<b><i>e-Discovery Tech:</b></i> Why the FRCP Amendments Mean Legal Teams Need Technology Now More Than Ever

As of Dec. 1, 2015, Rule 1 states: “These rules should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.”

As described in the Committee note about this rule, this language is intended “to emphasize that just as the court should construe and administer these rules to secure the just, speedy, and inexpensive determination of every action, so the parties share the responsibility to employ the rules in the same way.”

This rule change means that parties need to work together and not prolong the lawsuit in a way that is unjust, slow or expensive. We also know the reality of what (some) lawyers are capable of, which leans toward the opposite of just, speedy and inexpensive. You'll also notice that there's no penalty or sanction for not following this rule. However, judges can certainly get fussy about the application (or lack thereof) of this rule, and even admonish the non-complying party in their written opinion. So perhaps this amended rule will be meaningful in the long-run. Perhaps.

Rules 26(b)(1) and 37(e): Changes Are Specific to e-Discovery

As of Dec. 1, 2015, Rule 26(b)(1) is about limiting the scope of discovery, and states:

Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.

In my opinion, the most meaningful revision here is the inclusion of the language “proportional to the needs of the case” and the omission of the language “any documents or other tangible things and the identity and location of persons who know of any discoverable matter.” Very specifically, let's focus on the word any in contrast to the word need . That's a pretty substantial shift. Again, we know how (some) lawyers operate, so only time will reveal the impact on truly limiting the scope of discovery. Let's keep our fingers crossed there will be a meaningful impact so we can focus on the merits of the case, not the incessant busywork associated with “sky's-the-limit” discovery.

As of December 1, Rule 37(e) states:

Failure to Preserve Electronically Stored Information. If electronically stored information [ESI] that 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:

(1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or

(2) only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation may:

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

The opening clause of the Rule 37(e) previously read:

Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

I believe this is what should have in-house legal departments concerned. You can no longer hope that “exceptional circumstances” will serve as the escape hatch to avoid sanctions. Instead, the standard is “failed to take reasonable steps to preserve [ESI]” which is cause for concern for two reasons. First, it is purposely vague (reasonableness is a favorite of the legal system) so you don't really know what “ failed to take reasonable steps” means, and second, it is very likely to occur. In fact, lack of preservation is occurring in corporations and government agencies right now. This revision is also scary because the rules authorize sanctions for failure to take reasonable steps.

In light of these rule changes, it is time to examine in what way(s) your organization is failing to take reasonable steps to preserve ESI.

Again, Mike Hamilton gives insight on this issue: “First, it's important to remember that Rule 37(e) doesn't depart from common law duty to preserve relevant information, but rather authorizes specific measures that the court may employ in those instances where information that should have been preserved was lost, and more importantly, it specifies the findings the court must make for the court to impose curative or more extreme measures.”

Hamilton continues: “Next, understanding the five elements that must be found for the court to issue curative measures under Rule 37(e) is imperative in order to develop an e-discovery process around it:

1. Spoliated evidence must be in ESI form.
2. When duty to preserve triggered, information should have been preserved.
3. That information wasn't preserved.
4. Reasonable steps to preserve the information were not taken.
5. Information can't be restored or replaced.

The “reasonable steps” in the fourth element are based on a judge's subjective feeling on a case-by-case basis. Perfection is not the standard, reasonableness is. This may result in a drastic change depending on where you are located in the United States.

To get an idea of what that subjectivity might look like, U.S. District Judge Xavier Rodriguez (W.D. Texas), has stated he will use the following questions to determine if reasonable steps were taken:

• Was legal hold in place?
• Was legal hold communicated well?
• Was it acknowledged?
• Was it communicated on a regular basis?
• When employees depart, were steps taken to retain information?

Legal project management software minimizes the risk of e-discovery sanctions under the newly revised Rule 37(e) by proving to the court that reasonable steps were taken in every step (collection, processing, review and production), as well as providing visibility into all e-discovery tasks with documented audit trails and advanced reporting capabilities in case your process is contested in court. Tracking and analytics deliver task details, timelines, deliverables, budgets, and historical repositories for each project stage to quickly pinpoint any potential missteps or cost overruns.

In the same way, technology can help with proportionality as well. When it comes to proportionality and Rule 26(b)(1), data management software gives you the necessary information to make a persuasive argument to opposing counsel and the court, for proportional, cost-conscious e-discovery parameters. You can rapidly determine the volume of data, file count, files types, and their relative distribution in a data set before formulating your litigation strategy. Index, identify, and locate ESI and metadata as it exists “in the wild,” then create a searchable index and apply all of data management's early case assessment tools to rapidly identify key documents and locate crucial information before a single document is ever collected.

Conclusion

With the new amendments to the FRCP focusing on proportionality and reasonableness, collapsing the e-discovery process becomes imperative. But with growing data volumes, these steps also become exponential in scope. That's why legal teams need technology on their side.

Nancy Patton, Esq., is a senior solutions consultant for Exterro. She has been involved in electronic discovery for almost a decade and prior to joining Exterro, Patton worked as an attorney focused on e-discovery response, document review and legal representation in civil litigation matters.