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A new discovery
Allens Arthur Robinson
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Courts are starting to force litigants to efficiently manage electronic discovery, writes Clare Buttner
Electronic record-keeping has revolutionised discovery. Recent studies have estimated that the percentage of information stored by companies on paper is probably in the range of five to ten per cent, and likely declining rapidly. That means that over 90 per cent of information is stored in electronic form only.
Annette Hughes, e-litigation group leader and partner, commercial litigation at Allens Arthur Robinson , says this is making discovery a more complicated and potentially more costly process than ever before.
“We have undergone a communications revolution and are in a new era in terms of discovery. The electronic world is now the world in which corporations live and breathe in all aspects of their business. From software programs, email and SMS to voicemail – all of these technologies that we use to conduct our business create documents at every step of the way,” she says.
“In addition, we are becoming ‘connected’ 24 hours a day, through laptops, BlackBerrys and other PDAs, and multi-functional mobile phones. As a consequence, the volume of potentially discoverable information is huge,” she says.
When it comes to specifically addressing issues that cause difficulty in electronic discovery, the USA is leading the rest of the world. US courts have, for example, dealt with the recovery of metadata by shifting the cost where one party requires large amounts of electronically stored information to be produced at great cost with potentially little benefit. Legislative amendments have also been introduced.
On 1 December 2006, prescriptive and mandatory new rules for US federal courts took effect, dealing with the discovery of electronic evidence. Under the amended Federal Rules of Civil Procedure, companies engaged in federal court proceedings are required to have full knowledge of the whereabouts of all their electronic data and be able to produce it within a reasonable amount of time.
Roger Forbes, practice team leader, dispute resolution at Mallesons Stephen Jaques, says that although these rules apply only in the US Federal Court, they are likely to have an impact in Australia.
“The direct impact will be on Australian companies who might be involved in litigation if they have operations there or have a US parent company. That said, there is a longer term impact which is the extent to which these rules reflect what may occur here in time,” Forbes says.
“The US procedures attempt to bring to the surface, at a very early stage in proceedings, the scale and procedures they should adopt to manage effectively the discovery process.”
He believes that Australian courts will increasingly have to turn their attention to the distinction between electronic and hard copy evidence.
“We are daily grapping with the reality of electronic discovery and the courts here to date haven’t tended to adopt the same kind of approach as the US. What’s tended to happen here, especially in the Federal Court, is to have discovery by categories which are negotiated by the parties and then modified by the court,” he says.
“I don’t think as part of that process the courts have been as active as they could be to encourage the parties to confront the difficulties with electronic discovery. What’s tended to happen is the parties focus on categories of relevance on a particular topic and have ignored distinction between electronic and hard copy material.”
Locally, the Victorian Supreme Court is leading the way when it comes to e-discovery, recently introducing a new practice note to assist lawyers and their clients in dealing with the challenges presented by e-litigation by setting out protocols (Practice Note No. 1 of 2007, replacing Practice Note No. 1 of 2002).
Under the practice note, lawyers are required at an early stage to enquire of their own client and of the lawyer for the other party; whether they hold any electronic material that is potentially discoverable; to confer with the other parties about preservation and production of discoverable electronic documents; to give notice of any problems reasonably expected to arise with the discovery of electronic material; and to work together to ensure access to electronic material is made available where it requires special hardware or software.
According to Hughes, failure to adhere to these rules will likely result in a party facing adverse cost consequences.
“If I can’t agree a protocol with the other side, and a default protocol therefore applies which I haven’t adhered to, the court will be very unsympathetic to my request that a protocol which suits me apply, and I may have to change, for example, the format of my electronic documents or fields in my database at cost to my client which will almost certainly be unrecoverable,” he says.
“The other thing is, if you haven’t thought about these issues as the rule directs, for example you haven’t thought about problems with producing your information, and you discover late in proceedings that you have problems, the court will be very interested to know why you didn’t consider these issues at the beginning and will be inclined to be unsympathetic.”
The Federal Court of Australia is also looking to re-write its rules to make them easier to understand and more relevant to current forms of communication. Justice Bruce Lander is leading that inquiry and says reducing the cost of litigation is one of the main aims.
“We want to reduce the cost of discovery if possible because it’s the most expensive part of more complicated litigation and it’s so expensive as to make it prohibitive,” he says.
The fast pace of technological development, including changes to the availability and storage capacity of various types of media and communication tools, and the development of artificially intelligent tools for managing electronically stored information, will mean the courts and lawyers can’t afford not to evolve.
So what does this mean for lawyers?
The changes to the Victorian Supreme Court Rules on electronic evidence are the most progressive and comprehensive in Australia. They are likely to usher in a new era in which courts take a more pro-active role in the discovery process when it comes to electronic information, and lawyers should be prepared for more involvement from the courts as judges become more computer literate.
Traditionally, the first time litigants tried to deal with issues concerning electronic evidence was when they hit discovery. This is no longer good enough in Victoria. Best practice in all jurisdictions would be for opposing sides to hold discussions about how discovery will proceed at the commencement of proceedings.
Before these discussions take place, lawyers should familiarise themselves with their client’s computer system as best they can, along with their client’s information retention and destruction policies and procedures.
In anticipation of potential litigation, lawyers should be advising their clients to manage their litigation preparedness – knowing how their documents are stored, how they can be produced, and in what format. Companies should also ensure their record retention policies comply with the regulations in jurisdictions in which they operate.
“Litigators need to understand what the rules are now. They can’t wait until half-way through a case, when they are in the middle of discovery. They need to know now so they can advise their clients about this new world that we are living in and help them with the management of their electronic documents,” says Allens’ Hughes.
“Corporate lawyers need to proactively manage their electronic information. They need to have appropriate information management systems in place – systems that manage electronically stored information as well as hard copy documents.
“They need to be able to quickly suspend the deletion of all relevant information, however stored. They need to consider info management systems that allow them to centrally store and recover info efficiently and cost effectively and, avoiding the need to resort to back-up tapes which can be prohibitively expensive.”
The sense of urgency is echoed by Forbes at Mallesons.
“Clients now should be thinking about it, especially ones that operate in a litigation-prone environment. They should think actively about the management of their electronic documents so that they can simply manage a discovery process going forward. They need to think very actively about it so that they can at least understand the scale of the problem should they get sued.
“It’s very much an internal document management exercise for companies and some do it better than others but it’s a business expense they bear and they have to make judgement about whether they spend a little bit of money now to save a lot later.”
12-Apr-2007
Related Tags
courts , federal court , supreme court , e discovery electronic evidence , electronic documents
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