Nuix Legal Hold provides legal teams the ability to manage the electronic discovery process from the trigger event through collection, indexing and production of electronic data.  The system streamlines the overall process of responding to anticipated litigation and satisfies the duty to preserve relevant information in a defensible, repeatable manner. With Nuix Legal Hold, legal teams now have a fully integrated electronic discovery solution that systematically tracks, notifies and analyzes data from custodians subject to litigation holds.

“Zapproved has developed an effective and efficient system for managing litigation holds and the preservation workflow, and we’re very excited to work together to offer Nuix Legal Hold as a valuable service for our customers,” said Nuix CEO, Eddie Sheehy. “Nuix Legal Hold perfectly complements our existing solutions for managing electronic discovery.”

“Nuix and Zapproved are both committed to introducing powerful solutions into the legal market that our users find simple and easy to use,” said Monica Enand, CEO and founder of Zapproved. “By partnering with Nuix, we are integrating two state-of-the-art solutions in a way that empowers organizations to take on the challenging complexities of managing eDiscovery in-house.”

Following on the fact that emails and ESI pertaining to the case were lost, Judge Waxse seemed unimpressed with the defendants’ explanation. In a deposition transcript cited in the opinion, Branch’s managing partner demonstrates a complete lack of awareness of the purpose or process of a litigation hold, believing that such efforts weren’t necessary since “we wouldn’t destroy anything.” Interesting approach to a triggering event, given the seismic shift that had occurred nine months earlier with The Pension Committee opinion.  

Although initial sanctions were not particularly costly, the order from Judge Waxse did include immediately instituting a long overdue litigation hold.  Should relevant evidence be later revealed as not having been preserved, a motion for spoliation sanctions should certainly be expected.

The moral of the story, as Dennis Kiker rightly concludes, is that Pouncil serves “as a cautionary tale for law firms that e-discovery does not discriminate. The rules that apply to our corporate clients apply to us as well.” Well said.

Further Reading:

• Kiker, Dennis, “Allergies, E-Discovery and Karma: Yes, The Rules Apply to Law Firms, Too,” The e-Discovery Myth Blog, LeClair Ryan, April 23, 2012.
• Opinion: Pouncil v. Branch Law Firm (Case No. 10-1314-JTM-DJW, D. Kan. Mar. 7, 2012)

JETWG was established in 1998 and its members are made up of representatives of the AOUSC, the Office of Defender Services, the Department of Justice, the Federal Defender Organizations, private attorneys and federal judges. The JETWG’s stated purpose behind the recommendations is to “increase efficiency and reduce costs.”

Issues of legal holds and preservation are addressed within the Recommendations, although only cursorily. As stated in the NYLJ article, the primary difference is that civil cases emphasize “speedy, inexpensive and efficient resolution,” whereas criminal procedures must protect constitutional rights, including those of search and seizure and protection against self-incrimination. The only mention of preservation is that ESI from third parties should retain a copy in the native format.

Part of this is due to the nature of preservation in criminal matters which is less about preserving ESI from inadvertent deletion (as in civil cases) versus the direct seizure of criminal evidence in digital form. In criminal matters, the prosecution has more power to take control of ESI through court orders, search warrants and subpoenas.

However, there is more opportunity for criminal matters to take cues from civil procedures regarding preservation, most notably in the protection against inadvertent spoliation. Just as a plaintiff in a civil case may overlook its obligations to save ESI, law enforcement officials can also be prone to not adequately save information such as was asserted by Abbott Laboratories in In re Pharmaceutical Industry Average Wholesale Price Litigation. The NYLJ article also points to U.S. v. Goncalves in which text messages of FBI personnel undermined the prosecution’s case.

A documented procedure for issuing holds of digital evidence in order to avoid it being lost or altered is as critical in this circumstance as in a civil procedure and should be included as a critical process. Ensuring that the defense has access to emails, hard drives, text and IM messages, social media accounts, mobile phone records and internet search histories, among others — which can be altered or lost through inaction — is critical and clearly an area where more explicit guidance is needed.

The recommendations are expected to have a large impact on the way ESI is handled in criminal cases, and they also open the door for further discussions surrounding this complicated topic.  Judge Scheindlin and Rabkin state that the recommendations are “an important first step and…required reading” however, they also expect more guidelines to follow as this area evolves.

The RAND Institute for Civil Justice (ICJ) published an interesting study last week focusing on the costs of electronic discovery in civil litigation. The 131-page report Where the Money Goes: Understanding Litigant Expenditures for Producing Electronic Discovery offers some great insights into the costs of discovery, and perhaps more importantly, the current challenges that corporations face around preservation.

Before delving into ICJ’s findings, first a quick word about the study. The non-profit RAND Institute for Civil Justice, part of the renowned RAND Corporation, was founded in 1979 and is “dedicated to making the civil justice system more efficient and equitable by supplying…objective, empirically based analytic research.” In the case of this report, the research team led by Nicholas Pace and Laura Zakaras used a case-study method by working closely with eight “very large” corporations to examine their costs across 57 e-discovery productions. The identities of the corporations have been kept confidential.

What I found remarkable was the shift in focus of the study based on initial feedback from the respondents.  Originally, the preservation phase of electronic discovery wasn’t to be a focus of the study; but when the ICJ researchers spoke with in-house counsel they found many expressing “more concern about the challenges and costs of preservation than about the costs of responding to requests for production.” (p.85) With that realization, a new round of interviews were added to focus on preservation with interviews taking place from October 2010 to June 2011. One of the most telling findings is that two of the three recommendations of the entire report pertain directly to preservation.

Following are the four key takeaways pertaining specifically to litigation holds and preservation of electronic evidence from Where the Money Goes:

1. Preservation costs, although difficult to quantify, represent a significant portion of an organization’s discovery related expenditures (including efforts around implementing legal holds).

In speaking with in-house legal teams, researchers found it difficult to quantify expenses associated with preservation. Preservation costs are largely internal expenses in the form of staff time of the legal and IT staff as well as the distributed effort of custodians, and therefore difficult to track without concerted effort. Even with direct expenses, such as investing in a legal hold management system, the investment is distributed across all “present and future preservation needs” or may be “intertwined with other business purposes” such as records management (p. 86). Further, “softer” costs such as the opportunity cost of lost productivity and inefficiencies due to not adopting improved preservation processes represent a significant challenge to justify expenditures using traditional ROI economics.

2. Better numbers will help build a stronger business case for improving preservation, but corporations that have modernized anecdotally reported cost savings.

In spite of the challenges associated with tracking preservation cost, all participants “reported that expenses associated with preservation now constitute a significant portion of all of the company’s discovery-related activities.” (p.89) Some believed strongly that preservation costs were predominate (p.88). Reasons cited included the burden on staff of managing information under “hold” and the costs of storing data for long periods. The most telling – and the first time I can remember seeing this validated by a third party – are the burdens associated with implementing and auditing legal holds. (p.88) In these larger corporations, some staff are “dedicated to little other than managing preservation chores.” (p.88)

It was clear from the study that more research is needed to truly understand the total cost of preservation.  Without question, one of the key drivers is a clear tendency to over-preserve in the face of increasing risk and uncertainty regarding what constitutes reasonable effort. With better understanding of the costs, companies will find it easier and more imperative to invest.

3. Researchers noticed a “greater comfort level” around preservation for companies with an automated legal hold compliance system.

The study explicitly addresses the benefits of having a system like Legal Hold Pro in place. (p. 92) Despite the “potential for over-preservation” and the “awareness that compliance could never be fail-safe,” companies that had invested in an automated legal-hold-compliance system felt better off.  As reported, “moving from an ad hoc response for legal holds that depends on individual attorneys to craft and manage both notice and compliance to a process that was more routinized and more consistently documented and auditable was felt to remove some of the danger that the approach would be challenged in the future.”

4. Inconsistency across jurisdictions is compounding costs and illustrates the need for “uniform, transjurisdictional policies.”

As we’ve seen with recent case law, there continue to be conflicting opinions across jurisdictions regarding the scope and mechanics of legal holds and preservation. As the report notes, “in the context of preservation, a world in which IT, corporate policies, and the law all are rapidly evolving in sometimes-different directions, such complaints may have more traction than is usually the case.” (p.94) The participants worry about where they sit on the “continuum between total acceptability and serious sanctions.” (p.94) There is a unanimous and resounding desire for clear guidance on the scope and manner of preservation from the courts – which is one of the clear messages of this study to policymakers.

This post focuses on only one aspect of this important research project. Everyone involved in electronic discovery would be well served in downloading a copy of Where the Money Goes and reviewing the RAND Institute for Civil Justice’s analysis across the electronic discovery spectrum.

Further Reading:

• Pace, Nicholas M. and Laura Zakaras, “Where the Money Goes: Understanding Litigant Expenditures for Producing Electronic Discovery,” April 11, 2012, Institute for Civil Justice, Rand Corporation.

Four Perspectives on Preservation and Proportionality: The Judge, The GC, Plaintiffs’ Counsel and Defense Counsel

Date:   Thursday, May 17

Time:  8:30 to 10:00 a.m.

Location:  New York City Bar Association Building, 42 W. 44th St., New York, NY

Cost:  Complimentary, but space is limited. Reservation required.

CLE Credit:  Pending for NY

PROGRAM OVERVIEW 

Legal Hold Pro is proud to host a 90-min. presentation for attorneys and e-discovery professionals on the ongoing discussion around best practices for data preservation.  The panel will feature four perspectives: Judges represented by Hon. James Francis (S.D.N.Y), GCs by Lynn Dummett (Allianz), William Butterfield (Hausfeld) for Plaintiffs’ Counsel, and Defense Counsel with Robert Owen (Sutherland). The panel will be moderated by Hon. Ronald Hedges, a former U.S. Magistrate Judge and frequent presenter nationally on e-discovery issues.

The panel will update the audience on the topic of preservation and how the principle of proportionality should be applied. In anticipation of a discussion on amending the Federal Rules, the program will represent different perspectives on how retaining data is viewed with their interests in mind. This is a timely program since the cost of preservation is squarely in the spotlight due to recent events, including the Dallas Mini-Conference in September and the Pippins v. KPMG opinion.

The program continues the discussion that was first covered in our latest Signature Paper Preservation and Proportionality.

The case involved a truck accident that occurred in Nicaragua in 2008 involving two workers that were in the country working on contract for U.S.-based Vezer Industrial Professionals on an engineering project at a gold mine. A driver named JJ “Satan” Ocon drove the plaintiffs into town for dinner. The plaintiffs alleged that the driver “overloaded the vehicle and drove recklessly, at an excessive speed, and while under the influence of alcohol” resulting in a serious accident that injured the plaintiffs. Vezer claimed that Mr. Ocon, aka “Satan,” was employed not by them, but by a local transportation company.

This opinion principally focused on Vezer’s failure to preserve electronic information relevant to the case. Early in the depositions two employees of Vezer, including the owner of the company, admitted that they no longer had electronic data for several reasons – failure to search for and save the relevant documents, a computer crash and lack of back up for the computers in question. Mr. Vezer also maintained that his company was small and he primarily used the telephone for communication.

In response, to his argument of being a small company, Judge Delaney writes in her opinion that, “it seems clear that a proper litigation hold was not implemented.” She goes on to say that the small size of the company “does not explain why minimal, if any, efforts were made to preserve relevant documents and ESI…” following the trigger event which was, at the latest, when the defendants were served with the complaint.

In looking at the facts, the opinion states the following:

In sum, it appears that, despite its counsel’s instructions, Vezer merely proceeded with business as usual, without making any special effort to retain ESI relevant to this litigation. As such, Vezer has breached its duty to preserve discoverable information and the court may impose sanctions.

The court concluded that a default judgment was not appropriate and that the prejudice due to loss of data was not severe. Also, based on the Zubulake standard, the defendant’s actions did not rise to level of gross negligence. However, the court did conclude that monetary sanctions were appropriate (although not to the level requested), and the plaintiffs were awarded $3,200.

This opinion reminds us of three things.

• First, even if a company is small, employees need to make good faith efforts to implement a legal hold to the Zubulake standard to preserve data.
• Second, be prepared to defend figures provided when seeking monetary sanctions.
• Finally, when your driver’s name is “Satan” it’s perhaps wise to look for an alternate form of transportation!

A unanimous opinion out of a New York state appellate court in the Voom v. EchoStar is the first case at this level to explicitly uphold the standards set forth by U.S. District Judge Shira Scheindlin in Zubulake and Pension Committee. In the opinion, penned by Associate Justice Sallie Manzanet-Daniels of the New York Appellate Division of the Supreme Court, First Judicial Department, the justices upheld a lower court opinion that Echostar was “grossly negligent for failing to implement a litigation hold” and “that an adverse inference charge was an appropriate spoliation sanction.”

The matter commenced in February 2008 when EchoStar ended its $2.5 billion contract with Voom for broadcast rights to Voom’s programming. Voom sought sanctions for spoliation because EchoStar failed to issue a legal hold once litigation could be “reasonably anticipated” and failed to suspend automatic email deletion until four months after the suit was filed resulting in a loss of relevant emails.

Justice Manzanet-Daniels wrote in the opinion which upheld the November 2011 ruling by Manhattan Supreme Court Justice Richard Lowe the following:

This case requires us to determine the scope of a party’s duties in the electronic discovery context, and the appropriate sanction for failure to preserve electronically stored information (ESI). We hold that in deciding these questions, the motion court properly invoked the standard for preservation set forth in [Zubulake and Pension Committee], which has been widely adopted by federal and state courts. In Zubulake, the federal district court stated, “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold’ to ensure the preservation of relevant documents” (Zubulake, 220 FRD at 218).

The Zubulake standard is harmonious with New York precedent in the traditional discovery context, and provides litigants with sufficient certainty as to the nature of their obligations in the electronic discovery context and when those obligations are triggered.

This case is important for a couple of different reasons. First, EchoStar attempted to argue that Zubulake was “vague and unworkable” not providing guidelines for what ‘reasonable anticipation of litigation’ means. The appellate court unanimously rejected EchoStar’s argument, stating that the standard is already enforced in all four of the federal district courts and that ‘reasonable anticipation’ can be defined as “such time when a party is on notice of a credible probability that it will become involved in litigation.”

The other noteworthy point is that EchoStar had made this mistake and been sanctioned before, in 2005. The courts were aware and took notice that they had failed to correct an unacceptable practice that affected their current situation.

As Jonathan Sablone, et al., of Nixon Peabody wrote in their February 13 recap of Voom v. Echostar:

[T]he EchoStar court brought some long-awaited clarity to e-discovery law in New York State courts when it explained exactly what needs to be included in a “litigation hold.”

This decision by the New York Appeals Court is an emphatic reminder that courts will continue to impose sanctions for failure to preserve electronic data when litigation is imminent. Measures must be taken to have a legal hold process firmly in place and this is standard is continuing to permeate the U.S. judicial system – now to the state level – and the punishment, in this case an adverse inference instruction, can be severe.

Further Reading:

• Pierson, Brendan, “State Panel Adopts ‘Zubulake’ in Faulting Handling of E-Mails,” New York Law Journal, February 2, 2012
• Sablone, Jonathan, Constance Boland, Jacob Herstek and Kevin Sanders, “The Zubulake Preservation Standard Now Applies in the First Department,” Electronic Discovery and Evidence Law Alert, Nixon Peabody, February 13, 2012

This is the fifth year that Austin-based IE Discovery has been surveying attorneys, records managers, paralegals and IT professionals are facing “increased workload while moving more work in-house” while their e-discovery burden grew “exponentially.”

Here are a few of the highlights from this year’s survey:

• Budget constraints are lessening with only 15 percent of respondents reporting this as a top concern compared to 30 percent last year.
• Confidence is growing surrounding electronic discovery processes as 60 percent of those surveyed feel more confident about their ability to respond compared to the year before.
• Over 70 percent feel like they work well with their IT departments.
• Forty five percent of e-discovery projects are handled in-house.
• More than 30 percent said their electronic discovery burden grew exponentially.
• Agencies are moving towards cloud-based platforms.

The results of the Benchmarking Study survey build a strong case for implementing a cloud-based litigation hold and preservation workflow management tool like Legal Hold Pro.  Agencies are beginning to look at technology solutions to maximize employees’ efficiency and more defensibly handle the larger caseload in-house. Even though budget pressures may be easing, Legal Hold Pro is priced to be accessible in order to help free up employees to work on other projects.

If you work in the public sector, contact us at info@legalholdpro.com so we can show you a brief online demonstration so you can better understand how Legal Hold Pro can improve your agency’s processes.

Leading up to the conference, Law Technology News wrote about the expected buzzwords which pointed to “predictive coding” (a.k.a. “technology assisted review”), “social discovery,” and “Big Data.”  Hardly a presentation was heard that didn’t include these buzzwords being liberally sprinkled throughout.

Yet it’s interesting to think back just two short years to LegalTech 2010. Pension Committee had just been issued, reaffirming the importance for a robust legal hold process. Judge Scheindlin, and numerous jurists since, reminded the legal community of the need for and rationale of sound litigation holds.

With all the hype around this year’s buzzwords, it’s crucial that we not regress into thinking data preservation is no longer a concern.  In fact, all the “predictive coding” in the world won’t protect you from the corresponding sanctions (self-imposed or otherwise) that result from inadequate or ill-informed preservation practices.

So, with that as a backdrop, let’s look at

Four Reasons Why Predictive Coding Isn’t for Everyone:

Reason 1 – Having an effective preservation strategy will save you more than predictive coding.

Organizations spend too much, too early in the e-discovery process. As described at the Dallas Mini-Conference in September, GCs are over-preserving due to the “reputational fear of being sanctioned or even accused of spoliation.” By putting a solid legal hold and preservation process in place that is defensible, it provides more leverage at the Rule 26(f) ‘Meet and Confer’ to limit the scope of discovery. Further, a manual legal hold takes three times the amount of staff time as an automated legal hold process.

Reason 2 – Focusing on defensible litigation holds will make you thinner than predictive coding.

To be fair, it will make your collections thinner. As one GC noted in Dallas, “we are overdoing it by 90 percent.” With a sound preservation strategy, which Craig Ball refers to as “preserving carefully,” companies can right size their collections efforts to minimize the amount of data that requires subsequent handling, processing and production. At $500 or more per gigabyte, the less data the better.

Reason 3 – Courts haven’t punished anyone for bad “predictive coding” practices.

That’s not an apples-to-apples comparison, obviously, but the point is courts are demanding better preservation. Predictive coding still needs its day in court; whereas preservation practices no longer enjoy that reprieve and are scrutinized and frequently challenged. Read about recent cases here.

Reason 4 – Number of trigger events requiring a legal hold: 100%. Number requiring review: Less than 10%.

The number of reviews that seriously need “technology assisted review” remains minimal. For litigants facing large discovery data volumes, such advances in technology will undoubtedly help produce the most prescient information in less time and at less cost. Yet every company involved in litigation, regardless of size or frequency, must be familiar with and implementing preservation best practices (written holds, reminders, custodian acknowledgment, etc.)

While we’re trying to be somewhat lighthearted to make a point, the facts are that most legal teams still need to make strides toward fortifying their preservation practices. The bar is high and the courts are clearly impatient when dealing with possible spoliation. If you aren’t confident in your process, make 2012 the year you get your legal hold “house” in order.

To learn more, you may want to review “Intelligent Preservation” which suggests new approaches to lowering electronic discovery costs.

The new functionality supports defining any number of detailed tasks, with assigned resources such as IT personnel or records managers being able to report progress on each task. Hold managers can monitor in real-time both custodian compliance and collections progress, and retain a complete history of all actions taken.

Legal Hold Pro has become the fastest growing legal hold management system by helping corporate legal teams and law firms implement defensible preservation efforts. The on-demand system is intuitive to operate and can be used immediately without the need to install, configure or maintain software.

“The mission of Legal Hold Pro is to be the most straightforward path for organizations to get their data preservation process more than just under control, but streamlined and efficient,” said Brad Harris, Vice President of Legal Products, Zapproved. “With this latest release, our customers can ensure that both legal hold notifications and associated data preservation and collection tasks are effectively managed throughout the life of a matter.”

Legal Hold Pro has been embraced by Fortune 500 companies, leading law firms and government agencies because it reduces risks of adverse outcomes in litigation. The proven compliance platform also offers significant savings by reducing labor costs associated with legal holds by more than 75 percent which delivers an ROI of more than 260 percent in the first year.

To schedule a time to view a demonstration, send an email to info@legalholdpro.com or call (888) 376-0666.