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Archive for September, 2007

Lawyers charge a lot for discovery, and aren’t even very good at it

Posted by rjbiii on September 30, 2007

So says an article posted by Forbes.

Corporations are evidence machines, generating terabytes of electronic documents, e-mails and digitally recorded phone calls each year. Lawyers try to sift through all this dross in search of the smoking gun that can determine the outcome of a case. But, so say studies by library scientists and others, the lawyers aren’t very good at sifting. Worn down by the anesthetizing process of flipping through thousands of digital images a day, they miss as much as they find. That’s where a San Francisco company, H5, comes in. “Our work is to discover the ideal narrative to walk into court with,” says Nicolas Economou, 42. “We give you the bullets designed to win.”

The provocative headline, however, merely dissolves into an article that reads like a press release for H5, and uses examples that are in reality no more than straw men. The comparison of their automated search techniques with “eyes on” review done by a legion of attorneys is not considered a true measure for any searching and filtering technology. Or at least, it shouldn’t be. Comparisons these days should be about different technologies. This is difficult, because few software companies in the industry are secure enough to allow an objective party to compare applications and publicize benchmarks. But I already know any set of automated methodologies is better, faster, and more efficient than a thousand contract attorneys manually reviewing every document.

Now, this doesn’t mean that I’m happy with the state of technology in the industry. Far from it. Maybe H5 has a great solution. I’m not familiar with it. I agree, as well, that attorneys aren’t good at using methodologies developed and (for the most part) used by database gurus, records managers, and librarian scientists. As we’ve posted before, electronical discovery brings the need to access knowledge from across several disciplines. Attorneys often drive the process, and for good reason. For a large or complex project to be successful, however, those attorneys trying to manage the project need to know when to rely on someone else.

[HT: DataKos Blog]

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Posted in Articles, Discovery, Trends | Tagged: | Leave a Comment »

E-discovery Pitfalls: What a Tangled Web we Weave…

Posted by rjbiii on September 30, 2007

The second installment in our series on E-Discovery Pitfalls.

Law.com has posted an article in which a team of lawyers is now trying to justify their management of discovery project gone wrong:

Attorneys who once represented Qualcomm Inc. in its ill-fated federal patent case against Broadcom Corp. have asked a judge to pierce their client’s privileged communications.

With the threat of formal sanctions bearing down on them, lawyers at Heller Ehrman and Day Casebeer Madrid & Batchelder — Qualcomm’s former litigation counsel — are asking for a rare exception to privilege so they can explain to the judge how their side failed to produce hundreds of thousands of relevant documents during discovery in the San Diego case.

Qualcomm, citing privilege, has refused to produce any evidence about the discovery error. Magistrate Judge Barbara Major has ordered the attorneys to show cause at an Oct. 12 hearing as to why they should not be sanctioned. Now, in advance of the hearing, many of the outside counsel have hired their own lawyers and have been trying to find a way to explain what happened.

(emphasis added)

Obviously, this is an ugly situation for all parties, and it looks to get uglier. Lifting privilege is one of those actions necessary to examine an attorney’s management of a case, and is an element in bar malpractice suits. All the elements of a worst case scenario seem present with respect to a lawsuit: unhappy clients, their former attorneys who find themselves threatened by a deadly triple-threat of sanctions, malpractice actions, and state bar proceedings. Now, whether the attorneys are responsible or not is something that will only come out with further examination, although there is ample case law that states that ultimately the buck stops with counsel. However, an attorney doesn’t actually physically collect the data, so counsel’s responsibility is far from absolute.

How did we get here? To find out, let’s reboot and start from the beginning.

Read the rest of this entry »

Posted in E-Discovery Pitfalls, Sanctions | Tagged: , | 1 Comment »

Case Blurb: Qualcomm; Awarding Attorney’s Fees and other Legal Costs for litigation misconduct in patent cases

Posted by rjbiii on September 29, 2007

Under 35 U.S.C. § 285, “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285 (West 2007). In patent infringement cases, the Federal Circuit has held that an award of attorney fees under Section 285 involves a two-part determination: (1) “a district court must determine whether the prevailing party has proven an exceptional case by clear and convincing evidence,” a factual determination that the Federal Circuit reviews for clear error; and (2) “if the district court finds the case exceptional, it must then determine whether an award of attorney fees is appropriate,” which the Federal Circuit reviews for abuse of discretion. Perricone v. Medicis Pharm. Corp., 432 F.3d 1368, 1380 (Fed.Cir.2006).

The Federal Circuit has further held that the trial judge is in the best position to weigh the relevant considerations for exceptional case, “such as the closeness of the case, the tactics of counsel, the flagrant or good faith character of the parties’ conduct, and any other factors contributing to imposition of punitive sanctions or to fair allocation of the burdens of litigation.” Id. “[L]itigation misconduct and unprofessional behavior are relevant to the award of attorney fees, and may suffice, by themselves, to make a case exceptional.” Waner v. Ford Motor Co., 331 F.3d 851, 857 (Fed.Cir.2003) ( quoting Epcon Gas Sys., Inc. v. Bauer Compressors, Inc., 279 F.3d 1022, 1034 (Fed.Cir.2002)).

The prevailing party may prove exceptional case in a patent infringement suit by showing: “inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.” Phonometrics, Inc. v. Westin Hotel Co., 350 F.3d 1242, 1246 (Fed.Cir.2003) ( quoting Epcon Gas Sys., 279 F.3d at 1034). When the patentee is “manifestly unreasonable in assessing infringement, while continuing to assert infringement in court, an inference is proper of bad faith, whether grounded in or denominated wrongful intent, recklessness, or gross negligence.” Id. ( quoting Eltech Sys. Corp. v. PPG Indus., Inc., 903 F.2d 805, 811 (Fed.Cir.1990)).

Qualcomm Inc. v. Broadcom Corp., 2007 WL 2261799 (S.D. Cal. Aug. 6, 2007).
Full Order is found here, courtesy of K&L Gates.

Posted in 9th Circuit, Case Blurbs, Judge Rudi M. Brewster, Legal Fees Awarded, S.D. Cal., Sanctions | Tagged: , , | Leave a Comment »

Morgan Stanley punished for withholding e-mails

Posted by rjbiii on September 28, 2007

[HT: Information Governance Engangement Area]

Information Week reports that the Financial Industry Regulatory Authority has fined the financial services firm $12.5 million dollars:

Morgan Stanley on numerous occasions failed to provide e-mails requested by claimants in arbitration proceedings and regulators, FINRA said.

The financial firm previously had stated that its e-mail servers were destroyed in the 9/11 attacks, resulting in the loss of e-mails archived prior to that date. Morgan Stanley presumably had lost millions of pre-9/11 e-mails, but it was later discovered that they had been restored to the firm’s active e-mail system using backup tapes, which were stored in another location.

Additionally, FINRA found that Morgan Stanley destroyed many of the pre-9/11 e-mails in its possession by overwriting backup tapes that stored e-mail from 11 of its 12 servers and by allowing users to permanently delete e-mail.

In this case, the misbehavior during discovery occurred during arbitration and regulatory proceedings, rather than federal or state court cases. In such proceedings, it might be tempting to try to circumvent “normal” discovery obligations by agreeing to a more relaxed regiment. This might mean a less expensive process, but might not lead to a “just” resolution of the matter.

Posted in Arbitrations, Articles, Regulatory Proceedings, Sanctions | Tagged: | Leave a Comment »

Case Blurb: Zubulake III; Presumptions and Standards for Cost-Shifting Arguments

Posted by rjbiii on September 27, 2007

Although “the presumption is that the responding party must bear the expense of complying with discovery requests,” requests that run afoul of the Rule 26(b)(2) proportionality test may subject the requesting party to protective orders under Rule 26(c), “including orders conditioning discovery on the requesting party’s payment of the costs of discovery.” A court will order such a cost-shifting protective order only upon motion of the responding party to a discovery request, and “for good cause shown.” Thus, the responding party has the burden of proof on a motion for cost-shifting. Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 283 (S.D.N.Y. 2003).

In Zubulake I, I considered plaintiff’s request for information contained only on backup tapes and determined that cost-shifting might be appropriate. It is worth emphasizing again that cost-shifting is potentially appropriate only when inaccessible data is sought. When a discovery request seeks accessible data-for example, active on-line or near-line data-it is typically inappropriate to consider cost-shifting. Id.

The seven factor test from Zubulake III was posted here.

Editor’s note: Although the Zubulake decisions were foundations for current e-discovery law, and are referred to more than ever, please keep in mind that they were made before the enactments of the new amendments to the FRCP. Although many of the interpretations laid out by Judge Schindlin in the Zubulake decisions were codified in these amendments, there may be some divergence. Further, statutes numbers may have changed (or they may not have). I encourage you to do your own due diligence with respect to any case blurbs posted on our site, but especially those made before the enactment of the amendments to the FRCP. Thanks.)

Posted in 2nd Circuit, Back Up Tapes, Case Blurbs, Cost Shifting, S.D.N.Y | Tagged: , | Leave a Comment »

Craig Ball: ESI does not equal Native Data

Posted by rjbiii on September 27, 2007

Craig Ball writes that electronically stored information is not necessarily native data.

Reviewing the correspondence between the counsel, I spotted the problem. The e-mail was there, but in rich text format. Like many lawyers new to e-discovery, defense counsel regarded electronically stored information and native data as one and the same. They’re not.

The IT department had dutifully located responsive e-mail on the mail server and furnished the messages as RTF, a generic format offering easy access and electronic searchability. Any computer can read RTF, so it’s a reasonable choice. But it’s not the native format.

He goes on to explain that e-mail’s native file is the container file in which the message is stored. At the enterprise level, that might be and MS exchange database (extension = .edb) or a lotus notes database (extension = .nsf). On workstations, the container file will likely be an outlook database (.pst). By the way, an outlook database is merely a modified MS Access database. The messages are just entries in database fields, so the “native format” of a message is something of an exercise in creative deduction.

And because of that, Mr. Ball states:

How, then, do we realize the considerable benefits of native production for e-mail? The answer lies in distinguishing between production of the native container file and production of responsive, non-privileged e-mail in electronically searchable formats that preserve the essential function of the native source, sometimes called quasi-native formats.

I’ve not heard the term “quasi-native,” but it seems a reasonably serviceable name for the concept. The rest of his article discusses the way in which a quasi-native production would work.

Posted in email, Form of Production, Native Files | Tagged: , | Leave a Comment »

E-Discovery: Not just for the big cases

Posted by rjbiii on September 27, 2007

So reports PressofAtlanticCity.com:

Divorce attorney Carol Goloff often hears stories from wives whose husbands have been unfaithful. The proof, she says, is in the printout.
“The spouse will always have the e-mails and instant messages,” said Goloff, who has offices in Northfield and Upper Township. “I have more than a dozen cases where we have the actual transcripts of the online conversation.”

When matrimonial bliss goes bust, attorneys are looking to technology – from laptops to BlackBerrys to E-ZPass – for evidence to build their cases. This new way of collecting information is called electronic discovery, or e-discovery, and it’s changing the way law firms do business.

“As a trend, it’s been the biggest development in civil litigation in decades,” said attorney John Coughlin, of the law firm Duane Morris in Princeton.

Because of the changes to information systems, their integration into daily life, and new collaborative technologies, data can be found in all sorts of places. No case is immune, and the presence of ESI in cases will be the rule in the future, if it isn’t already.

Posted in Articles, Discovery, Trends | Leave a Comment »

Selecting E-Discovery Vendors

Posted by rjbiii on September 27, 2007

Ahh…a favorite topic (likely…not)! And the second installment on our series on effectively managing e-discovery.

The first item of business is to determine why (or even if) you need a vendor. Vendors fill niches from pre-dispute planning (document management, records management, providing a litigation hold plan) to data collection, to pre-review filtering and searching, to EDD processing, to providing Web-based review platforms for attorney review, for production, and for running Trial presentation systems, and for a hundred things in between. Some projects, especially smaller ones, are completely handled by outside counsel. A few corporations have processing capabilities in-house as well. In looking at large e-discovery projects, the management team (whoever is making the decision) has various models of vendor selection from which to choose.

First, there is an approach similar to that of hiring a general contractor. A knowledgeable and experience person is hired for the position of coordinator, or project manager who manages the project, on behalf the client company. This could be an attorney specializing in e-discovery law and related areas, or could be an expert who concentrates on the technical processes involved. One of the advantages of this approach is that allows some insulation for both the client and outside counsel with regard to liability for improper methodologies and approaches. The other main advantage is the one most hoped for: that the project is run expertly and competently, and is therefore free of any errors that might result in any substantial inefficiencies during the project itself, or (worse) deficiencies in production. Disadvantages include a lack of control over the process, and the requirement of fashioning an effective method of hiring the right manager. Also, that insulation that might be provided is certainly not absolute, as the hiring decision, and any progress monitoring program should be conducted with the thought of them holding up to a court’s scrutiny down the road. More often, either outside counsel or in-house counsel, or one of the litigation support professionals attached to the law firm or client end up managing the project. Disadvantages to this approach include the exposure to liability for the manner in which the project was managed and for any defects in the production.

No matter who manages the project, someone will have to collect, process, cull, house, review, and produce the documents. This can be a one-vendor solution (usually except for the “review” portion, often the domain of contract attorneys) or it may be broken down by segment and divvied up to vendors based on criteria such as price, competence, relationships, or some combination of such factors. A one vendor solution may reduce problems associated with communication and different technologies, capacities, and methodologies. Multiple vendors working together on large projects often are forced to reconcile incompatibilities in data formats, and must communicate clearly and frequently to avoid undue inefficiencies during the project. Personality differences and natural competitiveness must also be put aside for the sake of the common good. I’ve seen examples where minor mistakes were blown out of proportion by vendors who, upon discovering the issue, sent e-mails to everyone in the project team trumpeting their discovery. On the other hand, there is a level of quality checking that is accomplished by this arrangement.

It is my view that the process used to select a vendor (or vendors) is one of those key points of time in the litigation, with respect to discovery. A thorough vetting of a vendor’s capabilities, technology, experience and reputation is essential to defending that decision in the future should the need arise. Both law firms and corporate legal departments should request extensive information from candidates that outline their qualities necessary to the tasks they will be eligible perform. Preferred vendor lists should be built, examined periodically, and modified according to ever-changing circumstances. The primary purpose of the process is to select capable vendors. An important secondary purpose, however, is to craft a process that can be defended should something go wrong.

Posted in Best Practices, EDD Vendors, Effectively Managing E-Discovery, Trends | 1 Comment »

Case Blurb: Zubulake I, A Hierarchy of Accessibility based on storage media

Posted by rjbiii on September 26, 2007

Many courts have automatically assumed that an undue burden or expense may arise simply because electronic evidence is involved. This makes no sense. Electronic evidence is frequently cheaper and easier to produce than paper evidence because it can be searched automatically, key words can be run for privilege checks, and the production can be made in electronic form obviating the need for mass photocopying. Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 318 (S.D.N.Y. 2003).

In fact, whether production of documents is unduly burdensome or expensive turns primarily on whether it is kept in an accessible or inaccessible format (a distinction that corresponds closely to the expense of production). In the world of paper documents, for example, a document is accessible if it is readily available in a usable format and reasonably indexed. Examples of inaccessible paper documents could include (a) documents in storage in a difficult to reach place; (b) documents converted to microfiche and not easily readable; or (c) documents kept haphazardly, with no indexing system, in quantities that make page-by-page searches impracticable. But in the world of electronic data, thanks to search engines, any data that is retained in a machine readable format is typically accessible. Id. (citations omitted).

Whether electronic data is accessible or inaccessible turns largely on the media on which it is stored. Five categories of data, listed in order from most accessible to least accessible, are described in the literature on electronic data storage:

1. Active, online data: “On-line storage is generally provided by magnetic disk. It is used in the very active stages of an electronic records [sic] life-when it is being created or received and processed, as well as when the access frequency is high and the required speed of access is very fast, i.e., milliseconds.” Id. (citations omitted).

2. Near-line data: “This typically consists of a robotic storage device (robotic library) that houses removable media, uses robotic arms to access the media, and uses multiple read/write devices to store and retrieve records. Access speeds can range from as low as milliseconds if the media is already in a read device, up to 10-30 seconds for optical disk technology, and between 20-120 seconds for sequentially searched media, such as magnetic tape.” Id. at 319 (citations omitted).

3. Offline storage/archives: “This is removable optical disk or magnetic tape media, which can be labeled and stored in a shelf or rack. Off-line storage of electronic records is traditionally used for making disaster copies of records and also for records considered ‘archival’ in that their likelihood of retrieval is minimal. Accessibility to off-line media involves manual intervention and is much slower than on-line or near-line storage. Access speed may be minutes, hours, or even days, depending on the access-effectiveness of the storage facility.” The principled difference between nearline data and offline data is that offline data lacks “the coordinated control of an intelligent disk subsystem,” and is, in the lingo, JBOD (“Just a Bunch Of Disks”). Id. (citations omitted).

4. Backup tapes: “A device, like a tape recorder, that reads data from and writes it onto a tape. Tape drives have data capacities of anywhere from a few hundred kilobytes to several gigabytes. Their transfer speeds also vary considerably … The disadvantage of tape drives is that they are sequential-access devices, which means that to read any particular block of data, you need to read all the preceding blocks.” As a result, “[t]he data on a backup tape are not organized for retrieval of individual documents or files [because] … the organization of the data mirrors the computer’s structure, not the human records management structure.” Backup tapes also typically employ some sort of data compression, permitting more data to be stored on each tape, but also making restoration more time-consuming and expensive, especially given the lack of uniform standard governing data compression. Id. (citations omitted).

5. Erased, fragmented or damaged data: “When a file is first created and saved, it is laid down on the [storage media] in contiguous clusters … As files are erased, their clusters are made available again as free space. Eventually, some newly created files become larger than the remaining contiguous free space. These files are then broken up and randomly placed throughout the disk.” Such broken-up files are said to be “fragmented,” and along with damaged and erased data can only be accessed after significant processing. Id. (citations omitted).

Posted in 2nd Circuit, Case Blurbs, Cost Shifting, Judge Shira A. Scheindlin, S.D.N.Y | Tagged: , , | Leave a Comment »

Case Blurb: Zubulake I; Initial considerations of cost-shifting

Posted by rjbiii on September 26, 2007

Courts must remember that cost-shifting may effectively end discovery, especially when private parties are engaged in litigation with large corporations. As large companies increasingly move to entirely paper-free environments, the frequent use of cost-shifting will have the effect of crippling discovery in discrimination and retaliation cases. This will both undermine the “strong public policy favor[ing] resolving disputes on their merits,” and may ultimately deter the filing of potentially meritorious claims. Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 317-18 (S.D.N.Y. 2003) (quoting Pecarsky v. Galaxiworld.com, Inc., 249 F.3d 167, 172 (2d Cir.2001)).

Thus, cost-shifting should be considered only when electronic discovery imposes an “undue burden or expense” on the responding party. The burden or expense of discovery is, in turn, “undue” when it “outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.” Id. (citations omitted).

Posted in 2nd Circuit, Case Blurbs, Cost Shifting, Judge Shira A. Scheindlin, S.D.N.Y | Tagged: , | Leave a Comment »