Litigation today is more expensive and risk-filled than ever before, but not because of run away juries or expensive trials. Although these possibilities remain as real threats, in fact 98% of all federal court cases are resolved without trial. Litigation today is difficult primarily because of discovery. In the areas of commercial and employment litigation, discovery can involve forced disclosure of massive amounts of internal, otherwise secret, business records and information. The most burdensome discovery today is for email and other electronic documents located on a litigant’s computers, so called “electronic discovery” or “e-discovery.” The costs associated with “needle in the haystack” type e-discovery requests can be enormous, sometimes far exceeding the total amount in controversy. These same issues also apply to state and federal government investigations where no suit has been filed.
The problem of e-discovery reached such epidemic proportions that on December 1, 2006, the Supreme Court promulgated new Rules of Civil Procedure for all federal courts to follow to try to address these issues. The new Rules govern what is referred to as Electronically Stored Information (“ESI”), which includes not only all computer files, but all other electronic information, such as voice mail and videos. Although the Rules clarify certain issues, they also impose very stringent time requirements that most U.S. businesses are ill prepared to meet. The situation is worse for foreign companies doing business in the U.S. for a variety of reasons, including conflict of laws and the widespread dispersion of technology and ESI in different locations around the world.
The new Rules, combined with the new email and Internet-oriented culture in both business and society, create serious information management difficulties for everyone. For example, the Rules now require companies to preserve and produce within 100 days of the commencement of a lawsuit all potentially relevant ESI within their employees’ computers and other storage devices (such as thumb drives and cell phones), no matter where they are located. Strict compliance is starting to be enforced as judges across the country go on record as stating that the “pure heart, empty head” defense will no longer be tolerated in the area of e-discovery. All litigants are now subject to severe penalties for the accidental deletion of ESI that might be relevant to a lawsuit or government investigation. Liability may accrue even if the ESI is lost before notice of the suit or investigation, if a court later determines that the proceeding should reasonably have been anticipated. Penalties will almost certainly accrue if the destruction of ESI occurs after suit is filed.
The $1.5 Billion Dollar verdict against Morgan Stanley in the Coleman case in Florida, even though preliminarily reversed on other grounds, shows how important effective preservation procedures have become. So too does the well known Zubulake case in New York against the Swiss bank, UBS Warburg, which resulted in a $28 Million Dollar jury verdict for sexual discrimination. UBS Warburg lost the case in large part because of sanctions for missing emails, and not the actual merits of the case. In a world where sixty billion emails are sent daily, and most large corporations have more information stored on their computers than the biggest libraries in the world, the accidental loss of ESI can easily occur. The Zubulake and Coleman cases show that these mistakes can be very costly in the U.S. judicial system.
In my opinion, the only effective solution to this problem is the formation of internal, corporate e-discovery teams. The e-Discovery service team I co-lead with Ed Foster at my law firm, Akerman Senterfitt, is dedicated to assisting companies to carry out this task. Although the function of the team is primarily legal, the teams are necessarily multidisciplinary, comprised of representatives of IT, Business and Law.
The multidisciplinary team approach to e-discovery unquestionably works, but it is also true that these teams are notoriously difficult to setup, train, and function effectively. The cultures of these three groups, even within an otherwise close-knit company, are very different, and so too are their languages and gestalt. Members of the team need to be carefully chosen and rewarded for participation, and typical team building techniques employed. But the most important components for success are training and group work on a detailed, specific set of tasks. The group work establishes the common language and understanding that will eventually bring the members together and allow them to function as an effective team. Most companies do not have the necessary expertise or knowledge of the tasks to be performed, and are unfamiliar with the types of e-discovery protocols and procedures that need to be developed. That is where my services as an e-discovery team lawyer come in. It is a fascinating job; part law, part psychology and all geek. I love it!