Legal Hold Pro

Four Takeaways from the Dallas Mini-Conference on Preservation and Sanctions

By Brad Harris

Last month, the Advisory Committee on Civil Rules called together a mini-conference to solicit greater insight in the nature and scope of the preservation problem, including how technology is contributing to the issue and how rule changes might help address the problem. Held under the auspices of the Discovery Subcommittee, the Mini-Conference on Preservation and Sanctions took place September 9 in Dallas, Texas.  The subcommittee was chaired by Hon. David Campbell and included representatives from in-house counsel, law firms, government and the judiciary.

Influenced by recent opinions on preservation and spoliation, the mini-conference participants were seeking greater clarity with regards to what constitutes a triggering event, how the preservation scope should be defined, and how sanctions apply.  Different approaches to possible rules distributed in advance of the conference ranged from highly detailed enumeration of preservation obligations, to a focus solely on sanctions and how to determine reasonableness.

In reading the notes from the conference, it was clear that there are no ready answers.  There did seem to be several common points of view from the discussions and here are my four takeaways from reviewing the conference minutes:

1. Preservation is an increasing burden.

It was clear from the comments of in-house counsel that preservation is a huge and increasing burden.  Driven by the fear of sanctions motions and the resulting reputational damage, corporations are preserving vast amounts of ESI.  The cost of such action, especially given the traditional approach of segregating, collecting and retaining ESI, is overwhelming.

This expense is in spite of the fact that the vast majority of the data will never be used for discovery. One corporate general counsel described how less than 10 percent is ever processed for discovery, and far less ever produced.  Microsoft’s GC pointed to this“monumental inefficiency” which is clearly driving the desire for greater clarity and certainty as to what constitutes reasonableness and good faith.  Advances in technology such as new  ways to communicate, the blurring of corporate and consumer technologies, and the rise of cloud computing and storage will only make things worse.

2. The threat of sanctions is enough to drive broad preservation.

Despite sanctions being involved in less than 1 percent of cases, the threat of sanctions motions is enough to drive a “de facto rule that there must be extremely broad preservation.”  One corporate GC  described having already spent in excess of $5 million on preservation and is incurring $100,000 a month to segregate and preserve information for a case that is still only anticipated.  Rather than a presumption of sanctions, one judge noted, perhaps a better presumption “that certain sorts of preservation efforts are ordinarily sufficient” even in the absence of a strict rule.

3. Rule changes are likely not the answer.

There seemed to be a lot of discussions about the limitations of potential rule changes, especially given the fact that “80 percent of the concerns of in-house counsel are about pre-litigation decisions” where rules don’t apply.  The group discussed the effectiveness of Rule 26(f) – that litigants seem reluctant to bring up preservation during meet and confer meetings (citing a recent Sedona survey where preservation was addressed fewer than 25 percent of the time) and how the meet and confer simply occurs too late in the process.   Discussions also illuminated some of the potential unintended consequences of bright lines when it comes to defining what constitutes a triggering event or attempting to arbitrarily limit scope of discovery.

4. The need for proportionality.

One interesting observation from reading the notes from the mini-conference was a lack of specific discussion about rules of proportionality.  I suspect proportionality was on everyone’s mind, especially when one general counsel described having spent over $3 million in discovery costs for a matter with a “small” value of less than $4 million.  Several judges expressed concern that perceived advances in review technology (e.g., predictive coding) may create a false-sense of security that overly broad collection and review isn’t really a problem (let alone the cost-prohibitive nature of such technologies for many parties to litigation).   Although not directly applicable to pre-litigation obligations, it seems appropriate to include the principles of Rule 26(b)(2)(c) when considering “objective guideposts” for reasonable preservation efforts.

We will watch eagerly as additional progress is made on this effort to see if a consensus emerges among the diverse group of stakeholders.

Further Reading:

• Download the official minutes from of the mini-conference in their entirety here.
• Allman, Thomas, “Thomas Allman: Discovery Subcommittee Report,” EDDUpdate.com, October 4, 2011

More Legal Hold Pro blog articles...