2009 Predictions and Trends

Guest Blog by Sonya Sigler, General Counsel and V.P. of Business Development of Cataphora,
Inc.

When a new year rolls around, people immerse themselves in making resolutions they
have little chance of sticking to or they make predictions about the year to come. I am going to
stay away from making resolutions about weight loss that I won’t keep and, instead, focus on
trends and predictions about eDiscovery for this coming year.

Cooperation (and Collaboration)

A trend that emerged in the latter half of 2008 and is gaining momentum right now is Cooperation.
[Note: I have lumped cooperation and collaboration together because one leads to the other.]
Cooperation among lawyers, even while being adversaries, is a hot topic right now. There are
many indicators of this cooperation as a trend, but there are three examples that are fairly
illustrative of it.

First, The Sedona Conference® has issued its new Sedona Conference Cooperation
Proclamation, which, as of September 30, 2008, had been endorsed by 24 state and federal
judges from coast to coast. This document basically takes us back to the basics of why we have
the Federal Rules in the first place (see Rule 1), which is to exchange/share information and
prevent evidentiary surprises at trial. I think the trend is going to quickly expand beyond the
judges to include more practitioners and, more heartening, to include the clients. Corporations are
going to sign on to this Cooperation Proclamation in droves and, at the same time, they will
expect their outside lawyers to do so as well. A prime indicator of this trend was that there were
more in-house lawyers at the Sedona Conference Annual Meeting in Palm Springs this
November than at any other meeting of Working Group 1. If you are in-house counsel, I highly
recommend getting involved with this working group and coming to the mid-year or annual
meeting. In-house input is extremely important and is a voice that can be drowned out easily by
the defense bar voices. So, the bottom line is that the clients are getting wise to the costs
associated with not cooperating and will start requiring their outside counsel to support the
Cooperation Proclamation and act accordingly, on their behalf.

Two cases that need to be highlighted as a part of this cooperation trend are Judge Grimm’s
Manica opinion from October (see Ralph’s Prior blog for more detailed info) and U.S. Magistrate
Judge Deborah A. Robinson’s default sanctions award, in Moore v. Chertoff, Civil Action No. 00-
0953, dated December 17, 2008 (also see her detailed opinion of the same day on the discovery
violations in the discrimination case that led to this severe sanction).

The Opinion by Judge Paul Grimm for Mancia v. Mayflower Textile Services Co., Civ. No. 1:08-
CV-00273-CCB (D. Md. October 15, 2008) highlights cooperation as it is mandated by the
Federal Rules - it isn’t even about electronic discovery per se, just discovery. It talks about
playing hide the ball and making things difficult for the other side and basically comes out on the
side of common sense. Don’t just copy a set of interrogatories — do your job and tailor them to
the case and situation AND keep in mind what is at stake. Is it bet-the-company litigation or is it
$1M — act accordingly, cooperate accordingly. Judge Grimm is a wise man and practitioners
would do well to read his opinion. I think it is the first of many by other judges that will say the
same thing - something akin to what we all learned (or were supposed to learn) in Kindergarten:
“Play Well With Others.”

The second case I want to highlight under the cooperation trend/prediction, Moore v. Chertoff, is
a recent case about the Secret Service and its hiring practices. Judge Robinson harshly worded
opinion of December 17, 2008 was just the latest in a case first filed in 2000 that already had nine
orders to compel and three sanction orders. It seems that it is taking the Secret Service a long
time to “get the memo” on cooperation. Under the magistrate’s sanction, the Secret Service
(which says it will appeal the order) will be barred from presenting its own evidence or witnesses
when the lawsuit goes to trial and is limited to cross-examination of plaintiff witnesses. That is a
harsh penalty for not cooperating. Unfortunately, I think we will see more sanctions orders like
this before we start to see genuine cooperation.

Controlling Costs

2009 will bring a laser-like focus on cutting costs. With the general economic malaise and
uncertainty until the actual change in Administration, corporations are going to look at many,
many ways to cut costs. Litigation is an easy target (and a big one too).

Given the volume of data and the expense of reviewing documents and specifically, reviewing for
privilege, corporations are looking for ways to cut costs throughout the litigation process.
An article citing a recent industry study reported that “one-third of in-house counsel at companies
with more than $1 billion in annual revenue reported that 20 percent or more of their yearly
litigation spend was eaten up by preproduction privilege reviews. For one of our respondents, that
translated into an expense of $3 million to $5 million on a single case.” That is ridiculous and
corporations shouldn’t be paying that kind of money to review for privilege (see Use Technology
to Your Advantage below).

Costs can be controlled in any number of ways (in fact, I do a 1-2 hour CLE on this topic; feel free
to contact me if you are interested in doing this at your law firm or corporation) and should be
scrutinized from the beginning of any litigation. The GIANT elephant in the room is that law firms
get paid a ton of money to do document review and they don’t want to give up that cash cow.
Well, I have seen many corporations over the last few months send out RFPs to 1) consolidate
their litigation among law firms who are cost conscious (even to their own detriment given the
review cash cow I already mentioned) and 2) consolidate the work among a group of preferred
vendors. Both of those tactics are successful ways to control costs.

I think corporations are also taking back control of their litigation to minimize the spiraling costs of
discovery and to really control the decision-making about the litigation (when to settle, when to
fight to the end, etc.)

Two other ways to control litigation costs are to define a repeatable process and to assign a team
who is responsible for that litigation. Defining a repeatable process is hard work, but can be very
rewarding in terms of peace of mind, sanity, and lower costs. A repeatable process can include
any part of the discovery (or litigation) process: from how you collect data, to how your data is de-
duplicated, to how the data is reviewed (or not), to how the data is produced. If you have any of
these parts of the process defined up front (or the corporation does for you), then there is a lot
less wasted time, fewer periods of indecision, and less running around like a chicken with your
head cut off! Repeatability also means more defensible, which is also showing up as an issue
addressed in the courts - is your process defensible (see Ralph’s blog on Judge Facciola’s
opinion in O’Keefe).

Assembling a cracker-jack team is a great way to control costs; the team is familiar with your
data, with your process, your outside counsel, your preferred vendors, your way of doing things,
and above all else, is familiar with your business. The team isn’t always going to be the same size
- the size of the team will depend on the size and magnitude of your litigation.

The bottom line for controlling costs is to understand what you are buying (from vendors and
outside counsel) and what you are not buying, as well as understanding the value of what you
have bought.

Effective Information Management

Litigation is no longer a silo function in companies. Litigation is being looked at as a whole with
document retention, document (or records) management systems, litigation hold requirements,
and compliance requirements. At the heart of the issue with any of these functional areas is the
management of information - can you find what you want, when you want it? Most of the time the
answer is no. I have to spend way too long looking for it, if I ever find it (just look at your inbox to
test this belief).

IT people may become a litigator’s new best friend - can they speak intelligently about the data,
how it is kept, where it is kept, and how accessible it is or isn’t? These are all traits that now
matter in litigation. Data maps showing a corporation’s data can go a long way to help your
litigation team be prepared for a meet and confer. All of this rambling is really a long-winded way
to say: who manages and how you manage your information are of paramount importance now.
Cases and court opinions are catching up to real life. I think corporations and their outside
counsel took a wait and see attitude with the change in the Federal Rules. Now that the new rules
have been around for two years, more and more lawyers and judges are getting comfortable with
them (and they have even realized that the sky didn’t fall, as predicted by some). The impact of
the rules is catching up to real life in terms of the opinions of Judges; i.e. text messages are now
discoverable - weren’t they always??? — Flagg v. City of Detroit, 2008 WL 787061 (E.D. Mich.
Mar. 20, 2008).

Given that almost all information starts out as electronic now and that the volume of data is ever
expanding given the cheap cost of storage - we have to find better ways of searching and
retrieving the right information. Most cases come down to a handful of important documents -
finding that handful of important (or hot or smoking) documents quickly and efficiently, not to
mention cost effectively, will be what drives most decisions this coming year.

Use Technology to Your Advantage

There are so many new technologies (and old ones resurfacing in the litigation context) in this
area, that it is impossible to keep up with them all. Every vendor sounds like the other - just walk
the halls of LegalTech and you will find that every vendor says they do it all when it comes to
electronic discovery. I find it hard to believe that a coding and scanning vendor is a forensic
expert (but I’ll leave that to you to decide). Educate yourself as to what tools and technology are
out there and how they are best used.

I was asked by a lawyer at a very large law firm while I was giving presentation on search &
retrieval technologies why one would use clustering, if the cluster isn’t what you want to see - that
illustrated my point perfectly - you wouldn’t. Clustering technologies have their uses, but it may
not be the “use” you need at the moment. Use the right tool for the right problem, not one tool for
every problem. I am seeing law firms license software (that has one purpose) and use it for all
clients for all matters because they have paid a hefty licensing fee and now are trying to get a
good return on their investment — this may be doing their clients a disservice if it doesn’t fit their
needs for that particular litigation. Using the right tool for the right problem is easy to say, but
much harder to do, because you often don’t know what problem you have until you poke around
in the data a little bit. If you have keyword culled out most of the data, you will never really know
what technology would best suit your problem because you will most likely not figure out your
problem. It will have been culled out prematurely.

So that brings me to my next point in using technology to your advantage - is keyword search
dead?

Keyword search is good if you want to look at a slice of data in time versus find everything related
to a topic or the context of a document. Keyword search can be over-inclusive or under-inclusive
depending on the keywords you are using in your search. For a more comprehensive discussion
on keyword search and other search and retrieval methodologies, see the Sedona Conference’s
Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-
Discovery (August 2007). (For more information, I also do a CLE on these alternative approaches
to keyword search). Can you just walk in to a meet and confer with a key word list and hope that
your opponent will agree with it? Unlikely. Even judges are cautioning against this tactic. Saying -
if you do that, you must live with the results. See Henry v. Quicken Loans.

Given the Blair & Maron study (David Blair & M.E. Maron, An Evaluation of Retrieval
Effectiveness for a Full-Text Document Retrieval System, 28 Com. A.C.M. 289 (1985)), I can’t
believe law firms are still advocating that, and corporations are still paying, humans to review
documents (for relevance or privilege). [Note: Ralph explains the study and comments on the
Sedana Search & Retrieval paper in one of his prior blogs.] Technologies are available to
minimize the number of relevancy and privilege decisions a review team needs to make. Making
4,000 relevancy calls certainly sounds a lot better than making 4,000,000 relevancy calls. One of
the tools that can be used to do this is referred to as automated review or technology enhanced
review. The graphic illustrates what this process looks like:

Methods like this technology enhanced review method can and should be used for e-discovery
and judges have alluded to their acceptable use in various opinions. See Judge Facciola’s
comment about “where angels fear to tread” in his O’Keefe opinion and you will see what I mean;
or you can see one of his prior cases for his first hint that concept searching may be a better way
to go than keyword search. I also spoke to Judge Grimm while at the Sedona Working Group 1
meeting in November and I asked him (only half-jokingly) when he was going to come out with an
opinion that said these tools were OK to use and he said “I thought I already had.” See his Victor
Stanley opinion.

Another thing that I am seeing that is causing a lot of confusion in the market place is the use of
word analytics. What does it mean? Well, a good lawyer answer would be, “it depends.” Analytics
can mean what you want it to mean, kind of like statistics. Analytics can be the analysis of data
from a counting perspective - how many files, what file types, what were the words used in the
data set (an index), etc. And all of these things can be graphed so that they look nice (and visual
learners can grasp the meaning more readily than reading all of that text and numbers). But is
that really what is meant by analytics???

“Real” Analytics involves computationally difficult modeling, which isn’t quick or easy. So, look
under the covers when vendors tell you they do analytics to see what type they are really talking
about. (See Competence below)

So, the bottom line for using technology to your advantage is that there is a lot out there, and it is
a lot of technology that lawyers may not be familiar with (who knew you needed to be a
statistician? I thought I went to law school so I didn’t have to do this math stuff? Isn’t that what
you are thinking right now?) So, be creative in your problem solving and see what technology you
can use to your advantage to save you (or your client) a ton of money.

Industry Turmoil

Litigation Support has always been a fractured industry: it is full of regional companies that blow-
back or scan and OCR documents, or mom and pop type outfits that can help copy documents
when you are in a bind, but they cannot handle large cases or electronic data. Over the last few
years, shops that do coding and scanning have tried to convert themselves to a technology
company by licensing dtSearch (or other search technology) to keyword search electronic data.
This is not meant to cast aspersions on companies doing this, since they need to find a new
sustainable business model to survive in an ever a changing industry. Over the last few years,
many new companies have emerged that have written their own software or licensed someone
else’s and have applied the technology to electronic documents.

Companies are being acquired left and right; lit support companies AND law firms are going out
of business left and right. As an example, companies in risk management see the connection to
litigation and have bought companies on the litigation side. Acquisitions are difficult in the best of
circumstances. Integration of the technology and the people is difficult even when both
companies want the deal to happen. I was at Intuit when we were acquiring a company a month
and some acquisition integrations were easier than others. And the integrations are time
consuming and de-focusing from the core business. Sometimes it can take a year before the
merged company regains its focus.

I think the lit support market (or litigation market) is fundamentally relationship based, which many
software companies entering this space don’t realize. Currently, the relationship matters more
than having the best technology. The litigation market will move slowly away from a purely
relationship-based business because the effective use of technology will require it, but this
change will take a few years.

Despite these happenings, this industry will continue to be fractured - we are trying to solve many
complex problems all at the same time - which means that it will take awhile to sort it out and find
a solution that fits litigation, compliance, records management, governance, and risk
management. I am not sure that it will even happen. Finding a one-size fits all solution is a tall
order and no one company (or law firm, for that matter) can currently do it all.

All I can say is - when hiring outside law firms, or any vendor — do your homework, check
references, ask about future plans, exit strategies, profitability, etc.; no question should be off
limits when so much is at stake in a litigation matter! Lots of carcasses will litter the roadside of
the litigation support industry this year; you don’t want your law firm or vendor to be one of them.

Competence

I tried to keep this list down to five major trends/predictions, but this one is too important to not
have it’s own section: competence. I think Ken Withers speech at Georgetown’s Advanced
eDiscovery Institute this November was spot on when he suggested that there are too many
lawyers who think they know how to litigate in this “electronic” day and age. They may know how
to litigate, but they don’t know how to find the information, review it effectively, and keep out
privileged information in a cost effective way. Competence - in knowing where to look for
information, what types of information, how to analyze it, etc. - are all skills that lawyers (or
someone on their staff or team) need to develop in order to be truly competent. You may not find
all of these skills in one person, but surely you can assemble a team to be competent in all of
these areas. I would dearly love to see more effective use of tools and technology, so that
lawyers could spend less time reviewing documents and drafting privilege logs!

I think lack of competence has led to some disturbing behavior and, as a General Counsel, I hope
that this behavior doesn’t become a trend. The sometimes contentious relationships between in-
house and outside counsel is worsening. Examples of this range from Zubulake, where in-house
counsel simply sent an email and hoped that a litigation hold order is followed - they have to
proactively follow up on that litigation hold order - to Qualcomm, where sanctions and fines
resulted because they played hide the ball, to suits between vendors and the people who hired
them (Sullivan & Cromwell suing EED, for example). These are trends and happenings that I
would like to see end. See the Cooperation section above.

I want to end by saying this is a fascinating industry and is a time of turmoil so — Get in, hang on,
it’s going to be a bumpy ride in 2009.