Planning and Preparation for Litigation in the Large Corporate

Environment Under the New Federal Rules

James M. [Jim] Wright, P.E.

Wright Consulting LLC

Agenda

• General Considerations• Goals of Litigation Preparation• The New FRCP• E-Discovery Costs• Early Actions Essentials• Resources -The E-Discovery Team • The Discovery Process Under the New Rules

– Activities & Decisions– Key Client Considerations

• RECAP-Client Best Practices

General Considerations• The new FRCP introduce significant new

risks in litigation• Costs associated with processing data can

exceed the merit value of the matter• Best practices necessitate Client participation

in E-Discovery• Good preparation and planning are essential

to manage risk and cost. This includes:– Actions– Policies, Practices, Procedures, Protocols– Decisions - in advance of actual litigation

Goals of Litigation Preparation

• Response Planning– Identify Resources & Roles– Early Action Planning– Strategic Advantage

• Risk Management– Identify & Manage Risks– Internal Policies, Protocols in place– Spoliation Avoidance

• Cost Management– Identify opportunities

What are the New Rules?

• ESI formally defined in Rule 34[a]• Parties must now “Meet and Confer” to discuss

ED issues per Rules 16[b] and 26[f].• Producing parties must now identify all possible

sources of ESI, including those it does not intend to search due to excessive burden. Rule 26[b][2][B] establishes a procedure for dealing with such burden claims.

• A procedure for determining the form[s] of production is outlined in Rule 34[b].

New Rules [cont]• Parties in receipt of inadvertently produced

privileged ESI may not use it until waiver claim[s] have been resolved under Rule 26[b][5][B].

• Parties inadvertently destroying ESI by the “routine, good faith operation of their computer system[s]” [may] have some spoliation sanctions protection under the controversial new Rule 37[f] “Safe Harbor” provision.

• The new rules contain many ambiguities, especially in their practical application, which are somewhat clarified by the published Rules Committee Notes.

What does this mean re: Litigation?

• The cost of litigation is increasing dramatically under the new rules, with E-Discovery costs in the $$ millions becoming routine.

• Increased discovery costs are expected to raise the settlement value of small matters significantly.

• The risk of spoliation is much higher due to the volume and complexity of ESI.

• The legal and technical ambiguities present a variety of new risks as well.

E Discovery Cost Breakdown

• Collection 5-10%• Processing [ED Vendors] 10-25%• Legal Review 50-80%• Production 5-15%

• CONCLUSION:–Reduction of amount of ESI going to Legal

Review is the obvious key to cost management.

What is the industry doing?

• An E-Discovery industry [>$2BB in ’07] has arisen with technology tools to facilitate filtering and legal review of ESI.

• Law Firms have largely not acquired the technical expertise nor adopted practices to manage cost.

• Most large corporate litigants are moving to take management control of ED.

Scheduling Conference

Duty to preserve Filing

21 days?? days

Meet &

Confer

Early Actions TimelineUnder the new FRCP

Identify & Collect ESI

Analyze ESI : Qty/Type

Develop ED Plan

Prep for Meet & Confer

time

Early Actions Essentials• Client must take lead in early actions as Counsel comes up to

speed– Preservation & Collection– Analysis of ESI Collection– Privacy Law Issues Plan

• Counsel must also be able to come up to speed quickly to participate in development of Discovery Plan

• At Meet & Confer, a strategically-developed Discovery Plan provides significant advantage

• Early Preservation & Collection actions gain Good Faith with Court

• Important decisions/negotiations are being made while Safe Harbor is in effect

• Client and ED Vendors must have established relationship and work plan for early actions to be possible. Vendor[s] must have required reporting capabilities [File type, keyword]

Client

24

Counsel

3

1

E-DiscoveryVendors

The E-Discovery Team• Client

– Owns Risk, Pays Costs, so can make risk decisions quickly

– Knows ESI best, has IT resources– Ability to move early and quickly

• Counsel– Strategic Legal Knowledge– Familiarity with Court– Knowledge of legal issues in E-Discovery

• E-Discovery Tech Vendor[s]– Powerful technology options– Ability to apply resources as needed– Experience in processing ESI– Ability to provide expert testimony to E-

Discovery matters

Discovery

Management

• Discovery Management– Develops & Manages Discovery Plan

• Activities• Resources• Schedule

– Identifies Risk & Cost Issues– Coordinates Discovery Team

The E-Discovery Process Overview

PreservationPreservation CollectionCollection AnalysisAnalysis

DiscoveryDiscovery

PlanPlan

ESIESI

ProcessingProcessing

LegalLegal

ReviewReviewProductionProduction

MeetMeet

&&

ConferConfer

Rule 16Rule 16

SchedulingScheduling

ConferenceConference

PHASE 1PHASE 1

COLLECTIONCOLLECTION

& SCOPE& SCOPE

PHASE 2PHASE 2

PLANNING &PLANNING &

NEGOTIATINGNEGOTIATING

PHASE 3PHASE 3

EXECUTIONEXECUTION

PHASE 1 Actions & DecisionsPreservationPreservation CollectionCollection AnalysisAnalysis

1.1. Identify Key PlayersIdentify Key Players

2.2. Publish Lit HoldPublish Lit Hold

3.3. Interview Key PlayersInterview Key Players

4.4. Determine Relevant ESI Determine Relevant ESI Locations with Data MapLocations with Data Map

5.5. Identify Vulnerable ESIIdentify Vulnerable ESI

6.6. Determine Privacy or Determine Privacy or Confidentiality IssuesConfidentiality Issues

7.7. Determine Need for Determine Need for ForensicsForensics

8.8. Notify Opposing Notify Opposing Counsel?Counsel?

1.1. CollectCollect

2.2. Coordinate with Coordinate with CustodiansCustodians

3.3. Maintain Chain Maintain Chain of Custody of Custody RecordsRecords

1.1. Generate ESI Generate ESI Collection Inventory Collection Inventory ReportReport

2.2. Identify File Types of Identify File Types of InterestInterest

3.3. Identify Files where Identify Files where Native is NecessaryNative is Necessary

4.4. Identify non-standard Identify non-standard File TypesFile Types

1.1. Non-IndexableNon-Indexable

2.2. Non-Non-Commercially Commercially usableusable

3.3. Internal Internal ProprietaryProprietary

Preservation Key Considerations

PreservationPreservation

1.1. Identify Key PlayersIdentify Key Players

2.2. Publish Lit HoldPublish Lit Hold

3.3. Interview Key PlayersInterview Key Players

4.4. Determine Relevant ESI Determine Relevant ESI Locations with Data MapLocations with Data Map

5.5. Identify Vulnerable ESIIdentify Vulnerable ESI

6.6. Determine Privacy or Determine Privacy or Confidentiality IssuesConfidentiality Issues

7.7. Determine Need for Determine Need for ForensicsForensics

8.8. Notify Opposing Notify Opposing Counsel?Counsel?

Must have established process to acknowledge trigger and to identify KP’s.

Consider tiered KP list with different [less rigorous] search criteria for lower tiers.

Must have established protocol to publish hold notice. This must address all forms of ESI.

Technology tools exist to automate much of this process.

Use of questionnaires in advance of personal interviews. If prepared to do this in house, time savings are notable.

Develop a detailed Data Map internally which can be edited for each matter

If forensic collections are deemed appropriate, consider whether outside collectors are needed.

If you intend to exclude any significant ESI from preservation, consider notifying OSC to limit later

spoliation risk.

Collection Key Considerations

CollectionCollection

1.1. CollectCollect

2.2. Coordinate with Coordinate with CustodiansCustodians

3.3. Maintain Chain Maintain Chain of Custody of Custody RecordsRecordsConsider internal

collections. Will necessitate software, hardware, and people.

Establish protocol for collections from PC’s

which is subject to interruption and can be very time-consuming.

Consider whether to do this over the network or locally in user’s office[s].

Decide if making collection as a means

for preservation is cost-effective.

Perform collections internally with enterprise applications that

track CoC automatically.

Analysis Key Considerations

AnalysisAnalysis

1.1. Generate ESI Generate ESI Collection Inventory Collection Inventory ReportReport

2.2. Identify File Types of Identify File Types of InterestInterest

3.3. Identify Files where Identify Files where Native is NecessaryNative is Necessary

4.4. Identify non-standard Identify non-standard File TypesFile Types

1.1. Non-IndexableNon-Indexable

2.2. Non-Commercially Non-Commercially usableusable

3.3. Internal ProprietaryInternal Proprietary

Confirm the availability of applications or resources that can generate these reports quickly. These can

be desktop apps, or provided by ED vendors.

Consider using “inclusive” rather than “exclusive” approach. Identify hi-qty file types that can be excluded

[e.g. html]

Quantity of these file types can present significant cost challenges

Non-indexable file types cannot be electronically searched, so special process [e.g. OCR], or costly

human review is necessary

Consider the means to produce these in “reasonably usable” forms.

PHASE 2 Actions & Decisions

1.1. Identify File Types & Identify File Types & Search CriteriaSearch Criteria

2.2. Develop Plan(s) for Non-Develop Plan(s) for Non-Indexable and other File Indexable and other File Types to be SearchedTypes to be Searched

3.3. Develop Plan for Backup Develop Plan for Backup and other Mediaand other Media

4.4. Establish Burden Establish Burden Arguments for Excluded Arguments for Excluded [NRA] File Types[NRA] File Types

5.5. Identify 30[B]6 Identify 30[B]6 Deponent[s]Deponent[s]

DiscoveryDiscoveryPlanPlan

MeetMeet&&

ConferConfer

Rule 16Rule 16SchedulingSchedulingConferenceConference

1.1. Who Attends?Who Attends?

2.2. Present Proposed Present Proposed Discovery PlanDiscovery Plan

3.3. Negotiate Terms for Negotiate Terms for Search Criteria Search Criteria [Keyword List Sizes, [Keyword List Sizes, etc.]etc.]

4.4. Negotiate Privilege Negotiate Privilege IssuesIssues

5.5. Negotiate Form of Negotiate Form of Production & Timing Production & Timing [Rolling?][Rolling?]

6.6. Negotiate Negotiate Authentication Authentication IssuesIssues

1.1. Who Attends?Who Attends?

2.2. Negotiate Negotiate Differences in Differences in Discovery PlanDiscovery Plan

3.3. Present/Defend Present/Defend Burden Arguments Burden Arguments for NRA ESIfor NRA ESI

4.4. Argue Cost-ShiftingArgue Cost-Shifting

5.5. Negotiate ScheduleNegotiate Schedule

Discovery Planning Key Considerations

1.1. Identify File Types & Identify File Types & Search CriteriaSearch Criteria

2.2. Develop Plan(s) for Non-Develop Plan(s) for Non-Index-able and other File Index-able and other File Types to be SearchedTypes to be Searched

3.3. Develop Plan for Backup Develop Plan for Backup and other Mediaand other Media

4.4. Establish Burden Establish Burden Arguments for Excluded Arguments for Excluded [NRA] File Types[NRA] File Types

5.5. Identify 30[B]6 Identify 30[B]6 Deponent[s]Deponent[s]

6.6. Decide privilege issuesDecide privilege issues

DiscoveryDiscoveryPlanPlan

It is essential that a file type listing [both number and size of each file type] is available to do this. Not all ED vendors can generate this information easily.

Parties will usually accept a date range filter [i.e. file creation date]. The range must be negotiated

This can be complex, but is extremely important, as non-indexable files [e.g images] cannot be electronically searched, so expensive

human review is needed. Quantify these file types and if a significant number exist, either argue to eliminate them from further review if possible or propose an alternate, limited, processing scheme [e.g.

sampling, OCR & E-search, narrow date range, etc.].Also address files that should be produced native. & discuss

authentication thereof.

After identifying whatever backup media exists that might contain discoverable ESI, determine if it [largely] exists elsewhere and decide whether it can be argued that it is NRA [Not Reasonably Accessible]. Develop argument to include Undue Cost, Business Disruption, and

Disproportionality. Be prepared to defend the numbers at the Rule 16 hearing, or arrange for ED vendors to do so.

Decide who will be the 30[b]6 wtiness[es] to testify to collection methods and actions, and to defend burden arguments.

Does a Clawback Agreement make sense ?

Meet & Confer Key Considerations

MeetMeet&&

ConferConfer

1.1. Who Attends?Who Attends?

2.2. Present Proposed Present Proposed Discovery PlanDiscovery Plan

3.3. Negotiate Terms for Negotiate Terms for Search Criteria Search Criteria [Keyword List Sizes, [Keyword List Sizes, etc.]etc.]

4.4. Negotiate Privilege Negotiate Privilege IssuesIssues

5.5. Negotiate Form of Negotiate Form of Production & Timing Production & Timing [Rolling?][Rolling?]

6.6. Negotiate Negotiate Authentication IssuesAuthentication Issues

In addition to outside counsel, consider having the E-

Discovery coordinator[s] present, to consult with counsel

on ED issues, and to discuss with opposing party, if so

directed.

Present a detailed, proposed E-Discovery Plan, as

developed in the previous steps. Leave room for

negotiation. Discuss date ranges and file types first, as these are not

normally rigorously contested.For Keywords, agree to a procedure, but not specific

keywords at this time.

Negotiate a “Clawback” if deemed appropriate.

Subject to the court’s likely interest in expediency,

negotiate enough time to deal with the keyword process, and

subsequent review. Try to agree on a rolling production.

Negotiate Authentication methodology for any files to be produced in native

format.

Rule 16 Conference Key ConsiderationsRule 16Rule 16

SchedulingSchedulingConferenceConference

1.1. Who Attends?Who Attends?

2.2. Negotiate Negotiate Differences in Differences in Discovery PlanDiscovery Plan

3.3. Present/Defend Present/Defend Burden Arguments Burden Arguments for NRA ESIfor NRA ESI

4.4. Argue Cost-ShiftingArgue Cost-Shifting

5.5. Negotiate ScheduleNegotiate Schedule

Consider having E-D specialist[s] attend, or at least be available outside the meeting for consultation or testimony, or

at a minimum. by phone.

Be prepared to defend any burden arguments for the exclusion of ESI, even if agreed to by opposing counsel in the meet and confer. Consider having ED vendors present

or on call if deemed appropriate.

Be prepared to present the arguments for areas where agreement could not be reached in the Meet and Confer.

If arguments to exclude NRA ESI are unsuccessful, be prepared to argue for cost-

shifting.

Endeavor to get enough time to execute the Discovery Plan, and be mindful of the keyword process and review time. Try to agree on a rolling production.

PHASE 3 Actions & Decisions

1.1. Selection of E-Selection of E-Discovery Vendor(s)Discovery Vendor(s)

2.2. Management of Management of Vendor(s)Vendor(s)

3.3. Analysis of Vendor Analysis of Vendor Reports during Reports during ProcessingProcessing

4.4. Decisions on Filtering Decisions on Filtering CriteriaCriteria

5.5. Negotiate Keyword Negotiate Keyword List & ProcessingList & Processing

6.6. Coordination of any Coordination of any Vendor TestimonyVendor Testimony

1.1. Develop Review PlanDevelop Review Plan

2.2. Single or Multi-Single or Multi-Phase?Phase?

3.3. Contract ATTYS?Contract ATTYS?

4.4. Review Platform[s]Review Platform[s]

5.5. Limited Review due Limited Review due to Clawback?to Clawback?

6.6. Prioritize Review per Prioritize Review per Rolling Production Rolling Production AgreementAgreement

7.7. Develop Privilege Develop Privilege Log[s]Log[s]

1.1. Coordinate Coordinate Productions per Productions per ““RollingRolling”” Agreement Agreement

2.2. Confirm Confirm AuthenticationAuthentication

3.3. Oversee and Log Oversee and Log ProductionsProductions

4.4. Audit E-Discovery Audit E-Discovery Vendor QA/QC Vendor QA/QC ProcessesProcesses

ESIESI

ProcessingProcessing

LegalLegal

ReviewReviewProductionProduction

ESI Processing Key Considerations

1.1. Selection of E-Selection of E-Discovery Vendor(s)Discovery Vendor(s)

2.2. Management of Management of Vendor(s)Vendor(s)

3.3. Analysis of Vendor Analysis of Vendor Reports during Reports during ProcessingProcessing

4.4. Decisions on Filtering Decisions on Filtering CriteriaCriteria

5.5. Negotiate Keyword Negotiate Keyword List & ProcessingList & Processing

6.6. Coordination of any Coordination of any Vendor TestimonyVendor Testimony

ESIESI

ProcessingProcessing

Based on the Discovery Plan, vendor selection should consider amount and type[s] of ESI, the type[s] of processing planned, the time allowed to process it, and the amount of it that is expected to pass the

filters to legal review. To facilitate the process, it is best to have standing Master Agreements with the vendor[s] of choice.

The decision of who will manage the ED process is essentially important. Client-management is always best from a cost

management perspective.

The ability of the vendor to generate reports on the ESI as it is processed [the earlier the better], is essential. Always select vendors who can meet your needs in this regard. Of special

importance is keyword “hit reports” that quantify the number and total volume of “hits” for each keyword.

Once quantitative reports are generated by the EDVendor, decisions on filtering criteria can be made. Start with highly

selective criteria and expand as needed, to assure hi responsive rates early to allow production to begin. This is especially important with keywords, which is why this was negotiated earlier in Phase 2.

To the extent that burden or other arguments to limit processing of ESI are relevant, identify the responsible party early so preparation

can begin.

Legal Review Key Considerations

1.1. Develop Review PlanDevelop Review Plan

2.2. Single or Multi-Single or Multi-Phase?Phase?

3.3. Contract Attys?Contract Attys?

4.4. Review Platform[s]Review Platform[s]

5.5. Limited Review due Limited Review due to Clawback?to Clawback?

6.6. Prioritize Review per Prioritize Review per Rolling Production Rolling Production AgreementAgreement

7.7. Develop Privilege Develop Privilege Log[s]Log[s]

LegalLegal

ReviewReview

As soon as it becomes apparent what kind of

volume of data will make it to legal review, decide how to proceed: Single review

with Trial Counsel, or multi- review with initial review performed by lower cost

alternatives.

If contract attys are selected, several options exist:1] Self-contracted, hourly2] Specialty firm, hourly or unit rate3] All-inclusive fixed price

Selection of review platform is critical. If the file count is high [tens of thousands],

conceptual-grouping platforms are proven to

reduce cost significantly.

Based on the perceived sensitivity of the document

collection, consider producing without legal

review, subject to a privilege claw-back

agreement.Focus initial review on the

“low-hanging fruit” so production can begin early, minimizing complaint from the requesting party. This

gives more time to cull subsequent productions.

Many EDV hosting platforms can auto-

produce privilege logs for files so-coded during

review.

Production Key Considerations

1.1. Coordinate Coordinate Productions per Productions per ““RollingRolling”” Agreement Agreement

2.2. Confirm Confirm AuthenticationAuthentication

3.3. Oversee and Log Oversee and Log ProductionsProductions

4.4. Audit E-Discovery Audit E-Discovery Vendor QA/QC Vendor QA/QC ProcessesProcesses

ProductionProductionHaving negotiated the form of production in the Meet and Confer, the ED vendor can generate the production[s] during normal hours, and not the usual weekend 24/7 panic blitzkrieg, for which premiun charges apply. This also allows time for proper QA to confirm redactions,

privileges, etc.

Having negotiated a protocol for production of native files, the EDV can generate the production accordingly,

along with the cross-reference file with the authentication code [e.g hash values].

Depending on the size and schedule of the productions, stay vigilant as to the schedule to avoid last-minute

surcharges.

Be sure your EDV is maintaining timely QA on the process. This tends to get behind and can create delays and last-

minute problems.

RECAP - Client Best PracticesEssential In-House Requirements

• Enterprise Records Policy• What ESI must be retained & why, for how long?

• IT Resources Information• Detailed description of IT resources, both hardware and software [Data Map]• Where within the Enterprise the Records are maintained• What are operational policies and backup protocols? Note special systems [IM, TM, VM, VOIP, etc]• What are vulnerabilities of systems to loss of ESI?• Assets tracking capability, esp. for departing employees

•Preservation Capabilities• Identification of Key Players• Publication of Preservation Notices• Suspension of selective data destruction activities

• Understanding of privacy laws for foreign ESI

RECAP - Client Best PracticesImportant Decisions and Considerations

• Which activities will be performed in-house?• Resources to perform them?

• Who will publish Litigation Holds?• Who will perform management oversight of E-Discovery?• Who will develop 26[b][2][b] arguments ?• Who will engage E-Discovery vendors?• Who will perform first level Legal reviews?• Would a Discovery Counsel make sense?• Who will provide 30[b]6 testimony?• Who attends Meet & Confers?• Who will attend Rule 16 Conferences?