Best Practices in e-Discovery for Handling Unreviewed Client Data

March 16, 2014

Hacker_closeupBig data security, hackers, and data breaches are critical problems facing the world today, including the legal profession. That is why I have focused on development of best practices for law firms to handle large stores of client data in e-discovery. The best practice I have come up with is simple. Do not do it. Outsource.

Attorneys should only handle evidence. Law firms should not take possession of large, unprocessed, unreviewed stores of client data, the contents of which are typically unknown. They should not even touch it. They should stay out of the chain of custody. Instead, lawyers should rely on professional data hosting vendors that have special expertise and facilities designed for data security. In today’s world, rife as it is with hackers and data breaches, hosting is a too dangerous and complex a business for law firms. The best practice is to delegate to security professionals the hosting of large stores of unreviewed client data.

Although it is still a best practice for knowledgable lawyers to control the large stores of client data collected for preservation and review, they should limit actual possession of client data. Only after electronic evidence has been reviewed and identified as relevant, or probable-relevant, should a law firm take possession. Before that, all large stores of unidentified client data, such as a custodian’s email box, should only be handled by the client’s IT experts, and professional data hosting companies, typically e-discovery vendors. The raw data should go directly from the client to the vendor. Alternatively, the client should never let the data leave its own premises. It should host the data on site for review by outside counsel. Either way, the outside law firm should not touch it, and certainly should not host it on the law firm’s computer systems. Instead, lawyers should search and review the data by secure online connections.

This outsourcing arrangement is, in my opinion, the best practice for law firm handling of large stores of unreviewed client data. I know that many private law firms, especially their litigation support departments, will strongly disagree.

focusLaw firms should stick to providing legal services, a position I have stated several times before. Losey, R., Five Reasons to Outsource Litigation Support (LTN, Nov. 2, 2012); WRECK-IT RALPH: Things in e-discovery that I want to destroy!Going “All Out” for Predictive Coding and Vendor Cost Savings. Data hosting is a completely different line of work, and is very hazardous in today’s world of hacking and data breaches.

Best Practice: Full Control, But Limited Possession

Again, to be clear, law firms must have actual possession of evidence, including original client documents. Lawyers cannot do their job without that. But lawyers do not need possession of vast hordes of unidentified, irrelevant data. The best practice is for law firms to control such client data, but to do so without taking possession. Attorneys should limit possession to the evidence.

Only after the large stores of client’s raw data have been searched, and evidence identified, should the digital evidence be transferred to the law firm for hosting and use in the pending legal matter. In other words, lawyers and law firms only need the signal, they do not need the noise. The noise – the raw data not identified as evidence or possible evidence – should be returned to the client, or destroyed. Typically this return or destruction is delayed pending the final outcome of the matter, just in case a research of the raw data is required.

I know this is a very conservative view. My law firm may well be the only AmLaw 100 firm that now has this rule. This hands-off rule as to all large stores of ESI is a radical departure from the status quo. But even if no other large law firm in the world now does this, that does not mean such outsourcing is wrong. It just means we are the first.

tugboat_1930s

Remember the T.J. Hooper, the tugboat with valuable barge that sunk at sea because they were not equipped with radios to warn them of an approaching storm? The case involving this tragic loss of life and property is required reading in every law school torts class in the country. T. J. Hooper 60 F.2d 737 (2d Cir. 1932) (J. Hand).

Sometimes a whole profession can lag behind the times. There is no safety in numbers. The only safety is in following best practices that make sense in today’s environment.  Although law firm hosting of large data stores of client data once made sense, I no longer think it does. The high amount of data and security threats in today’s environment makes it too risky for me to continue to accept this as a best practice.

Current Practice of Most Law Firms

data-breachMost of the legal profession today, including most private attorneys and their law firms, collect large stores of ESI from their clients when litigation hits. This is especially true in significant cases. They do so for preservation purposes and in the hopes they may someday find relevant evidence. The law firms take delivery of the data from their clients. They hold the entire haystack, even though they only need the few needles they hope are hidden within. They insert themselves into the chain of custody. This needs to stop.

Corporate counsel often make the same mistake. The data may go from the client IT, to the client legal department, and then to the outside counsel. Three hands, at least, have by then already touched the data. Sometimes the metadata changes and sanctions motions follow.

It gets even worse from there, much worse. When the data arrives at the law firm, the firm typically keeps the data. The data is sent by the client on CDs, DVDs, thumb drives, or portable USB drives. Sometimes FTP transfer is used. It is received by the outside attorney, or their assistant, or paralegal, or law firm office manager, or tech support person. We are talking about receipt of giant haystacks of information, remember, not just a few hundred, or few thousand documents, but millions of documents, and other computer files. The exact contents of these large collections is unknown. Who knows, they might contain critical trade secrets of the company. They almost certainly contain some protected information. Perhaps a lot of protected information. Regardless, all of it must be treated as confidential and protected from disclosure, except by due process in the legal proceeding.

After the law firm receives the client’s confidential data one of three things typically happen:

1.  The law firm forwards the data to a professional data processing and hosting company and deletes all copies from its system, and, for example, does not keep a copy of the portable media on which the larges stores of ESI were received. This is not a perfect best practice because the law firm is in the chain of custody, but it is far better than the next two alternatives, which is what usually happens in most firms.

2.  The law firm again forwards the data to a professional data processing and hosting company, but does not delete all copies from its system, and, for example, keeps a copy of the portable media on which the larges stores of ESI were received. This is a very common practice. Many attorneys think this is a good practice because that way they have a backup copy, just in case. (The backup should be kept by the client IT as part of the collection and forwarding, not the law firm.) I used to do this kind of thing for years, until one day I realized how it was all piling up. I realized the risk from holding thousands of PST files and other raw unprocessed client data collections. I was literally holding billions of emails in little storage devices in my office or in subdirectories of one of my office computers. Trillions more were on our firm’s litigation support computers, which bring us to the third, worst case scenario, where the data is not forwarded to a vendor.

3.  In this third alternative, which is the most common practice in law firms today, and the most dangerous, the law firm keeps the data. All it does is transfer the data from the receiving attorney (or secretary) to another department in the law firm, typically called Litigation Support. The Litigation Support Department, or whatever name the law firm may choose to call it, than holds the billions of computer files, contents unknown, on law firms computers, and storage closets, hopefully locked. Copies are placed on law firm servers, so that some attorneys and paralegals in the firm can search them for evidence. Then they often multiply by backups and downloads. They stay in the firm’s IT systems until the case is over.

Rows of server cages

At that time, in theory at least, they are either returned to the client or destroyed. But in truth this often never happens and raw data tends to live on and on in law firm computers, back up tapes, personal hard drives, DVDs, etc. Some people call that dark data. Most large law firms have tons of client dark data like that. It is a huge hidden liability. Dark or not it is subject to subpoena. Law firm’s can be forced to search and produce from these stores of client data. I know of one firm forced to spend over a million dollars to review such data for privilege before production to the government. The client was insolvent and could not pay, but still the firm had to spend the money to protect the privileged communications.

Dangers of Data Intrusions of Law Firms

Data-Breach-climbThese practices are unwise and pose a serious risk to client data security, a risk that grows bigger each day. The amount of data in the world doubles every two years, so this problem is getting worse as the amount of data held for litigation grows at an exponential rate. The sophistication of data thieves is also growing. The firewall that law firms think protect their client’s data is child play to some hackers. The security is an illusion. It is only a matter of time before disaster strikes and a large store of client data is stolen. The damages from even an average sized data breach can be extensive, as the below chart shows.

Data_breach_cost

Client data is usually held by law firms on their servers so that their attorneys can search and review the data as part of e-discovery. As IT security experts know, servers are the ultimate target at the end of a lateral kill chain that advanced persistent threat (APT)-type attackers pursue. Moreover, servers are the coveted prize of bot herders seeking persistent access to high-capacity computing. Application control and comprehensive vulnerability management are essential to breaking the lateral kill chain of attackers. You do not follow all of this? Never seen a presentation titled Keeping Bot Herders Off Your Servers and Breaking the Lateral Kill Chain of Today’s Attackers? Of course not. I do not really understand this either. IT security has become a very specialized and complex field. That is one of my key points here.

Law firms are the soft underbelly of corporate data security. More and more bad hackers are realizing the vulnerability of law firms and beginning to exploit it. So many lawyers are technically naive. They do not yet see the danger of hacking, nor the severity and complexity of issues surrounding data security.

Sharon_NelsonSharon Nelson, President of the Virginia State Bar and well known expert in this area, has been warning about this threat to law firms for years. In 2012 her warnings were echoed by the FBI. FBI Again Warns Law Firms About the Threat From Hackers. Mary Galligan, the special agent in charge of cyber and special operations for the FBI’s New York Office, is reported by Law Technology News as saying: We have hundreds of law firms that we see increasingly being targeted by hackers. Bloomberg’s Business Week quoted Galligan as saying: As financial institutions in New York City and the world become stronger, a hacker can hit a law firm and it’s a much, much easier quarryChina-Based Hackers Target Law Firms to Get Secret Deal Data (Bloomberg 1/31/12).

If lawyers are in a big firm, their client’s data may already have been hacked and they were never told about it. According to Sharon Nelson’s report on a survey done in 2013, 70% of large firm lawyers do not know if their firm has ever been breached. The same survey reported that 15% of the law firms have experienced a security breach. That’s right. Fifteen percent of the law firms surveyed admitted to having discovered a computer security intrusion of some kind.

Sharon said that the survey confirmed what her company Sensei Enterprises already knew from decades of experience with lawyers and data security. She reports that most law firms never tell their attorneys when there has been a breach. Your law firm may already have been hacked multiple times. You just do not know about it. Sharon, never an attorney to mince words, went on to say in her excellent blog, Ride the Lightning:

We often hear “we have no proof that anything was done with client data” in spite of the fact that the intruders had full access to their network. Our encounters with these breaches indicate that if law firms can keep the breach quiet, they will.

They will spend the money to investigate and remediate the breach, but they will fail to notify clients under state data breach laws and they won’t tell their own lawyers for fear the data breach will become public. Is that unethical? Probably. Unlawful? Probably. But until there is a national data breach law with teeth, that approach to data breaches is unlikely to change.

Someday a breach will go public. A big data breach and loss by just one law firm could quickly make the whole profession as conservative as me when it comes to big data and confidentiality. All it would take is public disclosure of one large data breach of one large law firm, especially if the ESI lost or stolen included protected information requiring widespread remedial action. Then everyone will outsource hosting to specialists.

What if a law firm happened to have credit card information and it was stolen from the law firm? Or worse yet, what if the client data was lost when a lawyer misplaced his brief case with a portable hard drive? This would a nightmare for any law firm, even if it did not get publicized. Why take that risk? That is my view. I am sounding the alarm now on big data security so that the profession can change voluntarily without the motivation of crisis.

Outsource To Trusted Professionals

Data_monitoringI have never seen a law firm with even close to the same kind of data security protocols that I have seen with the top e-discovery vendors. Law firms do not have 24/7 human in-person monitoring of all computer systems. They do not have dozens of video cameras recording all spaces where data is maintained. They do not have multiple layers of secured clean rooms, with iris scans and finger print scans, and other super high-tech security systems. You have seen this kind of thing in movies I’m sure, but not in your law firm.

Some vendors have systems like that. I know. I have seen them. As part of my due diligence for my firm’s selection of Kroll Ontrack, I visited their secure data rooms (well, some of them; others I was not allowed in). These were very cold, very clean, very secure rooms where the client data is stored. I am not even permitted to disclose the general location of these secure rooms. They are very paranoid about the whole thing. I like that. So do our clients. This kind of data security does not come cheap, but it is money well spent. The cheapest vendor is often a false bargain.

Data_SecurityHave you seen your vendor’s secure rooms? Does your law firm have anything like that? How many technical experts in data security does your firm employ? Again, I am not referring to legal experts, but to computer engineers who specialize in hacker defenses? The ones who know about the latest intrusion detection systems, viruses, bot herders, and breaking a lateral kill chain of attackers. Protecting client data is a serious business and should be treated seriously.

Any data hosting company that you choose should at least have independent certifications of security and other best practices based on audits. The ones I know about are the ISO/IEC 27000 series and the SSAE 16 SOC 2 certification. Is your law firm so certified? Your preferred vendor?

The key question here in choosing vendors is do you know where your client’s data is? In the clouds somewhere within your vendor’s control is not an acceptable answer, at least not for anyone who takes data security seriously. As a best practice you should know, and you should have multiple assurances, including third party certifications and input from security experts. In large matters, or when selecting a preferred vendor, you should also make a personal inspection, and you should verify adequate insurance coverage. You want to see cyber liability insurance. Remember, even the NSA screws up from time to time. Are you covered if this happens?

Client data security should be job number one for all e-discovery lawyers. I know it is for me, which is why I take this conservative hands-off position.

Most Law Firms Do a Poor Job of Protecting Client Data

Computer security conceptFrom what I have seen, very few law firms have highly secure client data hosting sites. Most do not even have reliable, detailed data accounting for checking in and out client data. The few that do, rarely enforce it. They rarely (never?) audit attorneys and inspect their offices and equipment to verify that they do not have copies of client data on their hard drives and DVDs, etc. In most law firms a person posing as a janitor could rummage through any office undisturbed, and probably even gain access to confidential computers. Have you ever seen all the sticky notes with passwords around the monitors of many (most?) attorneys.

Attorneys and law firms can and should be trusted to handle evidence, even when that may sometimes included hundreds of thousands of electronic and paper files. But they should not be over-burdened with the duty to also host large volumes of raw unprocessed data. Most are simply not up to the task. That is not their skill set. It is not part of the legal profession. It is not a legal service at all. Secure data hosting is a highly specialized computer engineering service, one that requires an enormous capital investment and constant diligence to do correctly. I do not think law firms have made that kind of investment, nor do I think they should. Again, it is beyond our core competence. We provide legal services, not data hosting.

Even data hosting by the best professionals is not without its risks. Just ask the NSA about the risks of rogue employees like Snowden. Are law firms equipped to mitigate these risks? Are they even adequately insured to deal with losses if client data is lost or stolen? I doubt it, and yet only a few more sophisticated clients even think to ask.

Is your law firm ready? Why even put yourself in that kind of risky position. Do you really make that much money in e-discovery charges to your clients? Is that profit worth the risk?

Ethical Considerations

This issue also has ethical implications. We are talking about protecting the confidentiality of client data. When it comes to issues like this I think the best practice is to take a very conservative view. The governing ethical rule for lawyers is Rule 1.6 of the ABA Model Rules of Professional Conduct. Subsection (c) of this rule applies here:

(c)  A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.

justice_guage_negligenceAgain we are faced with the difference between reasonable efforts and best practices. The ABA and most lawyers agree that Rule 1.6 allows a law firm to take possession of the raw, unreviewed client data, no matter what the size, so long as certain minimum “reasonable efforts” are made to safeguard the data. I do not disagree with this. I am certainly not attempting to create a new, higher standard for professional malpractice. It is not negligent for a law firm to possess large stores of unreviewed client data, although it could be, if rudimentary safeguards were not in place. My position is that it is no longer a best practice to do so. The best practice is now to outsource to reliable professionals who specialize in this sort of thing.

Conclusion

HackerLaw firms are in the business of providing legal services, not data hosting. They need to handle and use evidence, not raw data. Lawyers and law firms are not equipped to maintain and inventory terabytes of unknown client data. Some firms have petabytes of client data and seem to be very pleased with themselves about it. They brag about it. They seem oblivious of the risks. Or, at the very least, they are over confident. That’s something that bad hackers look for. Take a conservative view like I do and outsource this complex task. That is the best practice in e-discovery for handling large stores of unreviewed client data.

I sleep well at night knowing that if Anonymous or some other hacker group attacks my firm, and penetrates our high security, as they often do with even the best defenses of military security systems, that they will not get a treasure trove of client data.

Data_privacy_wordsThis does not mean law firms should be lax in handling their own data and communications. They must be hyper-vigilant in this too. Security and hacker defense is everyone’s concern. Law firms should focus on defense of their own information. Firms should not compound their problems by vastly increasing the size and value of their targets. Law firms are the soft underbelly of corporate data security because of the information of their corporate clients that most of them hold.

Although some hackers may be hired by litigants for purposes of illegal discovery of privileged communications and work product, most are not. They are after money and valuable trade secrets. The corporate stashes are the real target. If these potential treasure troves of data must leave a corporation’s possession, be sure they are in the hands of professional big data security experts. Do not set yourself up to be the next hacker victim.





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