COMMENTS OF THE NEW YORK COUNTY LAWYERS’ ASSOCIATION FEDERAL COURTS COMMITTEE ON THE BEST PRACTICES IN E-DISCOVERY REPORT

March 20, 2013

COMMENTS OF THE NEW YORK COUNTY LAWYERS’ ASSOCIATION FEDERAL COURTS COMMITTEE ON THE BEST PRACTICES IN E-DISCOVERY REPORT OF THE COMMERCIAL AND FEDERAL LITIGATION SECTION OF THE NEW YORK STATE BAR ASSOCIATION

On the whole we are in agreement with the Guidelines contained in the report “Best Practices in E-Discovery in New York State and Federal Courts Version 2.0” prepared by the E- Discovery Committee of the Commercial and Federal Litigation Section of the New York State Bar Association (“NYSBA”). In our view, these guidelines thoughtfully crystallize rules with respect to the discovery of Electronically Stored Information (ESI) that will provide useful guidance to both state and federal practitioners. This guidance is of particular value given that E-Discovery is a relatively new and evolving area, and one that is increasingly consuming the resources of the bench and bar.

One overarching comment on the Guidelines is that they are intended as “best practices,” and we would explicitly disclaim any suggestion that these guidelines create “minimum standards” that become the standard in attorney malpractice cases, sanctions cases, and, potentially, attorney discipline cases. We take no position on the interaction of these “best practices” with the standards in those other areas.

We would also note that these rules are not likely to be the last word on the issue, given the pace of technological and doctrinal change in these areas. We thus welcome NYSBA’s commitment to issuing revised guidelines periodically.

Set out below are our comments, which are quite minor, on each of the specific guidelines.

GUIDELINE NO. 1: The law defining when a pre-litigation duty to preserve ESI arises is not clear. The duty to preserve arises, not only when a client receives notice of litigation or a claim or cause of action, but it may also arise when a client reasonably anticipates litigation or knew or should have known that information may be relevant to a future litigation.

In general, we fully agree with this guideline. The standards for document retention and preservation handed down by the courts are not clear and this guideline helps to clarify those standards. However, we advocate that the last clause of this guideline be amended so that the trigger is when the client “reasonably should have known that information may be potentially relevant to a future litigation,” not that the client “should have known” that information may be “relevant” to a future litigation.

First, we seek to avoid any ambiguity that may exist if the “should have known” concept is not explicitly modified by standards of reasonableness. While a reasonableness standard might well be implicit, we would urge that such a standard be explicitly imposed to limit the burdens (including extensive affirmative diligence standards) that could potentially be imposed on litigants.

Second, we urge that the “potentially relevant” standard replace the “relevant” standard in the last line of this guideline. The reason for this proposed change is that the courts have often required that “potentially relevant” documents be preserved, suggesting that the mere preservation of “relevant” documents is not sufficient. E.g., Richard Green (Fine Paintings) v. McClendon, 262 F.R.D. 284, 289 (S.D.N.Y. 2009) (“a litigant must ensure that all potentially relevant evidence is retained”). We also note that the courts have not hesitated to use the “potential relevance” standard when imposing sanctions. E.g., Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 436 (S.D.N.Y. 2004) (“I therefore conclude that UBS acted willfully in destroying potentially relevant information”).

GUIDELINE NO. 2: In determining what ESI should be preserved, clients should consider: the facts upon which the triggering event is based and the subject matter of the triggering event; whether the ESI is relevant to that event; the expense and burden incurred in preserving the ESI; and whether the loss of the ESI would be prejudicial to an opposing party.

We believe that the considerations involved in this guideline are appropriate to consider. We would however amend the guideline to explicitly note, as is currently implicit in the guideline, that the guideline’s list is not exhaustive and, accordingly, we would suggest inserting “without limitation, the following factors” after the word “consider.” Once again we would change the word “relevant” in the third line of Guideline No. 2 to “potentially relevant.” In addition, we would note another consideration: the extent to which the loss of ESI would prejudice the client’s own case, either because of the degradation of potentially helpful evidence or because the loss of ESI could result in preclusive sanctions that could curtail a client’s ability to support its own case. To reflect this consideration, we have urged that the guideline discuss not only prejudice to the “opposing party” but rather whether the loss of ESI would “materially affect” the determination of the case.

GUIDELINE NO. 3: Legal hold notices will vary based on the facts and circumstances but the case law suggest that, in general, they should be in writing, concise and clear and should include: a description of the subject matter; the date ranges of the ESI to be preserved; a statement that all ESI, regardless of location or storage medium, should be preserved unless other written instructions are given; instructions on how to preserve the ESI and/or whom to contact regarding how ESI is preserved; and the name of a person to contact if questions arise. Counsel should monitor compliance with the legal hold at regular intervals.

In general, we believe that this guideline is sound and adherence to it would help protect counsel and their clients in the event that questions are raised as to a company’s document- preservation effort. We strongly agree with the focus on concision and clarity so that the non- lawyers implementing the legal hold are able to comprehend and execute it effectively. The list of recommended measures to preserve ESI also is sensible and we endorse it fully. We would again advocate making it explicit that the guideline’s list is not exhaustive and again incorporate “without limitation, the following factors” following the word “include.”

We however disagree with the notion that legal hold notices need not always be in writing. See Guideline No. 3 (stating that notices should “in general” be in writing); Commentary to Guideline No. 3 n.2 (suggesting that notices not be in writing for small companies). We believe that there are no circumstances in which even small companies should rely upon oral litigation holds and, as a matter of sound practice, urge that written holds be imposed in all cases. We note that some courts have specifically condemned companies that have not imposed written litigation holds: “[T]he failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.” Merck Eprova AG v Gnosis S.P.A., 07 CIV. 5898(RJS), 2010 WL 1631519 (S.D.N.Y. Apr. 20, 2010).

Thus, we would strike the words “In general” where they appear in the second line of Guideline No. 3. We would also change the final sentence of this guideline so that it reads: “Counsel should establish documented protocols for the implementation of and policies regarding a legal hold, as well as should regularly monitor that those protocols are being followed, to ensure compliance with a legal hold.” This amendment is consistent with Principle 9 of the Sedona Conference on Litigation Holds. “The Sedona Conference Commentary on Legal Holds: The Trigger & the Process,” 11 Sedona Conf. J. 265, 270 (2010) (“An organization should consider documenting the legal hold policy and, when appropriate, the process of implementing the hold in a specific case, considering that both the policy and the process may be subject to scrutiny by opposing parties and review by the court.”). The establishment of documented protocols would enable client and counsel to easily demonstrate to the court the measures taken to implement the hold.

GUIDELINE NO. 4: Counsel should endeavor to make the discovery process more cooperative and collaborative.

We obviously do not disagree, although we would specify a non-exhaustive list of steps that counsel could take to promote cooperation, such as mutually agreed to search terms and custodians, exchanges of hit reports, agreements on limitations on burdensome archival searches and date ranges, and the like. “Among the items about which the court expects counsel to ‘reach practical agreement’ without the court having to micro-manage e-discovery are ‘search terms, date ranges, key players and the like.’ ” Trusz v. UBS Realty Investors LLC, No. 3:09 CV 268(JBA), 2010 WL 3583064, at *4–5 (D.Conn. Sep. 7, 2010) (quoting 10 Sedona Conf. J. at 217 (footnote omitted)); “The Case for Cooperation,” 10 Sedona Conf. J. 339, 344–45 (2009) (footnote omitted) (emphasis omitted) (“ Cooperation … requires … that counsel adequately prepare prior to conferring with opposing counsel to identify custodians and likely sources of relevant ESI, and the steps and costs required to access that information. It requires disclosure and dialogue on the parameters of preservation.”).

We also note that Guidelines No. 6 and No. 7 also discuss the need for cooperation and perhaps the Commentary to Guideline 4 should make an explicit cross-reference to those two guidelines.

GUIDELINE NO. 5: Counsel should be familiar with their client’s information technology, sources of ESI, preservation and scope and form of production, as soon as litigation is anticipated, but in no event later than any “meet and confer” or preliminary conference.

We do not disagree with this guideline and agree with the observation that many courts already impose such a standard. In addition to the admonition in this guideline, we urge that, before the meet-and-confer or preliminary conference, all counsel on a case involving ESI become familiar with the information-management technology employed by their own in-house and outside document-management vendors.

GUIDELINE NO. 6: To the extent possible, requests for the production of ESI and subpoenas seeking ESI should, with as much particularity as possible, identify the type of ESI sought, the underlying subject matter of the ESI requested and the relevant time period of the ESI. Objections to requests for ESI should plainly identify the scope and limitations of any responsive production. Boilerplate language which obscures the particular bases for objections and leaves the requesting party with no clear idea of what is or is not being produced should be avoided. If necessary, counsel should meet and confer to resolve any outstanding disputes about the scope or format of production.

We generally agree with this guideline. The admonitions against boilerplate objections and the need for meet-and-confer sessions to resolve disputes are consistent with the requirements imposed by prevailing rules and case law. Such guidelines are applicable to all discovery, not just e-discovery.

Our only proposed change is to add the qualifying language that appears at the beginning of the first sentence of Guideline No. 6 to the beginning of the second sentence as well. Thus, we would change the second sentence so that it reads: “To the extent possible, objections to requests for ESI should plainly identify the scope and limitations of any responsive production.” The reason for this change is to acknowledge that in some cases it may not be a simple matter to “plainly identify” the scope and limitations of a responsive production.

GUIDELINE NO. 7: Counsel should agree on the form of production of ESI for all parties prior to producing ESI. In cases in which counsel cannot agree, counsel should clearly identify their client’s preferred form of production of ESI as early in the case as possible and should consider seeking judicial intervention to order the form of production before producing ESI. In requests for production of documents or subpoenas and objections to requests to produce or subpoenas, the form of production of responsive ESI should be clearly stated. If the parties have previously agreed to the form of production, the agreement and the form should be stated. In any event, counsel should not choose a form of production based on its lack of utility to opposing counsel.

We agree fully with this guideline and with NYSBA’s belief that early resolution of ESI issues is generally beneficial for the parties and the court. Despite this common sense viewpoint, it is our observation that parties often do not resolve ESI issues at a sufficiently early stage and quite often do not seek judicial intervention at an early stage. As NYSBA’s comments correctly point out, going full speed ahead with an ESI production in the face of unresolved ESI issues can result in inappropriate and possibly unusable productions that can only be rectified by burdensome and expensive work.

Our one proposed change is to add the words “after a meaningful meet-and-confer process” in the second sentence to emphasize the importance of meeting and conferring to resolve any disputes prior to involving the judiciary and to stress that a meet-and-confer process is a condition precedent for judicial intervention. This concept is implicit in Guideline No. 7 as it is currently phrased, but we believe it is important to underscore explicitly the need for a robust meet-and-confer process, a concept to which Guideline No. 7 as currently phrased makes no explicit reference.

GUIDELINE NO. 8: Producing ESI should be conducted in a series of five steps: (1) initial identification and preservation of potentially relevant ESI; (2) collection of ESI in a manner that is forensically sound: (3) processing and culling of ESI to reduce volume; (4) review by counsel; and (5) production in a format that is reasonably usable or agreed to by the parties.

We agree that this guideline recites five steps that are commonly undertaken in not only ESI but all document productions. Our only concern is that the guideline currently reads as if these are the only five steps that are invariably taken and that they are always taken in the order listed. For example, it is sometimes the case that ESI collections may need to be augmented rather than “culled to reduce volume” if insufficient collection was made at the outset. It is also the case that attorney review might (particularly with small collections of ESI) occur even at step (1), (2), and/or (3) and not only at step (4). In addition, with the advent of predictive coding and other technological tools, some of these five steps may be combined or eliminated.

Accordingly, we would insert the word “generally” between the words “be” and “conducted” in the first line.

We further suggest adding one sentence at the end of the guideline. “Further, in producing ESI counsel should work collaboratively with its document-management vendors, as well as acquire a familiarity with any document-management vendors’ technology, protocols and policies to ensure a proper production.” If counsel works collaboratively with its document- management vendors and has a familiarity with the technology, protocols, and policies, counsel may be able to prevent discovery problems such as the inadvertent disclosure of information by the vendor. See Brookfield Asset Management, Inc. v. AIG Financial Products Corp., 2013 WL 142503 (S.D.N.Y. Jan. 7, 2013) (case involving waiver of privilege based upon inadvertent disclosure by a vendor; court “emphasizes the need for counsel for a producing party to keep a watchful eye over their e-discovery vendors”).

GUIDELINE NO. 9: Parties should carefully evaluate how to collect ESI because certain methods of collection may inadvertently alter, damage or destroy ESI. In considering various methods of collecting ESI, parties should balance the costs of collection with the risk of altering, damaging or destroying and the effect that may have on the lawsuit.

We agree fully with this guideline.

GUIDELINE NO. 10: Parties may identify relevant ESI by using technology tools to conduct searches of their ESI. In most cases, parties may search reasonably accessible sources of ESI, which include primarily active data, although if certain relevant ESI is likely to be found only in less readily accessible sources of if other special circumstances exist, less readily acessible sources may also need to be searched. The steps taken in conducting the search and the rationale for each step should be documented so that if necessary the party may demonstrate the reasonableness of its search techniques. Counsel should consider entering into an agreement with opposing counsel, if appropriate, regarding the scope of the search and the search terms.

We fully agree with this guideline. In particular, we agree with the advice in the commentary to develop a protocol for handling inadvertently produced documents.

Our only proposed change is to the last sentence so that it reads: “As a general matter counsel should attempt to enter into an agreement with opposing counsel regarding the scope of the search and the search terms.” It is our strong belief that early resolution of the scope of the search and search terms will reduce costs and avert discovery problems. Thus, it is our view that as a general matter, counsel should attempt to negotiate such agreements – although the likelihood of success is not always a sure thing.

GUIDELINE NO. 11: Counsel should conduct searches using technology tools to handle ESI that is subject to the attorney-client privilege, the work product immunity and/or material prepared in anticipation of litigation. Counsel should document its privilege searches and verify the accuracy and thoroughness of the searches by checking for privileged ESI at the beginning of the search process and again at the conclusion of the process. To avoid the situation in which an inadvertent production of privileged ESI may possibly be deemed a waiver of the privilege, counsel should consider, as appropriate, entering into a non-waiver agreement and having the court incorporate that agreement into a court order.

We agree with this guideline as a general matter, although we would note that for small productions of ESI the use of “technology tools” may not be necessary and it might be more economical and accurate for attorneys to conduct a manual review. In some cases, it may also be appropriate (with informed client consent) to conduct only a limited privilege review if there is an informed belief that few privileged documents appear in the ESI in question and that those few privileged documents are of little consequence to the litigation.

We would again advocate inclusion of the word “generally” between the words “should” and “conduct.”

We also insert the words “such as a claw-back agreement” after the words “non-waiver agreement.” The reason for this proposed change is to express our preference for claw-back agreements over quick-peek agreements (without suggesting that claw-back agreements are always the preferred solution). The notes for Fed. R. Evid. 502(d) specify two possible solutions for resolving the possibility of disclosure of privilege, “quick peek” agreements or “claw-back” agreements. We believe that the drawbacks of a quick-peek agreement often outweigh its benefits. Quick-peek agreements present a greater risk than claw-back agreements because the former may result in immediate disclosure of privileged material, making it unlikely that a party will be able to undo the damage of handing over the privileged document, even if privilege can still be asserted. See “The Sedona Conference Cooperation Guidance for Litigators & In-House Counsel,” Cooperation Point # 12, at p. 15 (March 2011) (“CAUTION: a quick peek agreement presents a heightened risk (compared to clawback agreements) of compromising the attorney- client privilege, and should not be entered into without the fully informed consent of your client.”).

In contrast, a claw-back agreement, by which inadvertently produced documents are returned to the producing party, presents fewer problems since such agreements generally provide that inadvertent disclosure will not waive privilege. Additionally, while the opposing side may have seen the document, the claw-back allows for the document to be retrieved, which will assist in protecting the privilege in the future.

GUIDELINE NO. 12: Counsel should take reasonable steps to contain the costs of e- discovery. To that end, counsel should be knowledgeable of developments in technology regarding searching and producing ESI and should be knowledgeable of the evolving custom and practice in reviewing ESI. Counsel should evaluate whether such technology and/or such practices should be used in an action considering the volume of ESI, the form of ESI and other relevant factors.

We generally agree with this guideline, but have proposed changes to make clear that counsel need only maintain a level of knowledge that is “reasonable” in light of the attorney’s practice.

GUIDELINE NO. 13: Parties should discuss the expected costs and potential burdens, if any, presented by e-discovery issues as early in the case as possible. If counsel expects that the client will incur disproportionate, significant costs for e-discovery or that e-discovery will otherwise present a financial burden to the client, counsel should endeavor to enter into an agreement with opposing counsel to allocate the costs of e-discovery or, if necessary, seek a court order as early in the case as possible and before the costs are incurred, allocating the costs of e-discovery and identifying which party pays for what e-discovery costs.

We fully agree with this guideline, with minor proposed drafting changes set out on the attached blackline version of the guidelines.

GUIDELINE NO. 14: Courts may issue sanctions for spoliation, or the intentional or negligent destruction or failure to preserve relevant ESI.

We do not disagree with this guideline, which accurately presents the existing state of the law.

Vincent T. Chang, Chair, NYCLA Federal Courts Committee

Yitzy Nissenbaum, Chair, E-Discovery Subcommittee, NYCLA Federal Courts Committee

NYCLA FEDERAL COURTS COMMITTEE PROPOSED GUIDELINES

GUIDELINE NO. 1: The law defining when a pre-litigation duty to preserve ESI arises is not clear. The duty to preserve arises, not only when a client receives notice of litigation or a claim or cause of action, but it may also arise when a client reasonably anticipates litigation or knew or reasonably should have known that information may be potentially relevant to a future litigation.

GUIDELINE NO. 2: In determining what ESI should be preserved, clients should consider, without limitation, the following: the facts upon which the triggering event is based and the subject matter of the triggering event; whether the ESI is potentially relevant to that event; the expense and burden incurred in preserving the ESI; and whether the loss of the ESI would materially affect the determination of the case.

GUIDELINE NO. 3: Legal hold notices will vary based on the facts and circumstances but the case law suggests that they should be in writing, concise and clear and should include, without limitation, the following: a description of the subject matter; the date ranges of the ESI to be preserved; a statement that all ESI, regardless of location or storage medium, should be preserved unless other written instructions are given; instructions on how to preserve the ESI and/or whom to contact regarding how ESI is preserved; and the name of a person to contact if questions arise. . Counsel should establish documented protocols for the implementation of and policies regarding a legal hold, as well as should regularly monitor that those protocols are being followed, to ensure compliance with a legal hold.

GUIDELINE NO. 4: Counsel should endeavor to make the discovery process more cooperative and collaborative, by engaging in such measures as, without limitation, mutually agreed upon search terms, exchanges of hit reports, preservation and the form of production of ESI (including metadata), and agreements on limitations on burdensome archival searches and dates ranges.

GUIDELINE NO. 5: Counsel should be familiar with their client’s information technology, sources of ESI, preservation and scope and form of production, as well as the information technology employed by any document-management vendors, as soon as litigation is anticipated, but in no event later than any “meet-and-confer” or preliminary conference.

GUIDELINE NO. 6: To the extent possible, requests for the production of ESI and subpoenas seeking ESI should, with as much particularity as possible, identify the type of ESI sought, the underlying subject matter of the ESI requested and the relevant time period of the ESI. To the extent possible, objections to requests for ESI should plainly identify the scope and limitations of any responsive production. Boilerplate language which obscures the particular bases for objections and leaves the requesting party with no clear idea of what is or is not being produced should be avoided. If necessary, counsel should meet and confer to resolve any outstanding disputes about the scope or format of production.

GUIDELINE NO. 7: Counsel should agree on the form of production of ESI for all parties prior to producing ESI. In cases in which counsel cannot agree after a meaningful meet-and-confer process, counsel should clearly identify their client’s preferred form of production of ESI as early in the case as possible and should consider seeking judicial intervention to order the form of production before producing ESI. In requests for production of documents or subpoenas and objections to requests to produce or subpoenas, the form of production of responsive ESI should be clearly stated. If the parties have previously agreed to the form of production, the agreement and the form should be stated. In any event, counsel should not choose a form of production based on its lack of utility to opposing counsel.

GUIDELINE NO. 8: Producing ESI should generally be conducted in a series of five steps: (1) initial identification and preservation of potentially relevant ESI; (2) collection of ESI in a manner that is forensically sound: (3) processing and culling of ESI to reduce volume; (4) review by counsel; and (5) production in a format that is reasonably usable or agreed to by the parties. Further, in producing ESI counsel should work collaboratively with its document-management vendors, as well as acquire a familiarity with any document-management vendors’ technology, protocols and policies to ensure a proper production.

GUIDELINE NO. 10: Parties may identify relevant ESI by using technology tools to conduct searches of their ESI. In most cases, parties may search reasonably accessible sources of ESI, which include primarily active data, although if certain relevant ESI is likely to be found only in less readily accessible sources of if other special circumstances exist, less readily accessible sources may also need to be searched. The steps taken in conducting the search and the rationale for each step should be documented so that if necessary the party may demonstrate the reasonableness of its search techniques. As a general matter counsel should attempt to enter into an agreement with opposing counsel regarding the scope of the search and the search terms.

GUIDELINE NO. 11: Counsel should generally conduct searches using technology tools to handle ESI that is subject to the attorney-client privilege, the work product immunity and/or material prepared in anticipation of litigation. Counsel should document its privilege searches and verify the accuracy and thoroughness of the searches by checking for privileged ESI at the beginning of the search process and again at the conclusion of the process. To avoid the situation in which an inadvertent production of privileged ESI may possibly be deemed a waiver of the privilege, counsel should consider, as appropriate, entering into a non-waiver agreement such as a claw-back agreement and having the court incorporate that agreement into a court order.

GUIDELINE NO. 12: Counsel should take reasonable steps to contain the costs of e-discovery. To that end, counsel should be reasonably knowledgeable of developments in technology regarding searching and producing ESI and should be reasonably knowledgeable of the evolving custom and practice in reviewing ESI. Counsel should evaluate whether such technology and/or such practices should be used in an action considering the volume of ESI, the form of ESI and other relevant factors..

GUIDELINE NO. 13: Parties should discuss the expected costs and potential burdens, if any, presented by e-discovery issues as early in the case as possible. If counsel expects that the client will incur disproportionate, significant costs for e-discovery and/or that e-discovery will otherwise present an undue financial burden to the client, counsel should endeavor to enter into an agreement with opposing counsel to allocate the costs of e-discovery or, if necessary, seek a court order as early in the case as possible and, if possible, before the costs are incurred, allocating the costs of e-discovery and identifying which party pays for what e-discovery costs.

GUIDELINE NO. 14: Courts may issue sanctions for spoliation, or the intentional or negligent destruction or failure to preserve relevant ESI.