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Technology, Techniques and Best Practices

Report: Predictive Coding Replaces Sanctions as the Big News in E-Discovery

by Bob Ambrogi | March 11, 2013

For the last several years, year-end reports on e-discovery have highlighted sanctions as the lead headline. (For examples from this blog, see Report: Sanction Requests Rise But Awards Hold Steady for 2011 and E-Discovery Sanctions Reach an All-Time High, Survey Finds.) For 2012, however, a different story took the lead spot — the rise of predictive coding.

Such is the conclusion of the 2012 Year-End Electronic Discovery and Information Law Update published by the law firm Gibson Dunn.

In our prior electronic discovery mid-year and year-end reports, the lead story was sanctions, as numerous decisions imposing onerous penalties for real or perceived e-discovery failures caught the attention of the legal community. By contrast, 2012 was the year of predictive coding, and of meaningful rules reform becoming an important step closer.

What made predictive coding the story of 2012, says the report, were the several court decisions that discussed and even endorsed it.

In the absence of judicial approval, many litigants were unwilling to use this technology. That may well change now, following several decisions approving review methodologies involving predictive coding.

Of course, the increasing acceptance of predictive coding and other forms of technology-assisted review was not the only big e-discovery story last year. Among others cited by Gibson Dunn in its report were:

  • Proposed amendments to the Federal Rules of Civil Procedure that would limit the most serious sanctions for failures to preserve to cases where the court finds that the failure was willful or in bad faith, or that it “irreparably deprived a party of any meaningful opportunity to present a claim or defense.”
  • The rise of international e-discovery and the corollary need to deal with foreign data protection and privacy law.  ”Foreign data protection and privacy laws have become pervasive and foreign data protection authorities more active in their enforcement of such laws,” says the report.
  • The European Commission’s proposal to replace the 27 data protection laws of the EU member states with a single data privacy regulation — a proposal that has good news and bad news for companies, according to the report.

Sanctions awarded by type and percentage of cases where sanctions granted

Even though the sanctions story is no longer the lead in Gibson Dunn’s year-end report, it is by no means gone away. However, rather than focus on punitive sanctions, courts have shifted towards pragmatic solutions.

“Decisions have increasingly noted that remedial monetary sanctions, as well as other measures such as reopening discovery and hiring forensic analysts to search for spoliated data, are generally fairer and better at making the aggrieved party whole than punitive sanctions such as a default judgment,” the report says.

An area that gained increasing attention in 2012 among e-discovery professionals and courts is the discoverability of social networking information, the report finds.  Courts increasingly face difficult questions about the extent to which parties are required to preserve social media and about whether changes to social media sites constitute spoliation. “One court this year even required a defendant in a trademark infringement case to recreate a Facebook page as it had previously existed, so that the Facebook page showed plaintiff in a photo that displayed ‘infringing trade dress,’” the report explains.

Additional key issues from 2012 identified by the report are:

  • Parties’ preservation obligations in advance of and at the outset of litigation.
  • The scope and meaning of “cooperation” in e-discovery, consistent with the Cooperation Proclamation of The Sedona Conference.
  • The emergence of proportionality as an increasingly important concept in e-discovery.
  • The continued lack of clarity from the courts about what constitutes reasonable efforts to prevent the disclosure of privileged information.
  • Greater emphasis by courts on the government’s e-discovery obligations and a greater willingness to sanction the government for failure to live up to those obligations.

The full Gibson Dunn year-end report is available on the website and in PDF format.

Filed Under: Case law, Court rules, Predictive Ranking, Privilege, Sanctions Tagged With: , , , , , , ,

Trends and Best Practices in E-Discovery Privilege Review

by Bob Ambrogi | July 3, 2012

Recent cases have presented several examples of the inadvertent production of privileged, “smoking gun” documents. In some of those cases, even with a clawback agreement in place, the court would not allow clawback. In others, even when clawback was allowed, the damage was done.

Below are the slides from a recent Catalyst Webinar, Trends and Best Practices in E-Discovery Privilege Review. (Follow that link to see and hear the entire webinar, with audio.) Presented by members of the Catalyst Search & Analytics Consulting Team, the webinar explores recent e-discovery trends and best practices regarding privileged documents.

View more PowerPoint from Catalyst Repository Systems

Filed Under: Privilege, Review, Seminars, Tips and Training Tagged With: , , ,

Webinar: Trends and Best Practices in E-Discovery Privilege Review

by Bob Ambrogi | June 19, 2012

You cannot unring a bell, as the saying goes, and nowhere in e-discovery is that more true than when privileged documents are inadvertently produced to an opposing party. Even if you have a clawback agreement and even if the court enforces that agreement (not a certainty), the damage may already be done.

On Thursday, June 28, at noon Eastern time, Catalyst will present a free webinar, Trends and Best Practices in E-Discovery Privilege Review, presented by three members of the Catalyst Search & Analytics Consulting team. John Hokkanen, director of Search and Analytics Consulting, and senior consultants Jim Eidelman and Ron Tienzo will explore recent e-discovery trends and best practices regarding privileged documents.

Topics will Include:

  • A brief overview of recent court decisions regarding attorney-client waiver issues and best ways to use FRE 502.
  • Best ways to search for potentially privileged documents.
  • Using advanced analytics to identify social networking among in-house counsel, outside counsel, management and others to categorize privileged documents.
  • Creating a privilege log automatically as you review.
  • Best ways to QC for privilege using analytics, sampling, and rule-based software.

To attend this free event, register here.

Filed Under: Catalyst News, Privilege, Review, Seminars Tagged With: , ,

Judge Peck Provides a Primer on Computer-Assisted Review

by John Tredennick | March 14, 2012

Magistrate Judge Andrew J. Peck issued a landmark decision in Monique Da Silva Moore v. MSL Group, filed on Feb. 24, 2012. This much-blogged-about decision made headlines as being the first judicial opinion to approve the process of “predictive coding,” which is one of the many terms people use to describe computer-assisted coding.

Well, Judge Peck did just that. As he hinted during his presentations at LegalTech, this was the first time a court had the opportunity to consider the propriety of computer-assisted coding. Without hesitation, Judge Peck ushered us into the next generation of e-discovery review—people assisted by a friendly robot. That set the e-discovery blogosphere buzzing, as Bob Ambrogi pointed out in an earlier post.

I recommend reading the decision (and its accompanying predictive-coding protocol) not for its result but for its reasoning. This is one of the best sources I have seen on the reasons for and processes underlying predictive coding. Indeed, Judge Peck provided a primer on how to conduct predictive coding that is must reading for anyone wanting to get up to speed on this process.

What is Computer-Assisted Review?

Judge Peck started by quoting from his earlier article in Law Technology News:

By computer-assisted coding, I mean tools (different vendors use different names) that use sophisticated algorithms to enable the computer to determine relevance, based on interaction with (i.e. training by) a human reviewer.

As Judge Peck concluded: “This judicial opinion now recognizes that computer-assisted review is an acceptable way to search for relevant ESI in appropriate cases.”

Why Do We Need Computer-Assisted Review?

The answer for Judge Peck was simple: Other methods of finding relevant documents are expensive and less effective. As he explained:

  • The objective of e-discovery is to identify as many relevant documents as possible while reviewing as few non-relevant documents as possible.
  • Linear review is often too expensive. Despite being seen as the “gold standard,” studies show that computerized searches underlying predictive coding are at least as accurate as human review, if not more accurate.
  • Studies also show a high rate of disagreement among human reviewers as to whether a document is relevant. In most cases, the difference is attributable to human error or fatigue.
  • Key word searches to reduce data sets also miss a large percentage of relevant documents. The typical practice of opposing parties choosing keywords resembles a game of “Go Fish,” as Ralph Losey once pointed out.
  • Key word searches are often over-inclusive, finding large numbers of irrelevant documents that increase review costs. They can also be under-inclusive, missing relevant documents. In one key study the recall rate was just 20%.

Ultimately, Judge Peck reminded us of the goals underlying the Federal Rules of Civil Procedure. Perfection is not required. The goal is the “just, speedy, and inexpensive determination” of lawsuits.

Judge Peck concluded that the use of predictive coding was appropriate in this case for the following reasons:

  1. The parties’ agreement.
  2. The vast amount of ESI (over 3 million documents).
  3. The superiority of computer-assisted review over manual review or keyword searches.
  4. The need for cost effectiveness and proportionality.
  5. The transparent process proposed by the parties.

The last point was perhaps the most important factor leading to the decision: “MSL’s transparency in its proposed ESI search protocol made it easier for the Court to approve the use of predictive coding.”

How Does the Process Work?

The court attached the parties’ proposed protocol to the opinion. While it does not represent the only way to do computer-assisted review, it provides a helpful look into how the process works.

  1. The process in this case began with attorneys developing an understanding of the files and identifying a small number that will function as an initial seed set representative of the categories to be reviewed and coded. There are a number of ways to develop the seed set, including the use of search tools and other filters, interviews, key custodian review, etc. You can see more on this subject below.
  2. Opposing counsel should be advised of the hit counts and keyword searches used to develop the seed set and invited to submit their own keywords. They should also be provided with the resulting seed documents and allowed to review and comment on the coding done on the seed documents.
  3. The seed sets are then used to begin the predictive coding process. Each seed set (one per issue being reviewed) is used to begin training the software.
  4. The software uses each seed set to identify and prioritize all similar documents over the complete corpus under review. Essentially, they review at least 500 of the computer-selected documents to confirm that the computer is properly categorizing the documents. This is a calibration process.
  5. Transparency requires that opposing counsel be given a chance to review all non-privileged documents used in the calibration process. If the parties disagree on tagging, they meet and confer to resolve the dispute.
  6. At the conclusion of the training process, the system then identifies relevant documents from the larger set. These documents are reviewed manually for production. In this case, the producing party reserved the right to seek relief should too many documents be identified.
  7. Accuracy during the process should be tested and quality controlled by both judgmental and statistical sampling.
  8. Statistical sampling involves a small set of documents randomly selected from the total files to be tested. That allows the parties to project error rates from the sample.
  9. Here, the parties agreed on a series of issues that will, of necessity, vary on other cases. The key point is that the parties agree on the issues and test the coding during the process.

Random Samples

It is important to create an initial random sample from the entire document set. The parties used a 95% confidence level with an error margin of 2%. They determined that the sample size should be 2,399 documents. You can figure this out using one of the publicly available sample-size calculators such as Raosoft, which we often use:

Seed Sets

The protocol goes on to describe a number of ways to generate seed sets including:

  • Agreed-upon search terms.
  • Judgmental analysis.
  • Concept search.

The parties frequently sampled the results from searches to evaluate their effectiveness.

There is at least a good blog post to be written about seed sets. Some computer-assisted coding systems like the one used for this case start their process with seed sets. The notion is that attorneys understand the cases, know what is and is not relevant and can train the system to recognize more relevant documents more effectively than starting with no seed documents.

Others think this is a mistake. They believe that however well meaning, the attorneys will bias the system to find what they think is relevant and get self-reinforcing results. In this regard, they are suggesting that the attorneys will make the same mistakes found in key word searches—thinking that you know which words will be most effective at finding your documents.

Systems following this logic urge the user to start from scratch, telling the system what is and is not relevant based on reviewing documents. As you do that, the system begins developing its own profile of relevant documents and builds out the searches. The belief is that the system may create a better search through this process than it might if you bias it with your seed documents.

There is a middle ground here as well. Many of the latter systems (no seed) will allow you to submit a limited number of seed documents as part of the training process. That may represent the best of both worlds or it may not, depending on your beliefs. The important point is that there are different approaches to computer-assisted processing. This protocol shows you one approach only.

Training Iterations

The process involves a number of computer runs to find responsive documents. The parties started with a first set of potentially relevant documents based on analysis of the seed set. After that review, the computer was asked to consider the new tagging and find a second set for testing. Then a third and a fourth.

The protocol suggested that the parties run through this process seven times. The key is to watch the change in the number of relevant documents predicted by the system after each round of testing. Once that number dropped below a delta of 5%, the parties had the option to stop. The notion is that the system has become stable by that time, with further review unlikely to uncover many more relevant documents.

Finishing the Process

Once the training has completed and the system is “stable,” we move from computer-assisted to human-powered review. At that point, the producing party reviews all of the potentially responsive documents and produces accordingly.

Final QC Protocol

As a final stage, the parties need to focus on the potentially non-responsive documents—the ones the system says to ignore. The parties select a random sample (2,399 documents again) to see how many were, in fact, responsive.

These same documents (non-privileged ones) must be produced to the opposing party for review. If that party finds too many responsive documents in the sample or otherwise objects, it is time for a meet-and-confer to resolve the dispute. Failing that, you can always go to the court and fight it out.

Is This the Bible on Predictive Coding?

Certainly not. There are a lot of ways to approach this process. However, first opinions on any topic carry a lot of weight. We chose a profession that is guided by precedent, and these are first tracks on this new and exciting subject. The suggested procedures make sense to me and provide a starting point for your predictive coding efforts. This opinion and its accompanying protocol are important reading whether you are proposing or opposing the process for your next case.

 

Filed Under: Case law, Predictive Ranking, Privilege, Review, Sampling, Search Tagged With: , , , , , ,

Check for Privilege Before Turning Over Your Database: The Lesson in Thorncreek Apartments

by John Tredennick | February 22, 2012

Before you give opposing counsel the keys to your production database, run at least one check on the privilege field to see if any of your documents are marked “privileged.” That is the lesson a federal judge taught a hapless defense counsel in Thorncreek Apartments III v. Village of Park Forest, 2011 U.S. Dist. Lexis 88281 (N.D. Ill August 9,2011). If you don’t, you may be deemed to waive the privilege. I hate when that happens!

Icon of two keys on a keyring“What’s going on here?” you might ask. Can anyone be that sloppy? “Maybe,” I say in response. At least that’s what it seemed like here. Counsel literally made a production database available for more than seven months without once checking to see if it included privileged documents. A waiver is not inadvertent if you were hopelessly sloppy about it. Here is the story.

The Facts

The plaintiffs filed a motion before the District Court arguing that privilege was waived for six documents included in a production database provided by defendant Village of Park Forest. The Village argued that the documents were inadvertently produced in a production database hosted by its online vendor Kroll Ontrack. (I don’t think Kroll did anything wrong here.)

Defense counsel went through what seemed like a reasonable process in pulling files off of a number of tape backups. First, they conducted a key word search to pull back documents that might be responsive. The key words had been agreed upon by opposing counsel and in some cases ordered by the court. (Looks like there may have been some controversy around the key words and no, people weren’t talking about predictive coding in this case.)

As a second step, Kroll put the potentially responsive documents in an online database for defense counsel to review. They did so, marking documents as responsive, non-responsive and privileged.

The third step was to place the documents released by defense counsel in another online database made accessible to plaintiffs’ counsel. As the court noted, documents that the Village elected to withhold from production were not placed in this database. So far it all makes sense.

Producing the Privilege Documents

Here is where the rub came. At some point, plaintiffs complained that they were not able to see the documents returned from the agreed-upon searches but marked non-responsive. The Village had previously said it would include non-responsive documents in the production database in order to show how many its review had identified. In an attempt to be magnanimous, the Village elected to begin placing all of the documents in the production database—responsive and non-responsive.

As the court noted, the parties’ briefs left it a bit “murky” as to how the Village intended to handle the documents counsel had reviewed and marked “privileged.” Why they were not pulled out of the population before the production database was marked live is simply beyond me.

But they were not and 159 privileged documents went online, easily available to plaintiffs’ counsel. Even more surprising, during the seven months the production database was live, Village counsel did not bother to produce a privilege log. At one point, counsel claimed that there were no privileged documents to withhold. Somebody tell me how that happened.

So, as you probably guessed by now, depositions started and some wiseacre slapped two of the juicy privileged documents in front of a witness. Village counsel erupted, claiming privilege and inadvertent production. The game was on.

Game On: Reel Those Privileged Documents Back In

Actually, the game was over, at least for defense counsel. It appears that the parties came to agreement with respect to most of the privileged documents (probably the non-important ones) but disagreed with respect to six of them. Quickly concluding that at least some of the six were privileged, the court thus was required to review the doctrine of inadvertent waiver.

The test for inadvertent waiver is pretty simple, made more so by the recent amendments to F.R.E 502:

  1. Were the documents privileged?
  2. Was the production inadvertent?
  3. Should privilege be waived nonetheless?

The privilege discussion didn’t interest me much. I did all that in law school. So, my attention was focused on the second and third prongs of the test.

Was the Disclosure Inadvertent?

As the court noted, this issue could be wrapped up with the third element, which goes to the heart of forgiveness. Rather than do that, the court espoused a simple analysis for this element.

It simply presumed based on the evidence before it that counsel didn’t really mean to include all of those privileged documents in the production database. And who would?

Certainly counsel wasn’t using those documents in an affirmative way, which was the original reason courts held that the full privilege would be waived. The old, “I did it because counsel told me to do it,” was a key way to waive privilege for that entire subject matter. That didn’t happen here.

Nor did the Village sit silent as opposing counsel was cramming those two juicy privileged documents down their witness’s throat. They got up and objected, allowing the deposition to go forward only under protest.

Surprisingly—and this seemed important to the court—it then took more than four months before Village counsel came up with a proper privilege log to join the dispute. While the court stated this as a dispositive fact, you can just tell it didn’t like counsels’ lackadaisical approach. Neither would I; I wonder what happened there.

Anyway, the court let them off the hook and ruled that the production of privileged documents were inadvertent. On to the next step in the test. (But don’t you take four months to produce your privilege log.)

Reasonable Steps to Prevent Disclosure?

Once the court concluded the production was inadvertent, the Village had two more hurdles to cross:

  1. Did the holder of the privilege take reasonable steps to prevent production of privileged documents?
  2. Did the holder of the privilege promptly attempt to rectify the error after it became known?

This case was about the first prong of that test. The court complained that the Village provided “precious little” about the steps taken to find and isolate privileged documents. Counsel for the Village wrote an email stating that he spent “countless hours” reviewing a “relatively large amount” of documents to find those with privileged content. Why, the court asked, was there no affidavit to support this allegation? Why indeed.

The court had no sympathy for the next argument—counsel thought that marking the document “privileged” would keep it out of the Kroll database. As the court astutely pointed out:

It would have been a simple matter for the Village to check the production database created by Kroll—before it went live online and became available to [plaintiffs]—to verify that privileged documents were not disclosed.

Duh! I am not privy to the Kroll software but I bet there was a simple way to search to see if anything was privileged—either by privilege tag, if that was included in the production database, or by the reference number given to the privileged documents. What happened here?

In a somewhat gratuitous fashion, the court piled on by noting that not a single privileged document was withheld and that no privilege log was produced.

I confess that I am puzzled myself as to how this happened. Counsel went to the trouble of marking 159 documents privileged. Why in the seven months that followed did counsel not ask for a printout from the Kroll system sufficient to produce a simple privilege log? Alas, we case readers don’t get to ask these questions.

As the court concluded—ironically citing yet another case as precedent for the point:

It is axiomatic that a screening procedure that fails to detect confidential documents that are actually listed as privileged is patently inadequate.

Sorry Charlie. You lose on that one.

Failing to Notice and Rectify

The court didn’t stop there. It went on to fail the Village on the second element of the test. It held that the Village failed to rectify the error in a timely way. Again, ignorance in using the Kroll database seemed to be at the heart of the finding.

For starters, the court forgave the Village for taking another four months after the deposition to issue the privilege log. Methinks the court didn’t like that fact at all but just didn’t want to say so.

Instead, the court jumped on counsel for failing to find its own error for over nine months—the period from March to December 2009 when the production database was available to the plaintiffs. According to the court, defense counsel should have logged-in and run a privilege search during this period. The 150+ hits that came back would have been a dead giveaway.

As the court said:

Yet for some none months, the Village apparently had no inkling that the production database contained documents that the Village wished to withhold as privileged, or that [plaintiffs] were reviewing and obtaining those documents. If that is true (and we accept that it is), that means the Village as not paying any attention whatsoever to what documents its opponent in the litigation was selecting from the database. Perhaps [plaintiff] simply selected all of them; the parties’ briefs do not tell us if this is so.  But, even if that were the case, a single visit to the production database could have alerted the Village to the problem.

This seems like piling on to me. Counsel clearly didn’t know much about databases or pay much attention to the process. The process was sloppy or non-existent. The client paid the price.

The court did go on to make one last point that brings us full circle. It noted that the problem might have come to light earlier had Village counsel provided a privilege log, which was its duty in the first place. Doing that might have forced plaintiff’s counsel to acknowledge what it knew—that the database had a bunch of privileged documents. But with no privilege log and a seeming statement that there were no documents being withheld on privilege grounds, all bets were off. Plaintiffs’ counsel could sit quietly until the deposition and then drop the bombshell on a hapless witness.

What Can We Learn From This?

This is a simple-enough case with a simple-enough message: Don’t produce documents in an online database without doing some basic checking first. Assuming, as the case does, that there was a field containing a privilege designation, it would take counsel milliseconds to realize that something bad was about to happen. If lead counsel wasn’t comfortable running the search, how about that tech-savvy associate or legal assistant? If not them, how about your friendly vendor? If asked, the Kroll people could have spotted the mistake. Some might say they should have but not me.

We built an automated production system that can be run by our clients with no Catalyst intervention. Rather than allow these kinds of mistakes to happen, we added a QC rule-set that will not allow a document marked “privileged” or “potentially privileged” to be produced without a specific override. Even if foldered for production, these documents are pulled out into a special folder that must be addressed by the client before a production can go through.

These rules are just another step in trying to make the process easier and more foolproof for lawyers who are not comfortable with technology. It doesn’t guaranty that a privileged document will never be produced—we have seen cases where the documents are marked privileged after they are produced—but it can cut down on mistakes. With the stakes (and the volumes) this high, you have to do everything you can to avoid an inadvertent waiver.

This is not a case where counsel took dozens of steps to avoid privilege yet something slipped through, as I have written about before. (See, Bad Facts Make Bad Law: ‘Mt. Hawley’ A Step Backward for Rule 502(b).) Rather, it is about a simple mistake that anyone could have caught with just a smidgen of effort. I don’t feel as bad for Village counsel as I do for some of the other victims. This case is no “derelict on the waters of the law,” it is a fair ruling on somewhat extreme circumstances. Counsel were sleeping on the job (or so it seems to me) and paid the price.

So, the lesson here? Don’t produce those documents without checking to see if privileged files might have snuck through. Run some searches, sample some documents and for God’s sake check the privilege field. You will sleep better, and pay lower malpractice premiums, if you do.

 

Filed Under: Case law, Privilege, Review, Search Tagged With: , , , ,

In E-Discovery, Even Google Needs Help with Search: Oracle Case is Lesson in the Complexity of Privilege Search

by Jim Eidelman and Bob Ambrogi | December 12, 2011

Lest anyone underestimate the complexity of privilege searching in e-discovery, consider the recent case in which none other than search giant Google got tripped up. Although the company’s privilege searches screened out an email labeled “Attorney Work Product,” the searches failed to catch nine drafts of the same email, autosaved by the author’s email program.

Worse yet, the email was a true “smoking gun.” In fact, the email was so potentially inculpatory that the judge remarked that it and the Magna Carta (common law) would be all that the opponent’s counsel would need to win its case. (It is interesting to note that this was not the only incriminating document, and this document is even more damaging to Google when paired with a 2005 email written by Andy Rubin, Google vice president in charge of Android.)

In this post, we’ll give you some background on the case and then discuss the lessons it teaches about privilege searching in e-discovery.

A Dispute Over Java

Since August 2010, Google has been locked in litigation with Oracle America over whether its Android operating system violates Oracle’s Java patents and copyrights. Within the month before Oracle filed the lawsuit, lawyers for both companies met to discuss the alleged infringement. Ten days later, Google General Counsel Kent Walker convened an internal staff meeting to discuss the matter further. One of the attendees was Google software engineer Tim Lindholm.

A week later, as a follow-up to that meeting and a prelude to another, Lindholm wrote an email addressed to Google senior counsel Ben Lee and Andy Rubin. The email was labeled “Attorney Work Product” and “Google Confidential.” In part, it said:

What we’ve actually been asked to do (by Larry and Sergei) is to investigate what technical alternatives exist to Java for Android and Chrome. We’ve been over a bunch of these, and think they all suck. We conclude that we need to negotiate a license for Java under the terms we need.

During the four minutes it took Lindholm to write this email, his computer auto-saved it nine times. Each time, the “to” and “cc” fields were still blank and the email was not labeled with the footer. Only the tenth and final version identified the recipients and included the labels for “work product” and “confidential.”

During discovery after the lawsuit commenced, Google produced the first eight drafts of the email to Oracle. It held back the ninth draft and the final version, listing both on its privilege log. Google later told the court that its electronic scanning mechanisms “did not catch those drafts before production” because the drafts did not contain the confidentiality or privilege headings and did not list any addressees.

In court documents, Google said, “Due to the volume and speed of production in this case, Google has been forced to rely on electronic screening mechanisms, which identify potentially privileged documents based in part on sender and recipient information, as well as privilege-related keywords.”  It appears that these drafts slipped through because there was no “eyes on” review of the documents unless they hit on privilege terms.

The Emails Come to Light

On July 21, 2011, in two separate hearings in the case – one a telephonic hearing before U.S. Magistrate Judge Donna M. Ryu to compel Lindholm’s deposition and the other a Daubert hearing before U.S. District Judge William Alsup – Oracle referenced one of the email drafts. In the Daubert hearing, Oracle read part of it into the record. Google’s attorneys responded by addressing the substance of the email, but they did not object to it as privileged or confidential.

Judge Alsup readily picked up on the email’s significance. At one point during the hearing, he said to Google, “You are going to be on the losing end of this document” with “profound implications for a permanent injunction.” At another point, he said that a good trial lawyer could use the simple combination of the Lindholm email and the Magna Carta to win Oracle’s case and get an injunction. And to add insult to injury, all this took place with several news reporters in attendance, without objection.

Judge William Alsup

After those hearings, later the same day, Google sent notice to Oracle that the draft email constituted “protected material” under a protective order/clawback agreement and asked that it no longer refer to it in public. The next day, asserting that the draft was “unintentionally produced privileged material,” Google clawed it back. Soon after, Google clawed back all draft versions of the email.

Google’s next move was to ask Judge Alsup to redact the transcript of the Daubert hearing to remove all references to the Lindholm document. The judge denied the request, ruling that the email was protected neither by the attorney-client privilege nor the work-product doctrine.

Meanwhile, Oracle filed a motion with Judge Ryu to compel Google to re-produce the emails it clawed back. Judge Ryu granted Oracle’s motion, finding that the email was neither privileged nor otherwise protected. Google appealed that finding to Judge Alsup, who entered an order on Oct. 20, 2011, affirming the magistrate judge. “The Lindholm email and drafts will not be treated as protected by attorney-client privilege or work-product immunity,” he concluded.

Google now says it will appeal Judge Alsup’s ruling.

What This Means for Privilege Search

Although much can be said about whether or not these documents were privileged, whether the privilege was waived, and whether the actions of the attorneys in the hearings were well thought out, we will focus on the implications for search.

Producing Autosave Documents. One big question this case raises is whether producing parties should ever include “autosave” drafts of documents. Many software packages delete the autosave information when the user saves the document or sends the email. The answer will depend on the circumstances of the case, but it is a question counsel should always consider.

Clawback Agreements under Rule 502. The only sure way to protect privileged documents is to review them. While it was the goal of Rule 502 of the Federal Rules of Evidence to obviate the need to review every document for privilege, this case once again shows that “you can’t un-ring a bell.” Once the other side sees a damaging privileged document, it’s almost impossible to control the damage.

Keyword Searching and Highlighting. Keyword searching would have flagged this document as Potentially Privileged only if the search terms had included “negotiat*” or “licens*”. Many firms don’t like to use such broad terms because they flag too many documents as Potentially Privileged. At Catalyst, we have developed a list of several hundred words commonly used in legal documents, and many clients like to use them in their “Potentially Privileged” searches. However, doing so will identify a large number of “false hit” documents that are not privileged. One approach we recommend is to use term highlighting so that all such terms are easy to see as the document is reviewed. Even that wouldn’t have helped in this case because it appears that only documents that hit on privilege search terms were reviewed for privilege.

Near Dupe Analysis. We generally recommend using email threading and near-dupe analysis software. While the principal benefit is speeding the review, a second important benefit is to prevent inconsistent coding. In this case, when the attorneys were reviewing the final version of the emails for privilege, they would also have seen the autosaved drafts and could “tag all” as privileged. Further, we always recommend an “inconsistent coding” analysis, part of which is to identify documents in the same set of near dupes/email threads that are inconsistently coded for privilege. This would have caught the autosaved drafts before production in this case, where non-hits weren’t reviewed.

(It is interesting to note that in the most famous case of inadvertent production of a privileged, “smoking gun” document, Mt. Hawley Insurance Co. v. Felman Production, it appears that the damaging document was a dupe of a document withheld and on the privilege log. This underscores the importance of doing an inconsistent coding analysis! On this point, see also our earlier post: Bad Facts Make Bad Law: ‘Mt. Hawley’ A Step Backward for Rule 502(b)).

Other inconsistent coding checks. In addition to duplicate, near-dupe and attachment family inconsistent coding checks, other  methods we recommend to look for similar documents are “More Like This” and Key Document Clustering. In this case, this was such an important document that the attorneys should have used analytics to find similar documents as a QC measure.

Predictive Coding. Would predictive coding have helped? It’s hard to say. If the final versions of the emails had been used as seed documents, or tagged as privilege in the set of documents in the privilege sample set, there’s a good chance that the autosaved versions would have been highly ranked for privilege. On the other hand, if they were not in the set chosen to be sampled and not among the seed documents, then they might have slipped through.

The Honor System. It is also worth noting that in most cases the claims of privilege for documents listed on the privilege log are very seldom challenged.  The attorneys producing the documents are essentially on the honor system.  Had the “autosave” emails not slipped through, Oracle would not have had any way to challenge the claim of privilege for the withheld emails.  The claim of privilege in this case was certainly arguable, but it is the practice of many parties to withhold whole families of documents even when only one document is privileged and otherwise to err on the side of claiming privilege.

The Bottom Line

Recently, IDG News Service reporter James Niccolai wrote a thoughtful examination of the Google-Oracle privilege fiasco, How Google Was Tripped Up By a Bad Search. As he noted, the irony in the case is that “the e-mail might never have seen the light of day if the search tools used to identify documents covered by attorney-client privilege had done their job.” In any other case, that might not be considered ironic. But this, after all, is Google.

Whether these draft emails slipped through as a result of human or technological error, Google attributed the error to “electronic scanning tools.” Google has not provided further details and Judge Alsup’s opinion contained no further explanation.

Even so, as we’ve reviewed in this post, the case is not without lessons for e-discovery professionals. No human or technology can offer 100 percent protection against inadvertent production of privileged documents. However, some of the steps we’ve outlined above will certainly help minimize the risk.

Filed Under: Case law, Predictive Ranking, Privilege, Search Tagged With: , , ,

‘Mt. Hawley’ Affirmed and Claim Dismissed: District Judge Again Puts His Stamp of Approval on Troubling Rulings

by John Tredennick | December 6, 2011

For over a year, we have been writing about a West Virginia decision (and its progeny) that we believe went too far in making new e-discovery law. The original decision, issued May 18, 2010, was styled Mt. Hawley Insurance Co. v. Felman Production. You can read my original post at: Bad Facts Make Bad Law: ‘Mt. Hawley’ A Step Backward for Rule 502(b).

In that decision, Magistrate Judge Mary E. Stanley held that Felman had waived attorney-client privilege by inadvertently producing a smoking-gun email to counsel suggesting that it might be helpful to their insurance claim for business interruption to backdate several orders from clients. If the orders had come in while the machinery in question was under repair, that might provide support for their $38 million dollar insurance claim. You have to love their chutzpa at the very least.

The 'smoking-gun' email involved a furnace such as this one, at Felman's West Virginia facility.

In my original post, I suggested that bad facts (outright fraud it seemed to me) might be responsible for what I thought was bad law. After all, the production had been overseen by a highly reputable law firm (which had no involvement in this email). Counsel had not only been diligent in trying to screen out privileged documents, but it had gone far beyond what we have typically seen elsewhere. Indeed, counsel cited over 20 steps they had taken, including a variety of review and sampling efforts:

  1. Negotiated the ESI stipulation with defendants.
  2. Hired an ESI collection vendor, Innovative Discovery.
  3. Discussed with Felman’s IT department the company’s computer network structure and identified potential sources of relevant ESI.
  4. Visited Felman’s West Virginia plant to coordinate and oversee ESI collection.
  5. Decided to collect data using forensic imaging.
  6. Directed the vendor to collect ESI from the current server and the backup server.
  7. Collected 1,638 gigabytes of data.
  8. Downloaded emails from 29 custodians for processing by its law firm, Venable.
  9. Hired a new vendor to process Felman’s Oracle and Soloman databases.
  10. Identified the first six workstations to be processed and learned that each contained more data than anticipated.
  11. Examined methods to cull non-relevant materials.
  12. Selected search terms to retrieve documents responsive to defendants’ document requests.
  13. Tested the search terms against the Felman emails and added additional search terms.
  14. Tested the search terms, including the additional terms, against the Felman emails, tagged responsive documents, and set them aside for privilege review.
  15. Produced 17,064 Excel spreadsheets.
  16. Selected privilege search terms to identify materials which are potentially privileged and relevant.
  17. Set aside potentially privileged materials for individualized document-by-document review for relevancy and privilege.
  18. Tested the privilege search terms against Felman’s emails.
  19. Retrieved native files of all images and examined thumbnails.
  20. Conducted “eyes-on” review of all documents identified both as relevant and potentially privileged.
  21. Decided to use a vendor to complete the processing of Felman’s emails.
  22. Produced ESI in native or TIF format, with 36 fields of metadata.
  23. Produced more than 346 gigabytes of data without sampling for relevancy, over-inclusiveness or under-inclusiveness.

Counsel got nailed simply because several of the Concordance indexes they used turned out to be corrupt. As a result, privilege searches didn’t turn up anything for the documents in those indexes. Since counsel didn’t attempt to review every one of the millions of documents they produced, several key documents slipped through the net. Reading between the lines, Magistrate Judge Stanley seemed to lay blame on the fact that they did not appear to sample the documents that they produced but never reviewed to see if any might be privileged.

We wrote about subsequent decisions as well as other commentary about the decision here:

Now, in what has to be the final straw in this saga, the presiding judge in the case, U.S. District Judge Robert C. Chambers, has taken the ultimate step by issuing further sanctions and dismissing the lost-business claim: Felman Production v. Industrial Risk Insurers, 2011 U.S.Dist. Lexis 112161 (Sept. 29, 2011).

Let us look at the court’s reasoning.

Bad Discovery Practices

U.S. District Judge Robert C. Chambers

You can’t read any of the Mt. Hawley decisions without being reminded that both the magistrate judge and the district judge were not happy with Felman’s discovery practices. Among others we have chronicled, you won’t win favor with the courts by backing up the trucks and dumping a ton of irrelevant electronic files on the opposition. When you go the next step and make every one of them confidential, regardless of content, you only worsen your position. The judge was particularly incensed to see pictures of kitties with a big confidential stamp on them. Kitties. Yes kitties. Awww, how cute. Oh, but there were a couple of naked men in the photos too (although not with the kitties, thank heavens).

There were also missing files and no real attempt to issue a litigation hold by Privat, the Ukrainian company that was at the controls in this case. Indeed, it appears that party Felman actively dissembled with respect to its true owners, a fun loving bunch of Ukranians with little respect for the discovery process. They got caught when one of the inadvertently produced documents showed that they were running the show. Oh what a tangled web they weaved!

As Judge Chambers explained:

Felman’s failure to comply with Judge Stanley’s August 19 and October 19, 2010 Orders was inevitable in light of the lack of care Felman exercised. … Felman did not provide litigation hold memos to the West Virginia Felman staff until four months after this case was filed. Felman also admitted that the Ukrainian custodians were not instructed to preserve their documents.

This led to the destruction of documents when the Privat representatives sold their computers before receiving a document request. Convenient, to say the least.

All this led to a motion for sanctions—either a dismissal outright or dismissal of the business interruption claims plus an adverse inference instruction regarding the missing documents.

The judge made short order of the motion. While not dismissing the case outright, he did dismiss the $38 million business interruption claim. He started by discussing spoliation, citing Magistrate Judge Grimm in Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 522 (D. Md. 2010).

A party subject to [the duty to preserve] must “identify, locate, and maintain information that is relevant to specific,predictable, and identifiable litigation.” In ascertaining whether a party has fulfilled its duty to preserve, a court must “determine reasonableness under the circumstances … [which] in turn depends on whether what was done—or not done—was proportional to that case and consistent with clearly established applicable standards.

The court went on to find specific culpability—gross negligence—in Felman’s failure to issue litigation holds and otherwise take steps to preserve evidence.

In the end, the court didn’t dismiss all claims but rather threw out the big one—for business interruption. It left the other claims and counterclaims to be tried.

The sanctionable conduct of Felman and the resulting prejudice to Defendants merits dismissal fo the business interruption claim because the unavailable evidence and improper conduct related predominantly to it. As to Defendant’s counterclaim, the unavailable evidence is less prejudicial and an adverse inference instruction is an adequate remedy.

The court also went on to award attorneys’ fee in the bargain.

What Happens Next?

My guess is that we won’t hear any more from the parties in this case. The business interruption claim was the heart of Felman’s demand in the first place. An adverse inference instruction is a powerful tool to address the rest of the claims, at least to the extent Felman oversteps the bounds of its insurance policy. Settlement is the likely next step in this matter.

What about a malpractice claim? Given the Felman party antics, I wouldn’t put it past them. They might claim malpractice for producing the damaging documents. With a bogus claim for $38 million at stake, who knows what they might do. At the least, this would present interesting evidentiary questions for the firm’s malpractice carrier. I wouldn’t want to be in the settlement meeting.

But my concern is for other cases more than for how this one wraps up. With 23 steps being ruled as not enough, what will be adequate? Perhaps the problem could have been remedied by some simple sampling procedures, but that isn’t clear from anything I read. Perhaps enough other judges will choose to ignore it so that it becomes weak precedent. “A derelict on the waters of the law,” as famed Supreme Court Justice Felix Frankfurter once said. That’s my vote. Send the bad guys home but leave e-discovery law alone.

Filed Under: Case law, Privilege, Review, Sampling, Sanctions Tagged With: , , , ,

New Model E-Discovery Order for Patent Cases Turns Fishing Expeditions into Games of ‘Go Fish’

by John Tredennick | October 10, 2011

Two weeks ago in his speech at the East Texas Judicial Conference, Chief Judge Randall R. Rader of the Federal Circuit Court of Appeals announced approval of An E-Discovery Model Order for patent cases. While not the first model order to hit the scene, this one could have far-reaching implications—not only for patent disputes but for other civil cases in federal and state courts.

As Judge Rader explained (and we all know), e-discovery in the digital age has gotten expensive. It turns out the situation is even worse for intellectual property disputes. One study suggested that this class of cases costs 62% more than the norm. At Catalyst, we host a lot of IP cases, so I don’t doubt those numbers one bit.

To help address this problem, the Advisory Council of the Federal Circuit created a special subcommittee to draft a model order governing e-discovery, which the Advisory Council then unanimously approved. One of the drafters’ goals was to limit the ability of litigants to turn discovery into an “unlimited fishing expedition.” In doing so, however, they may have gone too far. By limiting each party to five search terms per custodian, they have turned the search process into a game of Go Fish. At least that is the way it looks to me.

(For an earlier take on how to keep e-discovery from becoming like a child’s game, see Ralph Losey’s 2009 post, Child’s Game of “Go Fish” is a Poor Model for e-Discovery Search.)

I support efforts to limit discovery costs and agree they have gotten out of hand. However, the purpose of discovery is to help the parties get at the truth. Turning the search process into a game of five questions would not seem to be a step in that direction. To the contrary, it ignores the most basic tenet of effective search–that it must be pursued in an interactive fashion. With the new Model Order, I fear the courts are turning the search part of discovery more of a blind guessing game than a mechanism to find the documents that matter to your case.

What’s Right About the Model Order?

To be sure, there are a lot of good provisions in the Model Order, although I have questions about a few of them . Let me start with these and then turn to my concerns about the search limitations.

The order imposes cost shifting for disproportionate ESI production requests. It goes on to say that a party’s dilatory discovery tactics and, conversely, its efforts to promote efficiency and reduce costs will be considered in cost-shifting decisions. (Model Order Paragraphs 3 and 4.)

Intellectual Property Institute

Chief Judge Rader

This makes sense to me. The party demanding production can best determine that the information being requested outweighs the costs of producing it. However, somebody will have to determine when a discovery request is disproportionate.

General ESI productions will not include metadata other than date and time sent and received and distribution list. (Paragraph 5.)

I have some reservations about this one but generally agree. Outlook includes hundreds of metadata fields that are irrelevant in 99.9% of the cases. However, I am not sure how much this will save. The cost to extract a few fields is about the same as extracting all the fields. Still, it is mostly clutter so I like the idea. Simplicity is good in most cases.

General ESI production requests shall not include email. To obtain email, parties must propound specific email production requests. (Paragraph 6.)

This one surprises me. Email is at the heart of most disputes and ties heavily into prior art investigations. In Qualcomm, email not produced was at the heart of the sanctions hearings. Why is email singled out for special treatment here? I presume it is because of sheer volume.

Email production requests shall be propounded only for specific issues, rather than general discovery of a product or business. (Paragraph 7.)

This should prove interesting. I suspect a good lawyer will find a way to tie those broad email requests to “specific issues” which may render the limitation toothless.

Email production requests shall be phased to occur after the parties have exchanged initial disclosures and basic documentation about the patents, the prior art, the accused instrumentalities, and the relevant finances. (Paragraph 8.)

This is an interesting suggestion. I support efforts to keep discovery focused on key issues and I assume the goal is to keep initial productions to a minimum in the hopes that later email productions won’t be required.

Email production requests shall identify the custodian, search terms, and time frame. (Paragraph 9.)

This makes sense to me but it suggests that the parties will be able to define what search terms will bring back the relevant information. Without looking at the emails themselves, this will be difficult. Why not allow the parties to specify specific parties and review all of their communications during the relevant time frame? The chances of missing key discussions because you didn’t come up with the right search terms seems high to me.

Each requesting party shall limit its email production requests to a total of five custodians per producing party for all such requests. (Paragraph 10.)

When I was trying cases, I loved limits on depositions because they added a new tactical dimension to the game of preparing for trial. In a typical multi-party case, I would start by guessing which people the other parties would seek to depose and then try to maximize my reach by picking the ones that others didn’t pick. It was fun and didn’t really seem to get in the way of our search for justice.

Doing it for an email request seems both similar and different. In a multi-party case, will co-counsel get together and pick five different custodians each just to widen the net? Why impose such a limit? Why not make the parties justify their requests, perhaps setting a presumptive initial limit? Five seems like a small number to me.

The Model Order does say that should a party request email from more than five custodians, it shall bear the costs of the additional production. That sounds good but will doubtless spawn a host of follow-on debates about the reasonableness of the claimed costs.

Under FRE 502(d), the inadvertent production of a privileged document will not be deemed a waiver. Significantly, the party cannot use the inadvertently produced document to challenge the privilege or protection. (Paragraphs 12 and 13.)

This seems like a step in the right direction if it means the courts will take a harder line in waiver. In a number of recent decisions, the courts seem to have ignored the purpose of the recently amended FRE 502 and put counsel through a gauntlet of tests to justify retrieval of the inadvertently produced materials. See my comments on the Mt. Hawley decisions as on example.

In an effort to perhaps strengthen the safe harbor envisioned for FRE 502, the Order goes on to state:

The mere production of ESI in a litigation as part of a mass production shall not itself constitute a waiver for any purpose. (Paragraph 14.)

That will have some interesting consequences but should reduce some of the risk in producing ESI that hasn’t been reviewed multiple times before the production.

What’s Wrong with the Order

Here is my main concern with the Model Order. It states:

Each requesting party shall limit its email production requests to a total of five search terms per custodian per party. (Paragraph 11.)

Five search terms per custodian? For a major IP case? That number sure seems low to me, almost arbitrary. What are they trying to accomplish with this sort of limitation? To narrow down the number of documents produced in the case?

This approach might backfire by encouraging tactics that would broaden rather than narrow the results. If it were me, I would make my five search terms as broad as possible so as to bring back the proverbial kitchen sink. Without any other means to identify and isolate relevant documents, there is no other choice.

The five term restriction is even tougher because of the following additional limitation:

A disjunctive combination of multiple words or phrases (e.g., “computer” or “system”) broadens the search, and thus each word or phrase shall count as a separate search term unless they are variants of the same word.

This is troubling. Search experts routinely use different and varying words to describe a concept or event. They connect them with “or” statements.

Why? Because people use different and varying words when they communicate. Putting aside simple misspellings, search experts know that they have to account for two key concepts in language:

  • Polysemy: The fact that a word can have many meanings. “Strike,” for example, might signal a labor event or what happened to Alex Rodriguez in the bottom of the ninth to close the Detroit series.
  • Synonymy: The fact that many words can mean the same thing. We may file a case, a lawsuit, a claim, an action, a complaint, a petition and so forth.

Add to this the fact that we live in age of texting and Twitter. People no longer feel the need to use the King’s English. We regularly clip our sentences with shortcuts. “LOL,” “How R U?” and “Gr8” are common in electronic communications.

That is one reason key word searches fail. It is too easy to miss one of the many possible combinations used by your targets. The only remedy is to pepper your searches with as many “or” clauses as possible.

Under the Model Order, that would no longer be allowed. If your first search has five “or” clauses and you can’t convince the court that these are “variants of the same word,” you will be done. One search (an incomplete one at that) and out.

My second problem is that the proposed key word methodology seems flawed and almost backwards. Simple key word searching has been known to be ineffective for decades. Back in 1985, Blair and Maron conducted a study of the effectiveness of key word searches and found they only retrieved 20% of the relevant documents. See David C. Blair & M. E. Maron, An Evaluation of Retrieval Effectiveness for a Full-Text Document-Retrieval System, 28 Com. ACM 289 (1985).

During the TREC programs, researchers found that the key to making searches more effective was to interact with the documents. Some Lessons Learned To Date from the TREC Legal Track (2006-2009) (Feb. 24, 2010). Specifically, the researchers had to sample initial results from key word searches, refine their searches and sample again. Rinse and repeat techniques managed to bring results up to 50% effectiveness, which still isn’t all that good.

The most effective way to use key word searches is to combine them with different techniques. In one study, the author suggested that this approach could bring up the retrieval rate to about 78% of the total number of relevant documents. See: In Search of the Perfect Search.

Five search terms, with no sampling and limited “or” clauses? That doesn’t sound right to me. I think the courts should be going in the other direction. Encourage the parties to work together and sample the document population. Help them frame their searches so that they find the most relevant documents and only the most relevant.

Otherwise, we have let our fear of fishing expeditions convert the process to a game of Go Fish. “Give me all your eights,” counsel demands. “Go fish,”  opposing counsel replies.

For what it is worth, there is an “out” clause here. The Model Order states:

Should a party serve email production requests with search terms beyond the limits …, the requesting party shall bear all reasonable costs caused by such additional discovery.

What does this mean? If I want to submit a more effective search I can pay for it? Is this like buying a vowel on Wheel of Fortune? Perhaps it is a disguised cost-shifting mechanism.

File:Wheel of Fortune (US game show) title logo.jpgThe odd thing is this: For most systems, it doesn’t cost any more to run a long search with multiple “or” statements than a single term. After all, this is computer time we are talking about and not human effort. Catalyst allows searches up to 60,000 characters, for example, and that covers a lot more than five terms. Why not allow counsel to build at least five comprehensive searches before looking at cost shifting?

There is also another out. Under the Model Rule, the parties may jointly agree to modify the five-term limit without having to ask the court’s permission. The key is the requirement that the parties “jointly agree.” In my experience, one side always has an interest in being less helpful so reaching agreement may prove difficult in many cases. However, it may be that counsel will simply make expanding the number of searches allowed a standard part of their pretrial scheduling order.

Even with those outs, the default under the Model Rule is to force counsel to choose between games. Wheel of Fortune or Go Fish? These are not my preferred modes for modern e-discovery. It will be interesting to see how the Model Order works out in practice.

Filed Under: Court rules, Privilege, Search Tagged With: , ,

Seminar in Houston this Week on Protecting Privilege Using Defensible Search

by Bob Ambrogi | September 19, 2011

There is still time to register for How to Protect Privilege Using Defensible Search and Review Strategies, a live seminar and lunch in Houston on Wednesday. The seminar panel includes Harris County District Court Judge Ravi K. Sandill along with two lawyers who are experts in e-discovery search.

The program will review recent court decisions that illustrate the risks of inadvertent disclosure of privileged documents. Panelists will then review best practices for building searches, for using advanced analytics, any for verifying results through quality control and sampling.

There is no cost to attend the seminar, which is sponsored by Catalyst. Here are the details:

Date: Sept. 21, 2011

Time: Registration and lunch begin at noon. One-hour seminar begins at 12:30 p.m.

Location: Houston Technology Center, 410 Pierce St., Houston.

A registration form, a full description of the program and biographies of the speakers all can be found here.

Filed Under: Catalyst News, Privilege, Review, Search, Seminars Tagged With: , , , ,

Data-indexing Glitches and Inadvertent Disclosure: More on ‘Mt. Hawley’

by Bob Ambrogi | August 30, 2011

A case that has clearly caught the attention of e-discovery professionals is Mt. Hawley Insurance Company v. Felman Production Inc., 2010 WL 1990555 (S.D.W.Va., May 18, 2010). As we noted in a post here recently, U.S. Magistrate Judge Paul W. Grimm, a highly respected authority on e-discovery law and procedure, expressed criticism of the opinion in a recent article published in the Richmond Journal of Law and Technology, Federal Rule of Evidence 502: Has It Lived Up to Its Potential? And in a post on this blog last year, Bad Facts Make Bad Law: ‘Mt. Hawley’ A Step Backward for Rule 502(b), Catalyst CEO John Tredennick was one of the first to point out the flaws in the opinion’s analysis.

Now, the September issue of InsideCounsel magazine considers the Mt. Hawley case in an article by Michael Kozubek, Data-indexing Glitches Can Accidentally Disclose Privileged Documents. Kozubek zeroes in on one intriguing aspect of the Mt. Hawley case–the fact that the inadvertent disclosure of a “smoking-gun” email was due, at least in part, to an indexing glitch in one of 13 Concordance database files. Because of this glitch, searches by outside counsel failed to hit on the un-indexed emails.

Even in light of this failure of technology, the judge in Mt. Hawley faulted counsel for failing to perform critical quality control sampling. The InsideCounsel article quotes Catalyst’s Tredennick as suggesting that outcome was unfair:

John Tredennick, CEO of legal technology vendor Catalyst Repository Systems, questions the court’s assessment of the reasonableness of Felman’s efforts.

“In Mt. Hawley, plaintiff’s counsel performed many procedures including sampling and ‘eyes-on’ review of all documents identified both as relevant and potentially privileged before production—by my count as many as 23 steps,” he says.

The court should punish willful disregard or even abject sloppiness. However, punishing mistakes, particularly those caused by a vendor’s system, is bad policy, Tredennick adds. “The result will be people taking 50 steps to check everything or doing human review of everything, which runs up e-discovery costs.”

The article also quotes Ralph Losey, e-discovery team leader at Jackson Lewis, who agrees with Tredennick. “I’m inclined to think of the [Mt. Hawley] case as an outlier,” he tells InsideCounsel.

Still, the case illuminates the need for counsel–and their clients–to be diligent about quality control and not to become complacent about technology, Mayer Brown partner Anthony Diana tells InsideCounsel. “Organizations should not avoid the use of advanced technology for fear of privilege waiver,” he says in the article. “Rather, their counsel should carefully consider the risks involved in relying primarily upon technology to help curb the costs of a privilege review.”

Filed Under: Case law, Privilege, Review Tagged With: , , , ,
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