New Rules, Big Headaches

By Perry L. Segal

Around the summer solstice, Governor Schwarzenegger signed the California Electronic Discovery Act into law after vetoing a prior version in October 2008. California has the reputation of being ahead of the curve, but in this instance the Golden State rounded the bend and temporarily went off the road. The Federal Rules were amended almost three years ago, and by my informal count, California has the distinction of being the 30th state to amend its discovery statutes. We still have a lot of catching up to do.

Now that the process has been formalized (the old rules were pieced together like a patchwork quilt), there is a level playing field for attorneys over the entire state. Why is this important? Simply put, now attorneys must worry about staying on the right side of a whole new set of rules. For example, according to the new rules counsel may be held responsible for the conduct of their clients. Also, simply missing an e-discovery filing deadline may result in serious repercussions, such as an adverse inference or monetary sanctions, not to mention a malpractice claim.

With all of the apprehension generated in legal and technology circles by these rules, it's easy to lose sight of the fact that electronic discovery has been in existence for quite some time. In fact, many attorneys are surprised when I tell them that the first e-discovery case I worked on was from 1996. Consequently, there's established case law. Decisions at the state and federal level are already having an impact. Binding or not, judges will be consulting these cases for guidance?and lawyers would be wise to follow suit. One of particular note is Zubulake v. UBS Warburg LLC (229 F.R.D. 422 (S.D.N.Y. 2004)). Hint: "Zubulake" is not the machine that resurfaces the ice at a hockey rink.

Attorneys aren't the only people who may be technology-averse. But here's the problem: Attorneys must take the lead on e-discovery because there is a presumption of competence by the court. You cannot hire competence; you must provide it. Also, most technology experts aren't at risk of losing a professional license, but you are.

Think I'm exaggerating? It's estimated that out of all case law that addresses e-discovery issues, more than 35 percent result in sanctions. And the granddaddy of them all, Qualcomm v. Broadcom (2008 WL 66932 (S.D. Cal. 2008)), took place in district court in California.

So, you have to know what you don't know. How do you do that? Start with the "W5+H" approach: Who should be involved? What data are you looking for? When are the due dates? Where is the data? Why is it relevant? And how will you comply?

Who involves attorneys, technology experts, data custodians, and the cooperation of the client. What involves more than just data in response to a subpoena; you will also be searching for data that exculpates your client. When is critical not only because of sanctions, but also because not responding properly?and promptly?at each stage of litigation may result in a waiver of your client's rights. Where: Your IT expert isn't just going to waltz into a server room and retrieve the data you need. So where will you look? Cellular phones, text messages, instant messages, voice messages, thumb drives, printer/fax memory, laptops, PDAs, personal devices (relevant to the litigation), Facebook, Twitter, MySpace, off-site storage (managed in-house or by third parties), foreign locations, even Taser guns?that's right, a recent case covered the retrieval of electronic data from Taser guns. Why should the electronic data be produced? Is it relevant? Is it material? Is it privileged? The how is up to you.

Now for the really challenging part: You have to make the same demands on your adversary! This process is akin to walking a tight-rope, because California is not a disclosure state. As a result, attorneys tend to make "kitchen sink" discovery requests. If you try that with e-discovery, it likely won't pass muster because the cost could be astronomical. There have been cases in which massive amounts of cash were spent, but realistically?unless you're deliberately trying to drive up your opponent's expenses?all parties have an interest in keeping costs down. Besides, sauce for the goose is good for the gander: Your costs may spiral out of control as well.

Here's what to do: Identify technology experts and talk to them. Understand how electronically stored information (ESI) is created, regulated, and produced. You may demand John Doe's email messages from noon on October 8, but it's unlikely the IT department will be able to produce them by that criterion. Learn how to search for information so you can issue instructions that are clear and concise.

In the end, applying just a little common sense to the e-discovery process will prevent your conference room from turning into a panic room.

Perry L. Segal is an IT executive turned e-discovery attorney and consultant. He is a member of the California State Bar's Law Practice Management and Technology Section Executive Committee.

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