Controlling legal spend is a frequent and important topic of discussion, especially among in-house counsel and their litigation teams. Much of the discussion focuses on the problem of soaring discovery costs driven by the proliferation of electronic data. As an eDiscovery attorney, I employ early case assessment strategies and tools, technology-assisted review, and even low-cost outside staff attorneys to try and curtail the cost of discovery. In the end, the effectiveness of these cost-reduction alternatives hinges on whether clients have done their part to reduce the volume of data upstream.

Beyond implementing a formal records retention plan, there are a number of fairly simple steps that companies can take to help reduce litigation costs. Items 1-5 help reduce the volume of data that needs to be collected and reviewed. Items 6-8 will help ensure that your litigation budget is not exhausted on spoliation or sanctions motions.

1.   When implementing an email archive, be mindful of how it will impact litigation costs.

An email archive is not a cure to your litigation woes. Storing every company email that was sent or received in an email archive may make preservation easy, but it may also be contributing to your soaring discovery costs. Despite claims to the contrary, most archives have poor search and export features. It is also very difficult to pull out only responsive email from an archive.  Instead, you end up overspending on attorney review of irrelevant data or producing mounds of irrelevant data.

One way to control this issue is to tailor the archive for your own business and legal needs from the beginning. Do you really need every employee’s email messages for the last 10 years? Very few industries have regulatory requirements that require such broad retention. Even those that do usually only apply to a small subset of employees. Confirm any applicable regulatory requirements and consider your own business and legal needs. Consider creating email groups with different retention cycles.

2.  Shorten retention cycles on sources that are difficult and costly to access

Although Federal Rule 26(b)(2)(B) provides that a party need not produce electronic data from sources that are “not reasonably accessible,” there are always exceptions. Fighting those exceptions can be costly. Your insurance against those costly battles is limiting the amount of data stored in “not reasonably accessible” sources. For instance, shorten backup tape cycles to 30 days or less. In the event of a disaster, you want to rebuild your IT system to how it existed immediately before the event, not 60 or 120 days prior. This mindset should apply to other “not reasonably accessible” sources as well.  Limit areas where opposing counsel is likely to launch fishing expeditions by:  (1) setting the email dumpster to 0 days; (2) truncating webmail, Citrix and VPN access logs to a few days; and (3) discarding legacy email systems, old backup tapes, and departed or terminated employee data.  If older data is not necessary to run your business, then get rid of it.  Better yet, limit the volume you are creating or storing from the outset.

3.  Eliminate PSTs.

A company that allows individual users to store email in user-created PSTs will have higher discovery costs because PSTs can contain emails that are not on the email server or archive and therefore need to be collected, processed, searched, and reviewed. Unlimited storage also tends to reduce the need for email management and organization from the user’s perspective. Users tend to store more non-business worthy emails when they can stash them in PSTs hidden away from the eyes of IT. One way to avoid this problem is to have IT search for all PSTs located on the company networks and computers and push those into the archive when the archive is first implemented. The next step is to destroy the locally stored PSTs and have IT disable users’ abilities to create PSTs. If destroying PSTs will cause an employee uprising, at least disable their ability to create any PSTs going forward. Make sure IT documents the process used for pushing PSTs into the archive, and also documents the date PSTs were disabled. Litigation counsel will need this information to formulate a defensible search strategy.

4.  Use network drives and folder redirection rather than local hard-drive storage.

Dealing with data stored on users’ hard drives can be difficult and costly when there are numerous custodians. One way to reduce the number of hard drives that need to be imaged and searched is to control where users can store data. Individual employees should be encouraged to store documents on their network drives. As a safeguard, the My Documents folder on hard drives should be configured so that if an employee tries to save documents on their computer, it will actually be “redirected” and saved on their personal network drive. Tech savvy employees might be able to bypass redirection, but a company-wide folder redirection policy will refute an argument that every relevant custodian’s computer must be imaged, processed, and searched. Organize the file structure on the network file server by creating specific sub-folders and limit use of public drives. Both are extremely costly to search, and therefore, you want to be able to search in a defensibly- targeted manner.

5.  Improve internal communications to protect the attorney-client privilege.

A huge cost in discovery is privilege review, creating privilege logs, and defending waiver assertions if a privileged document is produced. The fear of overlooking privileged communications due to incomplete privilege search terms and having to review less than clear communications by employees slows down a document review, even if a clawback agreement is in place. You can eliminate these issues that increase costs by teaching employees how to communicate, especially regarding legal matters. Use proper subject lines and include a “privileged” designation and the name of the lawsuit/transaction if appropriate. Break email threads and conversations by training employees to begin a new email when a subject matter gears toward or away from privileged communications. Most inadvertent disclosures occur because the reviewer did not realize the communication was discussing advice or directions from counsel. One way to avoid this situation is remind employees to use clear references to outside counsel. Finally, keep an ongoing list of the company’s outside law firms, lawyers and their email addresses. Outside counsel will need a reliable complete list in order to quickly segregate potentially privileged documents.

6.  Issue prompt written legal hold notices and follow-up with key custodians.

Almost a decade has passed since Zubulake and courts simply are not going to excuse a company’s failure to issue a written legal hold. Email archives and swift collection of data by IT is not sufficient.  Companies must also issue a written legal hold notice to all relevant custodians. Many custodians store business-related data outside of IT’s reach–personal email accounts, media (CDs, DVDs, thumb drives and external drives) and home computers, just to name a few. Failing to inform employees that all relevant data must be preserved can be a costly mistake. Following up with relevant custodians is crucial. Conducting individual custodian interviews not only ensures that all relevant sources have been identified, but in most cases, sheds light on the best way to tackle the volume of data that has been collected.

7.  Monitor legal hold compliance and get IT’s buy-in.

Legal hold is a process, not just a document. Your legal hold process should be defensible and repeatable. Companies that get it right have a legal hold contact in the IT department who handles or directs all legal holds from the IT perspective. Each hold is handled consistently and collection decisions are documented. Finally, outside counsel will be defending your legal hold process, so make sure they understand your IT systems and are involved in developing a strategic, defensible plan and monitoring compliance.

8.  Resolve deleted data issues.

Loss of data during litigation needs to be handled swiftly. Outside counsel needs to work with IT to determine what was lost, when the loss occurred, and whether the data can be recovered. If items 5 and 6 were followed, the odds are that the loss occurred before the legal hold duty was triggered and can be defended. If item 2 was followed, there will be less for opposing counsel to argue pertaining to recovery of the lost data.


Related post:  Amendments to the Federal Rules make discovery better, faster, cheaper (Oct. 15, 2014).