The Dangers of Trusting Technology to Keep Privileged Documents From Opposing Counsel

It's every litigator's fear - inadvertent disclosure of privileged documents leading to a court finding of waiver of privilege.  A recent Illinois case shows just how easy it is to waive the privilege if you do not stay on top of the technological aspects of your production, even after conducting a complete review and indentifying privileged documents.

In Thorncreek Apartments III, LLC v. Village of Park Forest, 2011 WL 3489828 (N.D. Ill. Aug. 9, 2011), the court was faced with a defense counsel who "thought" that merely marking documents as privileged in an electronic database would keep them safe from production. Unfortunately for counsel, every document that had been identified as privileged was produced to opposing counsel. To make matters worse, defense counsel did not learn of the accidental disclosure for nearly nine months of discovery. He then waited an additional four months to produce a privilege log to opposing counsel. Not surprisingly, the court held that while some of documents were privileged when originally created, defense counsel had waived privilege by his actions, or more precisely his inaction.

Here are some key points from the case all litigators should take to heart when engaging in document production:
 

1.  Attorneys must take precautions to protect electronic disclosure of privileged documents. They should never presume that merely marking documents as privileged in an electronic database will prevent their production.

The court determined that the defendants' procedures for privilege review were "completely ineffective." Although counsel "thought" marking a document as privileged in the electronic database would automatically lead to it being withheld from opposing counsel, counsel never actually checked the production to assure that this was the case. The court also noted that counsel hardly could have taken adequate safeguards against production where every single privileged document, not merely one or two, had been produced.

2.  Attorneys should produce privilege logs close to the time when a production is made. It will act as a check on whether documents have inadvertently been produced and alert opposing counsel to a document's privileged status.

The Thorncreek court weighed heavily the defendants' nearly nine-months' ignorance regarding the disclosure of privileged documents. Defense counsel failed to check in at all, on the electronic database of documents to see what documents were present and what documents opposing counsel was viewing from the production.

Defense counsel was also faulted for failing to timely produce a privilege log. Such a log would have alerted both sets of counsel to a privileged document being accidentally disclosed. Instead, defense counsel waited more than a year after production began, and a whole four months after learning of the accidental disclosure during a deposition, to provide such a log.

3.  Where inadvertent production of privileged documents has occurred, counsel must immediately take steps to rectify the error in order to protect and maintain privilege.

The court came down on defense counsel for not knowing of the inadvertent production of privileged documents for months, and then failing to act with diligence after finding out.

It may be basic, but the lesson is that there must be additional checks and balances other than simply checking off documents as privileged in an electronic database, ten steps before they are actually produced. While this hardly means that an attorney must re-check every single document marked for production or privilege a second time, there could be, for example, a search of a sample of privileged documents to ensure they are privileged; and a sample of non-privileged documents to make sure nothing privileged has snuck into the pile. Another method is to run a search for a few attorney names, and verify that the resulting hits are marked privileged.

The bottom line is that counsel should always check a production for privileged documents, monitor documents in an electronic database, and act immediately to assert privilege when an accidental production is found. 

E-Discovery: Cutting Costs with Predictive Coding

The cost of e-discovery is forcing good companies to settle bad cases—but not for long. If your litigation budget had ears, “predictive coding” would be music to them.

How it works

Predictive coding is a “technology-assisted classifying process” in which “a human reviewer codes documents the computer identifies (as responsive)—a tiny fraction of the entire collection. Then, using the results of the human review, the computer codes the remaining documents in the collection for responsiveness.” There are four phases to the predictive-coding process:

  • Phase 1: A senior lawyer chooses the responsive electronic documents based on his or her review of a sample of the electronic documents
  • Phase 2: Phase 1 is repeated with senior lawyers until the computer is sufficiently “trained” to apply their conclusions across a wide set of documents (or the whole document set)
  • Phase 3: The predictive coding software is deployed against the entire document set and will distinguish between relevant and non-relevant documents, or prioritize the documents on a scale of one to 100 (depending on the software you select)
  • Phase 4: The documents that are machine-coded as responsive are subjected to a final human quality review and produced to the opponent

How it saves your company money

Using predictive coding software replaces the once overcrowded rooms of contract attorneys who pored over millions of records and billed by the hour. Rather than hiring 15 $80-per-hour reviewers working 40 hours per week for three weeks for a total review cost of $144,000, your company could conduct the same review with three senior lawyers at $600 per hour for eight hours at a total labor cost of $9,600, saving $134,400 without the cost of using the software. Furthermore, the empirical data on predictive coding confirms “the levels of performance achieved by ... technology-assisted processes exceed those that would have been achieved by ... the law students and lawyers employed by professional document-review companies — had they conducted a manual review of the entire document collection.”

So, why isn’t anyone using predictive coding yet?

No one wants to be the guinea pig. To date, no court has evaluated (or endorsed) the use of predictive coding.

However, a forceful judicial “endorsement” has been asserted by Andrew Peck, U.S. Magistrate Judge for the Southern District of New York:

I know what you’re waiting for: You think one day a judge will deliver an opinion or a judgment which says in terms that a particular kind of technology is approved by the court. ... Perhaps you have a mental picture of the occasion: “It is the opinion of this court that the use of predictive coding is a proper and acceptable means of conducting searches under the Federal Rules of Civil Procedure. ...” Perhaps the judge will go on to praise the car which he or she drove to work, offer an endorsement of the floor polish used in the court, and give a quick puff, as it were, for his own favorite brand of cigarette. IT’S NOT GOING TO HAPPEN!

Take advantage of predictive coding now

Given that both counsel and clients risk hefty sanctions (including default or dismissal) if the predictive coding software fails to “predict” the relevance of an important document, it is wise to be cautious. Litigators, however, can and should take advantage of the cost-saving benefits of predictive coding now by involving the court and the opponent in the predictive-coding process.

1. Learn about predictive coding technology and select a vendor;

2. Seek the opponent’s agreement to use the technology after fully disclosing the risks (in writing);

3. If the opponent agrees, identify to the opponent the documents you have identified as relevant that will guide the software;

4. If the opposition does not agree, run a demonstration on a sample set to prove to the opposition the validity of the software and method;

5. If the opposition still does not agree, move the court to compel your opponent to pay for the cost of a manual review.

Predictive coding is far too enticing a cost-saving mechanism to remain in the shadows for very long. Use the above approach to introduce predictive coding into your cases, and your outside counsel will be able to get back to spending your litigation budget to win bad cases instead of settling them.
 

 

This article was originally published in Inside Counsel.

Avoiding an E-Discovery Disaster

This summer the whole country, particularly those of us living on the gulf coast, anxiously watched the seemingly endless images of oil leaking into the Gulf of Mexico following the deadly explosion on the BP oil rig Deepwater Horizon.  While the leak has only recently been capped, litigation stemming from the oil spill has already commenced.

In a recent article on law.com, Fred Blum and Nader Mehizadeh noted that much of the litigation stemming from the BP oil spill will depend on volumes of electronically stored information in BP's control.  After noting the potential e-discovery disaster that may come upon BP if its electronically-stored information (ESI) is not properly handled, the authors outlined the following six factors that can help anyone avoid an e-discovery disaster:

1.  Preserve Relevant ESI. 

2.  Confer with your opponent.

3.  Collect Data Intelligently.

4.  Rely on your vendor.

5.  Consider using hosted databases.

6.  If all else fails, go to court.

The underlying principle behind all six factors is that retention and production of relevant ESI is something that parties in litigation simply cannot afford to ignore.  The risks are simply too high.  However, electronic discovery disasters can be averted if parties are willing to take the time, and expense, to ensure that relevant information is preserved, communicate with the opposing party and experts in the field, and utilize technology to their advantage. 

 

 

Documents Kept in the . . . Irregular Course of Business?

In yet another example of why records managers should be coordinating with legal on storage of documents, the U.S. Federal Court of Claims has held that documents archived in a manner other than the regular course of business do not comply with Rule 34 of the FRCP. 

In Ak-Chin Indian Community v. United States, 85 Fed. Cl. 397 (2009), documents stored in a different filing system than they were kept prior to transfer to storage were held not to have been kept in the ordinary course of business.  In that case, the plaintiffs were suing the government and wanted to get their hands on responsive documents kept in a bunch of boxes at the American Indian Records Repository (AIRR).  The boxes were indexed using an off-the-shelf commercial software package that "captures information about the source, files, and documents in [each] box [which information is subsequently] entered into the . . . database."  Id. at 398.  People digging around the database for, say, documents responsive to discovery requests, could run queries to search for them.  Id.  So, when served with discovery requests, the government turned to its handy database, ran a few queries to find the boxes that likely contained responsive documents, and sent the database query results along to the plaintiffs.  Id. at 399.  The plaintiffs filed a motion to compel, arguing that this didn't constitute a production of responsive documents organized and labeled by category of request as required by Rule 34 of the Rules of the U.S. Court of Federal Claims.  Id. 

Under Rule 34, "[a] party must produce documents as they are kept in the ordinary course of business or must organize and label them to correspond to the categories in the request."  Id. (quoting RCFC 34(b)(2)(E)(i)).  The Ak-Chin court held that the documents at the AIRR were not maintained in the ordinary course of business under Rule 34, because prior to transfer to the facility, they were reorganized from the filing system of the local agency offices to conform with the AIRR filing system (not wholly surprising, considering that AIRR was a records repository and records are not always in tip-top shape, organizationally-speaking, when they are first unearthed from the mess that makes up most people's filing cabinets). Id.  The court explained that "documents in storage are no longer in the usual course of business, they are kept in the usual course of storage," such that the only option under Rule 34 was to label and categorize the documents.  Id. at 400.  For documents transported to storage to still be kept in the ordinary course of business, the court said, the documents must be stored in the same way they were kept.  Id. The court was also concerned that the filing system at AIRR did not permit a meaningful review if the plaintiff was dissatisfied with the production.  Id. at 401.  Because only the boxes were indexed, not the specific documents in the boxes, the government was out of luck.  Id.

Take home message? Know just how your documents are arranged in storage in relation to how they're kept before they're retired to archives, boxes, and closets or you may incur additional costs to produce them.

Location, Location, Location

 King Edward VII was widely known for his infidelities, and his wife, Queen Alexandra, had to pretend to ignore his affairs and wild escapades. But she got the last word. In a famous, albeit  apocryphal, anecdote, as the King lay on his deathbed in 1910, the faithful and grieving Queen was stricken with one reassuring thought, and she supposedly turned to the King’s aide and said: "Now, at least I’ll know where he is."

  Although Queen Alexandra may have been comfortable with the King’s   whereabouts after his death, organizations cannot and should not take the same comfort with respect to their electronic files. E-files that have been deleted in accordance with an organization’s document retention policy may not be where an organization thinks those files are - gone. To the contrary, the files may be dangerously lurking in the deep dark corners of the organization’s information systems.

 

Unfortunately, when it comes to electronic documents, common document retention and deletion policies and procedures simply may not adequately protect sensitive information from falling into the hands of others. Deleting an e-mail or electronic document may not completely remove the data from a computer or computer system. Instead, the deleted information often remains there, typically on the computer's disk drive, until it is overwritten by other information.  The data can often be recovered using software tools designed for recovering deleted information.

 

When electronic information has not been completely deleted from a computer system, the information may be subject to discovery in litigation.  Kenneth L. Stein and Richard H. An, writing for The Privacy and Data Protection Legal Reporterhttp://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1167818523831, point out a number of cases where information that was thought to have been deleted from a computer system came back to haunt an organization in connection with litigation. In one such case, “forensic analysis of deleted electronic files established that the defendant had perjured himself in his sworn declarations to the court about having had no contact with a certain individual”. See YCA, LLC v. Berry, No. 03 C 3116, 2004 U.S. Dist. LEXIS 8129, at *20-24, 22 (N.D. Ill. May 6, 2004)… In another, “forensic officers were able to recover deleted computer images of child pornography, which led to a lengthy prison sentence for the defendant.” See Anderson v. McBride, No. 2:05-CV-1089, 2006 WL 2468284, at *2 (S.D. Ohio Aug. 24, 2006).

At the end of the day, a company should implement policies that both retain the documents that might be relevant to litigation, and destroys the documents and metadata that might be sensitive and private. A document retention policy that includes automatically deleting e-mails and electronic files, without also wiping the underlying data in those e-mails and files, leads to a false sense of security.

The lesson: unlike King Edward VII, who was safely interred in the chapel at Windsor Castle and hasn’t been seen since, your e-files are not dead and buried until the underlying data is wiped clean. Don’t let your metadata come back to haunt you.