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Industry Trends

eDiscovery Trends: More On the Recommind Patent Controversy
 

Perhaps the most controversial story discussed in the eDiscovery community in quite some time is the controversy regarding the patent recently announced by Recommind for Predictive Coding via press release entitled, Recommind Patents Predictive Coding, issued on June 8.  I haven’t seen this much backlash against a company or individual since last summer when LeBron James’ decision to leave the Cleveland Cavaliers for the Miami Heat (and the subsequent championship-like celebration that he and his teammates conducted before the season).  How did that turn out?  😉

Since that announcement, there have been several articles and blog posts about it, including:

  • This one, from Monica Bay of Law Technology News, asking the question: “Is Recommind Blowing Smoke?”  where discussed the buzz over Recommind’s announcement;
  • This one, from Evan Koblentz (also of Law Technology News), entitled “Recommend Intends to Flex Predictive Coding Muscles” which includes responses from Catalyst and Valora Technologies;
  • This one, also from Evan Koblentz, a blog post from EDD Update, where Recommind General Counsel and Vice President Craig Carpenter acknowledges that Recommind failed to obtain a trademark for the term Predictive Coding (though Recommind is still using the ™ symbol on the term Predictive Coding onthis page);
  • Three blog posts in four days from Sharon D. Nelson of Ride the Lightning blog, which debate the enforceability of the patent and include a response from OrcaTec, noting that Recommind’s implied threat of litigation is “nothing more than an attempt to bully the market place”.

There are several other articles and blog posts regarding the topic, but if I listed them all, I’d have no room left for anything new!  Sorry that I couldn’t include them all.

I reached out to Bill Dimm, founder of Hot Neuron LLC, makers of Clustify, which clusters documents in groups for effective, expedited review and asked him his thoughts about the Recommind press release and patent.  Here are his comments:

"Recommind's press release would have been accurately titled 'Recommind Patents a Method for Predictive Coding,' but it went with the much more provocative title 'Recommind Patents Predictive Coding,' implying  that its patent covers every conceivable way of doing predictive coding.  The only way I can see that being accurate is if you DEFINE predictive coding to be exactly the procedure outlined in claim 1 of Recommind's patent.  Of course, 'predictive coding' is a relatively new term, so the definition is up for debate.  The patent itself says:

'Predictive coding refers to the capability to use a small set of coded documents (or partially coded documents) to predict document coding of a corpus.' That sure sounds like it allows for a lot of possibilities beyond the procedure in claim 1 of the patent.  The press release goes on to say: 'ONLY [emphasis is mine] Recommind's patented, iterative, computer-assisted approach can 'bend the cost curve' of document review.'  Really?  So, Recommind has the ONLY product in the industry that works?  A few of us disagree.  Even clustering, which Recommind claims does not qualify as predictive coding will bend the cost curve because the efficiency boost it provides increases with the size of the document set.

Moving on from the press release to the patent itself, I would recommend reading claim 1 if you are interested in such things.  It is the most general method that the USPTO allowed Recommind to claim –  the other claims are all dependent claims that describe more specific embodiments of claim 1, presumably so that Recommind would have a leg left to stand on if prior art was found to invalidate claim 1.  Claim 1 describes a procedure for predictive coding that involves quite a few steps.  It is my understanding (I am NOT a lawyer) that the patent is irrelevant for any predictive coding procedure that does not include every single one of the steps listed in claim 1.  Since claim 1 includes things like identification cycles, rolling loads, and random sampling, it seems unlikely that existing products would accidentally infringe on the patent.

As far as Clustify is concerned, Recommind's patent is irrelevant since our procedure for predictive coding is different.  In fact, I explained in a presentation at a recent conference why random sampling is a very inefficient approach (something that has been known for decades in other fields), so I wouldn't even be tempted to follow Recommind's procedure."

So, what do you think?  Will the Recommind predictive coding patent allow them to rule predictive coding?  Or only their specific approach?  Will LeBron James ever win a championship?  Please share any comments you might have or if you’d like to know more about a particular topic.

Full disclosure: Hot Neuron is a partner of Trial Solutions, which has used their product, Clustify, in various client projects.

eDiscovery Trends: If You Use Auto-Delete, Know When to Turn It Off
 

Federal Rule of Civil Procedure 37(f), adopted in 2006, is known as the “safe harbor” rule.  It provides that “[a]bsent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.”

Let’s face it, every time we turn on our computers, we overwrite data.  And, the mere opening of files (without changing any data) can change the metadata of a file – for example, simply opening a Microsoft Access® database changes the last modified date of the Access file, even if no records are changed.  If there wasn’t some measure of “safe harbor” protection, an organization facing litigation might find it very difficult to conduct business during the case.

While it’s not always clear to what extent “safe harbor” protection extends, one case from a few years ago, Disability Rights Council of Greater Washington v. Washington Metrop. Trans. Auth., D.D.C. June 2007, seemed to indicate where it does NOT extend – auto-deletion of emails.  In this case, the defendant failed to suspend auto-delete on its email system when their preservation obligation commenced, resulting in emails only being available on back-up tapes.  Their argument that the tapes were “not reasonably accessible” was denied by the court, describing their request as “chutzpah”.

Of course, email, like any other type of ESI, should be subject to document retention and destruction policies and old emails should be purged when they reach the end of the retention period.  Microsoft Outlook® provides an option via its Auto Archive function to delete the emails instead of archiving them.  You can select this setting for all emails (via the Tools, Options menu, Other tab) or for selected folders (by right-clicking on them, selecting Properties and then selecting the AutoArchive tab).  That’s at the client level.

But, most organizations use Outlook through Exchange.  Exchange Manager enables administrators to set auto delete policies for the email user population to manage retention and destruction of emails, thus being able to disable  the auto delete function for users when the duty to preserve arises.  If your organization uses auto-delete, it’s important to have a policy in place for disabling auto-delete for litigation, whether at the Outlook client level, the Exchange level or with any other email system.

So, what do you think?  Does your organization use auto-deletion of emails?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: eDiscovery Malpractice Case Highlights Expectation of Higher Standards
 

Normally, eDiscovery Daily reports on cases related to eDiscovery issues after the decision has been rendered.  In this case, the mere filing of the lawsuit is significant.

Friday, we noted that competency ethics was no longer just about the law and that competency in eDiscovery best practices is expected from the attorneys and any outside providers they retain.  An interesting article from Robert Hilson at the Association of Certified eDiscovery Professionals® (ACEDS™) discusses what may be the first eDiscovery malpractice case ever filed against a law firm (McDermott Will & Emery) for allegedly failing to supervise contract attorneys that were hired to perform the client’s work and to protect privileged client records.  A copy of the article is located here.

J-M Manufacturing Co., Inc., a major manufacturer of PVC piping, had hired McDermott to defend against civil False Claims Act charges concerning the quality and sale of its products to federal and state governments. After the case was filed in January 2006, it remained under seal for nearly three years.  According to the complaint, during that time, a large-scale document review ensued (160 custodians) and McDermott hired Stratify, an outside vendor, to cull through the ESI.

J-M retained Sheppard Mullin Richter & Hampton to replace McDermott in March 2010.  Why?  According to the complaint, McDermott worked directly with the Assistant US Attorney to develop a keyword list for identifying responsive ESI, but, despite this effort, the first production set was returned by the government after they found many privileged documents. The complaint indicates that McDermott and its contract lawyers then produced a second data set again with a large number of privileged documents even though it was filtered through a second keyword list.

J-M contends in the complaint that McDermott's attorneys “performed limited spot-checking of the contract attorneys' work, [and] did not thoroughly review the categorizations or conduct any further privilege review.”  After Sheppard replaced McDermott on the case, they asked for the privileged documents to be returned, but the “relator” refused, saying that McDermott had already done two privilege reviews before giving those documents to the government and, therefore, J-M had waived the attorney-client privilege. In the complaint, J-M contends that 3,900 privileged documents were erroneously produced by McDermott as part of 250,000 J-M electronic records that were reviewed.  It is unclear from the complaint whether McDermott provided the contract reviewers themselves or used an outside provider.  It will be interesting to see how this case proceeds.

So, what do you think?  Have you experienced inadvertent disclosures of privilege documents in a case?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Best Practices: Competency Ethics – It’s Not Just About the Law Anymore
 

A few months ago at LegalTech New York, I conducted a thought leader interview with Tom O’Connor of Gulf Coast Legal Technology Center, who didn’t exactly mince words when talking about the trend for attorneys to “finally tak[e] technology seriously”.  As he noted, “lawyers are finally trying to take some time to try to get up to speed – whining and screaming pitifully all the way about how it’s not fair, and the sanctions are too high and there’s too much data.  Get a life, get a grip.  Use the tools that are out there that have been given to you for years.” 

Strong words, indeed.  The American Bar Association (ABA) Model Rules of Professional Conduct (Model Rules) require that an attorney possess and demonstrate a certain requisite level of knowledge in order to be considered competent to handle a given matter.  Specifically, Model Rule 1.1 states that, "[a] lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation."

Preparation not only means understanding a specific area of the law (for example, antitrust or patent law, both highly specialized.).  It also means having the technical knowledge and skills necessary to serve the client in the area of discovery.

The ethical responsibilities of counsel these days includes competently directing and managing the identification, preservation, collection, processing, analysis, review and production of electronically stored information (ESI) required to be produced pursuant to lawful discovery requests.  If counsel does not have that level of competency in a particular area, he or she is obligated to either acquire the knowledge or skill necessary to support those needs, or include someone else who does have the requisite skills as part of the representation.

Not too long ago, I met with an attorney and discussed how they handled preservation obligations with their clients.  The attorney indicated that he expected his clients to self-manage their own preservation and collection.  When I asked him why he didn’t try to get more involved to make sure it was being handled properly, he said, “I don’t want to alarm them.  They might decide they need a bigger firm.”

Recent case law is full of cases where counsel didn’t fully understand their eDiscovery obligations, and got themselves and their clients “burned” in the process.  If your organization gets involved in litigation, make sure to include eDiscovery competence among the factors you consider when determining counsel qualifications to represent you.

So, what do you think?  Is your counsel eDiscovery savvy?  If not, do they use a provider that is?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: Think Before You Hit Send
 

It’s not the only instance of a one character typo possibly ending a career; instead, it may simply be the latest.

Unless you’re living under a rock, you’re probably aware of the “Twittergate” story involving Rep. Anthony Weiner (D-N.Y.), where he initially claimed that a lewd photo posted via Twitter was posted by a hacker to his account, then subsequently admitted this past Monday that he, in fact, posted that picture.  Many are calling for him to resign from his Congressional position after posting the picture, as well as sending other pictures, which have since been identified.  (If you have been living under a rock, you can click here for more on the story).

The irony is that a one-letter typo may turn out to be his undoing.  Weiner intended to send the “tweet” as a direct message to another Twitter user, but used the ‘@’ instead of the ‘d’ (to indicate a direct message) to reference that user.  As a result, the message was published to all his followers, not just the intended party.  In fairness, even if he had sent the direct message correctly, he used a public photo sharing service, yFrog, to share the photo, so anyone that chose to browse through all of his photos would have still seen the controversial photo.

It is easier to communicate than ever, with a myriad of options from which to choose, including voice, video, email, posts, texts and “tweets”.  Perhaps, it’s becoming too easy.  Courthouses are filled with cases where “informal” communications are key evidence in determining the outcome of the case.  The formal typed letter has given way to the informal media of email to the even more informal media of posts, texts and “tweets”.  Now, just as important as the adage “think before you speak” is the adage “think before you hit send”.

We’ve all been there, hopefully with much less disastrous consequences.  If you’ve never selected ‘Reply to All’ by accident instead of ‘Reply’ when intending to reply to only the sender, please call me and let me know your secret.  Or, maybe, you’ve sent an email when upset that you regretted later.  Once released, those mistakes are out there and are difficult (if not impossible) to recall.

If you’re not in the habit of doing so already, it’s a good idea to take a deep breath before each email sent or each post made and review what you’re about to send out into the world.  Think before you hit send.  If you don’t, you just might be the topic on a future ‘eDiscovery Case Law’ post on eDiscoveryDaily!  😉

So, what do you think?  Do you have any cases that are driven by informal communications?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: The Best SaaS Providers are Certifiable
 

The increasing popularity of cloud-based Software-as-a-Service (SaaS) solutions is becoming well documented, with this very blog noting Forrester and Gartner predictions of tremendous growth in cloud computing over the next several years.  We’ve also noted the importance of knowing where your data is stored, as many online poker players learned the hard way when the recent US government crackdown of several gambling sites left them without a way to recover their funds.

If only there were some sort of certification, administered by an impartial third party, to ensure that your SaaS provider has implemented policies and processes that keep your information secure, stable and safe.  There is such a certification.

SAS 70 (the Statement on Auditing Standards No. 70) defines the standards an auditor must employ in order to assess the contracted internal controls of a service provider. Service providers, such as insurance claims processors, credit processing companies and, especially pertinent to eDiscovery, hosted data centers, are evaluated by these standards. The SAS 70 was developed by the American Institute of Certified Public Accountants (AICPA) as a simplification of a set of criteria for auditing standards originally defined in 1988.  Standards such as SAS 70 became critical in the wake of the Sarbanes-Oxley, which created significant legal penalties for publicly traded companies who lacked sufficient control standards for their financial information.

Under SAS 70, auditor reports are classified as either Type I or Type II. In a Type I report, the auditor evaluates the service provider to prevent accounting inconsistencies, errors and misrepresentation. The auditor also evaluates the likelihood that those efforts will produce the desired future results. A Type II report goes a step further.  It includes the same information as that contained in a Type I report; however, the auditor also attempts to determine the effectiveness of agreed-on controls since their implementation. Type II reports also incorporate data compiled during a specific time period, usually a minimum of six months.

SAS 70 reports are either requested by the service provider or a user organization (i.e., clients). The ability for the service provider to provide consistent service auditor's reports builds a client's trust and confidence in the service provider, satisfying potential concerns. A SaaS (2 a’s, as opposed to one for SAS) provider that has received SAS 70 Type II certification has demonstrated to an impartial third party a proven track record of policies and processes to protect its clients’ data.  When it comes to your data, you want a provider that has proven to be certifiable.

So, what do you think?  Is your SaaS provider SAS 70 Type II certified?  Please share any comments you might have or if you’d like to know more about a particular topic.

Full disclosure: I work for Trial Solutions, which provides SaaS-based eDiscovery review applications FirstPass® (for first pass review) and OnDemand® (for linear review and production).  Our clients’ data is hosted in a secured, SAS 70 Type II certified Tier 4 Data Center in Houston, Texas.

Social Tech eDiscovery: Use of Smarsh for Social Media Archiving
 

The online world thrives on social media, but for attorneys who must preserve sensitive social media data for discovery, the widespread growth of social technology presents a laundry list of problems.

Not only is it challenging to trace the communications shared on popular sites like Facebook, LinkedIn and Twitter when privacy settings can be turned on and off at whim, it’s also difficult to know whether the information available at any given time is complete, as content can be edited by users at any time or lost due to technical malfunctions.

In some cases, like this example, courts have ruled that even locked or private content on Facebook and other social networking sites is not protected from being requested as part of discovery. In other cases, such as this one, they have ruled differently.  You don’t know for sure how courts will rule, so you have to be prepared to preserve all types of social media content, even possibly content that is changed frequently by users, such as Facebook profiles and blog posts.  And, even though Facebook has introduced a self-collection mechanism, it may not capture all of the changes you need.  And, other social media sites have not yet provided a similar mechanism.  If items are changed or lost after the duty to preserve goes into effect, your organization can be sanctioned with steep fines even receive an adverse inference judgment based on the information you are unable to produce.

Fortunately, there are viable solutions that enable you to create a backup of all social networking activity and archive such information in the event it has to be produced in discovery. Portland-based Smarsh has archiving and compliance tools, including social media archiving and compliance that automate the archiving of social media accounts, preserving all necessary data in case you need it later for discovery.

Some of the benefits of Smarsh’s social media archiving tools include:

  • A complete, logged, and quantifiable record of all social media posts and administrator activity
  • The ability to define which social media features your employees have access to and to track all business communications
  • Compliance with SEC and FINRA regulations (including Regulatory Notice 10-06)
  • The tools to identify and minimize risk, saving your business time, effort, and money

Smarsh has been designed to satisfy all regulatory compliance objectives, transforming the data management hazards of social media into a system that automatically updates and archives itself – an attorney’s dream when litigation strikes. This application creates a simple and proactive approach to archival of social media data, enforcing preservation to ensure that the duty to preserve is met.

So, what do you think?  Do you use Smarsh or any other social media archival tool?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: Email Footers Give Privilege Searches the Boot
 

This communication (including any attachments) is intended for the use of the intended recipient(s) only and may contain information that is confidential, privileged or legally protected.  Any unauthorized use or dissemination of this communication is strictly prohibited.  If you have received this communication in error, please immediately notify the sender by return e-mail message and delete all copies of the original communication. Thank you for your cooperation.

This is an example of a standard email disclaimer often automated to appear in the footer of outgoing emails to disclaim liability.  Many organizations choose to add disclaimers to their emails for legal protection to attempt to protect themselves from legal threats such as breach of confidentiality or accidental breach of privilege.

However, when it comes time to collect and search email collections for confidentiality and privilege, these email footers can wreak havoc with those searches.  Searches for the words “confidential” or “privileged” will essentially be rendered useless as they will literally retrieve every email with the email disclaimer footer in it.

So, what to do?

One way to address the issue is to identify any other variations of words and phrases that might imply privilege.  Searching for phrases like “attorney client” or “attorney work product” – provided those phrases are not in the footer – may identify many of the privileged files.

Another way is to shift your search focus to names of individuals likely to conduct privileged communications, such as the names of the attorneys communicating with the organization.  Sometimes you may not know the names of all of the attorneys, so a search for domains associated with the outside counsel firms should identify the names of the individuals sending from or receiving to those domains.

If searching for the term "privileged" is still the best way to ensure that you find all of the potentially privileged files, one of our readers, Mark Lyon, actually identified a better way to search for the term “privileged” that I sheepishly admit I did not think of late last night when I wrote this, so I had to amend this post to include it (a first!).   Identifying the various footers at use within at least the main companies included in the collection, then excluding those entire footers from the index will remove those footers from filling up your search results.  Another reader, Joe Howie, has discussed in more detail an approach for removing those footers from the index.  Thanks to both Mark and Joe for keeping me on my toes!  🙂

So, what do you think?  Are email disclaimer footers making your privileged searches more complicated?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Sue Me and Lose? Pay My Costs.

In a ruling that may give some plaintiffs’ lawyers pause, a federal judge in Pittsburgh has ruled that the winning defendants in an antitrust case are entitled to reimbursement of more than $367,000 in eDiscovery costs.

In Race Tires Amer., Inc. v. Hoosier Racing Tire, Corp., No. 2:07-cv-1294, 2011 WL 1748620 (W.D. Pa. May 6, 2011), U.S. District Judge Terrence F. McVerry issued a 25 page opinion, finding that courts are increasingly approving awards of eDiscovery costs, noting that one judge described them as “the 21st century equivalent of making copies.”

In the suit, Race Tires America claimed that its competitor, Hoosier Racing Tire Corp., violated Sections 1 and 2 of the Sherman Act by entering into exclusive dealing contracts with motorsport sanctioning body Dirt Motor Sports Inc. that included a “single tire rule.”  Under the single tire rule, Dirt Motor Sports required that drivers and racers participating in its races use a specific brand of tire for a series of races or for the entire racing season, which Race Tires America argued shut it out of the market.

But Judge McVerry dismissed the suit on summary judgment, holding that such exclusive contracts are permissible in instances when a sports-related organization has freely decided that it wants exclusivity and has good-faith, pro-competitive or business justifications for doing so.  The decision was appealed to the 3rd Circuit, where the defendants won again and, after winning the appeal, the defendants filed their bills of costs in the district court.

The plaintiff argued that the costs should be disallowed because “electronic document collection, hard drive imaging and indexing and searching, commonly referred to as ‘eDiscovery charges,’ are not enumerated under Section 1920(4), and thus are not properly deemed recoverable costs.”  But Judge McVerry found that Congress, in the Judicial Administration and Technical Amendments Act of 2008, modified the wording of Section 1920(4), changing the phrase “fees for exemplifications and copies of papers” to read “fees for exemplification and the costs of making copies of any materials.”  Since that amendment, Judge McVerry said, “no court has categorically excluded eDiscovery costs from allowable costs.”  For example, in an Idaho case, Judge McVerry noted, the court awarded $4.6 million for the costs incurred for “the creation of a litigation database.”

Given the extent of the defendant’s eDiscovery activities, including copying nearly 500 gigabytes of data in response to over 400 search terms and creation of a litigation database, the court awarded $367,000 of the $389,000 eDiscovery costs requested by the defendants.

So, what do you think?  Should plaintiffs have to reimburse eDiscovery costs to defendants if they lose?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: The Only Prescription is More Cloud
 

A famous “philosopher” once said, “I got a fever, and the only prescription is more cowbell”.  Sorry, I couldn’t resist…that line always makes me laugh.  😉

It seems that many corporations and law firms “got a fever” and “the only prescription is more cloud”.

As we noted earlier this week, Forrester has forecast that the global Software-as-a-Service (SaaS) “cloud” computing market will grow from 40.7 billion dollars in 2011 to more than 241 billion dollars by 2020 – a six-fold increase.  In addition, the Gartner Group has projected that the cloud computing industry will have revenue of 148.8 billion dollars by 2014 – an even faster growth rate than Forrester’s forecast of 118.7 billion dollars for the same year.

So, there are the predictions.  The question is why?

One reason is the continued trend toward decentralization and globalization of organizations today.  In my recent interview with Jeffrey Brandt, Editor of the Pinhawk Law Technology Daily Digest, he noted that a 250 lawyer firm in Ohio was the 83rd largest law firm in the country several years ago, but now that same sized firm might not make it into the AMLAW 250.  Firms are growing and, as technology shrinks the world for many organizations, the barriers to expansion (even globally) are minimized.  Cloud computing technology is one of the ways in which technology shrinks the world today and enables decentralized organizations share applications and data.

And then, there is the economy.

In the past few years, many corporations and law firms have reduced their IT staffs – in some cases, significantly. Also, while the use of technology has continued to increase “by leaps and bounds”, expenditures for training or upgrading skill sets has lagged behind. Cloud computing technology solves this issue because the burden of keeping up with technology advances is shifted from the organization to the service provider.  As a result, many organizations are finding that “the only prescription for their fever” is “more cloud”.

In the coming days, we will discuss other cloud benefits as well as issues to consider and address before making the move to the cloud.

So, what do you think?  Is your organization storing more data in the cloud?  Does your organization have an effective plan in place for getting to the data when litigation strikes?  Please share any comments you might have or if you’d like to know more about a particular topic.

As we are off on Monday for the Memorial Day holiday, eDiscoveryDaily would like to thank all veterans and the men and women serving in our armed forces and the sacrifices you make for our country.  Thanks to all of you and your families and have a happy and safe Memorial Day!