Leveraging the FRCP to Minimize eDiscovery Costs

 

No one wants to throw money out the window; unfortunately in the world of eDiscovery, many organizations are spending far more than what’s required.  Beyond implementing proactive data management policies, corporations should also be looking to specific eDiscovery rules under the Federal Rules of Civil Procedure (FRCP) and the United States Code (U.S.C.) for cost reduction opportunities.

Below are two specific FRCP rules that can be leveraged by organizations to help them lower eDiscovery costs:

1. FRCP 26(b)(2)(C): – Cost shifting through proportionality claims during the discovery period

Under the FRCP, the responding party bears the cost of complying with production requests no matter how outrageous they may be, unless it can be proven that the request imposes an undue burden or expense relative to the proposed benefit of the information being sought.  Put another way, production requests are only considered valid if the value of the requested electronically stored information (ESI) is proportionate to the resources required for retrieving the ESI.  In a vast number of cases, it boils down to the accessibility of the ESI; including where it’s stored, what form it’s in and the resources required for producing it to the requesting party.

Below are three options for bringing a proportionality claim under the FRCP:

When planning eDiscovery, legal teams should proactively assess the validity of document production requests and whether actions can be taken to reduce potential downstream costs (e.g., processing, review, and production).  During eDiscovery, the responding party (usually the defendant) is often faced with production obligations that can be financially crippling.  By following these simple tips, costs can be easily reduced:

• Equip the legal and IT teams with the proper technologies and expertise that allow them to quickly search and assess the potential costs of eDiscovery.  Having valid, defensible eDiscovery cost metrics, can help counsel effectively argue for narrower eDiscovery parameters during FRCP 26(f) meet and confer negotiations.

• Work as cooperatively as possible with opposing counsel to negotiate a more cost-effective eDiscovery plan.  Proactive cooperation will foster goodwill with the presiding judge and should a protective order be requested from the court, better position the organization.

• In the event ESI has been collected with overly broad discovery terms, don’t fret. With the proper documentation and assessment, legal teams can bring proportionality claims after collection to mitigate downstream eDiscovery costs (e.g., privilege review), which can be the most costly.  If the responding party can prove an undue burden with a diminished benefit, the Court may retroactively shift all or part of the costs to the producing party.

2. 28 U.S.C. 1920(4) and FRCP 54(d): Taxation of e-discovery Costs after the case

After a winning case has been closed, it’s possible to recover eDiscovery costs from the losing party. Under FRCP 54(d), costs are “allowed to the prevailing party.” Even though the word “costs” can be an ambiguous word, 28 USC 1920(4) clarifies that costs include “fees for exemplification and the costs of making copies of any materials.” Courts across the country have struggled with the meaning of “copies.” Does it include native file to TIFF file conversion? Does it include database searching by a third-party vendor?

Litigants and Courts don’t seem to have a definitive answer on what eDiscovery activities are included under “copies.”  Some have taken the word copies more literally, disallowing eDiscovery costs outside the spectrum of copying, while others have done the opposite.  Either way, attorneys on both sides can take proactive measures to receive a big return from the Court or minimize costs owed to the prevailing party, by adjusting their eDiscovery strategy to account for the following:  

• Accurately track, record and log expenses, so the Court can accurately assess the claims for additional eDiscovery costs.

• Cooperate with opposing counsel to formulate eDiscovery preservation and collection parameters that target only potentially relevant ESI. This will help minimize additional costs and the risk of paying additional costs to the prevailing party.

Michael Hamilton is a Sr. E-Discovery Analyst at Exterro, Inc., focusing on educating Exterro customers, prospects and industry experts on the issues solved with the eDiscovery management. His eDiscovery knowledge, legal acumen and practical experience give him a valuable perspective on bridging the gap between IT and legal teams. He is a regular blogger on the E-Discovery Beat: http://www.exterro.com/e-discovery-beat/.