What is in store for e-discovery in 2015?

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WHAT’S IN STORE FOR E-DISCOVERY IN 2015?TOP 4 TRENDS TO WATCH

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Presenters

Stephanie L. Giammarco leads BDO’s Forensic Technology Services

practice with more than 20 years of experience and a background in

accounting, information technology and criminology. Having worked

on some of the largest financial frauds to date, she has led teams

creating databases of millions of records, performed advanced data

analytics and provided testimony pertaining to damages and

electronically stored information.

Stephanie provides litigation and consulting services to organizations

and their counsel, including data analytics, computer forensics and

e-discovery services related to domestic and international matters

involving product liability, financial statement fraud, class action

lawsuits, internal investigations, securities fraud, employee and

vendor schemes, and breach of contract. She is skilled in the

collection, preservation and analysis of electronic evidence, as well

as the implementation of various e-discovery tools.

She has been deposed as a Rule 30(b)6 e-discovery witness and

testified before the Judicial Arbitration Services on the calculation

of damages in contract disputes. Stephanie has published and

presented on a range of computer forensics and e-discovery topics,

including before the Securities and Exchange Commission, Security

Industry Authority and National Futures Association.

Dan Meyers is a partner in Bracewell's New York office and a member

of Bracewell's Litigation Section. He has experience representing

private investment funds, financial institutions and energy

companies in a wide range of complex commercial disputes before

federal and state courts.

Dan's practice focuses on eDiscovery and information governance.

Dan assists clients in developing their eDiscovery policies and

procedures, implementing those policies in specific cases and

ensuring that his clients’ regulatory and dispute-based preservation

obligations are satisfied in a cost-effective and fully-defensible

manner.

Dan's practice areas also include corporate governance disputes

(including breach of fiduciary duty claims and shareholder disputes),

federal bankruptcy claims (including fraudulent transfer and

valuation disputes), securities claims, and state law contract and

business tort actions. He also has experience defending parent

corporations against claims of derivative liability for the alleged

debts of their subsidiaries or affiliates, whether under common law

theories of alter ego and veil piercing liability or statutory bases for

derivative corporate liability.

Stephanie L. Giammarco, CPA/CITP, CFE, CEDS

Partner, BDO Consulting

[email protected]

Direct: 212-885-7439

Daniel S. Meyers

Partner, Bracewell & Giuliani

[email protected]

Direct: 212-508-6107

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Trend #1

Litigation readiness

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What’s in store for e-discovery in 2015?

Litigation Readiness

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The Spoliation Sanctions “Gotcha Game”

Judge Shira Scheindlin: e-discovery sanctions need limits, “lest litigation

become a ‘gotcha’ game rather than a full and fair opportunity to air the merits

of a dispute.”

Pension Committee, 685 F. Supp. 2d 456 (S.D.N.Y. 2010)

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But a “ ‘Gotcha’ Game” is Exactly What Has Occurred

Sanctions for e-discovery Violations: By the Numbers, Duke L.J. (2010)

Electronic Discovery Year-End Update (2012), Gibson Dunn

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The Proliferation of Sanctions Motions Continues

In 2014, companies reported a 42% rise in cases in which they have had to

defend their preservation practices

-- Legal Hold Pro, Legal Hold & Data Preservation Benchmark Survey 2014

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Common Types of Sanctions

Monetary fines:

Philip Morris sanctioned $2,750,000 for failing to preserve emails. U.S. v. Philip

Morris (D.C. 2004)

Pharmaceutical companies sanctioned $931,500 for failing to preserve text

messages. In re Praxada (S.D.Ill. Dec. 2013)

Adverse Inference Instructions:

“In practice, an adverse inference instruction often ends litigation—it is too

difficult a hurdle for the spoliator to overcome. The in terrorem effect of an

adverse inference is obvious. When a jury is instructed that it may infer that the

party who destroyed potentially relevant evidence did so out of a realization that

the evidence was unfavorable, the party suffering this instruction will be hard-

pressed to prevail on the merits.” Zubulake, 220 F.R.D. at 219-220

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“Preserve Everything” is Not the Answer

It’s too expensive. Companies spend millions preserving ESI when litigation

is threatened, but never actually filed

– And even when litigation is filed, the cost of collecting, processing and reviewing

is compounded by large troves of legacy data

It’s too risky. The more you store, the greater your exposure to a cyber

attack

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The Amended Federal Rules are an Incomplete and Unknown Answer

They are not effective until December 2015

It will be years before we know how the federal bench will interpret and

apply the new provisions

Judges may “end run” the new restrictions through their “inherent power”

to sanction for spoliation

The rules do not apply in state court proceedings, so businesses still will not

have uniform judicial standards against which to measure their conduct

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The Best Defense: a Litigation Readiness and Document Preservation

Plan

A party seeking sanctions for the spoliation of ESI must demonstrate that the

data was lost with a “culpable state of mind” (i.e., negligence, recklessness

or willfulness)

Maintaining a “comprehensive standard document preservation policy” is a

robust defense to any allegation of culpability

-- Research Fund. of SUNY v. Nektar Ther. (S.D.N.Y. 2013)

The proposed federal amendments only bolster reliance on a Litigation

Readiness and Document Preservation Plan because it will be very difficult to

prove that a company maintaining and following such a plan “failed to take

reasonable steps” and/or “acted with intent to deprive” their adversary of

the ESI

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Anatomy of a Litigation Readiness Plan

Audit of litigation and regulatory retention obligations

Data map of the sources and locations of data

Customizable form litigation hold letters

– For custodians, IT, HR and third parties

Interview forms

Standard release notices

Centralized tracking of hold status

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Trend # 2

Data analytics and visualization

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Data Analytics and Visualization

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The 4 V’s of Big Data

VOLUME VELOCITY VARIETY VERACITY

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The 4 A’s of E-Discovery Impact

ANALYTICS ASSESSMENT ACCELERATION ASSISTED

REVIEW

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The results…

Increased

planning /

more

prepared

Increased

efficiencyDecreased

Cost

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Trend # 3

Cross-border e-discovery

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Relevance of Foreign Privacy and Other “Blocking” Statutes to U.S.

E-Discovery

Scenario One: You are served with a document request seeking data that you

store on a foreign server located in a jurisdiction that prohibits the processing

or the cross-border transfer of that data. What do you do?

Scenario Two: Your adversary is trying to evade your document requests by

claiming that the relevant data is on a foreign server located in a jurisdiction

that prohibits the processing or the cross-border transfer of that data. What

can you do?

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Content of Foreign Privacy Laws

Every jurisdiction is different. The “red flag” takeaway is to

exercise caution whenever production is sought of documents

stored in a foreign jurisdiction

EU Privacy Directive

– Sets a floor that member states must adopt in their national laws

– Scope of “personal data”

– Prohibits the “processing” of data and also the transferring of

data to non-EU countries

– Permits exceptions, which should be reviewed carefully

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How U.S. Courts Address Foreign Obstacles to Production

The factors that US courts consider are:

1) the importance to the litigation of the documents or other information

requested;

2) the degree of specificity of the request;

3) whether the information originated in the United States;

4) the availability of alternative means of securing the information; and

5) the extent to which noncompliance with the request would undermine

important interests of the United States, or compliance with the request

would undermine important interests of the state where the information is

located.

Societe Nationale Industrielle Aerospatiale v. United States Dist. Court,

482 U.S. 522 (1987)

“Where the Money Goes” 2014 RAND Report

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Trend #4

Mobile data challenges

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The Challenges of Preserving, Collecting and Processing Mobile Data

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The results…

IDENTIFY all sources of potentially relevant data/reduce risk of spoliation

EMPLOY appropriate tools and software

UNDERSTAND what data is available

UTILIZE the information appropriately

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Q & AStephanie L. Giammarco

Partner, BDO Consulting

[email protected]

Direct: 212-885-7439

Daniel S. Meyers

Partner, Bracewell & Giuliani

[email protected]

Direct: 212-508-6107