October 25, 2013 / Media Mention

E-discovery can cost a hefty sum

Columbus Business First

Copyright 2013 Business First of Columbus Inc. All rights reserved. Reprinted with permission.
Published Oct. 25, 2013
By Colleen Marshall

You email on your smartphone, text to a colleague, download a PowerPoint onto your iPad and then use the desktop computer at home to finish a letter to a client. That's before you go to work - where you spend the day creating Word documents, spreadsheets and e-calendar appointments.

Now, could you please make copies of all that and everything else you've done on your devices over the past five years and send them to me? I don't care that your trade secrets and confidential business information might be disclosed. And I'm going to need to see all of the electronic records created by every officer of your corporation.

You are on the receiving end of an electronic discovery request and resistance is futile.

E-discovery is the sweeping, voluminous, sometimes unwieldy information gathering that is endorsed by courts as a fact-finding tool for parties to business disputes, employer-employee actions, even domestic court cases. (Wouldn't you love to share all of your social media posts and instant messages with your soon-to-be ex?)

E-discovery in commercial litigation takes on a life of its own, and businesses often are unprepared for the shocking amount of data they are expected to identify, preserve, review and then produce to a litigation opponent. Attorney Jay Yurkiw says, "The cost to comply can become the most expensive part of a case" if "you have a huge volume of electronic information."

The price tag for electronic discovery even might determine the outcome of an otherwise flimsy legal claim.

Yurkiw chairs the e-discovery practice group at Porter Wright Morris & Arthur. He recalls a client who had an agreement to obtain services from another entity. When the client decided to end the relationship, the other side claimed it had been a partnership and demanded a big payoff. Despite the likelihood Yurkiw's client would prevail in court, a business decision was made to offer a settlement since the cost of producing the electronic information would have topped $150,000 - and that's before the all the other costs of litigation.

A Rand Corp. study grouped the cost of e-discovery into three categories: collection, 8 percent; processing, 19 percent; and review, 73 percent. Depending on the amount of information, a review can involve teams of attorneys examining each document to determine if it can be legally withheld from the other side.

Some courts are allowing computer-assisted review, known as "predictive coding." Yurkiw describes it as allowing computers to classify documents based on input from expert reviewers. A state court in Virginia allowed predictive coding in Global Aerospace Inc. vs. Landow Aviation LP after the defendant estimated it had 250 gigabytes that would equate to 2 million documents, 20,000 hours and a cost of more than $2 million to review.

The cost of non-compliance can be more dramatic. Companies can discard data in the ordinary course of business, but once litigation is anticipated, a business has a duty to preserve potentially relevant information. The Equal Employment Opportunity Commission claimed a bank treated its female mortgage consultants differently than their male counterparts, steering more lucrative deals to men. The bank failed to preserve some data, resulting in denial of the bank's motion for summary judgment and a decision to instruct any jury hearing the case to take an adverse inference from the bank's failure to preserve the info.

Yurkiw advises clients to be careful about creating, storing and deleting electronic information.

"If a company is not making decisions about records retention at the organizational level, then it is leaving it up to individual employees to make ad hoc decisions about what is kept and deleted, and is likely increasing its long-term legal risks and costs."

You should copy that quote and store it in your files.