By Gulam Zade, General Counsel
Many small to mid-sized law firms today use eDiscovery Collection practices, such as relying on in-house resources and tools, that they believe to be faster and less burdensome than other options. It’s the path of least resistance. But is this wise? These practices can put them at reputational and financial risk.
If your firm is doing this, you are probably incurring far more risk than you realize. I want to make sure you understand the risks you might be taking and are aware of options that can produce the results you desire without the dangers. Here are my thoughts about how to produce evidence that will stand up in court because it was collected via defensible protocols.
A COMMON APPROACH TO eDISCOVERY TODAY
Let’s start with a description of how eDiscovery tends to work in many firms. What I’m about to describe may not be a perfect representation, but this is a play-by-play of what we have seen on many occasions.
A new case comes into a law firm. The client needs both a litigation strategy and an evidence strategy for managing electronically stored information or “ESI.” The lead attorney on the case puts together a team of in-house staff, often paralegals.
The team then identifies data custodians, data types—structured or unstructured, or both—relevant date ranges and other factors. For purposes of this example, we’ll assume the data is unstructured, that is, it includes email messages, word processing documents, spread sheets, presentations and so on.
The internal team asks the client and other evidence custodians for access to the data. The client provides a range of devices and file-types that contain the ESI. They might send hard drives or thumb drives with files on them or send .PST files (a propriety file format used to store copies of messages, calendar events, and other items within a Microsoft environment). Or they might give the internal team access to their network. We’ve seen all these means of ESI transfer.
The internal team then loads the data onto the local network, either by writing it onto a local server or by uploading it directly to a cloud service through their network. Review teams proceed to cull through the data to find evidence, after which the lead attorney shares what has been found with the client and plots out a litigation response strategy.
Sound familiar? What’s wrong with this approach? Isn’t it fast and safe? Might there be risks you are unaware of?
You put yourself in the best position to win by using a third-party Collections team with certified experience in digital forensics and recognized standing with the courts.
THE NATURE OF THE RISKS
If you are taking this kind of approach, then you are likely entertaining a number of substantial risks. The Electronic Discovery Reference Model or “EDRM,” in conjunction with revised Federal Rule of Civil Procedure 37(e), provides standard guidelines for how to handle electronic discovery. The EDRM breaks things down, start to finish, into the following stages:
I believe some law firms are putting their personal and corporate brands at-risk in the Presentation phase by not handling matters effectively in the Collection phase. Simply put, if you do not collect ESI in a way that is defensible in court, then opposing counsel can easily dismantle your arguments or even get certain types of evidence—which may be crucial to your case—excluded. That is a huge risk.
Note that FRCP 37(e) states that if ESI which “should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery,” the court can “presume that the lost information was unfavorable to the party” and even “dismiss the action or enter a default judgment.”
To be concise, the risks to you and your firm include:
- Opposing counsel could dismantle your evidence
- The courts could throw out evidence that is key to your case
- You could be hit with very expensive sanctions
These are the risks for ineffectively handling Collections. Let’s turn to some specific examples of real world court cases to show you what I mean.
SOME EXAMPLES AND TRENDS
The revisions to FRCP 37 went into effect in December of 2015. The general trend since then has been fewer total eDiscovery sanctions being ordered. However, significant sanctions are still common, especially in areas involving mobile devices, texts, and other more informal communications. Let me briefly describe three recent examples of sanctions or kinds of sanctions so you know what you are potentially up against:
- Law firm fined $1.1M sanction for asbestos discovery deceit. Per the Law360 website: A San Francisco law firm that engaged in a campaign of discovery deceit in defending an asbestos claim and failed to investigate a coverup of tens of thousands of improperly withheld documents by industrial manufacturer Tate Andale Inc. has been hit with a $1.12 million sanctions bill in Hawaii state court.
- Client suffered huge financial loss and law firm took reputational hit for intentional deprivation and spoliation of evidence: In GN NETCOM, INC., Plaintiff, v. Civil Action No. 12-1318-LPS PLANTRONICS, INC., a $3 million dollar verdict was delivered against Plantronics in a Delaware antitrust case. A senior VP had deleted, and told others to delete, as many as 90,000 emails. While monetary sanctions were not issued against Wilson Sonsini, the famed Silicon Valley law firm, the judge specifically called out the firm for dishonesty and incompetence. The law firm’s reputation suffered as a result.
- New risks relating to text messaging and social media are emerging generally: According to the 2016 Mid-Year E-Discovery Update put out by the Gibson Dunn law firm in August of 2016: “New sources of potentially discoverable ESI, such as text messaging and social media, have created new risks and difficulties for identification, legal hold preservation and collection. Indeed, many of the sanctions decisions in the first half of 2016 have involved failures to preserve text messages on mobile devices.” The report notes that there were many decisions involving failures to produce text, instant messages, or other mobile device data. Overall, this “reflects that these data sources are becoming increasingly important in e-discovery.” Further, the report noted that over 2/3 of businesses “have no archiving or supervision solution in place for text messages used for business communications.”
Given these trends, there are a few questions you might want to ask. First, why do these kinds of situations and outcomes happen in the first place? Second, how can you and your firm stay on top of new developments in rapidly evolving areas like preservation of texts and social media evidence? Finally, from the big picture perspective, what is putting your firm at risk?
THREE BIG RISK FACTORS
Based on LOGICFORCE’s experience and industry knowledge, there are three big risk factors that you both can control and very much need to control. These are:
- Documenting chain of custody
- Following industry standards for data collection (a sequestered ESI data environment)
- Sufficiently qualifying and training all your staff
These are three areas in which opposing counsel can make you an easy target for spoliation claims. Let’s explore them in greater detail.
DEFENSIBLE CHAIN OF CUSTODY
Do you, right this minute, already have defensible firm-wide chain of custody practices and protocols in place? Chain of custody is about proving, in ways that stand up in court, that while any ESI was in your custody, it was not altered, inappropriately accessed, tampered with or destroyed. You need to be able to show that any evidence in your possession or under your control is inviolate—the real deal.
Practices and protocols that you want to pay particular attention to include:
- Transfer: Has the ESI in question been moved directly from your client to your firm’s custody with no third party gaining possession or potentially gaining possession along the way?
- Access: Can you show that there has not been any unauthorized access to the ESI?
- Documentation: Do you have documented processes that show who had possession of and access to the ESI, and how it was handled during the entire time it was in your custody?
If you cannot prove unbroken chain of custody—then you and your firm are at risk.
FOLLOWING INDUSTRY STANDARDS (LIKE A SEQUESTERED DATA ENVIRONMENT)
Do you have a sequestered environment for processing ESI? While this is not mandated through the EDRM or FRCP 37(e), it is a best-practice that you should consider.
A sequestered environment is a space that is physically and electronically isolated from the rest of your working environment. This means that the environment has physical access controls, such as locks and keypads that require a code for entry (limiting access from unauthorized persons).
An appropriate environment also has its own dedicated electronic equipment, such as servers, desktop machines, internet access and network technologies (like firewalls) that cordon it off from other parts of your enterprise. It is a best practice that this equipment is 100% dedicated to Collection, Processing and storage of client evidence – not used for other activities at the firm.
Why should you consider a sequestered environment for ESI? One of the biggest risks of uploading client data onto your business network is the accidental co-mingling of data. Even if no co-mingling takes place, it is relatively easy for opposing counsel to point out the possibility of co-mingling and introduce reasonable doubt. This could cast a dark shadow over your case and evidence and make the rest of your case an uphill battle.
If client data is brought into a sequestered environment, and you can prove chain-of-custody, any accusations of co-mingling of your business data and your client’s private data are left mute.
It is not a good idea to simply bring in client data, copy it to a local drive or system and then upload it to an eDiscovery cloud service. In fact, that’s exactly how problems can occur in some scenarios. At LOGICFORCE, we have taken many steps to sequester our laboratory, including physical barriers, technical firewalls, chain of custody protocols to move data into the lab and other steps. This is one major reason our law firm clients, and their clients, trust our approach to eDiscovery.
STAFF QUALIFICATIONS FOR HANDLING ESI
Are the people you assign to Collections qualified? If not, you are placing your win-rates at unnecessary risk. Let me explain what I mean.
Unfortunately, there are few if any certification programs in place today for Collections. This means that many of the employees in small to mid-size law firms who handle ESI have no formal training or certifications. This makes them easy targets for opposing counsel. Imagine an evidence controversy arises: would you feel comfortable right now putting your internal team on the stand in defense of your firm’s practices and protocols?
We recommend that you avoid having ESI handled by personnel who have no formal training, certifications, or background that will stand up in court. Instead, try to have your ESI collected and handled only by those who are trained and certified by tool developers and service providers such as Nuix, FTK, X1 and Cellebrite.
An even better solution is to work with third-party groups who have formal training in collecting and processing ESI. Doing so will benefit you in three ways:
- Since a third-party will have done the work, it will give you a degree of insulation against any potential allegations of spoliation.
- It greatly increases the likelihood that your evidence will stand up in court.
- It provides people with court experience who can effectively speak to your Collections methodologies.
The best-case scenario is to use a third-party Collections team with certified experience in digital forensics. Such a team will be immediately recognized by the courts as competent and trustworthy collectors, processers, and handlers of ESI. Teams with a strong reputation and recognition from the courts give you the utmost confidence.
A RESOURCE TO HELP YOU
The risk of evidence spoliation claims is quite real and significant. In addition to financial risks like those I’ve described here, there are reputational risks for your key people and your firm overall.
Fortunately, there are many steps you can take to avoid or diminish these risks. Despite any misgivings you may have, the approach of working with a third-party to collect, process, and handle ESI is usually less burdensome and expensive—and certainly far more defensible—than having unqualified internal team members do this work.
If you would like even more ideas about how to improve eDiscovery at your firm, please download our free eBook called Ten Strategies To Add Ten Million Dollars To Your Law Firm. This free resource will help you develop a better approach to managing ESI in a way that preserves your reputation and improves your bottom line.