eDiscovering a Solution

Originally published in National Magazine (Canadian Bar Association)

Your corporate clients maintain several sophisticated computer systems, each of which contains terabytes (thousands of gigabytes) of data. Along comes a litigant who sues one of your clients. The discovery phase begins, and a nightmare may ensue.

“Under the civil rules of procedure in Ontario, you’re supposed to produce every single document that has a semblance of relevance to the case,” said David Outerbridge, Counsel for Torys LLP, Toronto and Chair of Ontario’s E-Discovery Implementation Committee. “If you take that to its logical extreme, you could spend hundreds of thousands, if not millions of dollars finding deleted documents, every document on a backup tape, and so forth.”

Welcome to the world of ediscovery. “It creates a whole new dimension of costs and time and effort,” said Outerbridge.

To make that welcome less painful, the Sedona Conference set up Working Group 7, commonly called Sedona Canada. This is the first Canada-based working group of the Sedona, Arizona-based nonprofit law and policy think tank. Working groups consist of experts who address issues with current legal systems and practices.

Sedona Canada released a draft of its discovery principles in February 2007 and the final version earlier this year. Litigation lawyers are eagerly embracing them. Like other groups, Ontario’s E-Discovery Implementation Committee is preparing model e-discovery precedents based in large part on the Sedona Canada Principles. “Our primary focus is on taking Sedona principles and turning them into something people can actually use,” said Outerbridge.

Knowledge of ediscovery procedures does not seem to be widespread. “In my practice, I’ve never received a preservation letter,” said Outerbridge, referring to a request sent to opposition counsel that details the information a litigant seeks.

Dominic Jaar does send litigation hold letters, but “Many times, I don’t even get a reply,” he said.

“When parties get a letter like this, rather than reply, or meet and confer, they go to their IT people and ask them to freeze the data,” added the in-house counsel, commercial litigation for Bell Canada. “IT says it takes a month, will cost X amount of money, and by the way, you’ll need to buy an extra server.”

“When the cost to meet data requirements is close to, or exceeds, the value of the suit, the lawyer often asks the client: ‘Why don’t you just pay?’ I often just get a cheque or an offer.”

If there’s one factor that elevates discovery costs, it’s the “semblance of relevance” test that applies to both production and oral discovery. “Relevance” as currently defined is so broad a concept that Coulter Osborne, former Associate Chief Justice of Ontario and leader of the Civil Justice Reform Project (CJRP) noted in his November, 2007 report “Civil Justice Reform Project” that “’trial by ambush,’ the original concern, has been replaced by ‘trial by avalanche.’” In other words, the semblance of relevance test often trumps concerns of proportionality: the time and cost of ediscovery relative to the damages at stake.

“We don’t want that,” said Nova Scotia Justice John Scanlan, a member of the Sedona Canada Editorial Committee. “We want issues to be tried in a timely and less expensive manner.”

“Our principles should be guidelines to litigants,” Scanlan continued. “We want to focus on substantive issues.”

The Sedona Conference has tackled ediscovery in the United States, and Canadian legal professionals can now learn from the relatively large cache of case law that has already piled up south of the border. “Ediscovery is a growing issue in Canada but we haven’t seen as much of it as they have in the US because we don’t have that extent of large complex litigation,” said Ontario Justice Colin Campbell, Chair of the Sedona Canada Working Group.

But American legal culture is not similar enough for Canadian lawyers to use it as a model. For instance, consider spoliation of evidence. In accordance with one Sedona principle, courts on both sides of the border generally draw adverse inferences, assuming that any destroyed documents would prove unfavourable to the party that destroyed them.

However, Canadian courts have yet to impose the draconian penalties for spoliation that American courts have levied against corporations and their legal counsel. “The same stick doesn’t hang over lawyers here,” said Outerbridge.

In the client’s defense, technology makes prevention of spoliation difficult. “The nature of computers is such that they’re constantly reusing memory space that was previously occupied by other data,” Outerbridge explained. “If you’re dealing with a case where real-time preservation is an issue, ediscovery requires very prompt action.”

Sedona Canada seeks to create uniform guidelines for every province and territory, to simplify class-action lawsuits and large lawsuits that “migrate” from province to province. A nationwide system would prevent decisions reached in one province from hobbling proceedings in another, while applying equally to smaller-scale disputes.

Montréal-based Jaar, who is writing a book on ediscovery, points out key differences in Québec’s civil law jurisdiction. For instance, plaintiffs in La Belle Province receive exactly and exclusively what they ask for, and no more. “Requests such as ‘Give me all the emails that were exchanged between my client and yours,’ would be deemed a fishing expedition in Québec,” said Jaar.

“Defendants can object to document request based on relevance, privilege and other reasons,” Jaar added.

Scanlan noted the effect Canadian ediscovery principles may have beyond the provinces. “The decisions we make here may have an impact in other jurisdictions,” he said. “In today’s free-trade world, things that used to be within our borders in terms of litigation now may have international implications. For example, rulings on admissibility of evidence made in Canada may affect proceedings in other countries.”

The Sedona Canada ediscovery report lists 12 principles, and early sentiments are that one in particular will make the initiative work. Experts refer to it as “meet and confer.”

Principle 4 of The Sedona Canada Principles states, “Counsel and parties should meet and confer as soon as practicable, and on an ongoing basis, regarding the identi?cation, preservation, collection, review and production of electronically stored information.”

“I think that is going to be the most important of the principles,” said Campbell. “It hearkens back to the days long gone by when that’s exactly what lawyers did before they got into lawsuits. They met with each other to find out what was involved and talked about how things could be done in an expedient fashion.”

“It seems completely foreign, especially for people who aren’t lawyers or who don’t work in a collaborative bar,” said Sedona Canada member Kimberley Kuntz, a partner with Bull Housser & Tupper in Vancouver. “You can work together to lay a discovery plan out, suitable to the litigation, based on the issues, the costs involved. And you avoid disputes down the road.”

Osborne seconds Kuntz’s observation in his report when he writes of the following “reality of civil litigation in Ontario”: “… discovery problems do not exist everywhere in the province.  They were found to arise primarily in larger, complex cases and most frequently in large urban centres such as Toronto.  They rarely exist in smaller communities where the bar enjoys a spirit of collegiality and cooperation.”

“The problems of ediscovery show the absolute need to go back to a cooperative approach,” said Campbell.

Kuntz, whose firm has been retained by the government of British Columbia in its litigation against tobacco companies, noted that lawyers dealing with large volumes of edocuments have already caught on. “We started very early on with the defendants in our lawsuit, meeting and conferring in advance over the scope of our discovery,” she said.

Outerbridge is aware of the other edge of the meet and confer sword, particularly for cases that deal with smaller dollar values. “If you ask somebody to use a meet and confer agreement 20 pages long that addresses 40 different topics, just having a meet and confer meeting itself would cost several thousand dollars,” he explained, “let alone actually doing everything discussed in a meeting.”

In these meetings, details matter. Peg Duncan referred to one reported instance in which the parties “met and conferred” and agreed on, among other things, the software they would use for exchanging productions. “However, they didn’t agree on the format of the content or on how the information would be coded,” said the Director, Business Opportunities and Emerging Technologies for Justice Canada. “As a result, one party’s production was much less searchable and had to be redone to meet the same level of functionality.”

Given the obvious advantage of searchable documents, should they not become a rule? Not in Jaar’s opinion. “We’re better off having guidelines rather than rules,” Jaar said, “because by having practice rules or procedure rules, you freeze the evolution of a domain where evolution never stops.”

Yet in most cases, lawyers and judges still search through numerous binders in court. “You can imagine the amount of time that’s wasted as people do this,” Duncan said. “Not many cases are done electronically.”

To reduce binder burden, Kuntz and her team plan to extend eproduction beyond the discovery phase. “We want to introduce documents electronically at trial as exhibits,” she said, “and do away with the tendency at trial to rely on binders as exhibits, with everyone having copies.”

“No lawyer can truly represent a client without understanding the nature of the evidence they need to use to advance their case,” said Kuntz. “You have to know your client and the data if you want to protect your client from adverse inferences like withholding evidence and spoliation of evidence.”

Lawyers who find ediscovery difficult can now rely on an emerging ediscovery consulting industry that is springing up on both sides of the border. Former lawyers and computer forensics specialists are joining major accounting and consulting firms to help litigants meet ediscovery requirements.

However, litigants may still be wary of bringing ediscovery to the courtroom. Increasingly, courts are pressing litigants to resolve cases more quickly, and should the judge not be versed in ediscovery, litigants may lose precious court time explaining it.

Another consideration for lawyers is privacy. “Personal information is inevitably co-mingled with business information, particularly on home computers imaged during the execution of an Anton Piller order” said Duncan. “Care in disposing of disk images is required to reduce risks like identity theft.”

Meanwhile, inside counsel will need to overcome the gap between themselves and their IT staff, the custodians of corporate data. “Corporate counsel is getting more involved in determining information retention/destruction policies to reduce the risk of inadvertent destruction of relevant documents,” said Duncan.

“Outside counsel also needs to work with a client’s IT shop in establishing a litigation hold,” Duncan continued. “The information management people will know what information is being created and stored, whereas the client probably won’t. They will have to take steps to prevent the destruction of information.”

How will Sedona principles spread through the Canadian court system? Osborne thinks the key players may be judges, who can deny requests for discovery relief unless the parties prove that they have met and conferred.

Campbell doesn’t want to see Osborne’s idea become legislation, “but judges can hold out the carrot and tell litigants ‘We’ll help you if you help yourselves,’” he said. “I think that’s how we’ll get to it.”

“I was a litigation lawyer for 30 years,” Campbell continued, “and I saw that we were losing the ability to have civil litigation provide a timely, efficient, non-costly resolution mechanism. The system also has to allow for self-represented litigants whose resources and abilities may not allow them to proceed with e-discovery.”

“I’m turning positive. I think this can make litigation more acceptable in the public realm than it has been, more efficient, less costly.”

A short history of the information avalanche

When did all this electronic information start to pile up? Peg Duncan pointed to 1995 as a pivotal period in the proliferation of digital documentation.

Prior to ’95, information networks were primarily local, said Duncan. “Office workers found them useful for access to shared printers,” she said.

Then the World Wide Web popularized the use of browsers and internet mail. At the same time, common networking and electronic mail protocols made it possible and convenient to exchange e-mail with people in other locations both within and outside the enterprise. And, in Duncan’s words, “the roof just came off.”

The initial enthusiasm was understandable. “We all thought early on that computers were going to solve all our problems in litigation because the answer to everything would be at our fingertips with the simple press of a button,” said Nova Scotia Justice John Scanlan, “but in many ways just the opposite has happened.”

“When we press a button now, we retrieve so much information which is not necessary to the litigation. The task becomes how to sort it out.”
“Almost all documents are generated on computers, before they become paper,” added Kimberley Kuntz. “Some never become paper.”

To drive the point home, Jaar offered an analogy. “Five years ago, would you have invested in a corporation where higher management kept employees from properly filing paper documents? Letting employees pile documents all over the place, on top of their desks, under their desks, in the bathroom, anywhere they can find space?”

“Many companies don’t have any document management systems,” Jaar continued. “Many don’t have any document retention policies. Many don’t have any policies regarding electronic communications. You’re dealing with an information mismanagement mess.”

“Litigation expenses in terms of electronically stored information may be the largest unfunded liability corporations have in the world right now,” Scanlan added.

Differences between paper and digital documents

Few corporations contemplated the differences between electronic documents and their paper cousins when they adopted information technology. Twelve years after the fact, Sedona Canada has listed six major differences that necessitate distinct ediscovery principles.

A. Volume and Duplicability: It’s easier for people to create and make copies of documents, and many systems do both without human intervention.

B. Persistence: Obliterating electronic documents is rarely as easy or as final as shredding paper.

C. Metadata: Computers and people store information about documents in the documents themselves.

D. Dynamic, Changeable Content: Particularly for databases like bank records and email threads, updates are a frequent fact of life. Even in seemingly static documents like Word files, metadata changes whenever the file is opened and saved.

E. Environment-Dependence and Obsolescence: Digital documents are incomprehensible without the software used to create them. This problem looms large when businesses move legacy data to new systems and decommission legacy systems.

F. Dispersion and Searchability: Electronic documents often reside in many places at once. Many of these documents, if created with text and image searching in mind, enable people to greatly increase the quantity of documents they can search.

Sedona Canada Principles at a glance

For the full text, please visit http://www.thesedonaconference.org/wgs/
and scroll down to “WG7: Sedona Canada”

Principle 1: Electronically stored information is discoverable.

Principle 2: In any proceeding, the parties should ensure that steps taken in the discovery process are proportionate, taking into account  (i) the nature and scope of the litigation, including the importance and complexity of the issues, interest and amounts at stake; (ii) the relevance of the available electronically stored information; (iii) its importance to the court’s adjudication in a given case; and (iv) the costs, burden and delay that may be imposed on the parties to deal with electronically stored information.

Principle 3: As soon as litigation is reasonably anticipated, parties must consider their obligation to take reasonable and good faith steps to preserve potentially relevant electronically stored information.

Principle 4: Counsel and parties should meet and confer as soon as practicable, and on an ongoing basis, regarding the identification, preservation, collection, review and production of electronically stored information.

Principle 5: The parties should be prepared to produce relevant electronically stored information that is reasonably accessible in terms of cost and burden.

Principle 6: A party should not be required, absent agreement or a court order based on demonstrated need and relevance, to search for or collect deleted or residual electronically stored information.

Principle 7: A party may satisfy its obligation to preserve, collect, review and produce electronically stored information in good faith by using electronic tools and processes such as data sampling, searching or by using selection criteria to collect potentially relevant electronically stored information.

Principle 8: Parties should agree as early as possible in the litigation process on the format in which electronically stored information will be produced. Parties should also agree on the format, content and organization of information to be exchanged in any required list of documents as part of the discovery process.

Principle 9: During the discovery process parties should agree to or, if necessary, seek judicial direction on measures to protect privileges, privacy, trade secrets and other confidential information relating to the production of electronic documents and data.

Principle 10: During the discovery process, parties should anticipate and respect the rules of the forum in which the litigation takes place, while appreciating the impact any decisions may have in related actions in other forums.

Principle 11: Sanctions should be considered by the court where a party will be materially prejudiced by another party’s failure to meet any obligation to preserve, collect, review or produce electronically stored information.  The party in default may avoid sanctions if it demonstrates the failure was not intentional or reckless.

Principle 12: The reasonable costs of preserving, collecting and reviewing electronically stored information will generally be borne by the party producing it. In limited circumstances, it may be appropriate for the parties to arrive at a different allocation of costs on an interim basis, by either agreement or court order.

For further reading

http://www.thesedonaconference.org/content/miscFiles/2_13WG7Draft.pdf

E-discovery is a legal process that depends on technology.

http://dominicjaar.blogspot.com/

University of Montréal resources

http://www.lexum.umontreal.ca/e-discovery/

http://www.lexum.umontreal.ca/e-discovery/digests-common.html#Scope

http://www.lexum.umontreal.ca/e-discovery/digests-civil.html

Case law digest:

http://www.oba.org/en/main/ediscovery_en/digest.aspx

http://www.oba.org/en/main/ediscovery_en/default.aspx

http://www.oba.org/en/main/ediscovery_en/model_precedents.aspx

B.C. Justice Review Task Force, c/o Law Society of BC

http://www.bcjusticereview.org/working_groups/civil_justice/civil_justice.asp

http://www.courts.gov.bc.ca/sc/ElectronicEvidenceProject/ElectronicEvidenceProject.asp

Reading list on PracticePro:

http://www.practicepro.ca/practice/eDiscovery_Rlist.asp

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