Use of e-discovery on the rise

December 2, 2008
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Imagine how many e-mails the employees of a company send and receive in a day — even a small company. Then imagine that company has to go to court and must provide any e-mail pertaining to a specific subject within a certain time range.

Now imagine the spike in Tylenol’s sales from all the headaches that situation would create.

There is a growing trend in law called electronic discovery, defined by Computer Technology Review as “the process in which electronically stored information is reviewed, processed and presented for the purposes of litigation or regulatory requests.”

And “electronically stored information” is more than just e-mails. Companies may be called upon for information stored in electronic documents, files, instant messages, etc.

Rich Samdal, a partner at Varnum Riddering Schmidt and Howlett LLP, has been following the ins and outs of e-discovery for some time and is the head of Varnum’s E-Discovery Task Force. He said the trend is mostly found in large cities like New York, Chicago and Los Angeles but is beginning to trickle into smaller markets.

“What we’re starting to see here in West Michigan is a lot of businesses start to look very carefully at what I call “RIM policies” — records and information management that deals with paper and electronic information. We’re counseling more and more clients on how to do it and what systems to set up, so when a lawsuit comes across their desk or when they’ve got a preservation obligation, they know what to do,” said Samdal.

“Washington, D.C., is an example of where a lot of regulation takes place. A lot of the larger companies are located in New York City, Los Angeles, and so you see just by the sheer volume of big-ticket cases with a lot of documents the issue has popped up sooner. It won’t be as big of an issue where either the dollar amount in dispute is not great or when there’s not a large quantity of e-discovery to go through.”

E-discovery may be used in a variety of court cases, said Samdal. He used breech of contract cases as an example.

“When there’s a contract dispute, you have parties communicating by e-mail between the two parties and internally,” he said. “You see them in a lot of states where you don’t have a no-fault divorce, in family law cases (with) custody disputes and things like that.”

E-discovery is still relatively new and many courts do not have specific case examples on which to base decisions. He addressed the condition of the U.S. Court of Appeals for the Sixth Circuit, under which Michigan falls.

“Because there are so many different types of situations that come up, you certainly look at what other circuits and federal courts have done to help explain how unique circumstances should be addressed. There’s just not been a full development of law within the Sixth Circuit to address all e-discovery issues,” said Samdal. “It’s still fairly new and you’re still getting opinions developing as we go.”

Another example of when e-discovery might be used in a case is when an employee is leaving a company and going to a competitor and there is a concern that the employee is sending privileged information to the new employer. Samdal said often that can be traced through e-discovery.

“We’ve had cases where unknown third parties spoof e-mail addresses and pretend to send e-mails from a particular employee to groups of other employees giving false impressions and false information about that employee,” he said. “In those settings you have to subpoena Internet service providers, you have to subpoena the e-mail account … and work through and see if we can find an electronic trail back to someone.”

He gave another example where a client’s bank account was accessed and money was wire-transferred out of the account. A forensic specialist was hired, many subpoenas were sent out, and the information was tracked through a number of banks and e-mail accounts — along with a private investigator watching three different suspects.

Samdal said e-discovery can be confusing when determining where to look for information and how to retrieve it.

“If you’re a lawyer and don’t understand all the facets of e-discovery, one of the things that can be confusing is, what vendor do I call? What should I be asking this vendor? What services do I need? How should I pay for that?” he said. “It’s sort of like going in and negotiating the purchase of a new car. If you don’t know anything about that process, you’re probably going to make a bad deal.”

He mentioned that there are a growing number of companies that provide different services in this area, one of which is Grand Rapids-based DC|Estrada, a consulting firm for e-discovery and litigation preparedness. Daniel Estrada, president of the firm, said that amendments passed in December 2006 created an increase in the need for e-discovery.

“They were amendments to the federal rules of civil procedure, and the federal rules of civil procedure essentially outline how litigation has to happen. It outlines the process for how discovery works; what kinds of documents and information has to be submitted to the courts; how the attorneys need to be communicating about the issues and those types of things,” said Estrada. “These rule changes essentially said electronic documents are a routine part of discovery. They are expected to be part of discovery.”

Estrada said paper documents are somewhat easier because they are tangible, whereas electronic documents can be more elusive.

“Just because I typed a letter on my computer doesn’t mean that it still exists as a Word document,” said Estrada. “Maybe I PDF’d it or maybe I printed it out and scanned it in after I made some edits to it. There are a lot of changes we make on a daily basis. It’s very easy and cost effective to copy files, change them and delete them and so forth within an electronic system.”

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