised of several million documents) and searching for emails to and from a given custodian.  That search proved a little more challenging than expected due to a legacy Microsoft Exchange attribute.  Let’s take a look at that scenario, substituting a generic email address.

If you have John Dough, who is an employee at Acme Parts, his email address might look like this: jdough@acmeparts.com.  And, for many emails that he sends to others, that’s how his email address might be represented.  However, it could also be represented this way, especially in his Sent Items folder in Exchange:

/O=ACME PARTS/OU=EXCHANGE ADMINISTRATIVE GROUP (FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=jdough

Why does it look like that and not like the “normal” email address that ends in “acmeparts.com”?  Because it’s a different type of address.

The first example – jdough@acmeparts.com – is an SMTP address.  This is the email address you commonly use and refer to when providing others your email address.  It’s probably even on your business card.

The second example – /O=ACME PARTS/OU=EXCHANGE ADMINISTRATIVE GROUP (FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=jdough – is the Exchange x500 address – it’s the internal Exchange address for your account.  So, why does that address exist?

It’s because when Microsoft decided to change the way servers were managed in Exchange 2007, they retained a single administrative group for backwards compatibility and stored details of Exchange 2007 servers there.  The legacyExchangeDN property of the mailbox in Active Director stores this information and, depending on the setup and version of the Exchange server when the emails are pulled from it, could be used as the address shown on some emails (especially when they’re received from internal parties).  I still see it pop up occasionally with some of the email collections that we encounter.

Fun fact for you: The value “FYDIBOHF23SPDLT” after “Exchange Administrative Group” is actually an encoded version of the string “EXCHANGE12ROCKS” with each character replaced with the letter that follows it in the alphabet (E->F, X->Y etc.).

So, what does that mean to you?  It can mean a more challenging effort to locate all of the emails for a given custodian or key party.

To address the situation, I generally like to perform a search for “exchange administrative group” or “FYDIBOHF23SPDLT” in the email participant fields (i.e., To, From, Cc, Bcc).  If I don’t get any hits, then I don’t have any Exchange x500 addresses and there are no worries.

If I do get hits, then I have to account for these email addresses.  Both the SMTP and Exchange x500 address have at least one thing in common – the custodian name.  Typically, that’s first initial and last name, but there are variations as some organizations (if they’re small enough) use just the first or last name for email addresses.  And, if you have two people with the same first initial and last name, you have to distinguish them, so the address could include middle initial (e.g., jtsmith) or number (e.g., jtsmith02).

In its Search form, CloudNine performs an autocomplete of a string typed in for a field, identifying any value for the field that contains that string.  So, an autocomplete for “jdough” in the To, From, Cc or Bcc fields would retrieve both examples at the top of this post if they were present – and also any personal email addresses if he used his first initial and last name on those too.  If it seems apparent that all “jdough” entries are associated with the custodian you’re looking for, then the search can be as simple as “contains jdough” (e.g., From contains jdough to get all variations in the From field).  If it looks like you have email addresses for somebody else, then you may have to search for the specific addresses.  Either way, you can use that technique to ensure retrieval of all of John Dough’s email address variations.

So, what do you think?  Have you encountered Exchange x500 addresses in your email collections? As always, please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Facebook Wants You to Send Them Your Naked Pictures to Prevent Revenge Porn. I’m Not Kidding: Data Privacy Trends

It sounds crazy, right?  Facebook wants you to stop worrying about your nudes being shared without your consent by actually sending it your nude photos.  It may not be crazy as it sounds.

In the article Facebook: upload your nudes to stop revenge porn, written by Lisa Vaas on the aptly named site Naked Security (what else?), the concept is introduced this way: “Facebook hasn’t given much detail, but from what little has been shared it sounds like it’s planning to use hashes of our nude images, just like law enforcement uses hashes of known child abuse imagery.”

Just as we generate hash values of documents in eDiscovery to identify duplicates, the same type of technology can be applied to photos.  So, the same photo, or identical copies of it, will always create the same hash.  A hash of your most intimate picture is no more revealing than this example provided in the article:

48008908c31b9c8f8ba6bf2a4a283f29c15309b1

Since 2008, the National Center for Missing & Exploited Children (NCMEC) has made available a list of hash values for known child sexual abuse images, provided by ISPs, that enables companies to check large volumes of files for matches without those companies themselves having to keep copies of offending images or to actually pry open people’s private messages.

The hash originally used to create unique file identifiers was MD5, but Microsoft at one point donated its own PhotoDNA technology (which creates a unique signature for an image by converting it to black and white, resizing it, and breaking it into a grid) to the effort.

Facebook hasn’t provided any detail as to whether that’s the technology it plans to use, but it has announced a pilot program with four countries – the UK, the US, Australia and Canada – in which people will typically be advised to send the photos to themselves via Messenger.  Facebook says that it won’t be storing nude pictures but will use photo-matching technology to tag the images after they’re sent via its encrypted Messenger service.  In theory, that would be enough to enable Facebook to take action to prevent any re-uploads, without the photo being stored or viewed by employees.

The author notes that she has submitted questions to Facebook for more info and poses an interesting question in the article: “For example, what safeguards are in place to ensure that people can’t take any old picture they want – a non-porn publicity photo, for example – and send it in, under the false premise that it’s a nude and that it’s a photo they themselves have the rights to have expunged from social media circulation?”

Good question.  Nonetheless, it’s an interesting concept and idea to prevent revenge porn – provided you can actually convince people to upload those photos and trust Facebook with them.

So, what do you think?  Do you trust hash technology to keep your most embarrassing photos from becoming public? As always, please share any comments you might have or if you’d like to know more about a particular topic.

Hat tip to Sharon Nelson and her Ride the Lightning blog (my go to source for interesting cybersecurity news) for the reference to the story.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Court Chastises Parties for Turning Case into a “Discovery Slugfest”: eDiscovery Case Law

In UnitedHealthcare of Fla., Inc. et al. v. Am. Renal Assoc., Inc. et al., No. 16-cv-81180-Marra/Matthewman (S.D. Fla. Oct. 20, 2017), Florida Magistrate Judge William Matthewman granted in part and denied in part the plaintiffs’ Motion for Reconsideration or Modification of Omnibus Discovery Order, clarifying the Court’s previous order regarding custodians and search terms, while denying the remainder of the plaintiff’s motion.  Judge Matthewman also chastised both parties for their lack of cooperation on search terms.

In the Court’s August order, the Court permitted Defendants to select an additional 16 custodians and an additional 12 search terms and to request more at a later date if Defendants have a good-faith basis to do so and also ruled that the defendants had not waived any privilege and did not have to produce a privilege log.

In the current Motion, the plaintiffs argued that the Court should reconsider or modify its Order because the Court never made a finding that Plaintiffs’ production was deficient, there is no evidence that would support such a conclusion, the Court did not tailor the additional custodians or search terms to “any purported inadequacy nor to any proportionality limits”, the Court did not “provide any mechanism for ensuring that ARA’s custodians and search terms do not capture an overwhelmingly, burdensome, disproportionate amount of information”, and the Court’s Order was “patently unfair”.  The plaintiffs also argued that the Court should reconsider its decision not to compel the defendants to provide a privilege log because they “wrongfully withheld a responsive, non-privileged document, and the Court should not rely on Defendants’ counsel’s representations that they have no additional non-privileged responsive documents.”

Noting that “the only asserted new evidence submitted by Plaintiffs consists of Docket Entries 303-1 through 303-4” (which included email correspondence, a list of the additional 16 custodians, a list of additional 12 search terms and a Declaration from the Director of e-Discovery at the plaintiff company), Judge Matthewman focused on the last paragraph of the Declaration, which stated:

“In my opinion and based on my experience, if additional time is taken to reexamine the search terms to minimize some of the more obvious deficiencies and then, after the search terms are run, allow for the parties to evaluate which terms hit on an excessive number of documents and narrow them accordingly, the process could be sped up significantly as the volume of documents for the steps after collection and indexing will likely be greatly reduced.”

In response, Judge Matthewman stated: “Ironically, this type of cooperation is exactly what this Court has been expecting from the parties and their counsel throughout this case—to work together to arrive at reasonable search terms, to run those search terms and engage in sampling to see if the search terms are producing responsive documents or excessive irrelevant hits, and then to continue to refine the search terms in a cooperative, professional effort until the search terms are appropriately refined and produce relevant documents without including an excessive number of irrelevant documents. However, despite what paragraph 12 of the Declaration suggests, and despite this Court’s suggestions to the parties and their counsel as to the cooperative and professional manner in which the parties should engage in the e-discovery process in this case, there has instead been an apparent lack of cooperation and constant bickering over discovery, especially e-discovery. The alleged new evidence submitted by Plaintiffs, that is, the list of additional search terms and custodians and the Declaration, clearly show that, where, as here, parties in a large civil case do not cooperatively engage in the e-discovery process, the collection and indexing of documents and the production of relevant documents, become much more difficult.”

Indicating that “the parties and their counsel, through their many discovery disputes and their litigiousness, have unnecessarily turned this case into what can best be termed as a ‘discovery slugfest’”, Judge Matthewman noted that “the parties have filed well over 50 discovery motions, responses, replies, notices, and declarations, many of which have been filed under seal” and that the Court “has held at least six discovery hearings in 2017, most of which were lengthy and contentious.”

Judge Matthewman also referenced several resources regarding cooperation for the parties to consider, including The Sedona Conference, the Federal Judges’ Guide to Discovery, as well as comments from Supreme Court Chief Justice John Roberts regarding the 2015 Amendments to Federal Rules of Civil Procedure 1 and 26.  With that in mind, Judge William granted in part and denied in part the plaintiffs’ Motion for Reconsideration or Modification of Omnibus Discovery Order, clarifying the Court’s previous order regarding custodians and search terms, while denying the remainder of the plaintiff’s motion, including their dispute over the number of custodians and search terms and the failure to require the defendants to produce a privilege log.

So, what do you think?  What can we learn from the parties’ lack of cooperation in this case?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

It’s NOT a Small World (After All) at the Masters Conference in Orlando: eDiscovery Trends

If you’re going to be in the Orlando area next Tuesday, November 14, join me and other legal technology experts and professionals at The Master’s Conference Orlando event.  It’s a full day of educational sessions covering a wide range of topics!

The Master’s Conference brings together leading experts and professionals from law firms, corporations and the bench to develop strategies, practices and resources for managing eDiscovery and the information life cycle.  This year’s Orlando event covers topics ranging from big data to privacy to cybersecurity to evaluating technology to the latest in Florida rules, among other things.

The event will be held at Wyndham Grand Orlando Resort Bonnet Creek, 14651 Chelonia Pkwy, Orlando, FL 32821.  Registration begins at 9am, with sessions starting at 10:00am.

Speaking of starting at 10am, CloudNine will be sponsoring the session It’s NOT a Small World After All at that time.  I will be moderating a panel that includes Chris Dix, Shareholder with Smith Hulsey & Busey, Matthew Detzel, Attorney with Akerman LLP and Neil Etheridge, Vice President of Marketing with CS Disco.

Our panel will discuss how big data and the variety of data sources are forcing a greater emphasis on pre-litigation data discovery, as well as integration and automation of enterprise on-premise platforms and cloud platforms before and during legal discovery.  It should be a very informative discussion with a very knowledgeable panel!  Hope you can join us!

Click here to register for the conference.  If you’re a non-vendor, it’s only $175 for the entire day!  So, if you plan to attend and haven’t registered yet (why not?), now is the time to do it.

This may be the last event for the year, but The Master’s Conference is already beginning to list events for next year.  Click here for more information on the first couple of events for next year.

So, what do you think?  Are you going to be in Orlando next Tuesday?  If so, come join us!  And, as always, please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Is VC Investment in the Legal Tech Market on the Decline?: eDiscovery Trends

Last week, we took a look at whether the eDiscovery market is growing, shrinking or shifting.  This week, let’s take a look at whether venture capital investment in the legal tech market is rising or falling.

That’s what Kevin O’Keefe, CEO and founder of LexBlog, examines in this Above the Law article (Investment In Legal Tech Is Slowing While Legal Tech Is Booming).

Kevin noted that he was surprised to read Holden Page’s story at Crunchbase that investment in legal tech startups “hit a hard peak in 2015 and has since been on the decline.”  Here is the graphic from the Crunchbase article that illustrates the trend:

Of course, as Kevin notes from the Crunchbase article, 2015’s peak was made by a couple big investments. $125 million in Chicago-based Relativity and $71.5 million in Avvo.  So, if you take that out of the equation, 2015 is pretty much in line with the other years (at least dollar wise).

On the other hand, in the Crunchbase article, Page notes that seed-stage funding (smaller investment until business can cash flow or until it is ready for further investment) in legal tech companies has risen in 2017.  “From 2011 to 2014, over 50 percent of the funding rounds made in legal startups were in the seed stage. And while the percentage of seed-stage deals dropped from 2015 to 2016, 2017 YTD has seen a rebound with nearly 45 percent of known funding rounds being made in the seed stage. This is bucking the overall trend seen in 2017, especially in the US, where seed-stage investment has experienced declines in favor of late-stage deals.”

As I’ve noted before, Rob Robinson keeps track of the eDiscovery mergers, acquisitions and investments in his excellent Complex Discovery blog (here is the link to all of those transactions he has tracked since November 2001).  While 2017 has been a relatively quiet year (so far) from an investment standpoint, 2016 was certainly a busy year.  And, this year isn’t over yet.  :o)

So, what do you think?  Is investment in the eDiscovery market growing or shrinking?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Is the eDiscovery Market Growing or Shrinking? Or Maybe SHIFTING?: eDiscovery Trends

If you look at the number of eDiscovery companies that have been merged or acquired over the past couple of years, you might think that the market is shrinking.  On the other hand, if you look at the number of venture capital firms investing in the industry and the number of new startups, you might think that the market is growing.  So, which is it?

According to the ABA Journal (Market to manage electronic documents in a state of flux, written by Jason Krause), more than 30 major eDiscovery companies were acquired or merged, or they disappeared.  But at the same time, venture capital firms poured millions of dollars into startups and upstart companies offering technology to manage electronic documents in litigation.  So, with regard to whether the eDiscovery market is growing or shrinking, maybe it’s a bit of both.

Jason’s article observes that “Large corporate clients are resistant to paying millions for litigation support services when a lawsuit arises. Rather, large organizations are investing in tools to manage electronic records before litigation ever happens.” “E-discovery revenue streams and technology are opening up opportunities for companies with a focus on data from the point of creation, rather than just from the point of a legal trigger event,” says (my colleague) Rob Robinson, who (if you read our blog regularly, you already know this) tracks industry investment activity and conducts a quarterly eDiscovery business confidence survey on his excellent website Complex Discovery.

So, maybe it’s not so much that the market is shrinking or growing, as much as it’s shifting.  Hmmm…

Jason points to industry estimates as an example that the eDiscovery market isn’t as lucrative, noting that “analysts at IDC Research claimed the e-discovery industry earned $9.7 billion in revenues in 2006 and predicted they would explode and hit $21.8 billion by 2011. But last year, IDC published a new set of figures. It said the industry had only just surpassed $10 billion in revenues, making a much more modest prediction of $14.7 billion in revenue by 2019.”

Jason points to the revised Federal Rules of Civil Procedure as one potential cause for weakened demand from clients, particularly Rule 37(e) and the reduced likelihood for significant sanctions – due in large part to the new “intent to deprive” standard to be met for significant sanctions to be administered.  He notes that, because of the rule change, clients “are less terrified of sanctions and less willing to spend big bucks on a service provider who will collect and process massive data sets.”  That, in turn, is leading to consolidating of “old-line e-discovery vendors”, like the LDiscovery $410 million acquisition of Kroll Ontrack in October of last year and the $240 million merger of OpenText and Guidance Software in July of this year.

To me, the other factor of change in that equation is automation – we’re seeing automation technology increasingly being applied to both collection and processing, reducing the requirement for the professionals that used to perform those services.  At least to a degree, eDiscovery revenue is shifting from services to software (though there is still a need for certain services) and automation and cloud technologies are continuing to make those services more affordable.

However, given the fact that data within organizations is doubling every 1.2 years (but budgets aren’t) and also given how many sources of data there are to manage these days, organizations still have a challenge – how to manage the growing volume and variety of data within the organization to meet the information needs for that organization.  As a result, I think we’re seeing a shift (there’s that word again) in focus to the left side of the EDRM model and Information Governance.  The need to gain insight into an organization’s data will continue to be strong, regardless of current sanctions rules regarding data spoliation.  Maybe that’s one reason why all those venture capital firms are investing – not just for the growth in the eDiscovery market, but also the growth in the InfoGov market as well where many of the same software and services can be applied.  When you put both of them together, the future (in my opinion) is still bright.  I shift you not.  :o)

So, what do you think?  Is the eDiscovery market growing or shrinking?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

After Objection, No Waiver of Privilege for Putting Information on File Share Site without Protection: eDiscovery Case Law

In Harleysville Insurance Co. v. Holding Funeral Home, Inc., No. 1:15cv00057 (W.D. Va. Oct. 2, 2017), Virginia District Judge James P. Jones sustained the plaintiff’s objections to the Magistrate Court ruling that the plaintiff’s placement of privileged information on a file share site and distribution of the hyperlink to access that information without providing any protection for the site resulted in a failure to take reasonable steps to protect the information.  As a result, for their “improper” conduct in failing to promptly return the materials, the defendants received an evidentiary sanction, barring their use of the inadvertently disclosed privileged materials.  Judge Jones overruled the plaintiff’s objection to the decision not to disqualify defense counsel, stating he was “not convinced that the ‘blunt remedy of disqualification is appropriate.’”

Case Background

In this dispute over a fire insurance claim by the defendants against the plaintiff insurance agent, a senior investigator for Nationwide Insurance, owner of the plaintiff company, uploaded surveillance footage to a file share service operated by Box, Inc. and sent an email containing a link to the site to an investigator at the National Insurance Crime Bureau (“NICB”) in September 2015.  The email contained a confidentiality notice indicating that the “e-mail contains information that is privileged and confidential”, but the information on Box was not password protected.  For a while, only the video was available on the Box site, but in April 2016, the Nationwide investigator placed files containing the plaintiff’s entire claims file and Nationwide’s entire investigation file for the defendants’ fire loss on the Box Site to be accessed by the plaintiff’s counsel – a month later, in response to a subpoena, the NICB electronically produced its files – including the email containing the link – to the defense counsel, which gave them access to the file share site containing the claims files.

Defense counsel subsequently accessed the site and reviewed and downloaded the entire claims file, but did not notify the plaintiff’s counsel that it had accessed the information until plaintiff’s counsel discovered the claims file included in materials produced by the defense in October 2016.  As a result of this discovery, the plaintiff moved to disqualify defense counsel; in response, they argued that that the motion should be denied because the plaintiff “waived any claim of privilege or confidentiality by placing the information on the Box, Inc., site where it could be accessed by anyone.”  Magistrate Judge ruled that Pamela Meade Sargent, determining that “Rule 502 does not apply in this situation to prevent a waiver of the work-product doctrine”, concluded that the plaintiff waived any claim of privilege or work-product protection over its Claims File.  She also declined to disqualify defense counsel, but ruled that they should bear the cost of the parties in obtaining the court’s ruling on the matter.  The plaintiff’s objected to both rulings.

Judge’s Ruling

Noting that “the magistrate judge did not have the benefit of reviewing the Claims File” and that “it is within my discretion to receive and consider additional evidence”, Judge Jones found that “the attorney-client privilege attaches to multiple documents contained in the Claims File”, calling them “the epitome of privilege.”  Judge Jones overruled the plaintiff’s objection to the magistrate court findings that the disclosure was inadvertent, leading to the consideration of three of five factors (Judge Jones agreed with the magistrate court that “Factors Three and Five have no applicability to this case”) to determine whether privilege had been waived:

(1) [T]he reasonableness of the precautions to prevent inadvertent disclosures, (2) the time taken to rectify the error and (4) the extent of the disclosure.

Noting that “the Box Folder was not searchable through Google or any other search engine, nor was it searchable on the Box, Inc. website” and that “as a practical matter, the [disclosed] URL itself functions as a password”, Judge Jones did “conclude that Nationwide, acting for Harleysville, did take reasonable precautions to prevent an inadvertent disclosure of the Claims File and that this factor weighs against a finding of waiver” and sustained the objection on reasonable precautions.  Judge Jones also observed that “Harleysville’s counsel were not notified of the disclosure until October 27, 2016” and “reached out to Insureds’ counsel to request destruction of the privileged materials on November 1, 2016” in sustaining the objection on time taken to rectify the error.  He also noted that the “disclosure in this case was not extensive” in sustaining that objection as well.

As for sanctions against defense counsel, Judge Jones found that “Insureds’ counsel had an obligation to ‘promptly return, sequester, or destroy’ the privileged materials, Fed. R. Civ. P. 45(e)(2)(B), with which they refused to comply.”  He also found that “Insureds’ counsel had a duty to uphold the integrity of the legal profession and to strive to avoid impropriety, as well as the mere appearance of impropriety” and that they “failed to do so”.  However, noting that “the mistakes by Nationwide’s employee initiated this issue”, Judge Jones declined to disqualify defense counsel, stating that “I am not convinced that the ‘blunt remedy of disqualification is appropriate.’”  Instead, Judge Jones found that “an evidentiary sanction is appropriate”, ruling that “the Insureds must not use any information contained in the privileged material, or information derived from such material, to seek additional information in discovery, through a subpoena, or in any other manner. Moreover, the Insureds must not use the information contained in or derived from the privileged material for any purpose in any filing or proceedings (including trial) in this action or any other related civil action.”

We covered the case previously here and Tom O’Connor and I also discussed it in a webcast as one of the key eDiscovery cases in the first half of 2017 here.

So, what do you think?  Was the first ruling right in waiving privilege or the second one right in determining that privilege was not waived?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.