Will New Electronic Discovery Rules Save Organizations Millions or Deny Justice?

Lawyers and federal judges are currently discussing a formal proposal to amend the Federal Rules of Civil Procedure (“Rules”) that could save some organizations millions of dollars. The Rules are significant because they dictate the procedures every party in federal civil court must follow when negotiating the exchange, or discovery, of documents and other information as part of a lawsuit. Sometimes Rule changes simply include minor modifications to add clarity. Other times, Rule changes like those being considered at this week’s Federal Rules Advisory Committee (“Advisory Committee”) meeting on November 7 and 8 in Washington, D.C., are potentially game changing.

A recent jury verdict for almost $1 billion following a court-ordered eDiscovery sanction, combined with a steady overall increase in eDiscovery related sanctions since last year, have helped fuel enterprise concerns about the cost of data preservation. See E.I. Dupont De Nemours and Company v. Kolon Industries, Inc., (E.D. Va. Jul. 21, 2011); and Gibson Dunn, “2011 Mid Year E-Discovery Update” (July 2011) (eDiscovery related sanctions nearly doubled between July 2010 and 2011). As a result of these concerns, many large organizations with massive amounts of electronically stored information (“ESI”), are calling for Rule changes. They are looking to curb the cost of identifying and preserving potentially relevant ESI that could help them avoid paying attorneys millions of dollars to sift through mounds of emails and other electronic files to find the right documents for each new case. These large enterprise litigants claim the lack of clarity in the current Rules unfairly requires organizations to err on the side of preserving evidence early and broadly or face the risk of stiff court sanctions if information that may have been relevant to a case is lost or deleted. They see the problem as a double-edged sword because in many cases, the more ESI preserved, the higher the costs of eDiscovery. On the other hand, failure to preserve enough ESI increases their risk of sanctions.

Millions saved? What’s the problem?

For some, the discussion feels like déjà vu “all over again” considering the Rules were amended in 2006 to address electronic discovery (“eDiscovery”) challenges in a world where paper documents were once the norm. In fact, the 2006 Rule amendments not only clarified that ESI is discoverable in today’s era of electronic information, they provide a framework for addressing eDiscovery that forces parties to develop a proposed discovery plan and discuss “any issues related to disclosure or discovery of electronically stored information. . . .” Fed. R. Civ. P. 26(f)(3)(C). The problem, opponents contend, is that the 2006 Rules are not followed by attorneys or enforced by judges. To lend credibility to their argument, they cite broad judicial endorsement of the Sedona Conference Proclamation. The Proclamation was published by a well-respected legal technology think tank known as the Sedona Conference and it has been referenced frequently across multiple jurisdictions in case law decisions. Typically, the references are admonishments by judges to parties guilty of poor eDiscovery practices. A common mantra among these judges is that if the parties had engaged in “cooperative, collaborative, [and] transparent discovery,” id., as recommended in the proclamation, the problems they encountered could have been avoided. In short, opponents of new Rules tend to invoke the position so eloquently articulated by the sheriff in the 1967 film, Cool Hand Luke, starring Paul Newman: “What we’ve got here is a failure to communicate.”

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Source: forbes.com
By: Matthew Nelson Esq.