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Technology, Techniques and Best Practices

New Catalyst CR Production Module Fully Automates Document Production

There has been much discussion within the e-discovery industry of late about the Gartner Inc. research report, Magic Quadrant for E-Discovery Software. Anyone who read the report knows that Gartner placed high value on automation within an e-discovery platform. Gartner said that “as much automation as possible” is the right approach because of its cost-effectiveness for customers and the leveragability it offers vendors. Gartner cited Catalyt’s ever-increasing automation of its platform as a reason for placing it in the “visionaries” quadrant.

Today, Catalyst took a significant step forward in automation and user control with the release of the Catalyst CR Production Module. The module enables users of the Catalyst CR search and review platform to take command of every step of a production, from selecting the documents to produce through delivering them when the production is complete.

Working directly through the Production Module’s interface, the user is able to do everything from customizing the production criteria and adding the documents to be produced to checking the documents prior to running the production and selecting where the production documents are delivered. Full control enables the user to monitor all aspects of the production and manage any errors that are caused by events such as document conversion failures.

With the release of the Production Module, Catalyst offers true end-to-end automation of all the core functions of the e-discovery lifecycle, from processing to production. That makes it easier for users to meet tight deadlines, avoid mistakes and manage costs.

To learn more about the Production Module, read the full announcement.

With FCPA Actions on the Rise, Search Takes Center Stage

Corporate Counsel magazine recently issued a report that should cause multi-national corporations and their counsel to pay attention: Trend Watch: Foreign Bribery Actions Doubled Last Year.

Specifically, the magazine reported that enforcement actions under the Foreign Corrupt Practices Act (“FCPA”) nearly doubled in 2010, rising to 76 (with complaints against 23 companies and 53 individuals). In 2009, the SEC and Justice Department brought 45 actions (against 12 corporations and 33 individuals). That number was a significant jump again from 2008 when the government brought 37 actions against companies and individuals.

The pace seems to be continuing as well. This month, Paul Hastings, one of the leading international firms advising on FCPA investigations, issued its first Quarterly FCPA Report for 2011 [PDF]. So far this year, it reports, enforcement continues apace, with actions brought against four companies and seven individuals, along with a blockbuster forfeiture and a number of guilty pleas and settlements. The forfeiture amounted to nearly $149 million and related to a high-profile arms contract case involving 22 indicted defendants.

Another international law firm, Herbert Smith, in an article, Developments in Anti-Bribery Legislation: The UK Bribery Act and its Impact for Japanese Companies [PDF], reported that, of the 10 all-time largest FCPA settlements, eight were achieved in 2010 and eight (together totaling over US$ 2.25 billion) were settlements with non-U.S. companies.

A lot of the recent activity seems to relate to the changing of the guard after the 2010 election. Under the Bush administration, FCPA enforcement happened but was not a priority. Under Obama and the Democrats, FCPA investigations seem to be a priority. As Assistant Attorney General Lanny A. Breuer said in a speech at a recent national FCPA conference, “We are in a new era of FCPA enforcement [and] we are here to stay.” (Also see our earlier post, DOJ’s Breuer Vows Heightened FCPA Enforcement.)

Add to all that the recent enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which provides that “whistleblowers” who provide information to U.S. authorities leading to successful prosecutions under the FCPA may be entitled personally to huge sums as a result (up to 30% of the monetary recovery). (See Fried Frank’s client memorandum, New Incentives for Foreign Corrupt Practices Act Whistleblowers: Dodd-Frank Wall Street Reform and Consumer Protection Act [PDF].)

At the least, the government had over 140 prosecutions and investigations underway in 2010, according to EthicalCorp.com. That figure is dramatically higher than previous years under prior administrations.

All you can say is watch out.

What Does This Have to Do with Search?

A lot actually. FCPA investigations typically involve hundreds of thousands or even millions of documents collected from all over the world. Sometimes, the investigations are initiated after the government issues a complaint. In those cases, counsel have a starting place for their investigation. The government has a good-faith obligation to set forth the basis of its complaint and that should alert counsel as to the people to interview and the subject matter for their searches.

In other cases, it doesn’t work that way. The FCPA laws impose liability on an acquiring corporation when mergers occur. That means that the buyer of another company could be held liable for bribes and other corrupt activities that occurred even before the merger. That is true even if the buyer never did anything wrong.

In that regard, it is a bit like buying a U.S. company that has plants and property. If you later determine that the property you are buying is contaminated with toxic chemicals, you may be facing expensive Superfund liability. It doesn’t matter that you didn’t release any pollutants at your company or at the new site you acquired. You’re stuck nonetheless.

Superfund’s broad environmental liability has led to a growing and lucrative practice for environmental audit companies. The same is true for the FCPA. Some of the largest law firms in the world, with the depth and geographic coverage to mount these investigations, offer specialized FCPA practices. Paul Weiss is one such firm but there are a number of others in the game.

The key difference is this: If you are doing an environmental audit, you know exactly where the property is. You can send out your teams to inspect the ground, review the chemical history of the plant, check where materials were dumped and even drill for problems. It is just a matter of money but you can certainly find problems if you are engaged to take a look.

FCPA Investigations are Not Easy

What about in an FCPA investigation? Well, the problem is a bit different. First, what kind of fraud are we looking for? Counsel can’t exactly assemble the staff and ask for a show of hands from anyone who has bribed a foreign official lately. What, nobody raised their hand? Well, bribery isn’t something you usually put on your resumé or Facebook page.

What to do? The law firms we work with often start by talking to people and collecting their documents. What can you learn about how they deal with government officials? What do the documents show? What about the expense accounts and other money transfers?

Search is a key part of the answer. Modern search engines allow you to search millions of pages in a variety of languages with the click of a mouse. But what do you search for? That’s the hard part.

Traditional Search Doesn’t Cut It

Traditional Boolean search certainly has a part to play in an FCPA case but it isn’t always the most effective method. The reason is that we don’t know exactly what we are looking for, let alone the terms that might elicit those documents. Searching for “bribe*” within 10 words of “government official” probably won’t do the trick. Searching for the names of the government officials in question (assuming you know even that) might help.

Boolean search becomes even tougher in FCPA due diligence investigations because we are trying to prove a negative—that employees in the company to be acquired were not bribing public officials. That means counsel has to comb company and employee records to determine that nothing improper is going on. A tough assignment to say the least.

This is where a non-traditional form of search can be helpful.

Think about the traditional approach to search: You ask the documents specific questions and hope they answer with helpful information. This is a bit like the games of Fish or Battleship from our childhoods. We kind of know what we are looking for and the trick is to frame queries to find out if it is there. So, we think of key term variants and try to frame our searches to find good stuff.

“Give me all your schemes to convince government officials to give us the business.” Answer: “Go Fish.” Uggh, try again.

Let the Documents Speak to You

Now consider another approach to search, one that is more effective for these kinds of cases. Instead of questioning the documents, you let the documents speak to you and tell you their secrets. While the technique is still based on search, the approach is different. It can be far more effective when you are dealing with large volumes of documents and have no clear road map to follow.

“What does he mean?” you ask. “After all, documents don’t speak, they just sit there.”

I mean this. Modern search engines collect data about documents than can help shed light on what they contain and how they relate to one another. For example, in Catalyst CR we collect statistics about the metadata contained in the documents we index. Thus, if I were looking at files obtained from a particular office or custodian, I could quickly determine a lot of helpful information about their contents—without running a search. Our Correlation Navigators feature allows you to see a wide range of information in a view that might look like this:

(Click image to enlarge)

In this case our focus is on recipients after a search on the Enron documents. We can quickly see who is on the sending or receiving end of emails and better focus our review on those files.

Likewise, the system looks for information within the bodies of the documents and can show key concepts being discussed in the population. Here would be a view of some of the topics being discussed in a sample of the Enron population:

(Click image to enlarge)

In this case, the words are placed in alphabetical order but sized by relevance. They can provide important clues as you try and hone in your investigation.

With Catalyst Insight, our next release of our flagship product, we are taking investigation to a whole new level. Along with the field information we can provide about people and topics, we will provide investigators with new tools to allow the documents to speak to them.

Here is a timeline view, for example:

(Click image to enlarge)

With the timeline and the various field facets, a searcher can interact with documents and allow them to “speak” about their contents. The searcher can interact with each of the facets or drill down into the timeline to see how the communications flowed between the parties.

Investigators can use similar tools to track communications between parties, which can help guide their investigation. Here is an example from Insight:

(Click image to enlarge)

In this case, you can click on any individual to move that person to the center of the graph. Instantly, you can see who individuals are communicating with and how often. Click on the numbers and you can look at the actual communications. As you continue your investigation, you can go back and forth among individuals and documents.

There are a number of other techniques you can employ to speak with your documents. Clustering documents around themes can help you sort through large volumes of documents and focus on those that might matter. Finding “More Like These” from a key document set can take advantage of more complex queries than most researchers can hope to create on their own. These methods let the computer do that work based on complex algorithms and let the documents speak to you and help your investigation.

There are many more techniques we could discuss for FCPA investigations but this is a start. Suffice it to say that search is at the heart of these investigations and that search is typically more complex than we learned using Lexis or Westlaw. Mathematics, analytics and visual cues are important here as we both interrogate the documents and let them speak directly to us.

Regulating Bribes and Corruption is Catching on Globally

If you think this issue is of importance only to U.S.-based corporations, think again. It is true that, for many years, the United States stood alone in its efforts to police international corruption. The FCPA itself has been around for 30 or so years, although enforcement efforts have stepped up only recently. Some questioned our cheek in trying to tell people how to do business in other parts of the world.

Despite these misgivings, the idea of combating corruption is catching on globally. England recently enacted a similar law called the UK Bribery Act. It goes into effect July 1, 2011, and will impact U.S. as well as Asian companies. Recently, the U.K. Ministry of Justice published its guidance on procedures companies can put into place to protect themselves under the new act. (Also see our earlier post, Is Your Company Ready for the UK Bribery Act?)

Other European governments are following suit. In December 2010, Spain passed legislation allowing companies to be held accountable for criminal liability and making it a crime to bribe foreign officials. A DLA Piper publication provides background on this legislation.

The Asian region isn’t ignoring this issue either. Singapore has the Corrupt Practices Investigation Bureau (CPIB) which is dedicated to enforcing its Prevention of Corruption Act.

Darren Cerasi, director of I-Analysis in Singapore (one of Catalyst’s Asia Partners), reports that while the CPIB was set up primarily to prosecute government officials, its jurisdiction also extends to civilian bribery and includes the potential for both fines and jail time. Indonesia is another country that is focused on bribery and other anti-competitive acts.

Interestingly enough, China has an Anti-Bribery Law as well, which came into effect in December 2008. The Chinese Anti-Bribery law was amended in February this year to include making it an offense to bribe government officials outside of China and non-government officials too. It is expected to come into force in May.

Our China hand, Richard Kershaw, director of Catalyst Asia, says that China seems to be interested in bringing more accountability to government and its people. In August of 2008, it also passed an Anti-Monopoly Law which allows citizens to sue for monopolistic practices along with government enforcement. These laws apply to both foreign and Chinese domestic companies.

To read more about China’s laws, see:

Japan is in the game as well. In a recent case, prosecutors in Japan got four former senior executives of a Japanese company to plead guilty to bribing a Vietnamese transport official. The guilty pleas are especially noteworthy given Japan’s historical reputation as a jurisdiction where anti-bribery enforcement has been relatively lax. (See the Baker Botts FCPA Update.)

Without question, international counsel will be faced with more and more of these tricky and high-stakes investigations. Documents will be at the center stage and search will be the key to making sense of them.

The Cloud Lets Consumers Concentrate on Service Instead of Servers

Recently, the chief information officer of the United States, Vivek Kundra, published a policy document “intended to accelerate the pace at which the government will realize the value of cloud computing.” Kundra’s Federal Cloud Computing Strategy (PDF) is a ringing endorsement of the cloud, as its opening words indicate:

The Federal Government’s current Information Technology (IT) environment is characterized by low asset utilization, a fragmented demand for resources, duplicative systems, environments which are difficult to manage, and long procurement lead times. These inefficiencies negatively impact the Federal Government’s ability to serve the American public.

Cloud computing has the potential to play a major part in addressing these inefficiencies and improving government service delivery. The cloud computing model can significantly help agencies grappling with the need to provide highly reliable, innovative services quickly despite resource constraints.

A few paragraphs later, Kundra says this:

By leveraging shared infrastructure and economies of scale, cloud computing presents a compelling business model for Federal leadership. Organizations will be able to measure and pay for only the IT resources they consume, increase or decrease their usage to match requirements and budget constraints, and leverage the shared underlying capacity of IT resources via a network.  Resources needed to support mission critical capabilities can be provisioned more rapidly and with minimal overhead and routine provider interaction.

Everything I’ve quoted above and much of the rest of this report applies to the private sector as much as to the public sector. The report deserves close study and I plan to delve into it in more detail in later posts.

But I wanted to highlight something in the report that, for me, sums up the advantage of cloud computing over traditional computing environments. In a section on how to provision cloud services effectively, Kundra writes:

To effectively provision selected IT services, agencies will need to rethink their processes as provisioning services rather than simply contracting assets.  Contracts that previously focused on metrics such as number of servers and network bandwidth now should focus on the quality of service fulfillment.

The cloud changes the equation for contracting IT resources, Kundra is saying. Most notably, he is suggesting that the primary focus in selecting a provider should no longer be on “metrics,” but on “service.”

Thinking of Software as a Service

What does he mean by that? I can’t presume to speak for Kundra, but I can tell you what I think he means.

Applications delivered via the cloud are often referred to by the name “Software as a Service.” The consumer has a need and the software serves that need. The important distinction is that SaaS enables the consumer to focus on the need, not the technology. Rather than first having to wrestle with finding and installing the right hardware and software, the consumer is able to get directly to the business at hand.

In 2005, just after Ray Ozzie became CTO for Microsoft, he circulated a memo to top executives that he titled, The Internet Services Disruption. He described the movement towards SaaS (and Microsoft’s need to follow suit), and he summed up the movement this way:

The ubiquity of broadband and wireless networking has changed the nature of how people interact, and they’re increasingly drawn toward the simplicity of services and service-enabled software that ‘just works’.  Businesses are increasingly considering what services-based economics of scale might do to help them reduce infrastructure costs or deploy solutions as-needed and on subscription basis.

Software that “just works,” as Ozzie put it, is the best description I’ve seen of SaaS. Another description he uses frequently is “seamless” — seamless productivity, seamless communications, seamless solutions, seamless IT. The consumer has a problem to solve or a task to do and just wants something that will deliver the service of enabling it to be done.

To my reading, this is Kundra’s message to government agencies about the cloud. The cloud lets you focus on the service you need delivered — the task you need done, the problem you need solved — without having to get hung up on the metrics and logistics of how it will be delivered.

E-discovery provides the perfect illustration of the power of the cloud to deliver the services clients need. A product such as Catalyst CR is available to clients on-demand. When clients face a discovery deadline or an investigation, they can get up and running immediately. The application is scalable to virtually any size project, is powered by a grid of hundreds of servers, and can be used by anybody with an Internet connection anywhere in the world. Rather than be sidetracked by worrying about what appliances to buy or software to install, the client starts directly on meeting its deadline.

As Kundra puts it, “Cloud computing will require a new way of thinking to reflect a service-based focus rather than an asset-based focus.” For consumers, that is a way of thinking that is long overdue.

Review Rates Using Catalyst CR are Triple the Norm, Study Finds

Reviewers using Catalyst CR achieved a document review rate three times the industry standard, an independent statistical-analysis firm found. Reviewers conducting a responsiveness review of electronic documents achieved an average rate of 142 documents per hour using Catalyst CR. The industry norm is generally pegged at between 20 and 50 documents per hour.

The study of review rates was conducted by Gary McClelland, principal of Bolder Stats, an independent statistical consulting and data analysis firm, and a professor of psychology, statistics and data analysis at the University of Colorado, Boulder.

McClelland analyzed data for 51 first-level reviewers who conducted both responsiveness and privilege reviews using Catalyst CR. They were part of a team that had a 90-day deadline to review more than 4 million documents for a U.S. Justice Department second request.

Based on his analysis of the data, McClelland concluded that the average rate of responsiveness review was 142 documents per hour, a rate he described as “dramatically faster” than the industry norm. Some of the reviewers achieved rates as high as 220 documents per hour. [Read more...]