Tag Archives: e-discovery

Proportionality in eDiscovery is Ideal, but Difficult to Realize Without an Optimized Process

By John Patzakis

(Originally published October 24, 2022 by JD Supra and EDRM)

Image: Kaylee Walstad, EDRM

Proportionality-based eDiscovery is a goal that all corporate litigants seek to attain. Under Federal Rule of Civil Procedure 26(b)(1), parties may discover any non-privileged material that is relevant to any party’s claim or defense and proportional to the needs of the case. Litigants that take full advantage of the proportionality rule can greatly reduce cost, time and risk associated with otherwise inefficient eDiscovery.

While there is a keen awareness of proportionality in the legal community, realizing the benefits requires the ability to operationalize workflows as far upstream in the eDiscovery process as possible. For instance, when you’re engaging in data over-collection, which in turn incurs extensive labor and processing costs, the ship has largely sailed before you are able to perform early case assessments and data relevancy analysis, as much of the discovery costs have already been incurred at that point. The case law and the Federal Rules provide that the duty to preserve only applies to potentially relevant information, but unless you have the right operational processes in place, you’re losing out on the ability to attain the benefits of proportionality.

However, traditional eDiscovery services typically involve manual collection, followed by manual on-premises hardware-based processing, and finally manual upload to review. These inefficiencies extend projects by often weeks while dramatically increasing cost and risk with purposeful data over-collection and numerous manual data handoffs. The good news is that solutions and processes addressing the first half of the EDRM involving collection and processing are now far more automated than they were even a few years ago.

Recently EDRM hosted a webinar addressing these issues – “Operationalizing your eDiscovery Process to Realize Proportionality Benefits” – and more specifically, as the title reflects, explored how to operationalize your eDiscovery process to achieve lower costs, improve early case strategy, realize faster time to review and reduce overall legal risk.

Here are some key takeaways from the webinar:

  • A detailed legal analysis was provided highlighting the case of Raine Group v. Reign Capital, (S.D.N.Y. Feb. 22, 2022), which applied proportionality at the point of identification and collection, not just production. The court endorsed the use of detailed and iterative keyword searches to identify and preserve potentially relevant ESI.
  • A demonstration was shown on how to enable detailed and proportional search criteria, applied in-place, at the point of collection. Such a capability is key to realizing the blueprint for targeted and proportional ESI collection outlined in Raine Group.
  • The speakers also discussed how organizations should move upstream to focus on information governance to reduce the data funnel as soon as possible. The new generation of eDiscovery technology in the areas of collection, identification, analytics, and early data assessment, enables enterprises to operationalize proportionality principles.

The webinar culminated with the notion that an optimized process that applies proportionality upstream at the collection and identification stage reduces the data volume funnel by as much as 98 percent from over-collection models, yet with increased transparency and compliance. A link to the recording from the webinar can also be accessed here.

Leave a comment

Filed under Best Practices, Case Law, Case Study, ECA, eDiscovery, Enterprise eDiscovery, ESI, Preservation & Collection, proportionality

Important SaaS Architecture Considerations for Legal Tech Software

by Kunjan Zaveri

With nearly all eDiscovery software now being offered on a SaaS basis, the cloud architecture decisions supporting the vendor’s platform are pivotal. Decisions on architecture design can lead to either very successful or very poor outcomes. The right architecture depends on the company’s SaaS delivery strategy, their customer profile and size, and the volume and nature of their anticipated transactions. These considerations are especially important in the legal tech space, which has some unique requirements and market dynamics such as heighted security and customization for large clients, and channel support (requiring platform portability), which are generally not as relevant to general SaaS architecture considerations.

At a high level, it is important to understand the two main SaaS architectures: multi-tenancy and single-tenancy. In cloud computing, tenancy refers to the allocation of computing resources in a cloud environment. In SaaS, tenancy is categorized into two formats: single-tenant SaaS and multi-tenant SaaS. In the single-tenant SaaS environment, each client has a dedicated infrastructure. Single-tenant products can’t be shared between clients and the buyer can customize the software according to their requirements. Multi-tenancy is an architecture where a single instance of a software application serves multiple customers. In a multi-tenant SaaS environment, many organizations share the same software and usually the same database (or at least a portion of a common database) to save and store data.

Single-tenancy and multi-tenancy SaaS each have their advantages and disadvantages, and the selection of either approach by a legal tech SaaS vendor should depend on their overall product and go-to-market strategy. Here are some of the advantages of a single-tenancy architecture:

1. Improved Security

With single-tenancy, each customer’s data is completely isolated from other customers with fewer and more trusted points of entry. The result is better overall security from outside threats and the prevention of one customer accessing another’s sensitive information, either intentionally or inadvertently.

2. Reliable Operations and Individual Tenant Scalability

Single-tenant SaaS architectures are considered more reliable as there is not a single point of failure that can affect all customers. For example, if one client uploads a massive amount of corrupt data that taxes resources and crashes the system, it won’t affect another clients’ instances. Single-tenancy is actually more scalable within an individual client instance, while multi-tenancy can better scale the addition and management of many customers.

3. Customization

Many large customers need specific features or unique security measures that require custom development, which can be very difficult in a multi-tenancy environment. Companies that use single-tenancy architecture can upgrade their services individually. Rather than waiting for the software provider to launch a universal update, users can update their accounts as soon as the download is available or decline patches that are not needed by a specific customer.  

4. Portability

With single-tenancy, a vendor can host their platform in their own SaaS environment, a channel partner’s environment, or enable their customers to install the solution behind their firewall or in their private cloud. Multi-tenancy SaaS does not allow for this flexibility.

Multi-tenant SaaS Advantages

Multi-tenancy is commonly utilized as most SaaS offerings are consumer or otherwise high-volume commoditized offerings, which necessitates such an architecture. Here are some of the key advantages of multi-tenant SaaS architecture over single-tenant:

1. Lower Costs

Since computing services are all shared under a multi-tenant architecture, it can cost less than a single-tenant structure. Scaling across the customer base is easier as new users utilize the same uniform software and resources as all the other customers.

2. Efficient Resources Spread Across all Customers

Because all resources are shared and uniform, multi-tenant architecture uses resources that, once engineered, offer optimum efficiency. Since it’s a changing environment where resources are accessed simultaneously, multi-tenant SaaS software needs to be engineered to have the capacity for powering multiple customers at once.

3. Fewer Maintenance Costs

Maintenance costs are usually associated with a SaaS subscription and aren’t passed through to the customer or incurred by the channel partner like with a single-tenant structure.

4. Shared Data Centers

Unlike a single-tenant environment, a vendor doesn’t have to create a new instance within the datacenter for every new user. Customers have to use a common infrastructure that removes the need to continually add partitioned instances for each new tenant.

So which architecture is the right one for a legal tech SaaS vendor? It completely depends on the company’s strategy, pricing, and nature of the offering. To illustrate this point, consider the examples of two hypothetical legal tech SaaS vendors: Acme and Widget.

Acme provides do it yourself data processing on a high-volume, low-cost basis, handling about 700 matters a week at an average project value of $400. Acme’s customer base is primarily small to medium size law firms and service providers who have multiple projects on different cases over the course of a year. Acme’s clients do not want to fuss with hardware or any software maintenance requirements.

Widget offers an enterprise-grade compliance and security data analytics platform, sold at an average sale price (ASP) of $400,000, but as high as $2 million for a dedicated annual license. Widget has 32 active enterprise customers and hopes to grow to 70 customers in three years with an even higher ASP. About a third of Widget’s clients prefer that Widget host the solution in Widget’s cloud instance. Another group of clients are large financial institutions that, for security and governance purposes, insist on self-hosting the platform in their own private cloud. The rest are instances sold through channel partners who prefer to host the platform themselves and provide value added services. Many Widget customers have particularized compliance requirements and other unique circumstances that require customization to support their needs.

For Acme, the correct choice is multi-tenancy. Acme offers a commoditized SaaS service, and it needs a high volume of individual customers to drive more transactional revenue growth. A single-tenancy architecture would prevent the company from scaling, would be too expensive, and unmanageable. However, some legal tech companies who have opted for this architectural approach have made the mistake of pursuing a more low-market commoditized strategy without making the initial considerable investment in engineering expertise and resources to build such an architecture.

In contrast, single-tenancy is the optimal architecture choice for Widget. While single-tenancy cloud is slightly more challenging to support, Widgets’ premium enterprise offering requires portability for the channel and rigorous security minded clients as well as customization, and thus is a clear fit for single-tenancy. In the future, Widget may have closer to a thousand customers or be acquired by a much larger company that will want to deploy the solution to their extensive client base. It would be a good idea for Widget to architect their single-tenancy platform in a manner, such as employing microservices, that will allow it to readily port it to a multi-tenancy environment when warranted.

So, for legal tech executives, the question to ask is whether your strategy and product offering is more in line with Widget or Acme. But the bottom line is to make sure your strategy drives your choice of architecture and not the other way around.

Kunjan Zaveri is the Chief Technology Officer of X1. (www.x1.com)

Leave a comment

Filed under Best Practices, Cloud Data, eDiscovery, Enterprise eDiscovery, SaaS

The Three Categories of eDiscovery Spoliation Sanctions

My last post discussed the important new Sedona Conference guidance, The Sedona Principles, Third Edition: Best Practices, Recommendations & Principles for Addressing Electronic Document Production. The revised principles are compelling, providing important direction to lawyers and eDiscovery practitioners alike. The Sedona Principles often make their way into court opinions and thus inform eDiscovery case law. In my view, the most interesting component of the updated Sedona Principles is its stance against full disk imaging for routine eDiscovery preservation, labeling the practice as unnecessary and unduly burdensome. Full disk imaging is still very widely used (some attorneys would say abused) for eDiscovery collection, which is an issue I highlighted at length last year on this blog.

The Sedona commentary brings into focus the judges’ rationale when issuing sanctions for failure to properly preserve ESI. Specifically, what types of conduct resulting in the destruction of ESI do the courts actually impose penalties for? I have been monitoring the caselaw involving failure to preserve ESI sanctions for over 15 years, and such cases fall under three general categories.

The first and most obvious category involves intentional conduct to delete or otherwise destroy potentially relevant ESI. There are many examples of such cases, including Sekisui Am. Corp. v. Hart, 2013 WL 4116322 (S.D.N.Y. Aug. 15, 2013), and Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598 (S.D. Tex. 2010).

The second category involves situations where there is no process in place and the organization asserts little or no effort to preserve ESI. In a recent example, a magistrate judge imposed spoliation sanctions where the Plaintiff made no effort to preserve their emails — even after it sent a letter to the defendant threatening litigation. (Matthew Enter., Inc. v. Chrysler Grp. LLC, 2016 WL 2957133 (N.D. Cal. May 23, 2016). The court, finding that the defendant suffered substantial prejudice by the loss of potentially relevant ESI, imposed severe evidentiary sanctions under Rule 37(e)(1), including allowing the defense to use the fact of spoliation to rebut testimony from the plaintiff’s witnesses. The court also awarded reasonable attorneys fees incurred by the defendant in bringing the motion. See also, Internmatch v. Nxtbigthing, LLC, 2016 WL 491483 (N.D. Cal. Feb. 8, 2016), where a U.S. District Court imposed similar sanctions based upon the corporate defendant’s suspect preservation efforts.

The final category involves situations where an organization does have a palpable ESI preservation process, but one that perilously relies on custodian self-collection. In a recent illustrative case, a company found themselves on the wrong end of a $3 million sanctions penalty for spoliation of evidence. The case illustrates that establishing a litigation hold and notifying the custodians is just the first step. Effective monitoring and diligent compliance with the litigation hold is essential to avoid punitive sanctions. GN Netcom, Inc. v. Plantronics, Inc., No. 12-1318-LPS, 2016 U.S. Dist. LEXIS 93299 (D. Del. July 12, 2016). Even with effective monitoring, severe defensibility concerns plague custodian self-collection, with several courts disapproving of the practice due to poor compliance, metadata alteration, and inconsistency of results. See Geen v. Blitz, 2011 WL 806011, (E.D. Tex. Mar. 1, 2011), Nat’l Day Laborer Org. v. U.S. Immigration and Customs Enforcement Agency, 2012 WL 2878130 (S.D.N.Y. July 13, 2012).

So those are the three general categories for ESI preservation sanctions. But here is the question that the new Sedona commentary indirectly raises: Are there any cases out there where a court sanctions a party who; one, had a sound and reasonable ESI preservation process in place, and two, reasonably followed and executed that process in good faith, but were sanctioned anyway because that one document or email slipped through the cracks, which theoretically could have been prevented by employing full disk imaging as a routine practice? I believe this is an important question because some organizations and/or their outside counsel cite this concern as justification for full disk imaging across multitudes of custodians as a routine (but very expensive and burdensome) eDiscovery preservation practice. This still occurs even with the 2015 amendments to the Federal Rules of Civil Procedure, specifically FRCP 26(b)(1), which requires the application of proportionality to all aspects of eDiscovery, including collection and preservation.

I am unaware of any such case described in the previous paragraph. But if anyone is, please let me know in the comments below!

 

5 Comments

Filed under eDiscovery

LTN: Social Media Evidence Even More Important than email and “Every Litigator” Needs to Address It

legaltech-news-thumbBrent Burney, a top eDiscovery tech writer of Legaltech News, recently penned a detailed product review of X1 Social Discovery after his extensive testing of the software. (Social Media: A Different Type of E-Discovery Collection, Legaltech News, September 2016). The verdict on X1 Social Discovery is glowing, but more on that in bit. Burney also provides very remarkable general commentary on how social media and other web-based evidence is essential for every litigation matter, noting that “email does not hold a flicker of a candle to what people post, state, admit and display in social media.” In emphasizing the critical importance of social media and other web-based evidence, Burney notes that addressing this evidentiary treasure trove is essential for all types and sizes of litigation matters.

Consistent to that point, there is a clear dramatic increase in legal and compliance cases involving social media evidence. Top global law firm Gibson Dunn recently reported that “the use of social media continues to proliferate in business and social contexts, and that its importance is increasing in litigation, the number of cases focusing on the discovery of social media continued to skyrocket.” Undoubtedly, this is  why Burney declares that “every litigator should include (X1 Social Discovery) in their technical tool belt,” and that X1 Social Discovery is “necessary for the smallest domestic issue all the way up to the largest civil litigation matter.” Burney bases his opinion on both the critical importance of social media evidence, and his verdict on the effectiveness of X1 Social Discovery, which he lauds as featuring an interface that “is impressive and logical” and providing “the ideal method” to address social media evidence for court purposes.

From a legal commentary standpoint, two relevant implications of the LTN article stand out. First, the article represents important peer review, publication and validation of X1 Social Discovery under the Daubert Standard, which includes those factors, among others, as a framework for judges to determine whether scientific or other technical evidence is admissible in federal court.

Secondly, this article reinforces the view of numerous legal experts and key Bar Association ethics opinions, asserting that a lawyer’s duty of competence requires addressing social media evidence. New Hampshire Bar Association’s oft cited ethics opinion states that lawyers “have a general duty to be aware of social media as a source of potentially useful information in litigation, to be competent to obtain that information directly or through an agent, and to know how to make effective use of that information in litigation.” The New York State Bar similarly weighed in noting that “A lawyer has a duty to understand the benefits and risks and ethical implications associated with social media, including its use as a … means to research and investigate matters.” And the America Bar Association recently published Comment [8] to Model Rule 1.1, which provides that a lawyer “should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.”

The broader point in Burney’s article is that X1 Social Discovery is enabling technology that provides the requisite feasibility for law firms, consultants, and other practitioners to transition from just talking about social media discovery to establishing it as a standard practice.  With the right software, social media collections for eDiscovery matters and law enforcement investigations can be performed in a very scalable, efficient and highly accurate process. Instead of requiring hours to manually review and collect a public Facebook account, X1 Social Discovery can collect all the data in minutes into an instantly searchable and reviewable format.

So as with any form of digital investigation, feasibility (as well as professional competence) often depends on utilizing the right technology for the job.  As law firms, law enforcement, eDiscovery service providers and private investigators all work social discovery investigations into standard operating procedures, it is critical that best practices technology is incorporated to get the job done. This important LTN review is an emphatic punctuation of this necessity.

 

Leave a comment

Filed under Social Media Investigations

Recent Court Decisions, Key Industry Report Reveal Broken eDiscovery Collection Processes

 

While the eDiscovery industry has seen notable advancements and gained efficiencies in widespread adoption of hosted document review and supporting technologies, the same is not yet true for the collection and preservation of Electronically Stored Information (ESI). Leading industry research firm Gartner notes in a recent Market Guide report that eDiscovery collection and preservation process “especially when involving device collection, can be intrusive, time consuming and costly..”  And some recent court decisions imposing sanctions on corporate litigants who failed to meet their ESI preservation obligations are symptomatic of these pain points.

Earlier this year, a Magistrate judge imposed spoliation sanctions for destruction of ESI in a commercial dispute, where the Plaintiff made no effort to preserve such emails — even after it sent a letter to the defendant threatening litigation. (Matthew Enter., Inc. v. Chrysler Grp. LLC, 2016 WL 2957133 (N.D. Cal. May 23, 2016). The court, finding that the defendant suffered substantial prejudice by the loss of potentially relevant ESI, imposed severe evidentiary sanctions under Rule 37(e)(1), including allowing the defense to use the fact of spoliation to rebut testimony from the plaintiff’s witnesses. The court also awarded reasonable attorney’s fees incurred by the defendant in bringing the motion.  And in another case this year,  Internmatch v. Nxtbigthing, LLC, 2016 WL 491483 (N.D. Cal. Feb. 8, 2016), a U.S. District Court imposed similar sanctions based upon the corporate defendant’s suspect preservation efforts.

In her June 30, 2016 “Market Guide for E-Discovery Solutions,” Gartner eDiscovery analyst Jie Zhang notes that “searching across multiple and hybrid data repositories becomes more onerous and leads to overinvestment.” Given that most enterprises’ retention policy efforts are often unenforced or immature, there is often a glut of content to search through. Accordingly, almost every e-discovery request is different and often time pressured, as IT typically handles e-discovery requests in an ad hoc manner.” As such, Jie observes that “In order to guarantee data identification and collection quality, IT tends to err on the side of being overly inclusive in data preservation approach. This could result in too much legal hold or preservation. For example, it is not rare for an organization to put all mailboxes on legal hold or put them on legal hold over time (due to multiple holds and never-released holds). Being put on hold not only adds to IT management overhead and prime storage cost, but also makes any archive or records management difficult.”

The common theme between the cited cases and Zhang’s analysis is a perceived infeasibility of systemized and efficient enterprise eDiscovery collection process, causing legal and IT executives to wring their hands over the resulting disruption and expense of ESI collection. In some situations, the corporate litigant opts to roll the dice with non-compliance — a clearly misguided and faulty cost benefit analysis.

What is needed is an effective, scalable and systemized ESI collection process that makes enterprise eDiscovery collection much more feasible. More advanced enterprise class technology, such as X1 Distributed Discovery, can accomplish system-wide searches that are narrowly tailored to collect only potentially relevant information in a legally defensible manner. This process is better, faster and dramatically less expensive than other methods currently employed.

With X1 Distributed Discovery (X1DD), parties can perform targeted search and collection of the ESI of thousands of endpoints over the internal network without disrupting operations. The search results are returned in minutes, not weeks, and thus can be highly granular and iterative, based upon multiple keywords, date ranges, file types, or other parameters. This approach typically reduces the eDiscovery collection and processing costs by at least one order of magnitude (90%), thereby bringing much needed feasibility to enterprise-wide eDiscovery collection that can save organizations millions while improving compliance.

1 Comment

Filed under eDiscovery