Litigation: Controlling litigation expense and exposure through appropriate self-help

Volume often is the primary driver of expense and burden in litigation, but fortunately, it largely is within a company’s control

Companies continually confront the exposure and expense attendant to electronically-stored information (ESI) in litigation. Clients used to worry about a single “smoking gun” document in discovery. Now, the sheer volume of ESI companies often must produce can be crippling, even in cases with relatively little risk or merit. Legally-imposed preservation requirements can foist enormous burden and expense on businesses even before litigation ensues.

Courts, regulators and legislators have provided limited relief. Proposed amendments to the Federal Rules of Civil Procedure, intended to narrow discovery and provide for greater proportionality between litigation expense and exposure, present some potential relief. But the amendments go only so far, and of course provide no relief for proceedings in other forums. So what are companies to do? The solution lies with appropriate self-help.

Volume often is the primary driver of expense and burden in litigation, but fortunately, it largely is within a company’s control. Although some ESI is subject to certain legal preservation requirements, such as Sarbanes Oxley and pending or anticipated litigation, much of a company’s ESI — indeed, perhaps the vast majority — at any given moment need not be preserved except for genuine business purposes. Businesses can dramatically cut cost and risk in litigation by adopting, and more importantly enforcing, appropriate document retention policies that ensure the routine destruction of all ESI that need not be maintained for legal or business purposes. With auto-deletion of ESI (except for data required to be preserved), employees need not be entrusted — or burdened — with routinely cleaning out their otherwise cluttered and growing mail boxes. Short time periods (e.g., 30 days) and small size limitations (e.g., megabytes, not gigabytes) are key. The same is true for archived and disaster-recovery data. Periodic compliance audits help ensure that companies do not learn of ESI hoarders only in litigation.

Litigation-readiness plans also can be very valuable. Some courts have sanctioned parties for discovery failures just for negligence. Identifying sources of potentially relevant data, assigning responsibility for preservation, collection, and production tasks, and describing the workflow for compliance before litigation arises can help avoid costly missteps.

Once in litigation, companies can manage expense and exposure through reasonable negotiation and cooperation, or motion practice when facing an uncooperative adversary. Obtaining an early order that specifically describes what must be preserved, and how, can remove the uncertainty that causes companies to over-preserve at unnecessary cost or under-preserve at avoidable risk, or both. The same is true for court-ordered discovery plans that bless significant limitations on discovery, such as ESI source limits, and cost-saving measures, such as advanced technological solutions. Parties also are well-served obtaining a non-waiver order, especially in federal court under Federal Rule of Evidence 502, barring inadvertent privilege waiver (and even allowing intentional disclosure of privileged information without waiver). 

Fortunately, technology has helped fill the gap between outmoded legal obligations and virtual warehouses brimming with data. Technology-assisted review (TAR) has proven more accurate, dramatically less expensive, and much faster than traditional manual review — and it has increasing support from the courts. TAR has a variety of uses, such as identifying responsive documents to be produced, privileged documents to be withheld, and confidential information to be redacted. Metadata (or “data about data”) can be used for cost-saving analytics and other applications, such as electronically-generated privilege logs that avoid the cost of tedious manual logs.

The less ESI businesses maintain and the more prepared businesses are for litigation, the less expense and exposure they face in litigation. And by embracing certain solutions, companies can significantly help themselves in ways the courts and rule-makers have not.

Contributing Author

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David D. Cross

David D. Cross is a partner in the Antitrust and Litigation groups and co-chair of the E-Discovery & Information Management Group in Crowell & Moring’s...

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