Close
Enter your
text here

Outsourcing

2013 eDiscovery Year in Review: eDiscovery Case Law, Part 4

As we noted on Thursday, Friday and yesterday, eDiscoveryDaily published 78 posts related to eDiscovery case decisions and activities over the past year, covering 62 unique cases!  Yesterday, we looked back at cases related to proportionality and the first half of the cases related to sanctions (yes, there were that many).  Today, here are the rest of the cases related to sanctions.

We grouped those cases into common subject themes and have been reviewing them over the previous three posts.  Today is the last post in the series.  Perhaps you missed some of these cases?  Now is your chance to catch up!

SANCTIONS

Of the 62 cases we covered this past year, over 40% of them (26 total cases) related to sanctions, either due to spoliation issues or inadequate or untimely productions, many of which were granted, but some were denied.  Oh, and, apparently, having your case dismissed isn’t the worst that can happen to you for spoliation of data.  Here are the remaining 13 cases:

Judge Rules Against Spoliation Sanctions when the Evidence Doesn’t Support the Case.  In Cottle-Banks v. Cox Commc’ns, Inc., California District Judge Gonzalo P. Curiel denied the plaintiff’s motion for spolation sanctions because the plaintiff was unable to show that deleted recordings of customer calls would have likely been relevant and supportive of her claim.

Spoliation of Data Can Get You Sent Up the River.  Sometimes, eDiscovery can literally be a fishing expedition. I got a kick out of Ralph Losey’s article on E-Discovery Law Today (Fishing Expedition Discovers Laptop Cast into Indian River) where the defendant employee in a RICO case in Simon Property Group, Inc. v. Lauria threw her laptop into a river. Needless to say, given the intentional spoliation of evidence, the court imposed struck all of the defenses raised by the defendant and scheduled the case for trial on the issue of damages.

Adverse Inference Sanction for Defendant who Failed to Stop Automatic Deletion.  Remember the adverse inference instructions in the Zubulake v. UBS Warburg and Apple v. Samsung cases? This case has characteristics of both of those. In Pillay v. Millard Refrigerated Servs., Inc., Illinois District Judge Joan H. Lefkow granted the plaintiff’s motion for an adverse inference jury instruction due to the defendant’s failure to stop automatic deletion of employee productivity tracking data used as a reason for terminating a disabled employee.

Appellate Court Upholds District Court Discretion for Determining the Strength of Adverse Inference Sanction.  In Flagg v. City of Detroit, the Sixth Circuit held that the district court did not abuse its discretion in issuing a permissive rather than mandatory adverse inference instruction for the defendant’s deletion of emails, noting that the district court has discretion in determining the strength of the inference to be applied.

eDiscovery Vendors Are Not Immune to eDiscovery Sanctions.  In Nuance Communications Inc. v. Abbyy Software House et al., California District Judge Jeffrey S. White refused Wednesday to dismiss Nuance Communications Inc.’s patent infringement suit against Lexmark International Inc. and Abbyy Software House, and awarded reimbursement of plaintiff’s attorneys’ fees and costs in excess of $130,000 as part of discovery abuse sanctions resulting from the late production of relevant documents from Abbyy.

Hard Drive Turned Over to Criminal Defendant – Eight Years Later.  If you think discovery violations by the other side can cause you problems, imagine being this guy. As reported by WRAL.com in Durham, North Carolina, the defense in State of North Carolina v. Raven S. Abaroa filed a Motion to Dismiss the Case for Discovery Violations after the state produced a forensic image of a hard drive (in the middle of trial) that had been locked away in the Durham Police Department for eight years.

When Lawyers Get Sued, They Have Preservation Obligations Too.  In Distefano v. Law Offices of Barbara H. Katsos, PC., New York Magistrate Judge A. Kathleen Tomlinson found that the defendant (an attorney who was being sued by the plaintiff she previously represented for breach of contract, negligence/legal malpractice, and breach of fiduciary duty/duty of care) had a duty to preserve information from a discarded computer and ordered a hearing for the defendant to address a number of questions to determine the potential relevance of the destroyed data and whether the defendant had a sufficiently culpable state of mind.

Plaintiff Receives Adverse Inference Sanction for Deleting Facebook Profile.  In Gatto v. United Air Lines, Inc., New Jersey Magistrate Judge Steven C. Mannion issued an adverse inference sanction against the plaintiff for failing to preserve data due to the fact that he either, deactivated his Facebook account and allowed the account to be automatically deleted after fourteen days, or that he deleted the account outright. Judge Mannion denied the defendant’s request for attorney’s fees and costs for “the time and effort it was forced to expend in an effort to obtain discovery”.

The Hammer Comes Down on Losing Plaintiff for Spoliation of Data.  Apparently, having your case dismissed isn’t the worst that can happen to you for egregious spoliation of data. You can also be ordered to pay the winning party over $200,000 in fees and costs for the case. In Taylor v. Mitre Corp., Virginia District Judge Liam O’Grady partially granted the prevailing defendant’s motion for fees and costs after the court dismissed the case due to the plaintiff’s spoliation of evidence.

Defendants Sanctioned, Sort Of, for Failure to Preserve Text Messages.  In Christou v. Beatport, LLC, Colorado District Judge R. Brooke Jackson ruled that the plaintiffs could introduce evidence at trial to show the defendants failure to preserve text messages after the key defendant’s iPhone was lost. However, the judge also ruled that the defendants could present “evidence in explanation…and argue that no adverse inference should be drawn”.

JP Morgan Chase Sanctioned for a Failure to Preserve Skill Codes.  In EEOC v. JP Morgan Chase Bank, District Judge Gregory L. Frost granted the EEOC’s motion for sanctions for spoliation of data, entitling the plaintiff to “a permissive adverse jury instruction related to the spoliation if this litigation proceeds to a jury trial”, and denied the defendant’s motion for summary judgment.

EEOC Sanctioned for Failing to Comply with Motion to Compel Production.  As noted previously in this blog, the Equal Employment Opportunity Commission (EEOC) was ordered to turn over social media information related to a class action case alleging sexual harassment and retaliation. Apparently, they were less than cooperative in complying with that order. In EEOC v. Original Honeybaked Ham Co. of Georgia, Colorado Magistrate Judge Michael E. Hegarty sanctioned the EEOC for failing to provide discovery of social media content.

Blind Reliance on Vendor for Discovery Results in Sanctions.  In Peerless Indus., Inc. v. Crimson AV, LLC, Illinois Magistrate Judge Susan E. Cox sanctioned the defendant for a “hands off approach” to discovery by relying on a vendor for conducting the discovery from a closely related non-party to the suit.

That’s our eDiscovery case review for 2013.  Let’s do it again next year!

So, what do you think?  Did you miss any of these?  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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Six eDiscovery Predictions for 2014, Part Two – eDiscovery Trends

It’s that time of year, where people make predictions for the coming year for all sorts of things, including electronic discovery trends for the coming year.  Friday, we covered my first three eDiscovery predictions for 2014.  Here are the remaining three predictions.

Prediction 4: Data security will be more of an emphasis than ever, yet we will continue to see more data breach stories than ever.

According to the 2013 survey entitled Security Snapshots: Threats and Opportunities that was conducted by the ABA’s Legal Technology Resource Center (available to members here), “Fully 70% of large firm respondents reported that they didn’t know if their firm had experienced a security breach”.  15% of survey respondents had experienced a security breach.

With notable security breaches happening at major corporations like Target, who recently provided an update to their holiday data breach issue that “the stolen information includes names, mailing addresses, phone numbers or email addresses for up to 70 million individuals”, and at our own Federal government, data security is becoming a major priority for everybody.

Law firms are no different.  As The American Lawyer’s 18th annual survey of law technology noted, eighty-six percent of respondents – technology directors and CTOs from 87 Am Law 200 firms – say they are more concerned about security threats now than they were two years ago.  To address the threat, law firms will have to be prepared to beef up their security infrastructure, either internally or via virtual resources.

Prediction 5: Small to medium sized law firms will need to leverage virtual resources more than ever to compete.

Speaking of virtual resources, it is becoming more difficult for law firms, especially small to medium sized firms, to keep up and compete.  Many small to mid-sized firms lack the project management expertise, the core competency, the infrastructure and the personnel in house to provide the full range of services that clients are demanding, especially for litigation support and discovery services.

Not only that, but maybe it’s not such a good idea for firms to handle all of their litigation support work in house?  “Why should you own and operate a nonlegal e-discovery business within your walls under the guise of a litigation support department?”  Collection, forensic analysis, processing, database creation and other related tasks are highly technical, nonlegal tasks that are the core competency of eDiscovery vendors, not law firms.  Through the use of virtual resources on a continual basis, “you can leverage your mass buying power and negotiate a low rate for all of your clients”.

Those aren’t my words, they’re the words of eDiscovery thought leader Ralph Losey (a little over a year ago) talking about his own firm, Jackson Lewis, and their decision to outsource their litigation support work.  If a firm like Jackson Lewis decides it’s best to make use of dedicated virtual resources, maybe it makes sense for your firm?  Regardless, I expect that more firms will be forced to outsource and leverage virtual resources to compete with the big firms and the small to medium sized firms that already outsource.

Prediction 6: Educating attorneys on eDiscovery best practices will continue to be a slow, painful process.

When we started eDiscovery Daily three years ago, some of my friends questioned whether there would be enough topics to justify a daily blog about eDiscovery.  Not only have there been enough topics, we’ve had to choose which topics to cover regularly.  There is plenty of information out there regarding eDiscovery trends and best practices, not just from this blog, but numerous other sources as well.

And, there are numerous industry thought leaders who have spent considerable efforts to educate attorneys on eDiscovery basic concepts and best practices.  People like Craig Ball, Ralph Losey, George Socha and Tom Gelbmann, Tom O’Connor and others have spearheaded initiatives to help attorneys (and law students aspiring to become attorneys) to understand eDiscovery better (here is a link to last year’s thought leader interviews if you want to check out their thoughts about education).

Unfortunately, many of the attorneys that I talk to still understand very little about eDiscovery.  Most of those don’t think there is a need to learn about it – often, they’ll tell me that they “don’t have big enough cases” to need to know about it.  I’ve heard other industry professionals discuss similar experiences about the attorneys they meet.  So, while we’ve done a lot in the industry to educate lawyers about eDiscovery, it appears we still have a long way to go.

So, what do you think?  Do you have any eDiscovery predictions for 2014?  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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Six eDiscovery Predictions for 2014, Part One – eDiscovery Trends

It’s that time of year, where people make predictions for the coming year for all sorts of things, including electronic discovery trends for the coming year.  Though I have to say, I’ve seen fewer predictions this year than in past years.  Nonetheless, I feel compelled to offer some of my own predictions.  If they turn out right, you heard it here first!

Prediction 1: Predictive coding technologies will become more integrated into the discovery process, for more than just review.

Two or three years ago, predictive coding (a.k.a., technology assisted review or computer assisted review) was a promising technology that had yet to be officially accepted in the courts.  Then, in 2012, cases such as Da Silva Moore v. Publicis Groupe & MSL Group, Global Aerospace Inc., et al, v. Landow Aviation, L.P. dba Dulles Jet Center, et al and In re Actos (Pioglitazone) Products Liability Litigation, predictive coding was approved (and there was at least two other cases where it was contemplated).  So, it’s beginning to be used, though most attorneys still don’t fully understand how it works or understand that it’s not a “turn-key” software solution, it includes a managed process that uses the software.

It’s not going out on a limb to say that this year predictive coding technologies will be more widely used; however, I think those technologies will branch out beyond review to other phases of the eDiscovery life cycle, including Information Governance.  Predictive coding is not new technology, it’s basically artificial intelligence applied to the review process, so it’s logical that same technology can be applied to other areas of the discovery life cycle as well.

Prediction 2: The proposed amendments will be adopted, but it will be a struggle.

Changes to Federal Rules for eDiscovery have been drafted and have been approved for public comment.  However, several people have raised concerns about some of the new rules.  Judge Shira Scheindlin has criticized proposed Rule 37(e), intended to create a uniform national standard regarding the level of culpability required to justify severe sanctions for spoliation, for creating “perverse incentives” and encouraging “sloppy behavior.”

U.S. Sen. Christopher Coons (D-Del.), who chairs the Subcommittee on Bankruptcy and the Courts, predicted that some proposed restrictions – such as reducing the number of depositions, interrogatories and requests for admission for each case – “would do nothing about the high-stakes, highly complex or highly contentious cases in which discovery costs are a problem.”  Senator Coons and Sherrilyn Ifill, president of the NAACP Legal Defense and Educational Fund Inc., also expressed concerns that those limits would likely restrict plaintiffs in smaller cases in which discovery costs are not a problem.

Needless to say, not everybody is a fan of all of the new proposed rules, especially Rule 37(e).  But, the proposed rules have gotten this far and there are a number of lobbyists pushing for adoption.  So, I think they’ll be adopted, but not without some controversy and struggle.

Prediction 3: The eDiscovery industry will continue to consolidate and many remaining providers will need to continue to reinvent themselves.

Every year, I see several predictions that more eDiscovery vendors will fail and/or there will be more consolidation in the industry.  And, every year there is consolidation.  Here’s the latest updated list of mergers, acquisitions and investments since 2001, courtesy of Rob Robinson.  But, every year there also new players in the market, so the number of providers never seems to change dramatically.  Last year, by my count, there were 225 exhibitors at Legal Tech New York (LTNY), with many, if not most of them in the eDiscovery space.  This year, the partial list stands at 212.  Not a tremendous drop off, if any.

Nonetheless, there will be more pressure on eDiscovery providers than ever before to provide services at reasonable prices, yet turn a profit.  I’ve seen bold predictions, like this one from Albert Barsocchini at NightOwl Discovery in which he predicted the possible end of eDiscovery processing fees.  I’m not sure that I agree that they’re going away entirely, but I do see further commoditization of several eDiscovery services.  The providers that offer truly unique software offerings and/or expert services to complement any commodity-based services that they offer will be the ones best equipped to meet market demands, profitably.

On Monday, I predict I’ll have three more predictions to cover.  Hey, at least that’s one prediction that should come true!

So, what do you think?  Do you have any eDiscovery predictions for 2014?  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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily 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 a Blended Document Review Rate of $466 Per Hour Excessive? – eDiscovery Replay

Even those of us at eDiscovery Daily have to take an occasional vacation (see above); however, instead of “going dark” for the week, we thought we would use the week to do something interesting.  Up to this week, we have had 815 posts over 3+ years of the blog.  Some have been quite popular, so we thought we would “replay” the top four all-time posts this week in terms of page views since the blog began (in case you missed them).  Casey Kasem would be proud!  Published less than two months ago in September, this post quickly vaulted to the top as the most viewed post of all time with over 1,400 lifetime views!  I guess the nerve of the plaintiff’s lead counsel struck a nerve with our readers!  Enjoy!

______________________________

Remember when we raised the question as to whether it is time to ditch the per hour model for document review?  One of the cases we highlighted for perceived overbilling was ruled upon last month.

In the case In re Citigroup Inc. Securities Litigation, No. 09 MD 2070 (SHS), 07 Civ. 9901 (SHS) (S.D.N.Y. Aug. 1, 2013), New York District Judge Sidney H. Stein rejected as unreasonable the plaintiffs’ lead counsel’s proffered blended rate of more than $400 for contract attorneys—more than the blended rate charged for associate attorneys—most of whom were tasked with routine document review work.

In this securities fraud matter, a class of plaintiffs claimed Citigroup understated the risks of assets backed by subprime mortgages. After the parties settled the matter for $590 million, Judge Stein had to evaluate whether the settlement was “fair, reasonable, and adequate and what a reasonable fee for plaintiffs’ attorneys should be.” The court issued a preliminary approval of the settlement and certified the class. In his opinion, Judge Stein considered the plaintiffs’ motion for final approval of the settlement and allocation and the plaintiffs’ lead counsel’s motion for attorneys’ fees and costs of $97.5 million. After approving the settlement and allocation, Judge Stein decided that the plaintiffs’ counsel was entitled to a fee award and reimbursement of expenses but in an amount less than the lead counsel proposed.

One shareholder objected to the lead counsel’s billing practices, claiming the contract attorneys’ rates were exorbitant.

Judge Stein carefully scrutinized the contract attorneys’ proposed hourly rates “not only because those rates are overstated, but also because the total proposed lodestar for contract attorneys dwarfs that of the firm associates, counsel, and partners: $28.6 million for contract attorneys compared to a combined $17 million for all other attorneys.” The proposed blended hourly rate was $402 for firm associates and $632 for firm partners. However, the firm asked for contract attorney hourly rates as high as $550 with a blended rate of $466. The plaintiff explained that these “contract attorneys performed the work of, and have the qualifications of, law firm associates and so should be billed at rates commensurate with the rates of associates of similar experience levels.” In response, the complaining shareholder suggested that a more appropriate rate for contract attorneys would be significantly lower: “no reasonable paying client would accept a rate above $100 per hour.” (emphasis added)

Judge Stein rejected the plaintiffs’ argument that the contract attorneys should be billed at rates comparable to firm attorneys, citing authority that “clients generally pay less for the work of contract attorneys than for that of firm associates”:

“There is little excuse in this day and age for delegating document review (particularly primary review or first pass review) to anyone other than extremely low-cost, low-overhead temporary employees (read, contract attorneys)—and there is absolutely no excuse for paying those temporary, low-overhead employees $40 or $50 an hour and then marking up their pay ten times for billing purposes.”

Furthermore, “[o]nly a very few of the scores of contract attorneys here participated in depositions or supervised others’ work, while the vast majority spent their time reviewing documents.” Accordingly, the court decided the appropriate rate would be $200, taking into account the attorneys’ qualifications, work performed, and market rates.

For this and other reasons, the court found the lead counsel’s proposed lodestar “significantly overstated” and made a number of reductions. The reductions included the following amounts:

  • $7.5 million for document review by contract attorneys that happened after the parties agreed to settle; 20 of the contract attorneys were hired on or about the day of the settlement.
  • $12 million for reducing the blended hourly rate of contract attorneys from $466 to $200 for 45,300 hours, particularly where the bills reflected that these attorneys performed document review—not higher-level work—all day.
  • 10% off the “remaining balance to account for waste and inefficiency which, the Court concludes, a reasonable hypothetical client would not accept.”

As a result, the court awarded a reduced amount of $70.8 million in attorneys’ fees, or 12% of the $590 million common fund.

So, what do you think?  Was the requested amount excessive?   Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

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

Someone Else’s Money – eDiscovery Best Practices

Leave it to Craig Ball to liken lawyers’ delegation of eDiscovery to Prince Akeem’s “royal backside wipers” in the Eddie Murphy movie Coming to America.

In Craig’s blog post E-Discovery and the Zamundan Royal Backside Wipers, he notes “everywhere I’m met with the attitude that electronic discovery isn’t a lawyer’s concern:  ‘It’s something you hire people to do,’ they say.”

“Certainly, we must hire people to do things we cannot possibly do.  But I contend that we hire people to do many things we could learn to do ourselves, and do economically.  Remember Eddie Murphy’s royal backside wipers in Coming to America? All it takes is money to burn; and if it’s someone else’s money, who really cares?”

The problem, as Craig notes, is that lawyers who refuse to educate themselves on eDiscovery and IT concepts run the risk that they may “go the way of the local bookseller and video rental shop”.  “Clients will not pay for Royal Wipers forever, and we should not ask them to do so.”

Craig then proceeds to provide five categories (with over 40 sub-categories) of “top-of-my-head list of lawyer duties” for eDiscovery.  It’s a great list and I won’t steal his thunder – you can click on the link above to view his post and the list.

Working for an eDiscovery provider, you might think that we prefer lawyers to remain ignorant regarding eDiscovery and turn everything over to us.  In fact, I find we get more work from attorneys that understand and appreciate the importance of managing eDiscovery effectively.  Those who understand the issues associated with electronic files, that processing files require a sound process, that you should test your search terms early and that cloud-based eDiscovery is secure are the attorneys who make the best clients as they understand the benefits of the services we provide.  Knowledge is power!

Craig finishes his post relaying the story of a recent speech, where afterward, he was approached by a woman who had expressed “frustration that IT folks use a lot of jargon and initialism when they discuss their work”, to which Craig noted that “perhaps lawyers should learn to speak a little geek”.  “[I]f you’re going to live in France, it makes sense to gain a little fluency in French.”

If not, you may find yourself a bit behind.  Sorry, I couldn’t resist.

So, what do you think?  What do you do to educate yourself on eDiscovery best practices?   Please share any comments you might have or if you’d like to know more about a particular topic.

For more of Craig’s thoughts about lawyers and eDiscovery education, check out his three-part thought leader interview from earlier this year.

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

New Survey Sheds Light on How Corporate Legal Departments Handle Outsourcing – eDiscovery Trends

These days, it seems as though every company is outsourcing work overseas.  Are corporate legal departments following suit?

Only to a point, according to a new survey available from ALM Legal Intelligence and discussed on David Hechler’s article on Corporate Counsel (The 2013 Legal Process Outsourcing Survey).  According to the article, “The LPO industry is like sex: There’s plenty of talk about it, but no one knows what goes on behind closed doors. Vendors will tell you that it’s really taking off—or is about to. They cite numbers in the billions of dollars, but these always seem to be projections.”

So, as the author notes, “we decided to ask corporate law departments (but not their law firms) to tell us about their experiences. We created an online survey and sent it out to lots of departments. We also posted links on CorpCounsel.com and invited readers to click in. And we asked not only whether they’ve made the leap, but, for those who have, where they’re sending work, what kind of work they outsource, what motivated them, and how they feel about the results.”

Here are some of the published results:

  • 54 percent of the respondents have outsourced legal work at some point;
  • Of the respondents who have outsourced legal work, 26 percent were “very satisfied” with the results, 41 percent were “satisfied”, 29 percent were “somewhat satisfied” and only 3 percent were “not at all satisfied” – meaning that over 2/3 of the respondents were at least satisfied with the work performed;
  • 65 percent of the respondents who have outsourced legal work have only done so within the US, while 35 percent have outsourced abroad (64 percent of those have sent work to India);
  • Document review and electronic discovery were the most frequently cited types of work being outsourced;
  • Asked why they outsourced legal work, fully 35 percent said “to test the idea.” This was the third most common reason, behind “lowering costs” and “reducing the time required to complete the work.”

Based on the survey, it appears that, while more organizations outsource legal work than don’t, most still haven’t dipped their toe in overseas waters (at least yet).

The full survey is available from ALM Legal Intelligence here for $599.

So, what do you think?  Did you expect overseas outsourcing to be more prevalent?   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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Five More Things to Know Before Moving eDiscovery to the Cloud – eDiscovery Best Practices

Yesterday, we covered the first five items in Joel Jacob’s article in Information Management.com (10 Things to Know Before Moving E-Discovery to the Cloud), which provides an interesting checklist for those considering a move to cloud computing.  Here are the remaining five items, with some comments from me.

6. Assess potential – and realistic – risks associated with security, data privacy and data loss prevention.  The author notes the importance of assessing security risks, and, of course, it’s important to understand how the cloud provider handles security and that there are clear-cut policies and objectives in place.  It’s also important to compare the cloud provider’s security mechanisms to your own security mechanisms.  Any cloud provider “worth their salt” should have a comprehensive security plan that meets or exceeds that of most organizations.

7. Develop an implementation plan, including an internal communication strategy.  The author advocates getting legal and IT on the same page, testing and conducting a proof of concept on work procedures and identifying quantifiable metrics for evaluating the system/service.  All solid ideas.

8. Leverage the success or adoption of other SaaS solutions in the organization to lessen resistance.  The author notes that “process of moving to the cloud and/or moving e-discovery to the cloud will need to be driven through cultural change management”.  However, they already likely use several SaaS based solutions.  Here are some of the most popular ones: Amazon, Facebook, Twitter, eBay and YouTube.  Oh, and possibly Google Docs and SalesForce.com as well.  That should address resistance concerns.

9. Run a pilot on a small project before moving to larger, mission-critical matters.  The author advocates finding a test data set or dormant case that has known outcomes, and running it in the new cloud solution.  The cloud provider should enable you to do so via a no risk trial (shameless plug warning, here’s ours), so that you can truly try it before you buy it, with your own data.

10. Understand you are still the ultimate custodian of all electronically stored information.  As the author notes, “The data belongs to you, and the burden of controlling it falls on you. The Federal Rules of Civil Procedure state that no matter where the data is hosted, the company that owns it is ultimately responsible for it.”  That’s why it’s critical to address questions about where the data is stored and mechanisms for securing your company’s data.  If you can’t answer those questions to your satisfaction with the cloud provider you’re evaluating, perhaps they’re not the provider for you.

So, what do you think?  Have you implemented a SaaS based solution for eDiscovery?   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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

10 Things to Know Before Moving eDiscovery to the Cloud – eDiscovery Best Practices
 

Software as a Service (SaaS) accounted for 49 percent of all eDiscovery software revenues tracked in 2011, according to Gartner’s report, Market Trends: Automated, Analytical Approaches Drive the Enterprise E-Discovery Software Market.  Joel Jacob’s article in Information Management.com (10 Things to Know Before Moving E-Discovery to the Cloud) provides an interesting checklist for those considering a move to cloud computing.  Here they are, with some comments from me.

1.     Actively involve all stakeholders across multiple departments.  The article promotes involving “as many stakeholders and members of management as possible, typically from legal, IT, compliance, security and any other department that may be impacted by a new model”.  Legal should also include outside counsel when appropriate – they will often be the heaviest users of the application, so it should be easy for them to learn and use.

2.     Document and define areas of potential cost savings.  Jacob advocates considering the eDiscovery process as defined by the Electronic Discovery Reference Model (EDRM).  It’s easy to forget some of the cost savings and benefits that cloud computing can offer – not only reduction or elimination of hardware and software costs, but also reduction or elimination of personnel to support in-house systems, as well.

3.     Evaluate the e-discovery platform first and the cloud options second.  Clearly, the eDiscovery platform must meet the needs of the organization and the users or it doesn’t matter where it’s located.  However, it seems counter-productive to spend time evaluating platforms that could be ruled out because of the cloud options.  At the very least, identify any cloud “deal breakers” and eliminate any platforms that don’t fit with the required cloud model.

4.     Benchmark your existing e-discovery processes including data upload, processing, review and export.  This, of course, assumes you have an existing solution that you are considering replacing.  You will compare those benchmarks to those of the potential cloud solution when you perform a small pilot project (as we will discuss in an upcoming step).  The eDiscovery platform that you choose should ideally give you the option to load and export your own data, as well as providing good or better turnaround by the vendor (when compared to your internal staff) for performing those same functions when needed.

5.     Learn the differences between public and private clouds.  As the article notes, “[c]ompanies need to understand where there [sic] data will go, how it is protected, and if it is secured according to any industry specific regulations that apply (e.g., HIPPA, Sarbanes-Oxley, etc.).”  It’s especially important to know where your data will go – if it’s stored internationally, access to it may be subject to different rules.  As for how it is protected, here is some more information regarding how data can be protected in a cloud environment.

Tomorrow, we will cover items 6 through 10 of the checklist.  Oh, the anticipation!

So, what do you think?  Have you implemented a SaaS based solution for eDiscovery?   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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Can’t Agree on eDiscovery? Try Using an eMediator – eDiscovery Best Practices

The Rule 26(f) “meet and confer” conference is a requirement in Federal cases as of the rules changes of 2006 to the Federal Rules of Civil Procedure.  It enables the parties in a lawsuit to discuss discovery and create a plan for the sharing of information during and before trial.  But, what if you can’t agree on how discovery should be handled?  Considering using an “eMediator”!

Allison Skinner and Peter Vogel recently wrote an article in Law Technology News (E-Mediation Can Simplify E-Discovery Disputes) that discusses the idea of using mediation for resolving discovery disputes.  As they note in the article, “What do lawyers fight about most in a civil lawsuit? E-discovery. So, it makes sense that mediation is appropriate for resolving discovery disputes.”

Some key recommendations from the article:

  • Lawyers for the litigants should agree to an eMediation at the outset of the case to develop a discovery plan that maximizes efficiency, reducing time and cost for the discovery process.
  • Expect for the eMediator to request the organization’s CIO (or CTO), general counsel, and outside counsel to participate at the beginning of the lawsuit.
  • Topics for which the eMediator will help facilitate discussion include naming the proper email custodians, identifying electronic evidence, and determining which evidence should be preserved to avoid spoliation claims later.
  • Like other instances of mediation, the discussion in an eMediation is confidential, the parties are given an opportunity to discuss eDiscovery candidly.  Your team can disclose information about the evidence without fear that they will later be deposed on the issues discussed during the mediation.
  • Each party should prepare an “eMediation Statement” to provide details about the dispute to help the eMediator understand the issues.
  • Be prepared to discuss search terms, databases, available technology, forms of production, and other issues for creating an eDiscovery plan of action with the mediator.

As the article notes, an eMediator “should be trained and experienced not only in eDiscovery, but in alternative dispute resolution” (ADR).  Depending on the type of litigation, the eMediator may also need to “have specialized knowledge in a particular practice area”.

Training programs for ADR are available at the American College of E-Neutrals, the University of California Hastings College of the Law, the Organization of Legal Professionals and The Sedona Conference.

For more on requirements and topics for the meet and confer, click here and here.

So, what do you think?  Have you ever used mediation for discovery issues?   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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily 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 a Blended Document Review Rate of $466 Per Hour Excessive? – eDiscovery Case Law

Remember when we raised the question as to whether it is time to ditch the per hour model for document review?  One of the cases we highlighted for perceived overbilling was ruled upon last month.

In the case In re Citigroup Inc. Securities Litigation, No. 09 MD 2070 (SHS), 07 Civ. 9901 (SHS) (S.D.N.Y. Aug. 1, 2013), New York District Judge Sidney H. Stein rejected as unreasonable the plaintiffs’ lead counsel’s proffered blended rate of more than $400 for contract attorneys—more than the blended rate charged for associate attorneys—most of whom were tasked with routine document review work.

In this securities fraud matter, a class of plaintiffs claimed Citigroup understated the risks of assets backed by subprime mortgages. After the parties settled the matter for $590 million, Judge Stein had to evaluate whether the settlement was “fair, reasonable, and adequate and what a reasonable fee for plaintiffs’ attorneys should be.” The court issued a preliminary approval of the settlement and certified the class. In his opinion, Judge Stein considered the plaintiffs’ motion for final approval of the settlement and allocation and the plaintiffs’ lead counsel’s motion for attorneys’ fees and costs of $97.5 million. After approving the settlement and allocation, Judge Stein decided that the plaintiffs’ counsel was entitled to a fee award and reimbursement of expenses but in an amount less than the lead counsel proposed.

One shareholder objected to the lead counsel’s billing practices, claiming the contract attorneys’ rates were exorbitant.

Judge Stein carefully scrutinized the contract attorneys’ proposed hourly rates “not only because those rates are overstated, but also because the total proposed lodestar for contract attorneys dwarfs that of the firm associates, counsel, and partners: $28.6 million for contract attorneys compared to a combined $17 million for all other attorneys.” The proposed blended hourly rate was $402 for firm associates and $632 for firm partners. However, the firm asked for contract attorney hourly rates as high as $550 with a blended rate of $466. The plaintiff explained that these “contract attorneys performed the work of, and have the qualifications of, law firm associates and so should be billed at rates commensurate with the rates of associates of similar experience levels.” In response, the complaining shareholder suggested that a more appropriate rate for contract attorneys would be significantly lower: “no reasonable paying client would accept a rate above $100 per hour.” (emphasis added)

Judge Stein rejected the plaintiffs’ argument that the contract attorneys should be billed at rates comparable to firm attorneys, citing authority that “clients generally pay less for the work of contract attorneys than for that of firm associates”:

“There is little excuse in this day and age for delegating document review (particularly primary review or first pass review) to anyone other than extremely low-cost, low-overhead temporary employees (read, contract attorneys)—and there is absolutely no excuse for paying those temporary, low-overhead employees $40 or $50 an hour and then marking up their pay ten times for billing purposes.”

Furthermore, “[o]nly a very few of the scores of contract attorneys here participated in depositions or supervised others’ work, while the vast majority spent their time reviewing documents.” Accordingly, the court decided the appropriate rate would be $200, taking into account the attorneys’ qualifications, work performed, and market rates.

For this and other reasons, the court found the lead counsel’s proposed lodestar “significantly overstated” and made a number of reductions. The reductions included the following amounts:

  • $7.5 million for document review by contract attorneys that happened after the parties agreed to settle; 20 of the contract attorneys were hired on or about the day of the settlement.
  • $12 million for reducing the blended hourly rate of contract attorneys from $466 to $200 for 45,300 hours, particularly where the bills reflected that these attorneys performed document review—not higher-level work—all day.
  • 10% off the “remaining balance to account for waste and inefficiency which, the Court concludes, a reasonable hypothetical client would not accept.”

As a result, the court awarded a reduced amount of $70.8 million in attorneys’ fees, or 12% of the $590 million common fund.

So, what do you think?  Was the requested amount excessive?   Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

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