Sigler Article 11 2005 E-discovery Law Strategy

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Volume 2, Number 7 • November 2005

In-House e-Discovery Processing: Much More Than Software By Conrad J. Jacoby Many law-firm clients, horrified by the expense of having their electronic data collected and processed by outside discovery specialists, press their law firms to find less expensive ways to get these materials ready for production in discovery. Fortunately (and conveniently), vendors offer a variety of products that law firms could use to process digital discovery materials in-house. Seeing the possibility of generating additional revenue while reducing a client’s out-of-pocket expenses, many law firms’ technology and training committees are being tempted to add internal electronic data discovery (EDD) processing services. Relatively few law firms, however, have analyzed the full range of technical and legal issues that come with offering these services. Developing specialized EDD services involves much more than buying a spare server and installing some off-the-shelf software. Building an EDD lab requires planning and careful analysis of technology, required expertise, staffing, and legal-liability issues. Failure to adequately weigh any of these points can lead to an unbalanced and under-prepared continued on page 5

Defining Metadata Counsel’s Duty To Preserve And Produce Brought Forefront In Recent Case By David H. Schultz

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ecently, the term metadata has become an electronic buzzword for litigators, their clients, IT personnel, courts and lawmakers. From the English dictionary to the proposed amendments to the Federal Rules of Civil Procedure, many information sources are attempting to define and clarify metadata, and its role in modern litigation. For example, Merriam-Webster’s Collegiate Dictionary recently added “metadata” to its newest edition and defines it as “data that provide information about other data.” The proposed advisory committee note to Fed. R. Civ. P. 26(f) elaborates on that definition, explaining metadata as “information describing the history, tracking, or management of an electronic document.” The Sedona Guidelines: Best Practice Guidelines & Commentary for Managing Information & Records in the Electronic Age adopts a more thorough definition of metadata, describing it as “information about a particular data set which describes how, when and by whom it was collected, created, accessed, or modified and how it is formatted (including data demographics such as size, location, storage requirements and media information.)”

SOME CLARIFICATION IN THE COURTS A recent Kansas decision — Williams v. Sprint/United Mgmt Co., 2005 WL 2401626 (D.Kan. Sept. 29, 2005) — represents one of the most important court opinions on metadata and parties’ obligations to produce it in response to a legal discovery request. The plaintiffs requested a “native” production of Microsoft Excel spreadsheets to determine whether there were “any actual other columns or types of information available” on them. After receiving the spreadsheets, the plaintiffs claimed that the defendant “scrubbed” the spreadsheet files to remove metadata without producing a continued on page 2

In This Issue Defining Metadata . .1 In-House e-Discovery Processing . . . . . . .1 New Rules For e-Evidence: The Case For The Defense . . .3 e-Discovery Docket Sheet . . . . .7

Defining Metadata continued from page 1 log of the information scrubbed. The plaintiffs also asserted the defendant locked cells and data on the spreadsheets, preventing the plaintiffs from accessing those cells. Although the court did not sanction the defendant, it ordered the defendant to produce the spreadsheets’ metadata and to produce “unlocked” versions of those spreadsheets. The court held that “when a party is ordered to produce electronic documents as they are maintained in the ordinary course of business, the producing party should produce the electronic documents with their metadata intact, unless that party timely objects to production of metadata, the parties agree that the metadata should not be produced, or the producing party requests a protective order.” Inconsistent and rapidly developing metadata-production standards — such as those set forth in Sprint — may leave practitioners confused about their obligation to produce metadata for legal discovery or regulatory investigations. According to Jonathan Redgrave of Redgrave Daley Ragan & Wagner LLP, the dangers of failing to understand requirements surrounding metadata production can be costly for a producing party. Redgrave notes that “Courts may order a producing party to produce data again if associated metadata relevant to the action was not produced initially, and they may require the producing party to bear the full cost of this second round of production. Accordingly, today there is a premium on thinking through issues related to form of production at the outset of the case.” If faced with a document production potentially involving metadata, you should prepare to address the following concerns: • What are the courts saying about metadata and production? • What technical aspects of metadata are important to a case? and • What production obligations are implicated by the existence of metadata?

WHAT’S THE STATE OF THE LAW? The current legal climate reflects a trend toward requiring practitioners to 2

review and produce metadata in response to a discovery request. Armstrong v. Executive Office of the President, 1 F.3d 1274 (D.C. Cir. 1993), rev’d in part on other grounds, 90 F.3d 553 (D.C. Cir. 1996) was one of the earliest cases to address the discoverability of metadata. In Armstrong, the district court held that government agencies that merely instructed employees to print out a paper version of any electronic communication had not reasonably discharged their preservation obligations under the Federal Records Act. The appellate court affirmed, stating, “[w]ithout the missing information, the paper print-outs — akin to traditional memoranda with the “to” and “from” cut off and even the “received” stamp pruned away — are dismembered documents indeed.” As the Armstrong court recognized, metadata can provide key pieces of relevant evidence and information about a particular e-mail, spreadsheet or other electronic document. A number of courts have recognized the evidentiary value metadata can have in a case and have routinely ordered parties to preserve metadata during legal discovery. For instance, in The Pueblo of Laguna v. United States, 60 Fed. Cl. 133 (Fed. Cl. 2004), the court granted the plaintiffs’ request for a protective order and required the government to preserve all documents, including electronic information, e-mail and metadata that contained relevant information or that might lead to the discovery of relevant information. Courts all over the United States have declared parties to have an obligation to produce metadata. In Jicarilla Apache Nation v. United States, 60 Fed. Cl. 413 (Fed.Cir. 2004), the court included metadata in its definition of “documents” that needed to be produced. The court directed the parties to produce records “in the format in which that party routinely uses or stores them, provided that electronic records shall be produced along with available technical information necessary for access or use.” Some courts are extending the obligation to produce metadata to third parties. For example, an Illinois court ordered a third party to reproduce documents — previously produced in continued on page 4

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New Rules for e-Evidence: The Case For The Defense By Sonya L. Sigler Part One of Two More than a few attorneys have so far managed to stave off the fateful day when they truly will have to address electronic evidence. Either they have been fortunate or smart in their selection of cases, or someone else has taken care of these issues for them. Or maybe they and opposing counsel have quietly decided that there was really nothing very interesting in those e-mails and that the paper documents will be adequate. However, that fateful day is arriving quickly as proposed changes to the Federal Rules of Civil Procedure come closer to final approval. (See, www. uscourts.gov/rules/newrules6.html. See also, “U.S. Judicial Conference Approves FRCP e-Discovery Amendments” in the October issue of e-Discovery Law & Strategy.) Although these new rules are not in effect yet, some courts and practitioners are being guided by the proposed changes. Many defense attorneys feel condemned to the role of Sisyphus, eternally pushing a rock up a mountain. They believe the burden of the new rules adds rocks to push. One of the broadest-reaching implications of the new rules is to make the process for reviewing electronic data much more transparent. Let’s examine implications and strategies concerning these proposed changes, particularly for counsel representing organizations that hold Sonya L. Sigler is vice president of business development and general counsel at Cataphora Inc. (www.cataphora.com). She is a member of the California State Bar and is a frequent speaker on various topics, including electronic discovery. She is a member of the Sedona Conference Working Group 1 on Electronic Document Retention and Production. Reach her at [email protected]. November 2005

large amounts of electronically stored information.

document-retention or compliance policies into practical effect.

EARLY DISCUSSION OF ELECTRONIC EVIDENCE

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Proposed rule 26(f) makes explicit the requirement for both sides to address e-discovery issues early in the process. Both sides must develop a good understanding at this early stage of what electronically stored information exists, where it is stored, how much there is and whether any of it is not reasonably accessible. When this requirement is coupled with increasing quantities of electronic data, attorneys must quickly develop a strong command of electronic-discovery issues that will be a crucial component of their case strategy.

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The defendant who can respond quickly and intelligently to discovery requests will have a significant strategic advantage. It is vital to prepare long before any subpoena arrives by proactively managing information assets: It’s important for the organization to understand what information it holds, and to implement policies for deleting any that needn’t be kept for regulatory or business reasons. Proactively managing electronically stored information can decrease the amount of data subject to discovery. If an organization has historically kept much of its data without any systematic retention policy, then going through the discovery process will likely be a very painful, expensive and time-consuming process. Legal (in-house and outside counsel), information-technology and business teams must learn to work more closely together to effectively manage all electronically stored information. None of the information-management, document-retention or compliance obligations can be met solely by any one group in an organization, because no one group has the requisite expertise. Business executives own the information; in-house counsel, sometimes with assistance from outside counsel, must formulate legal strategy and advise the executives; and IT staff are the guardians and operators of the systems that house the data. These groups will need to establish a close working relationship to put any

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The single most significant implication of the proposed rules once the case begins is that both sides will need to understand, far earlier than is the current practice, what potential electronic evidence may exist, where it is, how much there is, and which custodian’s data is where, and on what computer or backup media. Additionally, proposed rule 26(b)(2)(B) recognizes the difference between information that is “reasonably accessible” and that which is not, due to undue burden or cost of retrieval. Under this rule, the respondent is responsible for knowing where this hard-to-access data is, and will have to explain why the “burden or cost” makes it not reasonably accessible. To gain the early insight required to hold fruitful discussions regarding electronically stored information, both sides may need to depend on more sophisticated tools than have typically been deployed to date. Zubulake set a precedent of using statistical sampling of backup tapes to determine whether they might hold relevant e-mail messages that would justify their wider restoration. Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003). Counsel’s knowledge of these and other more advanced e-discovery techniques will play an increasingly important role in understanding what data you have and what it means. Whatever both sides agree to at the meet-and-confer sessions needs to be manageable. For corporate clients, cost pressures will play an increasing role in selection of vendors and methodologies. Costs are already high and the 2005 Fullbright & Jaworski Second Annual Litigation Trends Survey reports that controlling costs is general counsel’s number-one concern. Knowing what you have — and where it is — is the first step toward being able to more closely control discovery expenses. Part Two, next month, will discuss how e-evidence impacts overall case strategy and management, and look at some of the latest e-discovery tools available to defense attorneys and their clients.

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Defining Metadata continued from page 2 hard-copy format — in electronic format in Zenith Elec. Corp. v. WH-TV Broad. Corp., 2004 WL 1631676 (N.D. Ill. July 19, 2004). The court accepted the defendant’s argument that the documents needed to be produced electronically because the printed copies lacked metadata and the electronic files could be more easily searched. In addition to granting that request, the district court also found that the third-party defendants were responsible for the cost of producing the electronic data. The court noted that printing was a convenience and the documents could have been produced in their original electronic form. Similarly, In re Verisign, Inc. Sec. Litig., 2004 WL 2445243 (N.D. Cal. Mar. 10, 2004) involved a court order to produce electronic documents in native format. The magistrate judge specifically stated that a .TIFF document production was insufficient and ordered the defendants to produce the documents in a searchable electronic format — such as a native .pst format — that included metadata. Affirming the order, the district court declared that the Federal Rules of Civil Procedure “required [the defendants] to produce responsive electronic documents in their native .pst format if that is how they were stored in [the defendants’] usual course of business.” Parties who fail to preserve and produce metadata may be at risk for judicial sanctions — from adverseinference instructions to monetary fines, evidence preclusion or even default judgments. In re Telxon Corp. Sec. Litig., 2004 WL 3192729 (N.D. Ohio July 2, 2004) illustrates the degree to which courts will sanction a David H. Schultz is manager of legal consulting at Kroll Ontrack (www.krollontrack.com), based in Eden Prairie, MN. He consults with attorneys and litigation-support staff about electronicdiscovery, paper-discovery and computer-forensics issues in civil and criminal litigation, as well as about regulatory matters. He is a member of eDiscovery Law & Strategy’s Board of Editors, and can be reached at [email protected]. 4

party for failing to produce relevant metadata. In re Telxon involved allegations that an accounting firm failed to produce certain e-mails, metadata and other documents. In reviewing the matter, the magistrate judge found that the accounting firm must have known multiple database versions existed and the hard-copy production failed to capture relevant components — such as metadata — of the database. The magistrate recommended default judgment in favor of the corporation, declaring that “[n]o reasonable person could believe that PwC’s production … to Telxon … was a ‘good faith’ production.” These cases demonstrate how the judiciary is requiring parties to address issues relating to metadata. Counsel today must be prepared to justify the steps it takes to properly preserve and produce metadata.

CONSIDERATIONS IN REQUESTING AND PRODUCING METADATA Without its affiliated metadata, an electronic document is incomplete. In the context of litigation, metadata provides the information that is crucial to authenticating a document. Also, metadata resides in the “background” of a computer. This “behind the scenes” quality makes metadata extremely valuable in lawsuits because computer users are not typically aware of the computer’s metadata “log,” which documents each date/time a file is created, accessed and modified. These “digital fingerprints” can tell the story about a computer user’s conduct or the history of a particular file. To maximize the value of metadata in your next case, consider the following tips: Ensure that metadata is properly preserved. During legal discovery, the potential for losing metadata is enormous. Because metadata is not included in standard printed documents, attorneys engaged in litigation involving e-documents will not produce or receive a complete document if the electronic documents are simply printed and produced by themselves. Opening a file, however briefly (unless done under forensically acceptable conditions), modifies metadata. Aside from having to explain why the changes occurred, it also causes the loss of the prior

values in these important fields. This can turn potentially explosive evidence into totally useless files. Accordingly, counsel must develop and implement a plan to ensure that all potentially relevant data is protected. In some cases this may mean seeking a court order compelling preservation of metadata. Understand that different types of metadata exist for different files. The availability of metadata depends on the properties of the file type (eg, Microsoft Office documents, WordPerfect documents, some graphics files). In a case where metadata production is required, a litigation team will typically gather two primary types of file metadata during dataprocessing. File-system information is data stored independent of the file itself –– the file system contains information about the file (ie, file names, dates, path locations, sizes). On the other hand, internal e-mail and file metadata information is stored within the file itself and varies depending on the type of file in question (ie, tracked changes, document versions, hidden text, macros). Knowing what information can be gleaned from a particular file will give you the technical edge to navigate the challenges metadata poses. Capitalize on metadata as a tool for filtering the data set. The existence of metadata can help counsel filter the document sets, decreasing the volume of data requiring review and helping the litigation team focus the review process. For example, electronic documents have a variety of date/time metadata information that can be used to filter the original collection in a more focused review set. Besides the create date, most documents also have modified and access dates, and e-mails usually provide sent and received dates. Keep in mind that modified and sent dates tend to provide the most accurate information for sorting purposes. Be aware of the limits of a hardcopy production. Production of computer-based information in hardcopy form generally results in the receipt of discovery materials in a format (paper) that is incomplete and

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Defining Metadata continued from page 4 inaccurate. For example, a hard-copy production of e-mail files will provide only the information that appears on the face of the e-mails themselves, such as the “to,” “from,” “cc,” and “sent date/time” fields. It will not provide potentially crucial information such as the “bcc” field or the “date/time received” field; in other words, a paper production forces counsel to leave out certain key pieces of data that already exist in the electronic version of the documents. And a hard-copy production of electronic files will often result in an inaccurate representation of the facts. One simple example is the production of a Microsoft Word document that was first created in 2003. If the document is printed for production, the date on the document will automatically change to the date the document was printed, instead of the date it was written. While most e-discovery service providers have systems in place to prevent this type of metadata alteration, this scenario is a

In-House e-Discovery continued from page 1 facility that hinders, rather than enhances, a law firm’s ability to help its clients navigate the e-discovery process. A thorough exploration of questions in tiers that address potential needs to meet stated goals will help firms properly prepare.

WHAT SERVICES DO YOU WANT TO PROVIDE? Client needs should be a major component of analyzing whether a firm should try to develop in-house EDD-processing capacity. Setting up a quality lab can require significant investment, and it makes poor business sense to develop a facility that sits idle and costs money instead of generating revenue. Reviewing typical legal matters at a firm to spot e-discovery needs is a valuable way to begin the assessment process. In addition, examining matters after their completion will reveal existing work that was done and areas where a client could have used additional assistance. November 2005

real problem that arises frequently and is exacerbated by the requirement to produce in hard copy. Address concerns posed by native production. When a file is produced in its “native format,” it is in the original file format in which it was created, including the specific software applications used to create the document. Because viewing or searching documents in the native format may require the original application (eg, viewing a Microsoft Word document may require the Microsoft Word application), documents are often converted to a standard file format (eg, .TIFF) as part of e-document processing. But unlike native files, all the information in a paper document or document image is displayed within its “four corners”; metadata cannot be searched, accessed or viewed. Reviewing only printed or imaged documents results in an incomplete review. Litigation teams can now view native files in an online repository tool that obviates the need to acquire each of the native-file applications and removes any disadvantages with native-file Clients have very different e-discovery needs from one another. For example, white-collar criminal defense, internal investigations and regulatorycompliance inquiries frequently require “quick and dirty” review of corporate files — often while they are still on the company’s network. Preparing these materials for production in discovery is often secondary to quickly uncovering facts. Conversely, in antitrust or transactional matters, such as those involving second requests from the Securities and Exchange Commission (SEC) for information, the primary focus is usually on preparing voluminous materials for production to the government so it can decide whether to permit a proposed business transaction to move forward. Another consideration is whether clients already have their own EDD arrangements. An increasing number of corporate clients have negotiated long-term contracts with one or more national service bureaus in exchange for discount pricing and faster response times. Law firms representing

searching. Instead, native files can be loaded into the online database, along with extracted text and metadata. Using an electronic review tool keeps the metadata with the document and allows the reviewer to search this important information. Reviewing electronically created documents in an online repository also ensures that all computer-based evidence is evaluated and reviewed.

CONCLUSION Case law and emerging court rules will continue to clarify counsel’s obligations to preserve and produce relevant information. While the case law is unclear about whether parties must produce metadata as a matter of course, many courts have made it clear that parties must produce metadata when responding to a request for documents maintained in the ordinary course of business. Counsel today must stay abreast of these developments so that they can provide clients with zealous advocacy and avoid case-altering sanctions for spoliation. —❖— these clients have limited abilities to suggest alternative service providers. An assessment of potential EDD services should generate a written report of findings and a business plan that prioritizes the value of various EDD services in light of client demands. If sufficient data is available, then the assessment could include an analysis of EDD expenses that have passed through the law firm, breaking out dollars spent on collecting, filtering, reviewing and processing electronic materials. However, internal cost-analysis does not present a complete picture of potential EDD needs. Direct client contracts with EDD vendors, and the fact that some clients may have avoided extensive EDD expenses, will tend to make internal cost data understate the firm’s total involvement with EDD services. Drafting a written analysis provides additional value to the firm. Prioritizing potential EDD service

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In-House e-Discovery continued from page 5 offerings provides a road map for generating a reasonable budget for startup expenses. Without a clear priority list, it is far too easy to recruit staff with incorrect expertise or invest in tools that do not provide the specific functionality the firm wants.

WHAT STAFF YOU NEED?

DO

A second step in developing internal EDD services is deciding who will perform this work. Qualified staff is more valuable than specific tools. Properly trained staff members understand the importance of preserving evidence, documenting chain of custody and the ability to replicate any step in an EDD project. Also, by understanding a project’s goals, qualified staff members can assist clients regardless of which tools are available. An experienced computerforensics examiner, for instance, can obtain useful information using only common Windows utilities or a freeware hexadecimal editor. Even more important, an experienced forensics investigator will do so without inadvertently deleting or altering data. While anyone can buy software, not just anyone should hold himself or herself out as an EDD professional. Because of the diversity of data types that may be collected, EDD practitioners must make many subjective decisions, even in such straightforward-sounding tasks as converting electronic files into Group IV .TIFF images. It’s also difficult to extract data from certain file types — not to mention password-protected or encrypted files; consequently, EDDprocessing projects routinely fail to properly process at least a few e-mail messages or collected files. Finding and correcting — or explaining why it’s not possible to correct — these problems is a hallmark of a qualified and valuable EDD professional. Finding and retaining quality EDD specialists is a challenge. More jobs exist than competent professionals to fill them, so salaries are competitive and job-hopping is common. One solution used by a number of law firms is developing EDD specialists 6

from their existing staff. Detail-oriented paralegals with a good understanding of technology may be excellent candidates for this type of work. Similarly, attorneys with a technology or prosecutorial background may be well suited for leading EDD teams or even testifying as in-house experts on the subject. However, without sufficient experience or external training, these crossover EDD workers may not be qualified to validate internal EDD practices. A final challenge to developing an internal EDD team is realizing, and putting the realization consistently into practice, the reality that attaining and maintaining proficiency is a full-time job. Individuals who will validate a law firm’s EDD procedures and work product should be certified to use the specific EDD tools used at the lab. These tools, however, are constantly upgraded, requiring ongoing training and re-certification. Equally important, legal standards are constantly shifting as new court opinions are released. Without enough time to remain current on these issues, initially qualified staff can rapidly fall behind.

WHAT TOOLS ARE APPROPRIATE? Assessing client needs helps ensure that EDD tools will not be selected in a vacuum. In addition to functionality, another important consideration is the amount of data these tools will likely need to process. Although relatively few options exist with respect to forensic data-collection tools, EDD conversion software comes in different degrees of scalability. At the most basic level, common litigation-support programs can process a small number of electronic documents, though they choke on large volume. Further up the ladder, a number of more expensive programs offer user-friendly interfaces and increased capacity to process digital materials. Such software is used in many service bureaus and in law firms. At the very top of the ladder, high-powered solutions can swiftly process terabytes of material. Few vendors and virtually no law firms use these industrial-grade solutions, though. A formal needs assessment helps answer questions about which tools

are most appropriate. Firms should not expect that a single tool will meet the EDD needs of every client. However, by auditing their mix of clients and matters, law firms should be able to identify tools that would most often be useful to them. For matters that focus on “quick and dirty” document reviews, basic litigation-support software — and possibly forensic imaging tools — may be adequate to get the job done. For cases with relatively few discovery documents (either smaller matters or disputes that rely on relatively few written communications), a mid-level EDD processing tool may be more than adequate. Relatively few cases involve an avalanche of paper and data that can be managed only with industrial-grade technology, and most law firms are best served by outsourcing these oversized projects to service bureaus. Finally, besides features and scalability, law firms should also examine the extent to which an EDD tool has been validated. How many courts have accepted materials processed by a program into evidence? Software developers should be happy to provide this information. For new and existing products that do not have a long track record, developers should be able to provide a chief scientist or programmer who can testify to the technology used by a tool and the consistency of its results.

HOW WILL YOU MANAGE LIABILITY? A final important consideration for creating an EDD service group within a law firm is the extent to which the firm is comfortable with potential liability for EDD projects that go awry. No project goes exactly as planned, and — as with any fact discovery — some amount of material is always mangled. Most of the time, such errors have no bearing on the substance of a case, but occasionally, a significant piece of evidence may be altered, accidentally omitted from a document production or otherwise mishandled. Aggressive litigators have found that challenging the procedures used to collect, review and process digital data may not only continued on page 7

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e-Discovery

DOCKET SHEET

WHEN PRODUCING NATIVE DOCUMENTS, METADATA MUST REMAIN INTACT In an employment case involving allegations of age discrimination, the plaintiffs requested native production of Microsoft Excel spreadsheets so that they would be able to determine whether the documents “had any actual other columns or types of information available on a spreadsheet.” After receiving the spreadsheets from the

In-House e-Discovery continued from page 6 successfully keep key documents from being used in the courtroom, but also attacks the credibility and good faith of the producing party. In bad situations, important documents may be excluded from evidence. In worse situations, a judge may impose sanctions on the producing party. And in the worst situations, the court may strike a producing party’s defenses (see, Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co. Inc., No. 2003-CA-005045 AI, (Fla. Cir. Ct. Mar. 23, 2005; May 16, 2005; May 18, 2005)) (sanctions imposed as the result of inadequate e-discovery practices are direct cause of $1.45 billion jury verdict). A court may also enter a default judgment Conrad Jacoby is a senior consultant with the Potomac Consulting Group, based in Arlington, VA, where he focuses on developing effective strategies for collecting and managing electronic discovery, and helping clients effectively use technology in their legal practices. A member of the District of Columbia and Maryland bars, Jacoby serves on the District of Columbia Bar Association Law Practice Management Section Steering Committee, the editorial board of The Sedona Conference Working Group on Electronic Document Retention and Production, and the DRI Technology Committee. He can be reached by e-mail at [email protected]. November 2005

defendant, the plaintiffs claimed the defendant “scrubbed” the spreadsheet files to remove metadata without producing a log of the information scrubbed. The plaintiffs also asserted that the defendant locked cells and data on the spreadsheets, thus preventing the plaintiffs from accessing those cells. The defendant admitted that it had scrubbed metadata and locked certain cells but argued that the plaintiffs never requested production of the

metadata and claimed that the metadata was irrelevant and contained privileged information. The court gave the defendant seven days to show why it should not produce electronic Microsoft Excel spreadsheets in native format and why it should not be sanctioned for its behavior. The defendant declared that its actions were made in good faith, designed to prevent the plaintiffs from discovering continued on page 8

against the producing party (see, Metropolitan Opera Ass’n, Inc. v. Local 100, Hotel Employees, 212 F.R.D. 178 (S.D.N.Y. 2003)) (mismanagement of electronic-discovery materials was so egregious that summary judgment was the only appropriate sanction). Or a court may personally sanction the producing party’s counsel (counsel for producing party sanctioned for willful mismanagement of discovery). Losing evidentiary battles is painful enough, but when the law firm itself processed the materials and is directly responsible for the circumstances leading to a legal setback, an adverse ruling against a client can easily turn into malpractice liability for the firm. Law firms have traditionally avoided this type of liability by using outside experts and vendors. If the law firm used reasonable due diligence in selecting outside assistance with an EDD project, the fact that an alleged expert botched the project is not the law firm’s fault. Courts and clients have proven to be somewhat understanding in such situations, but bringing these services into a law firm removes this buffer — while also potentially increasing performance expectations. A final concern is that collecting and processing digital materials for production in discovery may be considered separate from a law firm’s core legal work, and a danger in that scenario is that insurance designed to cover legal malpractice may not provide coverage for errors, omissions

or other mishaps that can occur during EDD collection and processing. Separate coverage may be required. A few law firms have distanced themselves from legal liability by creating captive EDD service companies whose stock the law firm owns. These partially or wholly owned companies are legally separate from the law firm, so their mistakes should not be binding on the law firm. But because of close ties to their founding law firms, courts and clients may not view such service companies as neutral vendors. Such perceptions are only reinforced if a law firm routinely sends all its EDD work to a captive vendor without competitive bid or other indicia of an open bidding process.

CONCLUSION Adding in-house EDD services should be a measured process with specific objectives and benchmarks to measure whether the program is successful. The promise of a new revenue stream must be balanced against the challenge of building quality ancillary services that fall outside the expertise of most attorneys at a typical law firm. Also, potential revenue must be balanced against the not-insubstantial legal liability that can arise from mishandling electronic materials. Law firms that move forward with developing internal EDD services should strongly consider minimizing risks by adding insurance coverage or internal reserves to offset potential liability.

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e-Discovery Docket continued from page 7 information that the magistrate had ruled undiscoverable, and maintain data integrity. Although the court did not sanction the defendant, it ordered the defendant to produce the spreadsheets’ metadata and to produce “unlocked” versions of those spreadsheets. The court held, “when a party is ordered to produce electronic documents as they are maintained in the ordinary course of business, the producing party should produce the electronic documents with their metadata intact, unless that party timely objects to production of metadata, the parties agree that the metadata should not be produced, or the producing party requests a protective order.” Williams v. Sprint/United Mgmt Co., 2005 WL 2401626 (D.Kan. Sept. 29, 2005). (For a longer treatment of this decision, see our article this month, “Defining Metadata,” on page 1.)

e-Discovery Docket Sheet was written by Michele C.S. Lange, a staff attorney with Kroll Ontrack, with assistance from Charity Delich, a Kroll Ontrack law clerk. Lange has published numerous articles and speaks regularly on the topics of electronic discovery, computer forensics and technology’s role in the law. Information in these summaries is taken from the Kroll Ontrack monthly E-Discovery Case Law Update and Computer Forensics newsletters, which may be accessed at www.krollontrack.com. Lange is a member of e-Discovery Law & Strategy’s Board of Editors and may be reached at [email protected].

ELECTRONIC RECORDINGS RULED INADMISSIBLE AT TRIAL FOR PLAINTIFF’S FAILURE TO COMPLY WITH ORDER In an employment-related suit, the defendants filed a motion for sanctions alleging that the plaintiff violated a court order and withheld discovery. In its request for interrogatories and production of documents, the defendants specifically defined a “document” as including “electronic recordings” and “tape recordings.” After the plaintiff failed to provide the requested documents and information, the defendants sought to compel discovery. The court granted the motion and ordered the plaintiff to comply, to which the plaintiff then submitted answers to the interrogatories. During a deposition a month later, the plaintiff revealed that it failed to produce tape and electronic recordings falling within the scope of the defendants’ discovery requests. Although the plaintiff produced four electronic recordings shortly thereafter, the defendants sought Fed. R. Civ. P. 37 sanctions and requested dismissal of three of the plaintiff’s claims. Alternatively, the defendants sought an order prohibiting the plaintiff from introducing the recordings at trial. Defending the late production, the plaintiff claimed that he did not initially turn over the recordings because they were stored on his computer in a format that could not be easily copied. The court found this “a wholly unacceptable basis for failing to comply with discovery” and determined that the recordings would be excluded from evidence at trial. The court stated, “[m]uch of present day discovery is contained on computers. It is both parties’ duty to comply with the rules of discovery and court orders despite technical difficulties.” Shank v. Kitsap

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County, 2005 WL 2099793 (W.D.Wash. Aug. 30, 2005).

COURT DECLINES TO ISSUE PRESERVATION ORDER BUT EMPHASIZES PARTIES’ DUTY TO DEVELOP PLAN The plaintiffs alleged that the defendants concealed information and submitted false claims for payment relating to aircraft and parts delivered to the government. Claiming the defendants had attempted to “sweep evidence under the rug,” the plaintiffs sought a preservation order, requiring the defendants to “preserve documents, physical evidence, and electronic (computer-based) evidence for discovery and trial.” The plaintiffs further claimed that the defendants’ past conduct demonstrated a genuine concern that they might destroy relevant documents. In reply, the defendants stated that they had already taken appropriate steps to preserve relevant evidence within days of being notified of the lawsuit. The court found that the plaintiffs failed to show that any evidence would be lost or destroyed absent a preservation order. In refusing to grant the preservation order, the court declared that the defendants demonstrated they had the capability to preserve the evidence at issue. The court also issued an Initial Order Regarding Planning and Scheduling and stated, “the parties have a duty under Rule 26(f) to meet and develop a discovery plan, including arrangements for electronic discovery in accordance with this court’s Electronic Discovery Guidelines.” United States v. The Boeing Co., 2005 WL 2105972 (D. Kan. Aug 31, 2005). —❖—

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