Second Edition of The Sedona Principles and the Need for Proportionality

July 12, 2007

Sedona Arizona in April 2007The Sedona Conference  this week published the second edition to The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production (June 2007).  As a Sedona Conference member, I may be somewhat biased, but it is safe to say that everyone in the e-discovery world considers The Sedona Principles a key document for understanding electronic discovery and best practices.  This is especially true of the judiciary, who play an active role in Sedona.  Many district court judges across the country cite to The Sedona Principles and consider it to be authoritative.  The new  Principles can be downloaded for free at the Sedona website, so long as the copy is for your personal use only. 

If you have not read the first edition published in 2004 (with annotations revised in 2005), I strongly recommend you now go ahead and read this new and improved second edition.  To those who have studied the original Sedona Principles, relax, the 14 Principles remain the same, although they have been reworded somewhat.  This is a refined and updated version, not a radical rewrite, which is hardly necessary or appropriate after only three years.  But, you will still want to download and begin using this new version ASAP.  It is a significant improvement over the first edition in several respects. 

First, and most importantly, the second edition now ties directly into the new Federal Rules of Civil Procedure, most of which were significantly influenced by the Principles. The interface between the 14 Principles and the new rules is well explained. All of the Principle Commentaries have been updated and refined, but especially the Commentaries for Principle 12 on metadata, and Principle 14 on the imposition of sanctions. The Resources and Authorities provided with each Comment have been updated to include several new e-discovery cases and articles. In the process the total text has grown 30%, from 56 to 73 pages (excluding Appendixes). Finally, the second edition is more user-friendly and better written than before. For instance, it now includes a handy chart in the front that lists Topics correlating to the Principles, Federal Rules, and Sedona Commentary.

The new Preface makes the point that the Conference tried to keep the “rule of reasonableness” foremost in mind when writing and revising these e-discovery principles and best practices.

That rule is embodied in Rule 1 of the Federal Rules of Civil Procedure (courts should secure the just, speedy and inexpensive determination of all matters) and is applied through former Rule 26(b)(2) (now renumbered as Rule 26(b)(2)(C) – proportionality test of burden, cost and need) and in many state counterparts. The rule of reasonableness means that litigants should seek – and the courts should permit – discovery that is reasonable and appropriate to the dispute at hand while not imposing excessive burdens and costs on litigants and the court.

The best practices recommended by Sedona must always be tempered by proportionality. In other words, what may be reasonable for a ten million dollar case may be impractical for a routine case that barely makes the federal jurisdictional minimum.  That point is also embodied in Principle 2, which counsels application of the proportionality standard in making a costs-versus-needs analysis to determine what e-discovery efforts are appropriate. The Preface goes on to expand upon this point as follows:

Electronic discovery is a tool to help resolve a dispute and should not be viewed as a strategic weapon to coerce unjust, delayed, or expensive results. The need to act in good faith also extends to the efforts taken to reasonably preserve relevant electronic information, to the form of the production, and to the allocation of the costs of the preservation and production. All discovery issues should be considered in light of the nature of the litigation and the amount in controversy, as well as the cost, burden, and disruption to the parties’ operations.

If only all counsel would remember and follow these wise dictates, and judges would enforce them, we would all be better off. The reality is, many litigants are misusing e-discovery as a strategic weapon, including the so-called “weapons of mass discovery” as discussed in my June 20, 2007, Blog on discovery of computer RAM memory.

This is a key point for me, and so I am pleased that the newly revised Comment 2.b. now emphasizes how the total costs of e-discovery must be considered, not just the costs of retrieval and production:

Costs cannot be calculated solely in terms of the expense of computer technicians to retrieve the data but must factor in other litigation costs, including the interruption and disruption of routine business processes and the costs of reviewing the information. Moreover, burdens on information technology personnel and the resources required to review documents for relevance, privilege, confidentiality, and privacy should be considered in any calculus of whether to allow discovery, and, if so, under what terms. In addition, the non-monetary costs (such as the invasion of privacy rights, risks to business and legal confidences, and risks to privileges) should be considered. Evaluating the need to produce electronically stored information often requires that a balance be struck between the burdens and need for electronically stored information, taking into account the technological feasibility and realistic costs involved.

Comment 2.b. at page 17 of Sedona Principles.

This point about hidden costs needed to be emphasized.  It has been overlooked multiple times in the last several years, especially by over-reaching plaintiffs and less-discerning judges.  The disruption and privacy factors are hard to quantify, but are very real and burdensome. Further, the cost of review is skyrocketing out of control, despite some attempts to export the work to low paid hourly lawyers in India.  The attorney fees incurred to review ESI for relevance, privilege, confidentiality, and the like, now constitute the bulk of all e-discovery expenses. The estimates I have seen range from a low of 40% to a high of 60% of total e-discovery costs. 

All of these costs, especially review expenses, should, in my opinion, be considered by the courts in any proportionality analysis of whether to allow discovery, or to shift the costs of discovery.  These costs should be considered regardless of whether or not the ESI at issue is “reasonably accessible.” Unfortunately, Rule 26(b)(2)(B) does not expressly say that.  It provides for cost-shifting only if the ESI is inaccessible. For that reason, a request for accessible ESI that would impose unreasonable expenses on the producing party must be opposed on the proportionality test under Rules 1 and 26(b)(2)(C), Federal Rules of Civil Procedure, and Sedona Principle 2. Only in this way can the integrity of the judicial system be protected from the intentional misuse of e-discovery to force settlements based on expense avoidance, instead of merit.


Guest Blog: “Follow the Money” and Metrics: A User’s Guide to Proportionality in the Age of e-Discovery

April 8, 2018

This is a guest blog by a friend and colleague, Philip Favro. Phil is a consultant for Driven, Inc. where he serves as a trusted advisor to organizations and their counsel on issues relating to the discovery process and information governance. Phil is also currently active in The Sedona Conference. He obtained permission from them to include a description of a recent event they sponsored in Nashville on Proportionality.

“Follow the Money” and Metrics: A User’s Guide to Proportionality in the Age of e-Discovery

Moviegoers and political junkies have flocked to theaters over the past few months to watch period-piece epics including Darkest Hour and The Post. While there is undoubted attraction (especially in today’s political climate) in watching the reenactment of genuine leadership and courageous deeds these movies portray, The Post should have particular interest for counsel and others involved in electronic discovery.

With its emphasis on investigation and fact-gathering; culling relevant information from marginally useful materials; and decision-making on how such information should be disclosed and presented to adversaries, The Post features key traits associated with sophisticated discovery counsel.

Not coincidentally, those same attributes were on display in another drama from the 1970s of which The Post viewers were reminded: All The President’s Men. That investigative journalism classic depicts Washington Post correspondents Bob Woodward and Carl Bernstein as dogged reporters determined to identify the culprits responsible for the Watergate Hotel break-in in June 1972.

A critical aspect of their work involved Woodward’s furtive meetings with Mark Felt, who served at that time as the deputy director of the FBI. Known only as “Deep Throat” (until Felt revealed himself in 2005), Felt provided cryptic yet key direction that aided the reporters’ investigation. One of Felt’s most significant tips (as portrayed in the movie) was his suggestion that Woodward investigate the cash contributions made to help reelect then President Richard Nixon in 1972. Played by iconic actor Hal Holbrook in All The President’s Men, Felt’s soft-spoken but serious demeanor underscored the importance of his repeated direction to Woodward to “just follow the money.” By following the money, the Washington Post reporters helped discover many of the nefarious tactics that eventually brought down the Nixon presidency.

Proportionality

The directive to “follow the money” applies with equal force to counsel responsible for handling discovery. This is particularly the case in 2018 since courts now expect counsel to address discovery consistent with proportionality standards. Those standards – as codified in Federal Rule of Civil Procedure 26(b)(1) – require counsel, clients, and the courts to consider various factors bearing on the discovery analysis. They include:

(1) the importance of the issues at stake in this action; (2) the amount in controversy; (3) the parties’ relative access to relevant information; (4) the parties’ resources; (5) the importance of the discovery in resolving the issues; and (6) whether the burden or expense of the proposed discovery outweighs its likely benefit.

While all of the factors may be significant, monetary considerations – elements of which are found in both the “amount in controversy” and “burden or expense” factors – frequently predominate a proportionality analysis. As Ralph Losey (the owner, host, and principal author of this blog) has emphasized many times, “[t]he bottom line in e-discovery production is what it costs.” By following the money or, perhaps more appropriate for discovery, focusing on the money, counsel can drive an effective discovery process and obtain better results for the client.

As lawyers do so, they will find an increasingly sophisticated judiciary who expect counsel to approach discovery through the lens of proportionality. This certainly was the case in Oxbow Carbon & Minerals LLC v. Union Pacific Railroad Company, which has been prominently spotlighted in this blog. In Oxbow, the court applied the Rule 26(b)(1) proportionality factors to a disputed document request, holding that it was not unduly burdensome and that it properly targeted relevant information. While the court examined all of the Rule 26(b)(1) proportionality standards, money was the clearly determinative factor. The amount in controversy, coupled with the comparative costs of discovery – discovery completed and still to be undertaken, tipped the scales in favor of ordering plaintiffs to respond defendants’ document requests.

The Critical Role of Metrics

Essential to Oxbow’s holding were the metrics the parties shared with the court. Metrics – typically defined as a standard of measurement or (as used in business world) a method for evaluating performance – offer counsel ways to assess the “performance” of a particular document production. Metrics can measure the extent to which a production contains relevant materials, undisclosed privileged information, and even nonresponsive documents. Metrics can also estimate – as was the case in Oxbow – the resources (including time, manpower, and costs) a party may be forced to incur to comply with a discovery request.

Metrics enable a court to follow the money and properly balance the burdens of discovery against its benefits. Without metrics, a responding party could hardly expect to establish that a request is disproportionate and thereby prevail in motion practice. As Ralph observed in his post entitled Judge Facciola’s Successor, Judge Michael Harvey, Provides Excellent Proportionality Analysis in an Order to Compel:

Successful arguments on motions to compel require hard evidence. To meet your burden of proof you must present credible estimates of the costs of document review. This requires . . . reliable metrics and statistics concerning the ESI that the requesting party wants the responding party to review.

As discussed later on, other courts have also emphasized the critical role of metrics in evaluating the proportionality of a particular discovery request.

The Sedona Conference, Proportionality, and Metrics

For counsel who wish to better understand the role of metrics in discovery, the directive to “follow the money” will bring them to The Sedona Conference (“Sedona”). Sedona is the preeminent legal institution dedicated to advancing thoughtful reforms on important legal issues. While Sedona addresses matters ranging from patent litigation and trade secret misappropriation to data privacy and cross-border data protection, the organization is best known for its work on electronic discovery.

Renowned for its volunteer model and for attracting many of the best minds in the legal industry, Sedona prepares authoritative resources that are regularly relied on by judges, lawyers, and scholars. This is particularly the case with proportionality standards and how they should drive the determination of discovery issues.

Sedona published its first Commentary on Proportionality in Electronic Discovery (“Commentary” or “Proportionality Commentary”) in 2010 and a second version in 2013. Last spring, Sedona released a third iteration of the Commentary. Collaboratively prepared by a group of renowned judges and practitioners, the third version of the Commentary provides common sense direction on how metrics can help achieve proportional results in discovery:

Burden and expense should be supported by hard information and not by unsupported assertions. For example, if a party claims that a search would result in too many documents, the party should run the search and be prepared to provide the opposing party with the number of hits and any other applicable qualitative metrics. If the party claims that the search results in too many irrelevant hits, the party may consider providing a description or examples of irrelevant documents captured by the search.

Quantitative metrics in support of a burden and expense argument may include the projected volume of potentially responsive documents. It may also encompass the costs associated with processing, performing data analytics, and review, taking into consideration the anticipated rate of review and reviewer costs, based upon reasonable fees and expenses.

As the Commentary makes clear, metrics can provide insights regarding the effectiveness of search methodologies or the nature and extent of a party’s burden in responding to a particular discovery request. By sharing these metrics with litigation adversaries, counsel can informally address legitimate discovery questions or crystallize the issues for resolution by a court. Either way represents a more cost effective approach to discovery than the opacity of traditional meet and confers or motion practice.

Framing the Issues through Sedona’s TSCI Event

These issues were on display last month at Sedona’s TSCI conference in Nashville, Tennessee. The TSCI event typically provides attendees with an annual opportunity to stay current on developing trends in e-Discovery. The 2018 TSCI event remained consistent with that objective, spotlighting practice developments for counsel “from ‘eDiscovery 1.0’ to New and Evolving Legal Challenges.” Expertly chaired by Jerone “Jerry” English and Maura Grossman, TSCI featured sessions covering discovery and other issues relating to artificial intelligence (AI), the Internet of Things (IoT), mobile applications, data breaches, cross-border discovery, and the always engaging case law panel and judicial round-table.

One of the more practical sessions focused on the importance of using metrics, analytics, and sampling to achieve proportionality in discovery. Entitled Using Data Analytics and Metrics to Achieve Proportionality, the purpose of this session was to help attendees understand how counsel should present analytics, metrics, and sampled data to a court. The session featured a fantastic line-up of speakersGareth Evans, Maura Grossman, U.S. Magistrate Judge Anthony Porcelli, U.S. Magistrate Judge Leda Dunn Wettre – who were well situated to provide views on these topics. Audience members additionally offered insightful comments on the issues.[1]

The most important guidance the speakers and audience emphasized was the need for more complete disclosure of supporting metrics. Unless specific metrics are disclosed, neither adversaries nor the court can address issues as varied as the performance of particular search terms, the reasonableness of a production made using TAR or other search methodologies, or the burdens of a particular discovery request.

On the latter issue of substantiating arguments of undue burden, one particularly insightful comment offered during the session concisely summarized the interplay between metrics, proportionality, and cost: “Follow the money.” This admonition dovetailed nicely with the discussion of two recent cases during that session – Duffy v. Lawrence Memorial Hospital, No. 2:14-cv-2256-SAC-TJJ, 2017 WL 1277808 (D. Kan. Mar. 31, 2017) and Solo v. United Parcel Service Co., No. 14-cv-12719, 2017 WL 85832 (E.D. Mich. Jan. 10, 2017). Both of these cases spotlight how reliable metrics enable a court to follow the money and resolve discovery disputes consistent with proportionality standards.

Duffy v. Lawrence Memorial Hospital

In Duffy, the court modified a discovery order issued less than two months beforehand that granted plaintiff’s requests for various categories of emergency room patient records. In that first round of motion practice, defendant had argued that plaintiff’s requests were disproportionate and unduly burdensome. The court overruled those objections, explaining that defendant failed to provide any substantive metrics to support those objections:

Defendant objects to every document request as being unduly burdensome, but provides no facts to support the objection. Neither does Defendant provide evidence of the costs it would incur in responding to the requests.

In summary, defendant’s failure to share any meaningful metrics regarding the time, manpower, or costs it would incur to comply with plaintiff’s requests ultimately left its arguments bereft of any evidentiary support.

In the second round of motion practice, defendant adopted a different approach that yielded a more proportional result. Confronted by the staggering reality of the court’s production order and having learned how to properly use supporting metrics in motion practice, defendant moved for a protective order.

In contrast to its prior briefing, defendant shared specific metrics associated with the burdens of production. Those burdens involved the deployment of staff to individually review 15,574 electronic patient files so as to identify particular patient visit information. Such a process would be labor intensive and cost well over $230,000:

Defendant estimates it would take 7,787 worker hours to locate and produce responsive information for 15,574 patient records. If Defendant had ten employees working on the task, they would spend more than ninety-seven days working eight hours a day, at an estimated cost to Defendant of $196,933.23.

After aggregating the information, Defendant asserts it would need to redact patients’ personal confidential information . . . redaction would take ten reviewers fourteen days at a cost of $37,259.50. The process would include a quality control attorney reviewer who would spend two hours a day, and reviewers who would review 15 documents per hour for eight hours a day.

In sum . . . producing the information relevant to RFP Nos. 40, 41, 43, and 58 would take 8,982 hours of work and cost in excess of $230,000 if done by contract staff.

Simply put, defendant urged the court to follow the money. By substantiating its proportionality arguments with appropriate metrics, the court recognized its initial production order placed an undue burden on defendant.

As a result, the court adopted a modified order that instead allowed defendant to produce a random sample of 257 patient records. While advancing a number of justifications for its modified order, the court ultimately relied on the tripartite mandate from Federal Rule of Civil Procedure 1. The order would provide the parties to the litigation with a substantively better, more efficient, and less expensive method for producing relevant information.

Solo v. United Parcel Service

Solo v. United Parcel Service reached a result analogous to the Duffy holding, ordering that defendant produce only a sample of the information sought by plaintiff. In Solo, plaintiffs served an interrogatory that sought identification of shipment information relating to its putative class action claims (plaintiffs claimed that defendant overcharged certain customers for “shipments that had a declared value of over $300”). The interrogatory sought shipping record information that spanned a period of six years.

Defendant argued in response that the interrogatory was unduly burdensome and would impose a disproportionate production obligation on the company. Because most of the requested information was archived on backup tapes, defendant shared specific metrics regarding the “overwhelming” burdens associated with responding to the interrogatory:

UPS estimates that it would take at least six months just to restore the archived tapes as described above, at a cost of $120,000 in labor . . . that estimate does not include the time and expense of analyzing the data once extracted in order to answer Interrogatory No. 1, which would require extensive additional analysis of each account number and the manual review of contract language for individual shipper. Such a process would also require a substantial amount of time and resources on the part of UPS.

Based on the metrics defendant disclosed and given that plaintiffs’ claims had yet to be certified as a class action, the court found the interrogatory to be disproportionate. Following the money and drawing on the linked concepts of cooperation and proportionality from Rule 1, the court instead ordered that defendant produce a sample of the requested information from a six-month period. The court also directed the parties to meet and confer on developing an agreeable sampling methodology.

Conclusion

Duffy and Solo reinforce the critical interplay between metrics, proportionality, and money. Just like Oxbow, the responding parties from Duffy and Solo could hardly expect to substantiate arguments regarding undue burden and disproportionality without metrics. Indeed, the court in Duffy initially rejected such arguments when defendant failed to support them with actual information. However, by disclosing metrics with reasonable estimates of time, manpower, and costs, Duffy and Solo resulted in production orders more consistent with proportionality limitations.

All of which translated into substantial cost savings for the responding parties. Defendant in Duffy was facing a discovery bill of over $230,000 to review 15,574 patient files. Dividing the projected cost of the entire review process into the number of patient records – $230,000 ÷ 15,574 – reveals that defendant would pay approximately $15 to review an individual patient record. Under the modified production order, the new projected cost – $15 multiplied by 257 patient records – equals $3,855. Follow the money: the tactical use of metrics apparently saved the client over $225,000!

Duffy and Solo are consistent with and confirmed by Oxbow, the Proportionality Commentary, and the Federal Rules of Civil Procedure. These authoritative resources collectively teach that counsel who use metrics and focus on cost can drive an effective discovery process. Lawyers that do so will ultimately obtain better results for the client in discovery.

_______

[1] To encourage candid and robust debate during its events, Sedona has promulgated a nondisclosure rule. Known as “The Sedona Rule,” it proscribes attendees from identifying the speakers or audience members by name who share particular insights. It also forbids divulging the contents of particular brainstorming or drafting projects that have yet to be released for publication. The Sedona Rule otherwise allows for the anonymous disclosure of session content from its events.


Document Review and Proportionality – Part One

March 18, 2018

In 2013 I wrote a law review article on how the costs of document review could be controlled using predictive coding and cost estimation. Predictive Coding and the Proportionality Doctrine: a Marriage Made in Big Data, 26 Regent U. Law Review 1 (2013-2014). Today I write on how it can be controlled in document review, even without predictive coding. Here is the opening paragraph of my earlier article:

The search of electronic data to try to find evidence for use at trial has always been difficult and expensive. Over the past few years, the advent of Big Data, where both individuals and organizations retain vast amounts of complex electronic information, has significantly compounded these problems. The legal doctrine of proportionality responds to these problems by attempting to constrain the costs and burdens of discovery to what are reasonable. A balance is sought between the projected burdens and likely benefits of proposed discovery, considering the issues and value of the case. Several software programs on the market today have responded to the challenges of Big Data by implementing a form of artificial intelligence (“AI”) known as active machine learning to help lawyers review electronic documents. This Article discusses these issues and shows that AI-enhanced document review directly supports the doctrine of proportionality. When used together, proportionality and predictive coding provide a viable, long-term solution to the problems and opportunities of the legal search of Big Data.

The 2013 article was based on version 1.0 Predictive Coding. Under this first method you train and rank documents and then review only the higher ranking documents. Here is a more detailed description from pages 23, 24 of the article:

This kind of AI-enhanced legal review is typically described today in legal literature by the term
predictive coding. This is because the computer predicts how an entire body of documents should be coded (classified) based on how the lawyer has coded the smaller training sets. The prediction places a probability ranking on each document, typically ranging from 0% to 100% probability. Thus, in a
relevancy classification, each and every document in the entire dataset (the corpus) is ranked with a percentage of likely relevance and irrelevance. …
As will be shown, this ranking feature is key to the use of the legal doctrine of proportionality. The ability to rank all documents in a corpus on probable relevance is a new feature that no other legal search software has previously provided.71

It was a two phase procedure: train then review. Yes, some review would take place in the first training phase, but this would be a relatively small number, say 10-20% of the total documents reviewed. Most of the human review of documents would take place in phase two. The workflow of version 1.0 is shown in the diagram below and is described in detail in the article, starting at page 31.

Predictive Coding and the Proportionality Doctrine argued that attorneys should scale the number of documents for the second phase of document review based on estimated costs constrained to a proportional amount. No more spending $100,000 for document review in a $200,000 case. The number of documents you selected for review would be limited to proportional costs. Predictive coding and its ranking features allowed you to select the documents for review that were most likely to be relevant. If you could only afford to spend $20,000 on a document review project, then you would limit the number of documents reviewed to those within that scope that were the highest ranked as probable relevant. Here is the article’s description at pages 54-55 of the process and link between the doctrine of proportionality and predictive coding.

What makes this a marriage truly made in heaven is the document-ranking capabilities of predictive coding. This allows parties to limit the documents considered for final production to those that the computer determines have the highest probative value. This key ranking feature of AI-enhanced document review allows the producing party to provide the requesting party with the most bang for the buck. This not only saves the producing party money, and thus keeps its costs proportional, but it saves time and expenses for the requesting party. It makes the production much more precise, and thus faster and easier to review. It avoids what can be a costly exercise to a requesting party to wade through a document dump 192, a production that contains a high number of irrelevant or marginally relevant documents. Most importantly, it gives the requesting party what it really wants—the documents that are the most important to the case.

In the article, pages 58-60, I called this method Bottom-Line-Driven Proportional Review and describe the process in greater detail.

The bottom line in e-discovery production is what it costs. Despite what some lawyers and vendors may say, total cost is not an impossible question to answer. It takes an experienced lawyer’s skill to answer, but,
after a while, you can get quite good at such estimation. It is basically a matter of estimating attorney billable hours plus vendor costs. With practice, cost estimation can become a reliable art, a projection that you can count on for budgeting purposes, and, as we will see, for proportionality arguments.  …
The new strategy and methodology is based on a bottom line approach where you estimate what review costs will be, make a proportionality analysis as to what should be spent, and then engage in defensible culling to bring the review costs within the proportional budget. The producing party determines the number of documents to be subjected to final review by calculating backwards from the bottom line of what they are willing, or required, to pay for the production.  …
Under the Bottom-Line-Driven Proportional approach, after analyzing the case merits and determining the maximum proportional expense, the responding party makes a good faith estimate of the likely
maximum number of documents that can be reviewed within that budget. The document count represents the number of documents that you estimate can be reviewed for final decisions of relevance, confidentiality, privilege, and other issues and still remain within budget. The review costs you estimate must be based on best practices, which in all large review projects today means predictive coding, and the estimates must be accurate (i.e., no puffing or mere guesswork).
Note this last quote (emphasis added) from Predictive Coding and the Proportionality Doctrine: a Marriage Made in Big Data shows an important limitation to the article’s budgetary proposal, it was limited to large review projects where predictive coding was used. Without this marriage to predictive coding, the promise of proportionality by cost estimations was lost. My article today fills this gap.
Here I will explain how document review can be structured to provide estimates and review constraints, even when predictive coding and its ranking are not used. This is, in effect, the single lawyers guide, one where there has not been a marriage with predictive coding. It is a guide for small and medium sized document review projects, which are, after all, the vast majority of projects faced by the legal profession.

To be honest, back when I first wrote the law review article I did not think it would be necessary to develop such a proportionality method, one that does not use AI document ranking. I assumed predictive coding would take off and by now would be used in almost all projects, no matter what the size. I assumed that since active machine learning and document ranking was such good new technology, that even our conservative profession would embrace it within the next few years. Boy was I wrong about that. The closing lines of Predictive Coding and the Proportionality Doctrine: a Marriage Made in Big Data have been proven naive.

The key facts needed to try a case and to do justice can be found in any size case, big and small, at an affordable price, but you have to embrace change and adopt new legal and technical methodologies. The Bottom-Line-Driven Proportional Review method is part of that answer, and so too is advanced-review software at affordable prices. When the two are used together, it is a marriage made in heaven.

I blame both lawyers and e-discovery vendors for this failure, as well as myself for misjudging my peers. Law schools and corporate counsel have not helped much either. Only the judiciary seems to have caught on and kept up.

Proportionality as a legal doctrine took off as expected after 2013, but not the marriage with predictive coding. Lawyers have proven to be much more stubborn than anticipated. They will barely even go out with predictive coding, no matter how attractive she is, much less marry her. The profession as a whole remains remarkably slow to adopt new technology. The judges are tempted to use their shotgun to force a wedding, but so far have refrained from ordering a party to use predictive coding. Hyles v. New York City, No. 10 Civ. 3119 (AT)(AJP), 2016 WL 4077114 (S.D.N.Y. Aug. 1, 2016) (J. Peck: “There may come a time when TAR is so widely used that it might be unreasonable for a party to decline to use TAR. We are not there yet.”)

Changes Since 2013

A lot has happened since 2013 when Predictive Coding and the Proportionality Doctrine was written. In December 2015 Rule 26(b) on relevance was revised to strengthen proportionality and we have made substantial improvements to Predictive Coding methods. In the ensuing years most experts have abandoned this early two-step method of train then review in favor of a method where training continues throughout the review process. In other words, today we keep training until the end. See Eg. the e-Discovery Team’s Predictive Coding, version 4.0, with its Intelligently Spaced Training. (This is similar to a method popularized by Maura Grossman and Gordon Cormack, which they called Continuous Active Learning or CAL for short, a term they later trademarked.)

The 2015 revision to Rule 26(b) on relevance has spurred case law and clarified that undue burden, the sixth factor of proportionality under Rule 26(b)(1), must be argued in detail with facts proven.

  1. the importance of the issues at stake in this action;
  2. the amount in controversy;
  3. the parties’ relative access to relevant information;
  4. the parties’ resources;
  5. the importance of the discovery in resolving the issues; and
  6. whether the burden or expense of the proposed discovery outweighs its likely benefit.”

Oxbow Carbon & Minerals LLC v. Union Pacific Railroad Company, No. 11-cv-1049 (PLF/GMH), 2017 WL 4011136, (D.D.C. Sept. 11, 2017). Although all factors are important and should be addressed, the last factor is usually the most important one in a discovery dispute. It is also the factor that can be addressed generally for all cases and is the core of proportionality.

Proportional “Bottom Line Driven” Method of Document Review that Does Not Require Use of Predictive Coding

I have shared how I use predictive coding with continuous training in my TARcourse.com online instruction program. The eight-step workflow is shown below.

I have not previously shared any information on the document review workflow that I follow in small and medium seized cases where predictive coding is not used. The rest of this article will do so now.

Please note that I have a well-developed and articulated list of steps and procedures for attorneys in my law firm to follow in such small cases. I keep this as a trade-secret and will not reveal them here. Although they are widely known in my firm, and slightly revised and updated each year, they are not public. Still, any expert in document review should be able to create their own particular rules and implementation methods. Warning, if you are not such an expert, be careful in relying on these high-level explanations alone. The devil is in the details and you should retain an expert to assist.

Here is a chart summarizing the SIX-Step Workflow and six basic concepts that must be understood for the process to work at maximum efficiency.

The first three steps iterate with searches to cull out the irrelevant documents, and then culminate with Disclosures of the plan developed for Steps Five and Six, Final Review and Production.  The sixth production step is always in phases according to proportional planning.

A key skill that must be learned is project cost estimation, including fees and expenses. The attorneys involved must also learn how to communicate with themselves, the vendors, opposing counsel and the court. Rigid enforcement of work-product confidentiality is counter-productive to the goal of cost efficient projects. Agree on the small stuff and save your arguments for the cost-saving questions that are worth the effort.

 

The Proportionality Doctrine

The doctrine of proportionality as a legal initiative was launched by The Sedona Conference in 2010 as a reaction to the exploding costs of e-discovery. The Sedona Conference, The Sedona Conference Commentary on Proportionality in Electronic Discovery, 11 SEDONA CONF. J. 289, 292–94 (2010). See also John L. Carroll, Proportionality in Discovery: A Cautionary Tale, 32 CAMPBELL L. REV. 455, 460 (2010) (“If courts and litigants approach discovery with the mindset of proportionality, there is the potential for real savings in both dollars and time to resolution.”); Maura Grossman & Gordon Cormack, Some Thoughts on Incentives, Rules, and Ethics Concerning the Use of Search Technology in E-Discovery, 12 SEDONA CONF. J. 89, 94–95, 101–02 (2011).

The doctrine received a big boost with the adoption of the 2015 Amendment to Rule 26. The rule was changed to provide discovery must be both relevant and “proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). To determine whether a discovery request is proportional, you are required weigh the following six factors: “(1) the importance of the issues at stake in this action; (2) the amount in controversy; (3) the parties’ relative access to relevant information; (4) the parties’ resources; (5) the importance of the discovery in resolving the issues; and (6) whether the burden or expense of the proposed discovery outweighs its likely benefit.” Williams v. BASF Catalysts, LLC, Civ. Action No. 11-1754, 2017 WL 3317295, at *4 (D.N.J. Aug. 3, 2017) (citing Fed. R. Civ. P. 26(b)(1)); Arrow Enter. Computing Solutions, Inc. v. BlueAlly, LLC, No. 5:15-CV-37-FL, 2017 WL 876266, at *4 (E.D.N.C. Mar. 3, 2017); FTC v. Staples, Inc., Civ. Action No. 15-2115 (EGS), 2016 WL 4194045, at *2 (D.D.C. Feb. 26, 2016).

“[N]o single factor is designed to outweigh the other factors in determining whether the discovery sought is proportional,” and all proportionality determinations must be made on a case-by-case basis. Williams, 2017 WL 3317295, at *4 (internal citations omitted); see also Bell v. Reading Hosp., Civ. Action No. 13-5927, 2016 WL 162991, at *2 (E.D. Pa. Jan. 14, 2016). To be sure, however, “the amendments to Rule 26(b) do not alter the basic allocation of the burden on the party resisting discovery to—in order to successfully resist a motion to compel—specifically object and show that . . . a discovery request would impose an undue burden or expense or is otherwise objectionable.” Mir v. L-3 Commc’ns Integrated Sys., L.P., 319 F.R.D. 220, 226 (N.D. Tex. 2016), as quoted by Oxbow Carbon & Minerals LLC v. Union Pacific Railroad Company, No. 11-cv-1049 (PLF/GMH), 2017 WL 4011136, (D.D.C. Sept. 11, 2017).

The Oxbow case is discussed at length in my recent blog Judge Facciola’s Successor, Judge Michael Harvey, Provides Excellent Proportionality Analysis in an Order to Compel (e-Discovery Team,3/1/18). Judge Harvey carefully examined the costs and burdens claimed by plaintiffs and rejected the overly burdensome argument.

Plaintiffs’ counsel explained at the second hearing in this matter that Oxbow has spent $1.391 million to date on reviewing and producing approximately 584,000 documents from its nineteen other custodians and Oxbow’s email archive. See 8/24/17 TR. at 44:22-45:10. And again, Oxbow seeks tens of millions of dollars from Defendants. Through that lens, the estimated cost of reviewing and producing Koch’s responsive documents—even considering the total approximate cost of $142,000 for that effort, which includes the expense of the sampling effort—while certainly high, is not so unreasonably high as to warrant rejecting Defendants’ request out of hand. See Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309, 321 (S.D.N.Y. 2003) (explaining, in the context of a cost-shifting request, that “[a] response to a discovery request costing $100,000 sounds (and is) costly, but in a case potentially worth millions of dollars, the cost of responding may not be unduly burdensome”); Xpedior Creditor Trust v. Credit Suisse First Boston (USA), Inc., 309 F. Supp. 2d 459, 466 (S.D.N.Y. 2003) (finding no “undue burden or expense” to justify cost-shifting where the requested discovery cost approximately $400,000 but the litigation involved at least $68.7 million in damages). …

In light of the above analysis—including the undersigned’s assessment of each of the Rule 26 proportionality factors, all of which weigh in favor of granting Defendants’ motion—the Court is unwilling to find that the burden of reviewing the remaining 65,000 responsive documents for a fraction of the cost of discovery to date should preclude Defendants’ proposed request. See BlueAlly, 2017 WL 876266, at *5 (“This [last Rule 26] factor may combine all the previous factors into a final analysis of burdens versus benefits.” (citing Fed. R. Civ. P. 26 advisory committee’s notes)).

For more analysis and case law on proportionality see Proportionality Φ and Making It Easy To Play “e-Discovery: Small, Medium or Large?” in Your Own Group or Class, (e-Discovery Team, 11/26/17). Also see The Sedona Conference Commentary on Proportionality, May 2017.

Learning How to Estimate Document Review Costs

The best way to determine a total cost of a project is by projection from experience and analysis on a cost per file basis. General experience of review costs can be very helpful, but the gold standard comes from measurement of costs actually incurred in the same project, usually after several hours of work, or days, depending on the size of the project. You calculate costs incurred to date and then project forward on a cost per file basis.  The is the core idea of the Six Step document review protocol that this article begins to explain.

The actual project costs are the best possible metrics for estimation. Apparently that was never done in Oxbow because the plaintiffs counsel’s projected document review cost estimates varied so much. A per file cost analysis of the information in the Oxbow opinion shows that the parties missed a key metric. The costs projected ranged from an actual cost of $2.38 per file for the first 584,000 files, to an 1.17 per file estimate to review 214,000 additional files, to an estimate of $1.73 per file to review 82,000 more files, to an actual cost of $4.74 per file to review 12,074 files, to final estimate of $1.22 per file to review the remaining 69,926 files. The actual costs are way higher than the estimated costs meaning the moving party cheated themselves by failing to do the math.

Here is how I explained the estimation process in Predictive Coding and the Proportionality Doctrine at pages 60-61:

Under the Bottom-Line-Driven Proportional approach, after analyzing the case merits and determining the maximum proportional expense, the responding party makes a good faith estimate of the likely maximum number of documents that can be reviewed within that budget. The document count represents the number of documents that you estimate can be reviewed for final decisions of relevance, confidentiality, privilege, and other issues and still remain within budget.
A few examples may help clarify how this method works. Assume a case where you determine a proportional cost of production to be $50,000, and estimate, based on sampling and other hard facts, that it will cost you $1.25 per file for both the automated and manual review before production of the ESI at issue … Then you can review no more than 40,000 documents and stay within budget. It is that simple. No higher math is required.

Estimation for bottom-line-driven review is essentially a method for marshaling evidence to support an undue burden argument under Rule 26(b)(1). Let’s run through it again with greater detail and make a simple formula to illustrate the process.

First, estimate the total number of documents remaining to be reviewed after culling by your tested keywords and other searches (hereinafter “T”). This is the most difficult step but is something most attorney experts and vendors are well qualified to help you with. Essentially “T” represents is the number of documents left unreviewed for Step Five, Final Review.  These are the documents found in Steps One and Two, ECA Multimodal Search and Testing. These steps, along with the estimate calculation, usually repeat several times to cull-in the documents that are most likely relevant to the claims and defenses. The T – Total Documents Left for Review – are the documents in the final revised keyword search folders and concept, similarity search folders. The goal is to obtain a relevance precision in these folders greater than 50%, preferably at least 75%.

To begin an example hypothetical, assume that the total document count in the folders set-up for final review is 5,000 documents. T=5,000. Next count how many relevant and highly relevant files have already been located (hereinafter “R”).  Assume for our example that 1,000 relevant and highly relevant documents have been found. R=1,000.

Next, look up the total attorney fees already incurred in the matter to date for the actual document search and review work by attorneys and paralegals (hereinafter collectively “F”). Include the vendor charges in this total related to the review, but excluding forensics and collection fees. To do this more easily, make sure that the time descriptions that your legal team inputs are clear on what fees are for review. Always remember that you may be required to provide an affidavit or testimony someday to support this cost estimate in a motion for protective order. For our example assume that a total in $1,500 in costs and fees have already been incurred for document search and review work only. F=$1,500. The F divided by R creates the cost per file. Here it is $1.50 per file (F/R).

Finally, multiply the cost per file (F/R) by the number of documents still remaining to be reviewed, T. In other words T * (F/R).  Here that is 5,000 (T) times the $1.50 cost per file (F/R), which equals $7,500. You can then disclose this calculation to opposing counsel to help establish the reasonableness (proportionality) of your plan. Step Four – Work Product Disclosure. Note you are estimating a total spend here for this review project of $9,000; $1,500 already spent, plus an estimated additional $7,500 to complete the project.

There are many ways to calculate probable fees to complete document review project. This simple formula method has the advantage of being based on actual experience and costs incurred. It is also simple and easy to understand compared to most other methods. The method could be criticized for inflating expected costs by observing that the work initially performed to find relevant documents is usually slower and more expensive than concluding work to review the tested search folders. This is generally true, but is countered by the fact that: (1) many of the initial relevant documents found in ECA (Step-One) were “low hanging fruit” and easier to locate than what remains; (2) the precision rate of the documents remaining to be reviewed after culling – T – will be much higher than the document folders previously reviewed (the higher the precision rate, the slower the rate of review, because it takes longer to code a relevant document than an irrelevant document); and, (3) additional time is necessarily incurred in the remaining review for redaction, privilege analysis, and quality control efforts not performed in the review to date.

To be concluded …  In the conclusion of this article I will review the Six Steps and complete discussion of the related concepts.


Proportionality Φ and Making It Easy To Play “e-Discovery: Small, Medium or Large?” in Your Own Group or Class

November 26, 2017

Every judge who has ever struggled with discovery issues wishes that the lawyers involved had a better understanding of proportionality, that they had spent more time really thinking about how it applies to the requisites of their case. So too does every lawyer who, like me, specializes in electronic discovery. As Chief Justice Roberts explained in his 2015 Year-End Report on the Federal Judiciary on the new rules on proportionality:

The amended rule states, as a fundamental principle, that lawyers must size and shape their discovery requests to the requisites of a case. Specifically, the pretrial process must provide parties with efficient access to what is needed to prove a claim or defense, but eliminate unnecessary or wasteful discovery. The key here is careful and realistic assessment of actual need.

Proportionality and reasonableness arise from conscious efforts to realistically assess actual need. What is the right balance in a particular situation? What are the actual benefits and burdens involved? How can you size and shape your discovery requests to the requisites of a case?

There is more to proportionality than knowing the rules and case law, although they are a good place to start. Proportionality is a deep subject and deserves more than black letter law treatment. 2015 e-Discovery Rule Amendments: Dawning of the “Goldilocks Era” (e-discoveryteam.com, 11/11/15) (wherein I discuss proportionality, the Golden Ratio or perfect proportionality, aka Φ, which is shown in this graphic and much more, including the spooky “coincidence” at a CLE with Judge Facciola and the audience vote). Also see: Giulio Tononi, Phi Φ, a Voyage from the Brain to the Soul (Pantheon Books, 2012) (book I’m rereading now on consciousness and integrated information theory, another take on Phi Φ).

We want everyone in the field to think about proportionality. To be conscious of it, not just have information about it. What does proportionality really mean? How does it apply to the e-discovery tasks that you carry out every day? How much is enough? Too much? Too burdensome? Too little? Not enough? Why?

What is a reasonable effort? How do you know? Is there perfect proportionality? One that expresses itself in varying ways according to the facts and circumstances? Does Law follow Art? Is Law an Art? Or is it a Science? Is there Beauty in Law? In Reason? There is more to proportionality than meets the eye. Or is there?

Getting people to think about proportionality is one of the reasons I created the Hive Mind game that I announced in my blog last week: “e-Discovery: Small, Medium of Large?”

This week’s blog continues that intention of getting lawyers to think about proportionality and the requisites of their case. It concludes with a word document designed to make it easier to play along with your own group, class or CLE event. What discovery activities required in a Big Case are not necessary in a Small Case, or even a Medium Sized case? That is what requires thought and is the basis of the game.

Rules of Federal Procedure

Proportionality is key to all discovery, to knowing the appropriate size and shape of discovery requests in order to fit the requisites of a case. Reading the rules that embody the doctrine of proportionality is a good start, but just a start.  The primary rule to understand is how proportionality effects the scope of relevance as set forth in Rule 26(b)(1), FRCP:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.

But you also need to understand how it impacts a lawyer’s overall duty to supervise a discovery request and response as set forth in Rule 26(g). See Rule 26(g)(1)(B)(iii), FRCP:

neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.

Many other rules have concepts of proportionality either expressly or implicitly built in, including Rule 26(b)(2)(B) (not reasonably accessible); Rule 26(b)(2)(C)(i) (cumulative); Rule 1 (just, speedy and inexpensive), Rule 34, Rule 37(e), Rule 45.

Case Law

Reading the key cases is also a help, indispensable really, but reading what the judges say is not enough either. Still you need to keep up with the fast growing case law on proportionality. See for instance the fine collection by K&L Gates at: https://www.ediscoverylaw.com/?s=proportionality and the must-read, The Sedona Conference Commentary on Proportionality_May 2017. Here a few of my favorites cases:

  • In re Bard IVC Filters Prods. Liab. Litig., D. Ariz., No. MDL 15-02641-PHX DGC, 2016 U.S. Dist. LEXIS 126448 (D. Ariz. Sept. 16, 2016). In this must-read opinion District Judge David G. Campbell, who was the chair of the Rules Committee when the 2015 amendments were passed, takes both lawyers and judges to task for not following the new rules on proportionality. He then lays it all out in a definitive manner.
  • In re Takata Airbag Prods. Liab. Litig., No. 15-02599-CIV-Moreno, MDL No. 5-2599 (S.D. Fla. Mar. 1, 2016). Judge Moreno quotes Chief Justice Roberts’ comments in the 2015 Year-End Report that the newly amended Fed.R.Civ.Pro. 26 “crystalizes the concept of reasonable limits in discovery through increased reliance on the common-sense concept of proportionality.” 2015 Year-End Report on the Federal Judiciary.
  • Hyles v. New York City, No. 10 Civ. 3119 (AT)(AJP), 2016 WL 4077114 (S.D.N.Y. Aug. 1, 2016) (Judge Peck: “While Hyles may well be correct that production using keywords may not be as complete as it would be if TAR were used, the standard is not perfection, or using the “best” tool, but whether the search results are reasonable and proportional. Cf. Fed. R. Civ. P. 26(g)(1)(B)”)
  • Johnson v Serenity TransportationCase No. 15-cv-02004-JSC (N.D. Cal. October 28, 2016) (“… a defendant does not have discretion to decide to withhold relevant, responsive documents absent some showing that producing the document is not proportional to the needs of the case.”)
  • Apple Inc. v. Samsung Elecs. Co., No. 12-CV-0630-LHK (PSG), 2013 WL 4426512, 2013 U.S. Dist. LEXIS 116493 (N.D. Cal. Aug. 14, 2013) (“But there is an additional, more persuasive reason to limit Apple’s production — the court is required to limit discovery if “the burden or expense of the proposed discovery outweighs its likely benefit.” This is the essence of proportionality — an all-to-often ignored discovery principle. Because the parties have already submitted their expert damages reports, the financial documents would be of limited value to Samsung at this point. Although counsel was not able to shed light on exactly what was done, Samsung’s experts were clearly somehow able to apportion the worldwide, product line inclusive data to estimate U.S. and product-specific damages. It seems, well, senseless to require Apple to go to great lengths to produce data that Samsung is able to do without. This the court will not do.)
  • PTSI, Inc. v. Haley, 2013 WL 2285109 (Pa. Super. Ct. May 24, 2013) (“… it is unreasonable to expect parties to take every conceivable step to preserve all potentially relevant data.”)
  •  Kleen Products, LLC, et al. v. Packaging Corp. of Amer., et al.Case: 1:10-cv-05711, Document #412 (ND, Ill., Sept. 28, 2012).

Also see: The Top Twenty-Two Most Interesting e-Discovery Opinions of 2016 (e-discoveryteam.com, 1/2/17) (the following top ranked cases concerned proportionality: 20, 18, 17, 15, 14, 11, 6, 4, 3, 2, 1); and, Good, Better, Best: a Tale of Three Proportionality Cases – Part Two (e-discoveryteam.com 4/8/12) (includes collection of earlier case law).

Sedona Commentary

The Sedona Conference Commentary on Proportionality_May 2017 is more than a collection of case law. It includes commentary hashed out between competing camps over many years. The latest 2017 version includes Six Principles that are worthy of study. They can certainly help you in your own analysis of proportionality. The cited case law in the Commentary is structured around these six principles.

THE SEDONA CONFERENCE PRINCIPLES OF PROPORTIONALITY

Principle 1: The burdens and costs of preserving relevant electronically stored information should be weighed against the potential value and uniqueness of the information when determining the appropriate scope of preservation.

Principle 2: Discovery should focus on the needs of the case and generally be obtained from the most convenient, least burdensome, and least expensive sources.

Principle 3: Undue burden, expense, or delay resulting from a party’s action or inaction should be weighed against that party.

Principle 4: The application of proportionality should be based on information rather than speculation.

Principle 5: Nonmonetary factors should be considered in the proportionality analysis.

Principle 6: Technologies to reduce cost and burden should be considered in the proportionality analysis.

Conclusion

Proportionality is one of those deep subjects where you should think for yourself, but also be open and listen to others. It is possible to do both, although not easy. It is one of those human tricks that will make us hard to replace by smart machines. The game I have created will help you with that. Try out the Small, Medium or Large? proportionality game by filling out the online polls I created.

But, you can do more. You can lead discussions at your law firm, company, class or CLE on the subject. You can become an e-discovery proportionality Game-Master. You can find out the consensus opinion of any group. You can observe and create statistics of how the initial opinions change when the other game players hear each others opinions. That kind of group interaction can create the so-called hive-effect. People often change their mind until a consensus emerges.

What is the small, medium or large proportionality consensus of your group? Even if you just determine majority opinion, and do not go through an interactive exercise, you are learning something of interest. Plus, and here is the key thing, you are giving game players a chance to exercise their analytical skills.

To help you to play this game on your own, and lead groups to play it, I created a Word Document that you are welcome to use.

Game-Master-Hive-Mind_e-Discovery_Proportionality_GAME

 

 


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