Electronically stored information (ESI) is a necessary fact of life in business. Technological advances have created staggering volumes of information. While essential, ESI’s sheer magnitude has exponentially increased the cost of commercial litigation. Today, responding to a discovery request can be in the millions of dollars if several years’ worth of archived emails and files find themselves in the discoverable net. At a recent roundtable among managing attorneys of their commercial law firms, ESI was the single most discussed topic.
The ESI Problems
Modern computerization has resulted in a nightmarish amount of information. Some speculate that more than 90 percent of all business information is electronically stored. Companies retain a vast amount of ESI to protect their business from disaster (not for litigation). To that end, just the cost of restoring certain types of ESI to readable, searchable and reviewable formats can be astronomical, particularly when compared with its limited relevance.
Beyond acquisition, businesses must engage lawyers to review ESI in litigation. The literal million-dollar question of ESI is attorney review. There is a no heavier drain on resources than reviewing ESI before production. Attorneys must review documents for relevance, responsiveness, privilege and trade secret. Assuming it takes an attorney an average rate of one hour to review 50 documents, it would take five years to review 500,000 documents, working 2,000 hours per year. Thus, it is not uncommon for attorneys to employ a small battalion of law clerks for nothing but document review.
And, while the duty to preserve evidence is not a new concept, ESI has forever changed the import of the obligation. Each time a new litigation matter arises, companies are expected to begin a “litigation hold” on any process that may delete relevant information. It is up to the party and its counsel to preserve ESI in a reasonable and good faith manner. Attorneys often seek to take advantage of poorly executed litigation holds by turning a business dispute into a side-show of squabbles. In comparison with the actual relevance, the negative inference can quickly transform business disputes into concocted conspiracy theories.
ESI Management Tools for Businesses
Businesses often embrace a “save everything” approach. In the digital world, as technology improves, storage devices get smaller and cloud-based storage becomes available, companies can actually save everything. Saving everything, however, will have a hoarder’s effect on litigation and reduce ESI discovery to a search for the proverbial needle in the haystack. The most effective tool to reduce ESI discovery cost is data management. Developing and employing a sound data management policy can be the ounce of prevention to avoid the pound of cure in litigation.
If a business finds itself approaching litigation, it should act early and engage experts to assist with data collection. Anyone who has ever used a search engine to locate information on the web can attest to challenges in forming the perfect query. People often do not use the same terms, making the search for information difficult and resulting in false positives that yield a vast amount of useless information. An expert can help businesses take proactive measures in identifying its ESI.
Although it may sound counterintuitive, litigants should be cooperative and involve the court early. Traditionally, the party responding to a discovery request bears the burden of expense. While some courts have begun to soften this approach, it is an issue that should be addressed early. Moreover, involving the court early will help avoid the opportunistic lawyer looking for a way to derail the dispute into an ESI sideshow.
Predicting the Future
ESI was formerly a big business problem for high-stakes litigation. Given the proliferation of computerization in all businesses (both small and large), ESI is no longer a big business problem; it is simply a business problem. Mandatory ESI protocols are likely on the horizon as the first step in any litigation to streamline the process and cost. While ESI costs will never be avoided entirely, poorly planned management will result in staggering litigation costs.
Frank M. Flansburg III, Co-Founder and Co-Owner, Schwartz Flansburg
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