“eDiscovery and Information Governance is a dynamic and complex market. To be successful with eDiscovery projects and develop broader information governance strategies, teamwork across traditional roles is mandatory,” says James D. Shook, Esq., Director of eDiscovery and Compliance Practice at EMC. “This is our third year of sponsoring a day of thought leadership CLE sessions at LegalTech. With this year’s lineup we have brought together the best legal and technical minds to deliver best practice insights during sessions at Legal Tech in New York.”

EMC is sponsoring the following sessions for CLE credit on January 31st in Concourse E:

Harnessing Search Technology Effectively – 9:00 am – 10:00 am

Search has become a cornerstone of all legal technology, from legal research to early case assessment to document review. As search becomes more accessible, it also becomes more powerful, requiring experts in the technology to take full advantage of the available tools. There is still a gap though, as search methodologies used in different stages of a case are vastly different. Case teams need to assess what strategies must be used, engage experts in both subject matter and search technology, and be aware of potential pitfalls. This session will provide attendees an opportunity to hear from experts in the field, preparing them to tackle search more effectively in their own cases.

Speakers:

Charlie Kaupp, eDiscovery Consultant, Digital Strata, Inc.

Don C. McLaughlin, Jr., Esq., President and CEO, Falcon Discovery

Dan Brassil, Principal Consultant, H5

Kenneth Rashbaum –  Rashbaum Associates LLC

Overcoming the FUD To Bring eDiscovery In-House – 10:30 am – 11:30 am

Bringing more of the eDiscovery process in-house can result in substantial savings and better control over the process.  Yet many corporate IT and in-house counsel are afraid to assume the responsibility for the process.  Listen to a panel of experts discuss the most common concerns and how to overcome them to improve your process.

Speakers:

David Yerich, Esq., Director of eDiscovery at United HealthCare

Ian Campbell, iConect

James D. Shook, Esq., Director of Compliance and eDiscovery team EMC

Security, Hacking, and the Rise of Corporate CyberTerrorism: What every GC must Know! – 12:00 pm – 1:00 pm

 The benefits of corporate networks and the Internet, which deliver instant global communications, have accelerated the pace of business.  However, they have also created new vulnerabilities that cyber criminals, nation-states and “hacktivists” have learned to exploit.  Andrew Cohen, Esq., and Branden Williams were part of a team that responded to an advanced cyber attack on RSA in March of 2011.   In this session, you will learn the impact of advanced threats to corporate security, the impact of large scale intellectual property theft, and what every General Counsel must know to help protect corporate interests.  RSA, The Security Division of EMC, provides security, compliance and risk management solutions to organizations throughout the world including 90 percent of Fortune 500 companies.

Speakers:

Andrew Cohen, VP and Associate General Counsel – EMC

Branden Williams, CTO, CISSP, CISM – RSA, an EMC company

Heidi Maher, Esq., EMC – Principal, eDiscovery and Compliance Practice

The Case For Machine Coding in Document Review: A Judicial Perspective – 2:00 pm – 3:00 pm

The case for using machine coding and classification of documents in the eDiscovery review process has never been stronger.  As costs and ESI volumes continue to grow, machine coding promises faster, cheaper – and better.  Yet there remain many concerns about how to properly use these technologies, and the potential for risk when used incorrectly.  Hear what a prominent member of the Judiciary and members of the Bar have to say about the promising future – and their concerns for reaching it.

Speakers:

Honorable Andrew J. Peck, United States Magistrate Judge

Ed Larkin, Esq., Partner, Venable LLP

James D. Shook, Esq., Director of Compliance and eDiscovery team EMC

What it takes to have fun as a 30(b)6 witness – 3:15 pm – 4:15 pm

We have all heard horror stories, reviewed cases about organizations / defense teams who crashed and burned in court when they brought their ill-prepared, inarticulate, tech heads into the courtroom as “subject-matter-expert” (SME) / 30(b)6 witnesses in Federal Court on electronic records and eDiscovery matters.  Therefore, we have seen many examples of what not to do in those critical / do-or-die situations.  We at EMC thought it was about time someone showed you and explained what an example of an effective 30(b)6 witness looks like in addition, to what it took to prepare, what to do, what not to do and what was learned from the experience.  This session will employ a role-play learning method with a plaintiff as-well-as defense attorneys and our SME witness.

Speakers:

Thomas Reding, CRM

Heidi Maher, Esq.

Richard Vestuto, Esq., Vice President, Client Advisory Services, Merrill Corporation

Laws, Regulations, and the Cloud: The Confluence of eDiscovery with Pervasive Governance – 4:30 pm – 5:30 pm

Today, many organizations are looking to the Cloud for answers for controlling escalating information management costs.  However, organizations cannot just be focused on the perceived information technology infrastructure cost savings offered by the Cloud.  Organizations must be equally focused on laws, regulations and information governance issues.  If your organization has governance issues currently, then the Cloud will only exacerbate them.  Discover what the Cloud means to others and why it’s critical to place Pervasive Governance ahead of any Cloud initiative in your organization.

Speakers:

Fiona Schrader, Principle Product Manager Records Retention, Compliance, and Governance

Tom Reding, CRM, EMC – Principal eDiscovery and Compliance Practice

William O’Neil, Jr., Esq., EMC – Principal eDiscovery and Compliance Practice

RSVP and reserve your session seat @ EMC’s LegalTech Sessions

In this presentation, you will learn:

• How to Find the Goods and the Gold – How do we discover and collect content on the companies’ and and experts’ Twitter, Facebook, YouTube, and LinkedIn pages, or blogs?
• Issues with Privacy Laws and Privacy Walls – What privacy laws or regulations need to be considered when conducting discovery of social media content? How do they differ in different regions?
• The Importance of Social Media Policies – What type of policy and enforcement activities will help companies to take advantage of social media’s benefits while minimizing the risks it imposes on the business?

Discover the OnDemand Webinar

James D. Shook, Esq., CIPP EMC eDiscovery Expert

by James D. Shook, Esq.

This is the time of year when many make predictions for 2011.  But while we try to look forward, the reality is that as an industry, we have not yet conquered our eDiscovery challenges from 2010 – or even 2009 or earlier!  In the spirit of the season and with a nod to Charles Dickens’ A Christmas Carol, I decided to take a Scrooge-based approach to eDiscovery.  Without further ado, I present the ghosts of eDiscovery Past, Present and Future.

eDiscovery Past

In the early days of eDiscovery, even before the amendments to the FRCP in December 2006, we all made plenty of mistakes as we learned about this challenging new area.  Many of our problems resulted from collecting and preserving electronically stored information (ESI) from backup tapes; artificially segmenting the eDiscovery process into three stages known informally as “collect stuff”, “throw stuff over the wall” and “review stuff”; and pretending that eDiscovery either was a passing fad, or just could not be as difficult as we had heard.

While the list of mistakes and challenges from the past is virtually limitless (see Ralph Losey’s recent blog entry on this issue), many of these mistakes really boiled down to a few fundamental issues:  a lack of coordination and communication between Legal and IT (and Records Management or “RM”); and a lack of basic knowledge on IT systems from people working in legal roles.

If these ghosts of eDiscovery past continue to plague you, next year resolve to:

• Have your legal team learn at least the basics about your IT infrastructure;
• Insure that Legal, IT (and RM) coordinate, communicate and interact on a regular basis; and
• Have a basic plan, prepared in advance, for what to do when eDiscovery hits.

eDiscovery Present

Over the last year, we continued to struggle with the concept of when sanctions should be awarded for eDiscovery blunders, and how we should determine the severity of those sanctions.  In fact, these are such difficult issues that there is currently disagreement even within the same jurisdiction (compare Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, et al., 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010) (Amended Order) with Orbit One Commc’ns, Inc. v. Numerex Corp., 2010 WL 4615547 (S.D.N.Y. Oct. 26, 2010)).

But there were several other trends that rang through loud and clear.  One of the clearest trends is that there is significant risk in relying upon employees to preserve and collect their own data for eDiscovery.  (See our “Weekend At Bernie’s” post).  While there is still no absolute prohibition, the problem with “custodian-based eDiscovery” is that employees can be self-interested or uninterested in a case, making it risky to assume that they will do what they are asked.  Even for those who are sufficiently motivated, many will still fail because they are under-educated on both legal and IT issues.  This makes it exceptionally difficult for them to determine what ESI should be retained as relevant to a case, and how to properly find and preserve that ESI.

Another clear trend is that unintentional – and even seemingly minor and understandable—eDiscovery blunders can cascade into prejudicing a case and result in severe sanctions.  (See Harkabi v. Sandisk Corp., 08 Civ. 8203 (WHP) (S.D.N.Y. Aug, 23, 2010).

A trend that has been around for a while, but seems to finally be gaining momentum, is enforcing the point that litigation holds do not begin upon receipt of the first Request For Production of Documents, or even upon being served with a Complaint.  Instead, the hold duty attaches when one can reasonably anticipate litigation, which typically occurs before the data of service (and for plaintiffs, will certainly occur before filing the Complaint).  Courts are beginning to take a closer look at when a party’s preservation process actually began, so companies need to get legal informed about litigation threats so that decisions on holds can be made at the right time.

If these ghosts have the chance of haunting you, next year resolve to:

• Rely more upon your eDiscovery team of investigators and counsel, and arm them with useful technologies to complete their work.  Merely hoping that your employees are handling the preservation and collection of critical ESI is no longer a viable option;

• Review your eDiscovery processes to insure that litigation holds are integrated into your business processes.  This will insure that holds can be recognized at the appropriate time and not just after litigation has already commenced.

eDiscovery Future

There are two main roads that the ghost of eDiscovery Future can take.  The first is the obvious road of emerging and future technologies.  For 2011, emerging issues will clearly include the Cloud and social media technologies such as Facebook and Twitter, and we will certainly see some new technologies that we have not yet even worried about.

The second road in the future is more sinister, and relates to issues that we should already be aware of but have failed to adequately address because they have not yet risen to the right level.  These issues are actually riskier because we should be prepared, and mistakes with these technologies may not be viewed in a forgiving light because we should know better.  As a few examples, this group would include legal issues around international data privacy, data stored in Sharepoint repositories, and structured databases.

It is difficult to predict what you should do about the ghosts of eDiscovery Future, but consider a few possible resolutions for the new year:

• At minimum, update your ESI Map to include basic information about data that may be outside your firewall (such as outsourced Email and other Cloud technologies, Facebook, Twitter, etc.);

• If you transact business outside the U.S., understand the basics of privacy law and determine whether and how they may impact you in normal litigation matters; and

• Subscribe to a publication that will keep you updated on the latest legal and technology developments (Law Technology News and its Daily Alert are terrific, free resources).

Good luck in 2011!

Quentin Archer, Partner - Hogan Lovells, London

Kazeon eDiscovery Best Practice Webinar Series

with Quentin Archer and James D. Shook with J. David Morris as moderator.

As businesses go global, legal complications have followed. Ignoring cross border legal obligations, privacy laws, and litigation discovery orders have had severe consequences for numerous companies, including sanctions in the millions of dollars/pounds.

How does today’’s General Counsel successfully navigate the global legal seas?

James D. Shook, Esq., EMC eDiscovery Expert

Discover in this Webinar:

• US Law and eDiscovery
• UK Law and eDisclosure
• Cross border Privacy Challenges
• How to protect your corporation in cross-border disputes?

Register Now!, as space is limited for this one time premium webinar.

J. David Morris, EMC SourceOne eDiscovery - Kazeon

Rakesh R Nair, EMC eDiscovery Manager

by Rakesh R. Nair

Having spent the better part of a decade designing Information Management & eDiscovery Solutions, I decided to write a blog to share some of my findings in this space.

This is my first post and if you are even remotely interested in Information Management for the Enterprise, then read on!

Unstructured Information

Corporations large and small create significant amount of data that include documents, presentations and email messages.  Most of this data is “unstructured”, i.e it resides on file shares and employee laptops/desktops.  Industry analysts like Gartner estimate that this unstructured information accounts for 80% of all corporate information and expect it grow at 60%  or more each year.

In the simplest terms, unstructured information is nothing but “unmanaged” information.  The file system on which this information resides typically is not monitored and the content is practically invisible to employees, auditors or corporate compliance officers. In an effort to provide a greater degree of visibility, control and management of this information to meet compliance reporting requirements and enhance it’s abilities and obligations to respond to corporate litigation, many organizations have implemented one or more technologies, each of which has advantages and disadvantages:

1.     Enterprise File Backup

Many companies attempt to solve the problem by creating regular backups of all the data on the network. These backups are saved to tapes, which are typically shipped and stored at a remote location for disaster recovery purposes. Backing up all data regardless of its business value is an inefficient use of time and resources, increases the cost of tape storage and decreases the likelihood of rapid single file recovery, which is the most-used aspect of file backup, thereby still leaving the problem of quickly identifying “responsive” data, unsolved.

2.     Enterprise Content Management

Enterprise Content Management (ECM) systems can effectively manage many types of content and can provide access and version control, both of which are effective aspects of information management. ECM systems also tend to have significant costs to setup and maintain. These systems typically require an organization to purchase server and user licenses, implement policies and processes for using the system, and train its users. Because of these costs, companies often limit their ECM implementations to specific areas of their business or types of data, such as documents that pertain to finance or HR. According to many analyst organizations, ECM systems are being used to manage approximately ten percent of today’s corporate information.

3.     Enterprise Search

Enterprise Search is an effective way to index and find documents or emails that contain certain keywords.   Most are easy to implement and mid-range enterprise implementations require only a modicum of regular maintenance.  Some organizations also deploy Enterprise Search for proactive litigation readiness i.e ability to quickly produce responsive information pertaining to a litigation or an investigation.

Unfortunately, most enterprise search engines are tuned to find all the documents that may contain a particular term, rather than a specific document that may be required by an auditor. It is left to the user to sift through the thousands of returned documents to find what he needs, which can be a time-consuming and costly exercise.  For example, many enterprise search engines do not provide the ability to look for sensitive and high risk Personal Identification Information (PII) like SSN, Drivers License etc or Payment Credit Industry (PCI) information like Credit Card within unstructured data.  Additionally, search engines are mostly lacking in providing the ability to manage or take actions on the indexed documents.  Furthermore, scalability of many Enterprise Search Engines is called into question when they are required to “proactively” index and search data in the order of Terabytes or Petabytes.

Discover the Full article

The first half of 2010 saw a plethora of decisions refining e-discovery case law and building

on past trends in a rapidly-evolving field. Attorneys from Gibson Dunn provide an overview

of recent e-discovery developments, based on their analysis of 103 e-discovery decisions

issued between January 1 and June 17, 2010.

Discover More

James D. Shook, Esq., CIPP EMC eDiscovery Expert

In customer meetings and speaking engagements, I sometimes relate eDiscovery sanctions to Dante’s “Inferno” and its nine circles of hell.  The idea is that those who have poor eDiscovery processes and cannot meet their obligations to preserve relevant ESI have a good chance of facing sanctions.  At that point, the only question becomes the level of sanction – in Dante-speak, the circle of hell – on which to land.  Fortunately for most, the determination of the sanction is based in large part on the level of culpability — but as we will see in a few recent cases, the road to, uh, sanctions can be paved with good intentions.

Judges have a wide variety of sanctions available to remedy eDiscovery violations, which typically revolved under the failure to retain relevant ESI.  From least to most harsh sanction, they are:

• Further discovery
• Cost-shifting
• Fines
• Special jury instructions
• Preclusion; and
• Default judgment or dismissal (terminating sanctions)

(Pension Committee v. Banc of America Securities, 2010 WL 18431 (S.D.N.Y. Jan. 15, 2010) at 19-20).  The court has broad discretion in such matters, with the severity of the sanction normally based upon a combination of (1) the prejudice caused to the innocent party and (2) the degree of culpability of the bad actor.  (Victor Stanley v. Creative Pipe (“Victor Stanley II”), No. MJG-06-2662 at 71-72 (D. Md. Sept. 12, 2010); Pension Committee at 19-20).  As Judge Grimm notes in Victor Stanley II, harsh sanctions can result from a low level of culpability where there has been considerable prejudice to the injured party (to remedy the innocent party); and can also be awarded where prejudice is minimal but the culpability is great (to punish the wrongdoer and discourage future bad actors).  (Victor Stanley II at 72).

The Punishment Fits the Crime

In Victor Stanley II, Judge Grimm deals with a party – Mark Pappas, the president of defendant Creative Pipe – who repeatedly deleted ESI in deliberate attempts to frustrate the discovery process.  If you read the incredibly detailed opinion, you will see that this is not your run-of-the mill case where typical mistakes are made because IT did not talk to legal, or the lawyers did not know about much about IT concerns such as backup tapes or destruction policies.  Pappas intentionally and knowingly deleted thousands of files, deleted email while claiming that he was actually preserving the email in the “Delete” folder, and even used programs in an effort to eliminate more ESI (and his trails).  All along, he intentionally misleads the court and the opposing party about the state of discovery in the case and the defendant’s efforts to preserve and collect data.

Ultimately, Judge Grimm has seen enough, and he fashions one of the most interesting — and severe — sanctions that we have seen in eDiscovery caselaw.  Not only is judgment entered against the Defendant on one of the main claims in the case –the default judgment seems to be a fair response to all of the spoliation activities –- but Judge Grimm finds it important to go a step further:

I order that Pappas’s acts of spoliation be treated as contempt of this court, and that as a sanction, he be imprisoned for a period not to exceed two years, unless and until he pays to Plaintiff the attorney’s fees and costs that will be awarded.  [Emphasis added].

Prison – could it be a secret 10^th circle?  This punishment is not even on our original list of possible sanctions!  (Technically, this part of the sanction is for contempt of court and not merely a remedy for violating eDiscovery requirements).   Truly, a sanction like this will apply only in the very rarest of circumstances.  However, before you discount the case as just another “shark bite” case, take a look at the next one.

Little Bad Acts Add Up

In interesting contrast to the totally indefensible acts of Victor Stanley II is Harkabi v. Sandisk Corp., 08 Civ 820 (S.D.N.Y. Aug 23, 2010).  In Harkabi, the defendant (ironically a high-tech, electronic data storage company) never intentionally deleted ESI, but it did make several important mistakes:

-                    After segregating and then imaging the plaintiffs’ laptops (former employees), employees ultimately lost all of the data before it could be produced;

-                    The company deleted relevant email messages during its transition to a new email archive platform (which also occurred after litigation hold began but before production);

-                    The company failed to quickly realize these mistakes and – either as a function of that failure or as a separate mistake – failed to promptly inform the plaintiffs and the courts of these issues.  In fact, the plaintiffs were the first to discover that there were problems with defendant’s production, despite defendant’s assertions that it had not reason to believe that there were any problems.

Unlike Victor Stanley II, these problems seem to arise from a lack of attention to detail and possibly a lack of legal and/or IT knowledge.  While the court takes those circumstances into account, it also notes that in-house counsel was noticeably absent at critical junctures of the case, such as:

(1) when the plaintiffs’ original hard drives, which had been physically set aside, were copied onto a retention server;

(2) when those hard drives were later wiped so that the laptops could be re-issued to other employees; and

(3) during the transfer of email into the new archive system – which was particularly troubling because many of those emails should have been on litigation hold – there is no record that legal was involved at all.

Because much of the data was ultimately recoverable, one could argue that these are mostly minor to or moderate-level transgressions (and they certainly are minor in comparison to Victor Stanley II).  But to the court, taken together they show some serious problems and in response, the court leveled appropriately serious sanctions:

-                    to address plaintiffs’ costs and the delays in the eDiscovery process, defendants were ordered to pay money sanctions of $150,000; and

-                    Perhaps even more important, the court authorized an adverse inference instruction to be issued to the jury when the case is tried, permitting or requiring the jury to assume that Sandisk destroyed evidence that would have helped the plaintiffs to prove their case.

These are serious sanctions.  While the court stopped short of a terminating sanction (the 9^th circle), there are few cases that can reasonably survive a strong adverse inference instruction that seems likely to be given here.  Thus, while the sanctions are vastly different on their face from those in Victor Stanley II (particularly in the issue of incarceration), the practical difference on the actual cases may be very similar.

Conclusions

The language of Pension Committee, Victor Stanley II and other important rulings in 2010 are sounding a common theme: that the bench has less tolerance for eDiscovery violations, and is more willing to order appropriate sanctions for violations.  While you may not always be able to avoid procedural issues with your eDiscovery processes, taking a diligent approach and documenting your processes will help you to avoid serious sanctions.

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Randolph A. Kahn, Esq., Kahn Consulting	James D. Shook, Esq., EMC eDiscovery expert and Attorney

Date: Wednesday, July 14, 2010
Time: 10:00 AM Pacific

EMC is proud to bring you this special webinar focused on how you should think about handling eDiscovery in 2011. Our esteemed guest speaker, Randolph A. Kahn, Esq., is well known in the legal/compliance circles and brings a wealth of knowledge on eDiscovery.

He will be discussing current trends in eDiscovery that will dictate how you perform eDiscovery in 2011, risks associated with current practices/tools/processes and best practices to consider adopting in order to get ahead of your eDiscovery woes. Joining him in this discussion will be our in-house attorney, James D. Shook, Esq., who too brings tremendous eDiscovery knowledge to the event.

Register Today, as seating is limited for this premium webinar.

All attendees will be entered into our drawing for a new iPad.

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Gain autonomy and receive improved eDiscovery guidance

James D. Shook, Esq., CIPP EMC eDiscovery Expert

In today’s economic environment, companies deploying new technology have to show not just that they will be better and faster, but also just how much faster and better so that they can justify the expense.  Part of the buying process frequently involves gathering data on how much it costs to handle a business process in the current environment, how much can be saved with improvements, and establishing that the savings will justify the cost of the improvement (and frequently, how long it will take to do so).  Most companies refer to this process with the shorthand acronym of “ROI” or “return on investment”.  (In financial circles, ROI is actually a more complex analysis, but it’s still a good acronym for our purposes).

For companies that are looking to bring more of their eDiscovery process in-house, the ROI process can be difficult.  While we intuitively know that we can save money and cut risk with a leading eDiscovery solution, it can be tough to show that quantitatively because financial information is usually not readily available.  Even within the legal department, the cost of eDiscovery is frequently not well-known.  Often, time and money spent on eDiscovery issues is buried with other tasks in time entries from outside counsel; internal costs are generally not tracked at all; and payments to third-party processes are passed through (or marked up) by outside counsel and difficult to locate.

The benefits can also be difficult to calculate.  For example, many companies have poor eDiscovery processes (what we term “Faux eDiscovery“), where they wrongly or negligently ignore data sources and/or sound eDiscovery processes.  Faux eDiscovery can actually be very inexpensive — the real “cost” is in the risk with being caught and sanctioned.  But risk is difficult to quantify.  The result is that some companies trying to improve their eDiscovery processes may actually find a negative ROI (i.e. we only spend $10,000 per litigation now but it will cost us $50,000 to do it right) because they fail to identify or quantify the real ROI — their reduction in risk by handling eDiscovery properly.

If you are putting together an ROI analysis for bringing eDiscovery in-house, here are a few things to consider:

The general statistics available about eDiscovery costs are startling.  It’s well-established that having legal professionals review data – one of the later steps in the eDiscovery process — is expensive, with $18,750 per gigabyte a well-accepted number.  (Gartner, Reducing the Cost and Risk of EDiscovery in 2009, 1/9/2009 at 6).  Over the last several years, the average cost of discovery per case ranged from $621,880 to $2,993,567 (Litigation Cost Survey at 3).  And as noted earlier, Gartner advised an IT eDiscovery budget of $500,000 for a modestly sized case.    (Gartner, Reducing the Cost and Risk of EDiscovery, at 5).

Cutting through the noise, Gartner notes that many companies report a full return on their investment in an eDiscovery solution within 3 to 6 months — or within a single large case.  (Gartner, Marketscope for E-Discovery Software Product Vendors, 12/21/2009 at 2).  While these high-level facts alone may not be enough to convince anyone who requires a detailed ROI, they can help to set the stage for acceptance and also tend to strike a nerve with many C-level executives.

Undertake basic investigation on costs.  Talk to the legal department about how many “cases” they handle in each month (or year), being sure to include internal investigations and employment claims, regulatory inquiries and other matters where data is being preserved, collected and/or processed — not just “lawsuits”.  Ask them if they have information about amounts paid to outside service providers (perhaps through their law firm) for eDiscovery services.  Also check with the people who handle backups and email within the IT department — since different groups within legal may be asking them for help, they may actually have the best view of this work, and could even have hired an outside vendor to handle some eDiscovery-related work.  IT wil generally know whether the company has had to purchase tape processing equipment, additional storage or other non-standard equipment to help the lawyers with eDiscovery.

Check on soft-costs, too.  Most IT departments are only too ready and able to tell someone (anyone!) how much time they have devoted to eDiscovery tasks.  Frequently groups of 2-3 staffers can be assigned full-time or better for weeks or months on a medium or large case.  Without a chargeback model, legal might not even be aware of the massive undertaking to help them.

You may only be able to gather information on a few cases.  In that scenario, try to figure out whether it’s legitimate to extend the information out across the full volume of cases:  were these cases representative of what’s happening?  Do our cases tend to be similar or repeatable?  Do I have a good sampel?  When detailed information is not available — and usually it’s not — your goal is to get an understanding of the magnitude of the spend, and not necessarily the exact dollar amount.

There are a variety of ways in which you can begin to assess the savings that an eDiscovery solution will bring to the company.  In many cases, after purchasing a solution the incremental costs fo reach case will be almost nothing.  The better systems will enable custodian notification, search, preservation, collection and processing within the platform, so that investigators can efficiently handle these tasks.  This is really the purpose of the ROI analysis — case-by-case handling costs should be very small, because the expense is up-front in the purchase and deployment of the solution.

One area where the savings can be significant, but still substantial, is with “eyes-on” legal review.  An efficiently deployed system will help to minimize the amount of data collected, processed and eventually reviewed; but the review volumes can still be large.  And the hourly costs of review will be the same (although you can get some savings from de-duplication, clustering, email threading, etc.).  Still, we routinely see 50%+ savings in review based on the reduction in volume for efficient collection and culling.

You may decide that risk is too difficult or political to calculate as part of the ROI.  Or you may decide that it’s a necessary component that you must include.  Both approaches can be effective.

If you decide not to calculate a specific value for risk, you should still consider some risk analysis as part of your process, even as merely a “plus” factor to your overall analysis.  In doing this, take note of recent cases where companies have paid sanctions, had their case compromised and/or faced a backlash in the press (and potentially from shareholders).  You may not have a value for that risk, but the message will resonate with management.

If you do calculate risk, consider a conservative approach and factor in the probability of a sanction.  For example, you might decide that a severe sanction would compromise your ability to effectively defend (or prosecute) a case, and a larger case can be worth $5,000,000.  If you estimate a 10% chance of being sanctioned, you could take the resulting product ($5,000,000 x 10% = $500,000) as a basis for your risk value.  Remember that this risk amount would apply to each such case; so while the risk amount for a sanction on a smaller case might seem low (let’s say $20,000), it would be applied over a far larger number of cases.  It adds up!

Also remember that sanctions costs can exceed the entire estimated value of a case.  There have been many cases where shoddy eDiscovery processes have resulted in expensive remediation efforts — legal fees in determining what went wrong and how to fix it (and fending off motions for sanctions), repeating earlier work or being forced to use extraordinary efforts such as tape restoration.  So even a $500,000 case with eDiscovery problems could easily require more than the case value to try to “fix”.  (And don’t let anyone argue that you could always just write a check to settle the case.  Opposing counsel may have valued the case at a higher value than you, and once they realize that you are in trouble, it could be tough to negotiate a fair settlement).

Sometimes a simple model is better.  We have used extremely complex ROI models that were spot-on, but difficult to explain, and ultimately were ignored. We have also seen very simple models — “an eDiscovery solution will save us 50% in review costs, and last year review costs were $5M” — that have carried the day.  Hopefully, as you work on your ROI project, you’ll uncover the method that will best establish your case.  Until then, consider using a scenario-based approach (small case, medium case, large case), develop your facts for each one, and extrapolate the costs across the volumes that you expect to see each year.

DISCOVER MORE

Solving e-Discovery Challenges

Date:  May 25, 2010
Time:  6:00 to 8:30 PM
Place:  Capital Grille
Location: 633 N. St. Clair St.
Chicago, IL 60611

Click here to Register!

E-Discovery introduces risks, drives up costs and causes headaches for inside counsel and IT departments alike.  We invite you to join Laurus Technologies and EMC for an informative presentationwritten specifically with the General or Inside Counsel  in mind–that will simplify the process of selecting and implementing an e-discovery framework.  The audience will learn how e-Discovery:

• Empowers an organization with classification, security, retention, proper disposition and access to information
• Helps discover and manage content, and apply secure legal hold across a variety of repositories
• Provides secure authorized investigator access, defensible collection results, and chain of custody
• Automates the eDiscovery process and quickly deploys in days or weeks instead of months

You will also learn how EMC SourceOne delivers comprehensive information governance solutions and enables you to take a proactive approach to legal requests, ensuring litigation readiness.

James D. Shook, Esq., CIPP EMC eDiscovery Expert

About the Presenter:  James Shook, Esq., CIPP
Jim Shook is a recognized authority on legal e-discovery and information governance. In his role as the Director of EMC’s e-Discovery and Compliance Legal Team, Jim works with EMC’s customers to help them solve their challenges with e-Discovery, compliance, and privacy.  Prior to joining EMC, Mr. Shook spent over ten years practicing law as a litigator in one of Phoenix’s oldest law firms and as the general counsel to two technology companies

Jim is a long-time member of The Sedona Conference, a well-known legal think tank, and is an active contributor on several Sedona committees. He has served as an editor on the Electronic Discovery Reference Model (EDRM), and publishes and speaks regularly at conferences on technology’s impact on legal issues, including the publication of “Don’t Be An e-Discovery Ostrich” in late 2009.

For More information, contact Steve Susina at Laurus Technologies
630.521.8932 or ssusina@laurustech.com