Top Ten Reasons e-Discovery is a Major Headache for Most Companies and Lawyers

Edvard Munch's Edvard Munch's Edvard Munch's Most corporate counsel agree that Electronic Discovery is the major problem in litigation today. Here are the Top Ten reasons:

  1. The costs to preserve, find and review electronic evidence, including emails, are astronomical, and getting worse every day. See Eg., Kentucky Speedway v. NASCAR, 2006 U.S. Dist. LEXIS 92028 (E. D. Ky. Dec. 18, 2006) ($3,000,000 expenses in 5 months for e-discovery alone).  According to an unconfirmed report by a Microsoft insider, it now spends an average of $20 Million Dollars per case.  It is no surprise that e-discovery is now the hot field for entrepreneurs, and that it has mushroomed into a $2 Billion Dollar a year industry.
  2. The unacceptably high risks of losing a case, or being forced to settle a case because of e-discovery, rather than the merits.  The mistakes in e-discovery are pervasive and often disastrous. The biggest of them all is the Coleman v. Morgan Stanley case in Florida, which resulted in a $1.5 Billion Dollar verdict. Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co., Inc., 2005 WL 674885 (Fla.Cir.Ct.. 2005) (although the decision has preliminarily been reversed, the Florida courts are not through with this yet).  Also see: GTFM, Inc. v. Wal-Mart, 2000 WL 1693615 (S.D.N.Y. Nov. 9, 2000), (sanctions); Exact Software v. Infocon, 2006 WL 34999992 (N.D. Ohio) (Dec. 5, 2006) (more sanctions); Phoenix Four, Inc. v. Strategic Resources Corp., 2006 WL 1409413 (S.D.N.Y. 2006) (still more sanctions).
  3. Electronic records are easy to destroy or alter, but the bad emails and instant messages never seem to go away! The smoking guns in court rooms today are found in computers, not filing cabinets. In fact, 98% of all business records are now electronic, and 80% of them are never converted to paper or other tangible form. So if you don’t look for the ESI, you will miss the key evidence.
  4. The amount of electronic information stored by most corporations today is staggering.  In the Enron case, they found twice as much information stored in its computers than in the Library of Congress; over 78 Billion pages.  As of 2006 the world is sending 60 Billion e-mails per day.  The volume makes it impossible to retrieve and review everything in most large cases today, and nearly impossible for anyone not an expert to find the needles in the haystack.
  5. The computer systems and information storage systems have become extremely complex.  It is difficult for any one expert to understand it all.   The complexity makes mistakes almost inevitable, and explanation to supervising judges and magistrates near impossible.
  6. Most companies do not have functional ESI management policies. If they do, they are not monitored, much less enforced. With thumb drives and online accounts today so commonplace, most companies have no idea where all their business records and communications really are, even if they know where they are supposed to be.
  7. There have been so many mistakes with e-discovery in the past several years that many judges and magistrates are now upset.  They will no longer tolerate mistakes.  As one judge puts it the “pure heart, empty head” defense will no longer work in his courtroom.  Most judges today are reacting by imposing high standards and duties upon the parties and legal counsel.  See eg. Zubulake v. UBS, 229 F.R.D. 422 (S.D.N.Y. 2004) (“Zubulake V”) as discussed further in the Blog “Duties” page above.
  8. The New Federal Rules of Civil Procedure make the problem worse by accelerating all deadlines and prohibiting the avoidance of e-discovery issues until the end of a case.  The only way to comply with the new rules is to be extremely well prepared, even before a law suit is filed, and that requires tech-savvy legal counsel, and well-prepared litigants.
  9. Most lawyers and law firms are unprepared for e-discovery. Attorneys need to know the basics of information management and computer technology to handle e-discovery issues correctly, but in point of fact, most do not. They do not even like the subject.  As everyone in the profession knows, most trial lawyers are big talkers, not geeks. If a law firm does have one or two attorneys with some computer-tech expertise, they are typically the youngest with little or no litigation experience. 
  10. Most corporations and in-house legal counsel are unprepared for e-discovery.  They may have fine IT departments, and great inside legal counsel, but the two departments speak very different languages and do not work well together.

In my opinion, the only viable solution to the problem of e-discovery is for a company to create its own internal e-discovery readiness response team (“Team”).  The alternative of delegating everything to expensive e-discovery vendors, and dozens of outside counsel around the country, has been tried and does not work.  Of course vendors are still key, and so are outside counsel, but the corporate client needs to be in charge of its own destiny.  The internal e-discovery Team is the best hope to reduce costs, manage risks, and better control quality. 

As discussed further in the Blog “About” page above, the Team is composed of in-house attorneys, IT personnel and management.  It rests on the three pillars of Law, Information Science, and Technology.  The Team functions to implement litigation holds, collect data within the timeline of new Rules, retain e-discovery vendors, supervise local counsel, and improve electronic records systems.  A few companies have done this already and it works: Pfizer, Halliburton, and Merrill Lynch, to name a few. 

But experience shows it is hard to get Law and IT to work together and communicate. Most companies want and need outside help to set up their Team.  That is where I come in, and the services of my law firm.  We make the Team happen.  Our e-discovery program is unique because it is designed to empower the client by helping the company to start and run their own Team.  We serve as Team Coach and Trainer. The Client is the Owner, and has its own Team Captain.  Just like a Coach sometimes has to step up and argue with the referees, we also sometimes appear in court when necessary to advocate the Team’s position, and assist local counsel on these issues.  In that sense, we also serve as a National e-Counsel.  It is a challenging service, but one we love to perform!

One Response to Top Ten Reasons e-Discovery is a Major Headache for Most Companies and Lawyers

  1. I completely agree. The need to be prepared in electronic discovery for litigation purposes has already been established, but as companies start to realize the benefits of taking a preemptive approach, they also notice the need for a change in the IT system. That is why companies like Cataphora, a leader in electronic analysis and review, are encouraging companies to move the e-discovery practice in-house and use the outside vendors as a customer support forum for the technology. The “team” approach is exactly what we are looking for in the future of this industry and we as a company would like to aid in this transition. Electronic discovery and record management are changing the litigation field, but it is also affecting the infrastructure of businesses and companies need to respond accordingly.

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