Initially, we started at ground zero with the notion that defensibility is in most instances equated with the “reasonableness” standard, which is pervasive across many areas of the EDRM spectrum… from preservation to production.  Instances include:

• Preservation — “[a]s soon as a potential claim is . . . identified, a party is under a duty to preserve evidence which it knows, or reasonably should know, is relevant to the future litigation.”
• FRE 502 (b) – the disclosure does not operate as a waiver in a Federal or State proceeding if the (2) the holder of the privilege or protection took reasonable steps to prevent disclosure;
• General Privilege Waiver — In SEC v. Badian, 2009 WL 222783 (S.D.N.Y. Jan. 26, 2009)(link), “there is no basis … to conclude that there were precautions [to prevent the disclosure], let alone whether they were reasonable.”
• FRCP 37(e) — Absent exceptional circumstances, a court may not impose sanctions under these rules 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.

While the foregoing isn’t exhaustive it does highlight the persistent nature of the reasonableness standard as practitioners seek a defensibility sanctuary.  The good news is that the law doesn’t require perfection and there are also a number of ways to obtain reasonable defensibility:

• Demonstrable acceptance by the opposition – here the notion is that collaboration with the opposition allows the parties to comfortably move ahead with their discovery process and even if it’s not objectively reasonable, the parties consent to the protocol will in most instances carry an imprimatur of reasonableness.
• Auditing / process transparency.  Similar to the first bullet, auditing the process and giving the opposition visibility into the process steps will often make it hard for them to lodge successful downstream challenges.
• Adherence to Local Rules (See 7th Circuit Pilot Program) or judicial order.  Another avenue than can provide some degree of safety is compliance with a discovery protocol mandated by local rules, although that compliance may ultimately be challenged.
• Statistical confidence intervals / sampling – the use of statistics as a way to bolster process defensibility is starting to come to maturity and in the future I think that detailed precision, recall and other statistical indicates will play a large role in e-discovery defensibility.

None of these steps can be guaranteed to really get you off the hook from a rapid opposing party calling foul, but using them in a “belt and suspenders” fashion will certainly help buttress any discovery process.

For more illumination on the topic please see the following video of my interview with John Loveland, who’s waxing poetically about discovery defensibility.

“(a) continuing comments by business leaders and practicing attorneys, regarding the need for reform of the civil justice pretrial discovery process in the United States, (b) the release of the March 11, 2009 Final Report on the Joint Project of the American College of Trial Lawyers Task Force on Discovery (“Task Force”) and the Institute for the advancement of the American Legal System at the University of Denver (“IAALS”), and (c) The Sedona Conference® Cooperation Proclamation.”

The impetus of the Pilot Program was the “broken” nature of the electronic discovery process with the belief that better collaboration and cooperation would certain help remediate the situation.

“The goal of the Principles is to incentivize early and informal information exchange on commonly encountered issues relating to evidence preservation and discovery, paper and electronic, as required by Rule 26(f)(2). Too often these exchanges begin with unhelpful demands for the preservation of all data, which often are followed by exhaustive lists of types of storage devices. Such generic demands lead to generic objections that similarly fail to identify specific issues concerning evidence preservation and discovery that could productively be discussed and resolved early in the case by agreement or order of the court. As a result, the parties often fail to focus on identifying specific sources of evidence that are likely to be sought in discovery but that may be problematic or unduly burdensome or costly to preserve or produce.”

What I really like about the Pilot Program is that it strives to be both prescriptive and practical, which should hopefully avoid the type of ambiguity often exploited by obstreperous counsel.  For example, there is an entire section on early case assessment (ECA) principles, which require discussion of:

• Production issues
• Identification of electronically stored information (ESI)
• The scope of preservation
• The meet & confer process

There’s also the relatively novel requirement that counsel designate an e-discovery “liaison” to work with the parties to coordinate and flesh out germane e-discovery issues.  Regardless of whether the e-discovery liaison is an attorney, a third party consultant, or an employee of the party, the e-discovery liaison(s) must:

“(a) be prepared to participate in e-discovery dispute resolution;

(b) be knowledgeable about the party’s e-discovery efforts;

(c) be, or have reasonable access to those who are, familiar with the party’s electronic systems and capabilities in order to explain those systems and answer relevant questions; and

(d) be, or have reasonable access to those who are, knowledgeable about the technical aspects of e-discovery, including electronic document storage, organization, and format issues, and relevant information retrieval technology, including search methodology.”

Needless to say, this requirement alone should make marked improvements in the e-discovery dialogue, which unfortunately seems like it’s occurring (literally) among participants who both speak different languages and don’t realize it.

Finally, what makes the Pilot Program unique is that its Principles will be subjected to testing during the phases of the Pilot Program, which is scheduled to end on May 1, 2010 (for the first phase).

This project certainly seems like it’s on the right track and pending feedback from the bench and bar, it could serve as a model for local jurisdiction everywhere.

Rule of Court 3.724 was amended to require discussion of “Any issues relating to the discovery of electronically stored information” no later than 30 calendar days before the date set for the initial case management conference.  The broad language (i.e., “any”) was augmented by eight specific categories that must be expressly discussed:

(A) Issues relating to the preservation of discoverable electronically stored information;

(B) The form or forms in which information will be produced;

(C) The time within which the information will be produced;

(D) The scope of discovery of the information;

(E) The method for asserting or preserving claims of privilege or attorney work product, including whether such claims may be asserted after production;

(F) The method for asserting or preserving the confidentiality, privacy, trade secrets, or proprietary status of information relating to a party or person not a party to the civil proceedings;

(G) How the cost of production of electronically stored information is to be allocated among the parties;

(H) Any other issues relating to the discovery of electronically stored information, including developing a proposed plan relating to the discovery of the information;

Many of these issues track FRCP language (including forms of production, preservation, privilege issues, etc.).  However, section G seems somewhat novel given the historical “American Rule” where the producing party is required to bear all necessary costs of production.

Curiously missing, in comparison with FRCP 26 B(2)(b), is the need to discuss the handling of “inaccessible” ESI, although this could easily be subsumed in the “any other issues” language of section H.  Also missing is a discussion about proposed searching and/culling protocols (aka “keyword negotiations”) which are often part of the core meet and confer topics in Federal court.

Nevertheless, the scope is broad enough to require *a* discussion of all likely relevant electronic discovery issues, which was often lacking historically.  Once that discussion starts, reasonably savvy counsel should be able to flesh out most of the significant issues.  And, given this broad language a judge would presumably give them a hard time for any material omissions.

The deal will come as a relief to Kazeon’s long-suffering shareholders. The company was founded in 2003 and, over the past 6 years, it raised over $60 million in equity financing, double the amount it usually takes successful software companies to reach profitability. But despite all that investment, revenue has been hard to come by. According to former Kazeon employees, the company’s revenue totaled only $7 million over the past 12 months. Perhaps as a result, there’s been a lot of management turnover, and last year the board retained a recruiter to find a new CEO. In light of all that, selling the company for $75 million, or 10 times trailing revenue, is a great outcome for Kazeon’s shareholders. It also provides some level of job security for Kazeon’s employees, many of whom have been offered retention bonuses to stick around.

On the other side of the coin, the deal also makes sense for EMC, which needed to flesh out SourceOne, its recent re-branding of the Email Extender archive. In launching SourceOne in April 2009, EMC described it as an integrated portfolio of products: SourceOne Email Management for email archiving; Discovery Manager for legal holds of email; Celerra and Centera for storage; and Discovery Collector for identifying and collecting data from desktops and file shares. EMC owned all of those products except one: Discovery Collector, which instead was to come from EMC Select Partner, StoredIQ. It is widely known that EMC tried repeatedly to acquire StoredIQ but was rebuffed. So instead, it purchased Kazeon (i.e., the Kazeon Information Server) so that it now owns all aspects of SourceOne and does not have to rely on partners.

Will this eDiscovery deal be successful? We will have to wait and see, but Seagate’s experience is not encouraging. A year after it acquired Metalincs, Seagate laid off most of the staff and hired UBS to help it sell what was left of the electronic discovery company. There have not been any takers.

IDOL, which is the underlying technology behind Aungate, is a powerful, flexible, extensible platform. But it only works if you spend several millions of dollars on software licenses, and dedicate a full-time team of at least 3 people to maintain it.  Autonomy has sought to address some of these issues with a lower-priced package called Retina, but you’d be hard-pressed to find any successful implementations of it.

So, who IS using Autonomy and powering the company’s strong financial performance? And what are they using it for? The answer, from my own experience, is very large companies and government agencies that make multi-year, multi-million dollar commitments. In return, Autonomy becomes a “strategic partner”, an extension of a customer’s in-house IT team, and works closely with them on installation and customization. Typically, the product is used for large scale, complex, enterprise search, and proactive information management.

Like all of us, Autonomy is a product of its time. Started in the late 20^th century, it is a traditional enterprise software company, like Siebel or PeopleSoft, which offers a product which is powerful, flexible, but expensive, hard to use, difficult to implement. By contrast, modern 21^st century web-applications, like salesforce.com or Netsuite, come from the opposite end of the spectrum. They make simplicity, and ease-of-use their design center, and seek to offer the subset of functionality you really need at a small fraction of the cost of traditional software.

From a customer perspective, either can work – it’s all a question of what you want. Are you more comfortable with an easy-to-use, quick-to-deploy, low-cost web application for e-discovery, or do you place “strategic value” on the flexibility and infinite customization of traditional software? This note from Gartner will help you make the right decision.