Editor: Please tell readers about your practice as E-Discovery Counsel at Kramer Levin.
Schulman : I am the firm's point person for legal issues relating to the preservation, review and production of electronic documents, and I act as a resource for both attorney teams and clients who have questions about legal standards and obligations. So, when there's an e-discovery dispute in a case, I may be brought in to help with a brief or a deposition of an IT representative. I also consult with clients on document retention policies and novel e-discovery issues as they arise. In more complex or time-sensitive projects, I might take the lead on designing and executing a discovery protocol. I also stay current with the latest developments in the field, write articles in legal publications, and frequently speak at e-discovery conferences. I am an active member of The Sedona Conference, an organization dedicated to developing e-discovery law in a just and reasoned way. Another aspect of my role is to coordinate with our Legal Technology Services group to make sure we continue to make available cost-effective, state-of-the art tools for our lawyers to use in the discovery process.
Editor: Given the integral role of IT specialists in the e-discovery process, how important is technological savvy to the practice of commercial law today?
Schulman : If you look at an average case, upwards of 50 percent of the time and money expended on prosecuting or defending a commercial action involves the collection, processing, review and production of documents in response to discovery requests and related tasks such as privilege logs. The relevant documents are no longer found in warehouses or filing cabinets. Instead, people are using new software platforms and tools to conduct business. Whether it's Facebook, instant messaging, Twitter, Salesforce, or the next new thing, the business communications that tell the story of "what happened and why" are increasingly found in computer data systems. In a recent high-profile corruption prosecution in New Jersey, the government was sanctioned for not preserving text messages sent between a confidential informant and FBI agents during the course of the investigation. You may have thought that teenagers were the most frequent text messagers; it turns out that secret agents are doing it too. Understanding the technology that lies behind the tools people are using to conduct business is critical to formulating discovery strategies and also making sure the legal team has uncovered all the evidence that is important to defending or prosecuting a client's case.
Editor: Is there an advantage in having a dedicated E-Discovery Counsel?
Schulman: Relatively few firms have a dedicated E-Discovery Counsel who focuses on legal standards and defensible discovery strategies. Yet courts are increasingly expecting lawyers to appear before them at an early stage, well-versed in a client's data systems and related technical issues. For example, the August 2010 amendments to New York Uniform Rules 202.12(b) and (g) added the requirement that counsel who appear at the preliminary conference must be "sufficiently versed in matters relating to their clients' technological systems to discuss competently all issues relating to electronic discovery." E-Discovery Counsel can also make a difference in ways that are not immediately obvious. For example, few attorneys know that you only need to examine a random sample of about 1,500 documents out of a very large set in order to speak with statistical confidence about the contents of the entire collection. That kind of specialized knowledge can be tremendously useful when working through the discovery process.
Editor: We often read about e-discovery sanctions cases. What are the real risks of being sanctioned?
Schulman : Much of the e-discovery jurisprudence has developed around cases where things have really gone awry. In spoliation cases, it often isn't even the original spoliation that drives the sanctions decision - it's the failure to disclose the problem early on, and subsequent attempts to hide the problem. It is hard to say what the overall risk is because there is little appellate guidance and each case is fact specific. But in the Second Circuit, a party can be culpable and sanctioned for data loss even in the absence of bad faith. That means litigants with cases in the New York courts ought to be especially cautious. Courts in this jurisdiction have held parties to increasing standards, and recent studies have shown that the number of e-discovery sanctions decisions is on the rise nationwide, so it is important to be vigilant.
Editor: Is there a case from the past year that has you particularly concerned?
Schulman : A lot has been written about Judge Scheindlin's Pension Committee decision from last year. That decision articulated a very high standard for preservation, including the need to issue a written litigation hold upon the reasonable anticipation of litigation. It's a very important decision. But that was a case that involved parties who had made no effort at all to preserve documents. More troubling to me is the more recent Harkabi v. SanDisk case from the Southern District of New York. In SanDisk , the general counsel had issued four preservation directives and had taken other steps to direct the preservation of sources of relevant ESI, including securely storing former employee laptop computers. A year later, the company's IT department wanted to reissue those laptops by copying the data to a server. When the imaged data later was unable to be located, Judge Pauley imposed severe sanctions. The decision suggests a very high standard for in-house counsel even after the issuance of preservation instructions. Even if the attorneys do all the reasonable things required to preserve ESI, if you have a technical failure or an IT department that acts on its own, a resulting data loss may still trigger sanctions.
Editor: What are some ways to address clients' cost concerns with regard to producing and reviewing the massive amounts of potentially relevant ESI located in corporations today?
Schulman : One of the best ways to address the cost issue is to encourage clients to focus on electronic discovery issues early in the case. The federal rules now require early conferencing on e-discovery matters, and there can be tremendous strategic and cost advantages in how one handles that early opportunity. For example, learning early on, by conferring with a client's IT personnel, that email received before a certain date is located on a legacy system and will be very expensive to collect and process can help the attorneys guide the proposed cutoff dates during early meet-and-confer negotiations with an adversary.
Another helpful approach is the use of advanced software tools to get a quick handle on the most relevant documents. This can be very helpful at deciding whether to pursue a quick settlement or to dig in for a battle and ultimate victory. Those are insights that were never possible before in a world where thousands of paper documents had to be reviewed manually before any conclusions could be drawn about the strength of the case. Having sophisticated e-discovery advice at an early stage can make a tremendous difference in both the cost of dealing with the case and even the outcome.
Editor: "Cloud computing" is fast becoming a buzzword in technology circles. Will it have an impact on e-discovery?
Schulman: Cloud computing is undoubtedly a revolution in the world of corporate information technology. As an example, the federal government's Cloud First strategy promises to save half of the $80 billion federal technology budget by moving agency data into the cloud. The cost savings and efficiencies of moving a corporation's data into the cloud are irresistible. However, cloud computing poses a serious threat to an organization's ability to prepare for and respond to document preservation and e-discovery obligations because the data is now in the hands of a third party. That complicates a company's ability to implement a litigation hold, to prepare for meet-and-confer sessions on e-discovery, to conduct a prompt early investigation of its own data, to collect and produce ESI on a timely basis and in an appropriate format, and to defend against third-party subpoenas and disclosure of corporate data to government investigators. Cloud data stored in foreign jurisdictions could also inadvertently trigger foreign data privacy laws. When selecting a cloud service provider and negotiating service agreements, many companies appear to be focused on the cost-saving aspects without consulting counsel proficient in e-discovery issues and related legal issues.
Editor: E-discovery is often viewed as a necessary evil. What are some of the new developments in the field that have you excited?
Schulman : Computer technology once promised us a paperless office. That obviously hasn't happened, and instead technology has brought us huge volumes of electronic data that are expensive to deal with in discovery. This can be very frustrating to a client who wants an efficient, substantive resolution of the dispute. However, over the past couple of years, I have seen the emergence of increasingly sophisticated software that promises to help. These software tools are designed to focus and prioritize a document review project, to use what's known as "predictive coding" or "machine learning" to pre-sort documents into relevant categories, to find near duplicates that can all be treated in a similar fashion, to assist in the negotiation of effective keywords, to automatically generate concepts and "topics," to gather relevant conversation threads, and to provide other strategic insights into an electronic document collection.
These tools are unquestionably powerful when used to conduct internal investigations, pre-discovery case analysis, and the review of large document sets produced by adverse parties. They are also increasingly being used by parties to streamline their document review process. This year, I am serving as a topic authority for the TREC Legal Track study sponsored by the National Institute of Standards and Technology, a really fascinating project designed to evaluate the accuracy and efficiency of automated document review techniques. A challenge that has been created by technology now looks like it may one day be solved - or at least greatly ameliorated - by technology. I am excited to be moving to the point where electronic discovery is something we do strategically, to win cases or settle on favorable terms, rather than just being a burdensome and expensive stage of the litigation process.
Published October 4, 2011.
