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We saw this post at http://it-lex.org/judge-calls-companys-ediscovery-policies-clearly-unacceptable-orders-further-depositions/, and felt compelled to repeat it here (again).

The factual specifics of Scentsy, Inc. v. B.R. Chase, LLC are relatively unimportant, but a recent order [PDF] addresses eDiscovery concerns and reiterates a point that has been made on this site countless times before. Co-defendant Harmony Brands, LLC claimed that plaintiffs had failed to produce enough key documents, and alleged that this was due to an insufficient litigation hold policy. When your opposing counsel is suggesting that your eDiscovery procedures are lacking, it’s probably worth listening. Accordingly, prior to this hearing, Harmony asked

the Court to compel Scentsy to conduct a forensic exam of its own computer systems at its own expense to retrieve any deleted discoverable data, or to order other appropriate sanctions.

The Court makes the point that timing is a key consideration when talking about spoliation, and observes that the dates and the time-frames here at a little unclear as to when litigation was reasonably foreseeable and when particular documents were deleted. The rule for sanctions is that

a court may not impose sanctions… on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system

and so there has to be a finding of bad faith from Scentsy before any sanctions can be imposed. Speaking about the apparent state of Scentsy’s policies:

Generally not deleting documents, and orally requesting certain employees to preserve relevant documents concurrently with filing a lawsuit, is completely inadequate. It is very risky – to such an extent that it borders on recklessness.

Though speaking “generally”, that comment seemed fairly particular to this party. To make that point clearer, the Court declared that

Scentsy’s document retention and litigation hold policies are clearly unacceptable.

Ultimately, the Order allowed Harmony to depose Scentsy employees on the particular subject of whether documents were destroyed. The Court withheld sanctions in this Order, but suggested that, depending on what comes up in these depositions, the window would be open in the future. An adverse inference at trial, or the dismissal of some of Scentsy’s counterclaims are possible sanctions to look out for as this case progresses.

We’ve said before and we’ll say it again: Have a solid policy. Review that policy. Don’t let yourself be open to this kind of challenge. Keep those steps in mind and you’re a lot less likely to get called out by a judge like this.

Eleventh Hour spotted a rising trend that may soon impact Employment Termination/Disputes; Insurance Claims; Intellectual Property/Trade Disputes; Third Party Requests; Product Liability and other litigation practices.  Legal organizations continue to search for new ways to further curb costs of ediscovery and combat exponential increase in information creation and replication.

Some legal organizations are beginning to examine reuse of matter-related data.  This effort will impact legal, IT, records and litigation support.

Several key drivers pushing review of how to reuse information in multiple related matters:

1. Average preservation life of legal hold data has increased to more than 2 years;
2. 14% increase in matters with 500 to terabyte of data;
3. By 2015, 20% of information will be touched by the cloud;
4. Same custodians on legal hold in more than one matter; and
5. Increased creation and replication of data across network systems (i.e., legacy data)

Objective is to Leverage Work Products from Similar Matters

For multi-matter eDiscovery and serial litigation the objective is to leverage work products from similar matters through analysis (e.g., key topics, critical players, specific vocabulary and jargon, and highly relevant documents, or common privilege and intellectual property intersections.  This level of information management streamlines the review process with respect to repetitive coding relevance, privilege, intellectual property and confidentiality review.  Production librarying offers systematic cataloging which in turn offers search across previously produced information, and also delivers greater quality control for related matters.

To achieve multi-matter efficiency legal organizations will need to refocus infrastructure and information management toward developing a central evidence repository that can classify, organize, search and maintain information for long periods of time.  This infrastructure will need to be scale-able to accommodate inclusion of multi-related matters, and their various data sets – preservation, working copies, search sets, productions, and backups.

Challenges Ahead for CIO/Litigation Support to Formulate Team and Plan to Address Data ReUse for Serial or Multi-Matter Litigation

CIOs and Litigation Support will be required to assemble and charge a cross-disciplined team with the means to address (1) infrastructure; (2) information management; (3) processes; and (4) technologies to realize a central evidence repository capable of managing multi- related matters.

___________

Eleventh Hour has recently participated in several presentations about serial and multi-matter information management, and is prepared to lead  briefings with top CIOs on this rising trend.  We have been working with clients for more than three years on developing central evidence repositories that streamline data organization by matter.  Now data reuse in that matter management environment is ready to come of age in serial and multi-matter litigations.

Centralization/Virtualization Promote Legacy Data Reuse as Means to Reduce Discovery Costs

Eleventh Hour believes that the current workflow for electronic discovery is not a best practices model and can be improved to benefit the parties to litigation.   For the litigation/investigation matrix, the need to efficiently manage multiple matters and the corresponding e-discovery obligations for each matter can be a challenge for legal teams because the traditional e-discovery process revolves around a single matter.  Each matter requires the IT intensive tasks of collection and processing, the expense of document review and the time pressured stress of delivering exacting productions. And for most corporations this process begins anew with each matter.  But the reality is that the same custodians and information are frequently needed in multiple matters. The unfortunate result is unnecessarily repeating costly steps in the process and an inability to leverage valuable work product and information from one matter to the next.

A much better workflow is for the legal organization is to maintain control of its own electronic documents (ESI) and to incorporate as part of a Central Evidence Repository (CER).  For the legal organization to point “collected” data of the preservation set to the central repository, and then to bring its processing and legal teams and opposing counsel to that data repository.  This will eliminate unnecessary re/distribution and duplication of data.  CER usage will greatly reduce matter discovery costs.  It will foster reuse of already collected custodial data in subsequent or similar matters.  CER usage will foster better legal hold compliance, help protect the corporations’ intellectual property and privilege information, and may be recognized as an elemental step in establishing a defensible process.

One of the top five risk categories in the Altimeter report, “Guarding the Social Gates: The Imperative for Social Media Risk Management,” is the release of confidential information/personal data; loss of intellectual property; legal, regulatory or compliance issues; and identity theft/hijacking.

34% said insiders taking intellectual property out of the data network is perceived as the biggest security threat to the  firm. 2012 Am Law Tech Survey

Confidential information/personal data; intellectual property, or identifiable information may reside in:

• Business Intelligence - research and due diligence focused on legal, regulatory, financial and reputational risk information usually generated by the firm’s businesses and committees
• Contracts, Technology, Privacy and Intellectual Property - vendor agreements, privacy issues and technology and intellectual property matters
• Employment – employee-related, benefits and medical information about employees and contingent workers
• Finance Legal and Corporate Governance - financing, preparation of required legal filings and support of corporate governance practices
• Management - legal, regulatory, reputational and transactional information regarding corporate operations
• Litigation and Regulatory – litigation, arbitration, regulatory and other proceedings work product that involve company, its affiliates or their employees, as well as other matters in connection with proceedings in which the corporation is not a party

What Can Be Done to Stop Leakage of Intellectual Property?

The place to start is with developing a repore between Legal, IT and Records.  Together this team should work collectively to address risk, policy, compliance, security, and information value questions.  An action plan may include these basic steps which starts with understanding what data you have and where it lives:

1. Identify where data lives within the environment.  This starts with preparing an enterprise information identification map that may be used to evaluate meta data, authorship, content and data life.
2. As a subset of the enterprise information identification process determine which files may contain intellectual property.  This may be done using an enterprise level indexer which generates a searchable index containing metadata and content for all common unstructured files and email. This unified index contains information about data residing on backup tapes, networks and large storage file systems to allow for search, de-dupe and extraction of unique content through a single interface
3. Determine the data’s value window.  Is this information still important to the organization/business?  Is it the latest version?  Is it necessary to keep prior versions?  Are prior versions missing?  Should related information be consolidated in one location?  How much longer will this information be valuable?
4. Tie data (whether it contains IP or not) to records management policies and schedules.  If there is no RIM policy, then it may be time to develop one so that it may be regularly applied to manage this information.  This may require engaging Legal, Records Management and IT.
5. Apply security protocols to data containing IP.  This may require updating security protocols, and coordination between Legal, IT and Records.
6. Determine if any data is subject to a legal hold/preservation.  Make sure legal hold is properly in place for this data.  Guard data accordingly.  This may require both Legal, Records and IT input to properly address.
7. Apply RIM policies and schedules to the data.  Where data is under legal hold/preservation RIM policies may need to be suspended.  Information should be scheduled such that there is a mechanism to indicate when legal hold is removed and this information may be put back under RIM disposition scheduling.
8. In Discovery, institute procedures to evaluate data for intellectual property at key EDRM stages including preservation/legal hold, collection, processing, review and production.  It may be advisable to seek protective orders for this data prior to production.

Repeat these steps regularly as new enterprise data is generated, or is evaluated for discovery purposes.

Indexing technology may be used to effectively define enterprise information for purposes of legal hold and collection.  This type of technology allows organizations to organize enterprise data assets, making them accessible and searchable. As it processes data, a searchable index is generated containing metadata and content for all common unstructured files and email.  This unified index contains information about data residing on backup tapes, networks and large storage file systems to allow for search, de-dupe and extraction of unique content through a single interface.  The resulting road map may be used to effect RIM/information governance or data management/migration projects, or in discovery to implement legal hold or collection management.  See, for example www.indexengines.com.