Controlling e-discovery costs while minimizing litigation risks are two of the greatest challenges that in-house lawyers face—challenges that most companies aren’t equipped to handle.

“Given the relative complexity of e-discovery, very few companies can build and support a completely in-house discovery model,” Glen McFarlene, executive director of e-discovery at JPMorgan Chase, said during a recent Webcast exploring e-discovery solutions.

McFarlene noted that even at JPMorgan Chase, which built its in-house program years ago and has several specific tools to address the various phases of e-discovery, still requires outside assistance in certain situations. The need to host data outside a corporate firewall, so multiple parties can share and review that data, is one such example.

Still, McFarlene said, he is a “staunch believer” in an in-house program where it makes sense. “Generally speaking, the corporation knows their data best and is usually best equipped to solve data issues themselves,” he said.

To assess whether an in-house program suits your company, consider whether your legal department has the following characteristics:

High volumes of litigation;

External vendor costs exceed those for internal tools and staff;

Support from executive management;

Support from finance and procurement teams to prepare business cases; and

Part of a heavily regulated industry, where compliance tools may already be in place for accessing or leveraging data.

The best place to start when building an in-house program, McFarlene said, is to examine your “e-discovery workflow continuum” and pinpoint where you can reduce the most risks. Some vendors do offer tools purporting to offer end-to-end solutions for e-discovery needs, but arguably no single tool can address the entire e-discovery workflow from preservation to production, he said.

For the majority of companies, however, an integrated system makes the most sense, experts say. Integrated solutions offer a package of products, services, and technologies targeted to each company’s specific needs.

“What it comes down to is aligning your people, processes, and technology with the unique needs and risks presented by e-discovery.”

—Michael Simon,

Technology Counsel,

Stratify

Bayer

“Integrated solutions are often necessary to manage all of the technology and processes that corporations are not equipped to build out,” said David Bayer, vice president of marketing for Stratify, an e-discovery solutions provider, who also spoke during the Webcast.

“What it comes down to is aligning your people, processes, and technology with the unique needs and risks presented by e-discovery,” said Michael Simon, technology counsel at Stratify.

That means having someone at the general counsel level who understands those risks and can limit the company’s risk exposure, McFarlene added. “E-discovery is not just something you can hand off to IT.”

Likewise, in-house lawyers and IT departments alike need to understand the company’s technology limits. “Overusing or incorrectly using limited in-house technology will lead to sub-par results, wasted time, delays, and higher costs, and may even put you in jeopardy with the courts,” McFarlene said.

Simon

Document preservation is one specific area where in-house lawyers have found themselves in a lot of legal hot water lately, Simon noted. He cited the recent case of William Gross Constructions Associates v. American Manufacturers Mutual Insurance, where the court explicitly issued a “wake-up call to the bar” that it had to do more than design key-word searches and hope for the best. “While this message has appeared in several cases … it appears that the message has not reached many members of our bar,” the court tartly noted in its ruling.

SEARCHES IN THE DARK

The following excerpt details the decisions made in William Gross v. American Manufacturers and Victor Stanley, Inc. v. Creative Pipe, Inc..

DISCUSSION

This case is just the latest example of lawyers designing keyword searches in the dark, by the seat of the pants, without adequate (indeed, here, apparently without any) discussion with those who wrote the e-mails. Prior decisions from Magistrate Judges in the Baltimore-Washington Beltway have warned counsel of this problem, but the message has not gotten through to the Bar in this District. As Magistrate Judge Paul Grimm has state:

“While keyword searches have long been recognized as appropriate and helpful for ESI search and retrieval, there are well-known limitations and risks associated with them, and proper selection and implementation obviously involves technical, if not scientific knowledge.”

***

Selection of the appropriate search and information retrieval technique requires careful advance planning by persons qualified to design effective search methodology. The implementation of the methodology selected should be tested for quality assurance; and the party selecting the methodology must be prepared to explain the rationale for the method chosen to the court, demonstrate that it is appropriate for the task, and show that it was properly implemented.

Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D.251, 260, 262 (D. Md. May 29, 2008) (Grimm, M.J.).

Magistrate Judge Facciola has taken the warning even further:

Whether search terms or “keywords” will yield the information sought is a complicated question involving the interplay, at least, of the sciences of computer technology, statistics, and linguistics. Given this complexity for lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread. This topic is clearly beyond the ken of a layman and requires than y such conclusion be based on evidence that, for example, meets the criteria of Rule 702 of the Federal Rules of Evidence.

Source

William Gross v. American Manufacturers (March 19, 2009).

Simon also cited Victor Stanley v. Creative Pipe, where 165 privileged documents had accidentally been turned over to opposing counsel because the defendants were rushing to meet a deadline. As previously reported by Compliance Week, in that case the court said that attorneys who can’t explain how they chose key words, or can’t demonstrate their competency in doing so, fail to comply with the Federal Rules of Civil Procedure, which require lawyers to certify that they made a “reasonable inquiry” that the production is “complete and correct.”

Each case highlights the “need to perform the kind of quality assurance testing and sampling that the judges describe in these opinions,” Simon said. “You need a system—the right technology combined with the right process—that helps you organize and provide a way to refine, sample, and test your searches to show that you are, in fact, locating the relevant documents.”

Hosted Solutions

Corporate legal departments can also choose to outsource their e-discovery programs to an outside vendor, although such “hosted solutions” carry their own considerations as in-house and integrated solutions do.

Security should be one of the highest priorities, Bayer said. In hosted solutions, that applies not only to connecting to the hosted application, but also to the security that is in place with each e-discovery matter. “Especially situations where there are multiple work groups, review teams, and even parties to a matter, the need for a robust security policy system is paramount,” he said.

Unlike data centers under corporate control, Bayer said, the data centers for hosted e-discovery are far removed and under the management of the e-discovery service provider. Therefore, it is “imperative” to have the ability to review their security processes and protocols. Software-as-a-Service audits, which document activities and control objectives across operations and processes, can help achieve that.

In addition, disaster recovery is also a critical element to minimize loss data and work product. “However, hosted e-discovery service providers have been slow to deploy enterprise-grade disaster recovery protocols,” Bayer said.

He added that hosted e-discovery solutions can succeed or fail based on their level of customer support. With a hosted solution, in-house attorneys should ensure that they have round-the-clock access to technical support and to project managers, who should have hands-on knowledge of e-discovery matters.

“And since the most productive and efficient of reviews is ultimately dependent on actual production, clients should insist on planning processes and multi-level quality controls for their production,” he said. Even more than raw capacity numbers, a hosted solution needs to allow clients “to start small and expand deployment as matters escalate,” he said.