The Upper Hand

Grappling with e-discovery has vexed companies large and small in recent years, and the prospect of complying with a new set of federal discovery rules is cause for even more consternation.
But some legal departments through experience and planning are ahead of the curve and are positioned to handle what comes their way when facing e-discovery requests.
Verizon is one such company.
It has created a team within the legal department to focus just on e-discovery. Its mission is to ensure inside and outside counsel, and the company’s IT personnel, are up to speed on the new discovery rules (which went into effect Dec. 1, 2006), as well as the ins and outs on electronically stored information generally.
The legal group at the telecom giant has been facing e-discovery in complex cases for some time now, according to assistant general counsel Richard P. Owens, and that working knowledge has helped to demystify the process of searching for and producing electronically stored information.
“The new federal rules are not the first inkling of this issue,” said Owens, who has been involved in about a dozen class actions. “But they do highlight that e-discovery is here and now and we all have to deal with it.”
Owens, based in Verizon’s Boston office, recently took a few minutes to provide tips and suggestions on what it takes to effectively manage e-discovery requests, and to understand what’s required in the new federal rules.

In-House: If a company hasn’t done much to prepare for the new e-discovery rules, what should it do and in what order of priority?
Owens: Even before focusing on the new rules, in house counsel first need to ensure the legal department and claims staff are familiar with document retention obligations and when those obligations arise. They need to understand the steps necessary to retain relevant documents. Second, your legal department needs to understand the litigation claims portfolio of your company and the proper document retention steps with those cases already in the mix. This will help going forward in understanding the types of information your company will likely need to retain in the future and what’s required under the new federal rules.
As to the new rules, you first need to meet with the IT folks to learn and understand the various systems that store data within your company. It’s important to get a good map of what you have for electronically stored information, and to understand what can and cannot be done within those systems to get access to the data, as well as how data is retained or eliminated in the normal course of business.
You also need to learn what data is accessible or not accessible as those terms are used in the federal discovery rules. There will be some fleshing out [in case law] as to what’s “readily accessible” under the new rules. Hopefully, your IT department can explain to you in plain English what information is actively stored, what is in back-up storage and what is on disaster recovery tapes. These data storage systems each have various levels of accessibility.
Once you have gathered all of this information, you should develop a workable process to put a “legal hold” on electronically stored information, as well as paper documents, when you have a notice of a claim. Bear in mind that a notice of claim can come early in the process, such as the first complaints or e-mails to a manager raising an employee’s or customer’s dispute.
In court, you should be prepared to quickly explain your company’s data storage systems and provide the necessary information so a judge can really understand where the data is stored and the costs involved in producing it. You have to have that kind of preparation in hand. The time for identifying the witnesses who can provide such an affidavit or testimony is now, not when you are faced with a motion to compel.

In-House: Even if you have been preparing all along, what should you be doing to make sure you aren’t caught off-guard in litigation?
Owens: From that perspective, coordination is critical to ensure that you’re not caught off-guard. What you say in one particular case has to be consistent and accurate. You need to have a plan in place to let you know how the data storage systems work and what they contain. This might be more problematic for an entity that has far-flung operations with varying systems from state to state. You don’t want to find yourself making statements in a case in Virginia that’s inconsistent with what you’ve said in cases in Massachusetts or Maine.
Both in-house counsel and outside counsel need to understand the same thing, namely, your company’s ability to search for and identify electronically stored information, as well as the procedures in place to preserve documents once your company is on notice of a claim. And not only is it important to ensure outside counsel handling litigation understands this, but it’s also important that your department’s attorneys who are dealing with your company’s business people understand this as well. They and the business people need to be aware of these obligations. In smaller companies, certain key players in management should be made aware of these obligations.

In-House: In short, what impact do you expect the new rules to have on litigation in federal court and on settlement negotiations generally?
Owens: It’s difficult to predict the impact on settlements generally. But one thought that comes to mind is that the new rules will likely impact how attorneys look at cases, which could be a positive. It could mean that a risk assessment of cases will take place as early as possible. It’s very helpful to evaluate early on what is the right plan for a particular case. Knowing more information up front is better. That’s how you make better business decisions and how business people make decisions. This could mean a push for earlier settlements if in fact there’s an earlier evaluation of the risks and rewards of a case.

In-House: What are the “walk-away” points to always keep in mind moving forward?
Owens: The new rules are just that – rules. They don’t change the substantive law. The law on document retention and spoliation that existed prior to the new rules remains in place. But the new discovery rules do highlight the importance of documents retention. Counsel need to be aware of not only the effect of the new rules in federal court, but also as to what they can expect to happen in state court as well. The conference of state court chief justices recently issued guidelines on e-discovery in state courts. You need to be prepared to deal with these issues in state court as well as federal court. There are a lot fewer guidelines in state court and some of the procedural rules in place haven’t yet caught up with discovery in today’s litigation. You also need to have an ongoing relationship with those people in your company that manage data. You want to facilitate and not get in their way, but at the same time you need to ensure compliance with the new rules and existing law.

In-House: In general, what tasks should in-house counsel farm out to ensure compliance with the new rules?
Owens: There’s no one answer that fits all companies. Their needs vary dramatically based on the nature of the information that’s stored, how it’s stored, and the availability of internal resources. But as part of learning about your company’s systems and the capabilities of the IT department and the in-house legal department, you can assess where there are gaps and who can do the necessary tasks efficiently.

In-House: What should in-house counsel do to ensure your company’s IT group is up-to-date and on board with the new rules?
Owens: You need to have that relationship – really a partnership – with your IT folks so you can understand what their needs are and how they operate, and so you can relate to them what the rules require, and what the substantive law requires. Just as important, you need to relate why it’s important to the company to comply with the rules. This is critical. On the business side, litigation is not part of their day-to-day jobs. They may not understand how complying with the discovery rules fits in with the overall strategic goals of the company, and why it’s important to protect the company through understanding and complying with these rules.