A hybrid approach to eDiscovery

An Industry Insight feature with Daticon EED

Steve Stein explains how combining in-sourced software and out-sourced services can lead to lower cost and less risk.

“Failing to collect potentially responsive content or accidentally destroying content has resulted in major sanctions and fines in recent cases”
-Steve Stein, Daticon EED

Given the current state of the economy, the risks and costs for financial services providers faced with requests for electronic discovery have never been higher. These realities are forcing most corporate counsel to look for alternatives to the model of outsourcing the management and execution of eDiscovery to outside counsel and third party service providers. Due to the complexity, however, in-sourcing the entire process isn’t a realistic or effective option for most organizations.

For the majority of cases, corporations can in-source early-stage components of discovery. Once litigation has begun (or is reasonably likely to begin), corporate counsel must first identify and notify all potential corporate witnesses and/or systems administrators to preserve evidence. This custodian notification process must be auditable so that it can be defended if challenged in court. Once custodians have been notified, corporate counsel must implement the legal hold process in order to preserve all potentially responsive paper and electronically stored information.

By deploying an in-house application that is either built on an existing enterprise content management (ECM) platform or a stand-alone system, corporate counsel can efficiently and effectively in-source custodian hold notification, identification of data sources, automated hold and preservation notices, with a process that is auditable. The strategic alignment of eDiscovery software on existing ECM investments enables corporate legal departments to effectively preserve electronic content for compliance, investigation and potential litigation needs, while saving IT from having to support additional applications.

The next step is to collect the information. In general, for small cases and minor litigation, in-house technology is effective for the document collection process, and some of the more advanced ECM systems offer this capability. The scope and subject matter in larger cases, however, brings greater risk of challenge and error, and therefore corporations will most likely continue to rely on third-party consultants who specialize in the collection and management of large amounts of data.

Failing to collect potentially responsive content or accidentally destroying content has resulted in major sanctions and fines in recent cases and can adversely affect the defense of the merits.  For example, judgments handed down against corporate defendants in highly publicized cases – $29 million against UBS in the Zubalake case and $1.45 billion in Ronald Perelman’s lawsuit against Morgan Stanley in the Coleman case – were largely driven by eDiscovery missteps (although the Coleman case was later reversed for reasons unrelated to the eDiscovery issues). For matters that represent significant financial exposure or involve an allegation of fraud among key employees, it is recommended to hire an outside data expert – with experience in testifying – to oversee and/or execute data collection.

Corporations can cut costs by minimizing the number of documents reviewed. Outsourcing the legal document review process to outside counsel is, on average, 70 percent of the cost of the total eDiscovery process. Many top-tier eDiscovery vendors offer consulting services and strategies to help corporate counsel reduce the data set before review. These strategies may include maximizing the use of in-sourced culling technology or the initial culling of data by the eDiscovery provider using sophisticated search technology. 

The best way to minimize the costs and risks of litigation for the corporation is to create a well-documented, enforceable eDiscovery strategy and response plan that incorporates:  (1) an early assessment of the severity and exposure in the case, (2) a process for effecting custodian notification of a litigation hold for those cases that require such action, (3) a plan for whether to collect data internally or whether to contact outside experts and (4) a consistent plan to cull data to limit the amount of data that requires review.  Having these best practices in place, combined with the appropriate balance of in-sourcing and outsourcing, will advance your efforts to create and maintain the most effective and efficient eDiscovery process for your organization.
For more information, please visit www.eedinc.com.

Steve Stein is Vice President of eDiscovery Consulting, Daticon EED, Inc. He leads Daticon EED’s national eDiscovery consulting practice, having worked with corporations and law firms on eDiscovery issues since 2000. As an eDiscovery consultant, he works with many clients to scope and implement work flow solutions for the retention, collection, review and production of electronic data. Stein brings to this practice the perspective of extensive hands-on trial experience, having first-chaired ten jury trials and second-chaired some twenty more.