This week, the U.S. Congress heard testimony about prospective e-Discovery-related additions to the Federal Rules of Civil Procedure -- the first such hearing since the rules were last updated in 2006. Did you miss it?
The Costs and Burdens of Civil Discovery
When some of the first rules about e-Discovery came to be, e-Discovery was much different than it is today. There was not a lot of electronic data, nor were there a lot of costs (at least not by today’s dollars) associated with discovering it for litigation purposes. According to the Federal Rules of Civil Procedure, full disclosure of relevant information by both parties will “secure the just, speedy, and inexpensive determination of every action and proceeding.”
That sounds easy enough, until you consider that it’s almost 2012 and identifying relevant information involves sorting through huge amounts of email and electronically stored information (ESI). Speedy and inexpensive went out the window a long time ago.
It isn’t that companies are complaining that e-Discovery is too expensive, but that the Federal Rules of Civil Procedure need to be updated to account for technological advances, which is partially responsible for information’s rapid explosion from mere megabytes and gigabytes, to terabytes and petabytes (1000 terabytes = 1 petabyte). Incidentally, advances in technology have also made it easier to review information, but it’s still a costly and not so speedy endeavor if you don’t have the right tools or if your information remains unstructured.
Consider the following:
- In 2008, litigation costs for the Fortune 500 alone were estimated to be more than $200 billion, with the discovery process arguably the most expensive part of litigating a dispute. (source: eLaw forum)
- Microsoft collects 17.5 GB per custodian, averages four custodians per matter, has 329 matters on hold (a third of them are active cases) and collects more than 700 MB for every 2.3 MB that are actually used. (source: testimony from Thomas Hill)
The Anticipation of Litigation
On Tuesday, December 13 (the fifth anniversary of the e-Discovery Federal Rules of Civil Procedure), the House Constitution Subcommittee held a hearing called, “The Costs and Burdens of Civil Discovery” at which several witnesses presented varying views of the costs and burdens of existing discovery practices. By design, these hearings are meant not to supplant the rulemaking process established by the Rules Enabling Act, but rather to serve as an oversight function of updating Congress on developments regarding the eDiscovery costs and burdens issue.
Many of the witnesses gave persuasive testimony. Thomas Hill, Associate General Counsel responsible for Environmental Litigation and Legal Policy for General Electric Company, for instance, discussed in his prepared statement the considerable costs incurred well before litigation:
GE, like all potential litigants, must preserve information in anticipation of litigation. But there are no clear rules or even consistent guidance regarding when we must preserve information or what should be preserved -- or for how long. This uncertainty forces GE to make case-by-case determinations about when litigation may be anticipated and the potential scope of litigation that a plaintiff might bring someday. Essentially, GE must guess whether a case will ever be filed, guess as to what claims may ever be brought, and then do its best to preserve an unspecified amount of information for an indefinite period of time.
This uncertainty is created because the current discovery rules do not provide parties with adequate guidance as to when their obligations to preserve ESI begin (or even what ESI to preserve) in anticipation of litigation. Court decisions interpreting these obligations are inconsistent, and judges often evaluate whether a company adequately preserved ESI with 20/20 hindsight. As a result, parties who seek to comply with these rules must cast a wide -- and very expensive -- net. American companies, like GE, that face the potential for litigation are forced to preserve vast amounts of ESI that may never actually be required in the case. Certainly much of it will never be reviewed, never be produced, and never see the inside of a courtroom.
On the Contrary
But not all witnesses were there to support the claim that e-Discovery is too expensive or burdensome. William P. Butterfield, an attorney with the DC-based of Hausfeld law firm testified that
…the costs of preservation -- one aspect of the e-Discovery process -- make up only a small portion of discovery costs. The Sedona Conference Working Group on Electronic Document Retention and Production (WG1), widely recognized as the preeminent think tank focused on e-Discovery issues, recently surveyed its members on the proportion of costs spent on preservation and other specified litigation activities. 132 Working Group members responded to the survey, and 69% of the survey respondents identified themselves as representing defendants. The survey revealed that only about 19% of the total costs of discovery were attributable to preservation of potentially discoverable information. In other words, the Sedona survey does not support, but rather calls into question, the contention that preservation costs, in particular, are excessive."
So what happens next? We wait, of course. The members, based on the testimonials they heard yesterday, could have a rules proposal by March 2012. Until however, companies will have to continue to manage both the increasing amounts of data and costs associated with preserving and reviewing it.