eDiscovery: Ultimately Too Costly to Ignore

Because of their ubiquitous nature, documents stored in electronic form… should be specifically targeted by counsel in developing their discovery plans.  Failing to do so may not only prejudice their case, but may also constitute malpractice.  — Michael Overly, California Continuing Education for the Bar, 1998

Over the last decade, the application of discovery to electronic documents and records has increased dramatically and has become a routine part of litigation involving corporate disputes.

California commissioner Richard Best, former discovery referee and adjunct law professor, wrote that:

The challenge to the bench and to the bar is to achieve cost effective discovery and improve the quality of the litigation process…  Because of rapidly developing technology, lawyers and courts must embrace the continuing education on the relevant technology and on the reevaluation of the application of basic discovery concepts… Its efficacy depends on the proper application, grounded firmly in experience and knowledge, of such concepts as “good cause”, “undue burden“,  “cost shifting”, “cost benefit”,…

The phrase “undue burden” is often applied as a criterion for determining whether or not the cost involved with eDiscovery are excessive relative to the nature and size of the litigation case.  Generally the producing party is required to bear the costs for producing the requested information.  For example, if the intended likely penalty outcome from a litigation case is $50,000 but the estimated cost involved to produce electronic evidence is double that or more, the court may rule the eDiscovery request to be an “undue burden”.

“Undue burden” had been a frequent excuse for parties in a dispute to avoid producing electronic evidence.  Jason Krause in a law.com editorial quotes Jim McGann of Index Engines, an eDiscovery vendor, as saying “The standard starting argument for many lawyers used to be that discovery was going to be burdensome, no matter what the facts were. Now many lawyers are realizing that you can’t just complain that something is too expensive to recover and wait for the judge to rule it inaccessible.”

Records Management and eDiscovery technology is improving at a rapid pace.   For example, a study by Integreon found the cost related to discovery using technology available in 2010 sped the process of tape discovery by 75 percent compared to comparable technology that was available in 2005.

But while eDiscovery technology is improving, others say that it still is unable to keep up with the speed with which electronic data is being stored.  The sheer volume of data is increasing dramatically across the board. David Kessler, partner with Drinker Biddle in Philadelphia said: “I find that technology has made the cost of e-discovery perhaps 30 percent cheaper, but we are forced to handle 70 percent more volume than in the past.  Once we start to get a handle on e-mail and other file types, audio files, social media, and other discoverable types of data began coming into play.”

eDiscovery is a hard problem and the technology to enable it will continue to improve.  One point that is very clear though is that the courts are expecting more and more that companies have a handle on their electronic data.  Companies that don’t need to be prepared to face the wrath of the courts and potentially large penalties.