E-disclosure in Practice

February 12, 2007

My earlier article took as a premise that many firms want to go down the e-disclosure route but are defeated by the lack of information, not least as to the likely costs. I foresaw a move towards more transparently-priced packaged solutions and I summarised what I intended to cover in this follow-up article – something of a hostage to fortune this, since it allows little room to bring in what I picked up at LegalTech in New York, where I was the only independent UK commentator in a British squad of more than 50 suppliers and their clients.

LegalTech is not just a showcase for the latest products, nor merely a forum for high-level discussions about future developments. The presence together of the brightest and best of the UK experts (as well as those of other jurisdictions) was an opportunity to discuss more mundane day-to-day matters with both buyers and sellers of products and services. My last article aroused some comment, as was intended. Much of what emerged is as relevant to the ‘converted but uncommitted’ as it is to the experts.

This article considers the content of the typical disclosure – ‘typical’ meaning shorn of the complicating factors and reduced to the essentials of a routine job – and looks at each of the elements which you may come across in dealing with it. It ends with a discussion on saving start-up costs and with a prediction as to two contradictory pressures which will affect buyers and sellers alike.

Disclosure documents, disclosure data, metadata etc

The questions asked at seminars suggest that the speakers’ wisdom on esoteric matters is passing over some listeners’ heads because of an assumption that they know the basics. A parallel is a recipe book which adds to a cook’s existing knowledge, rather than one which aims to provide core understanding – there is room for both but the former will bewilder rather than enlighten the novice.

Leaving aside for this purpose the many but marginal sources of the wider forms of ‘documents’, and ignoring the complications of multiple backups etc, a document is likely to be in one of three forms:

• a mail file such as an Outlook .PST comprising many messages
• an electronic file such as a Word document or a spreadsheet
• a conventional paper document of one or more physical pages in a ring binder or folder.
There are broadly three ways of giving disclosure with these.

1. Print the lot, assemble them in date order in a set of ring binders, and start typing up a list, pull out the privileged, duplicated or irrelevant ones as you go, then print off as many copies of the result as you need for circulation.

2. Send for a litigation services provider. He will eye up your collection, give you a quotation and a timescale and take it all away. You will get back a database and an invoice. You don’t need to know how they do it, but they will have done at least the following:

a. Fed your .PSTs to a software process which captured the details of senders, recipients, dates etc, and extracted the attachments and linked them to the messages. A .PST carries a mass of information about each message – metadata – and it is possible to create a draft list of messages and attachments almost without human intervention.
b. Sucked in information from your Word and other electronic files which can be used to build a partial database. The value of this in its raw form will depend on the documents – at its simplest, a file may have a descriptive name and it will certainly have a last saved date. The file properties may also show who created the document and when, and this can be captured – but may be missing, ambiguous or misleading. However inadequate, this at least makes an entry in a draft database which can be corrected if necessary.
c. Scanned the paper documents as images and typed up an entry in the database about it – this is the labour-intensive and expensive bit.
d. Optionally converted all the electronic files to .TIF or .PDF images so they can supply either or both of the originals and the image version.
e. Optionally extracted all the text from the documents to give you a searchable body of text.
f. Put the whole lot into a database vehicle either on their own servers or for delivery to you or to a third-party hosting company.

Be clear that many cases introduce degrees of complication which defy this largely automated model, and need skilled and time-consuming manual intervention. This article is about every-day routine disclosure.

3. Choose software with built-in tools or add-on modules to do much of the automatable part of the above in-house – the extracting of messages and file properties, the linking of attachments, the extracting of file properties and the creation of a first-pass database.
The end-result in each case is a draft list for further refinement. The rest of this article considers the pros and cons of each of these routes or, rather, the factors which drive you one way or another.

What size cases justify e-disclosure?

‘Size’ in this context generally means the number of documents involved. Different people express different views and assert confidently that a certain number – 1,000 or 2,500 documents is a minimum population worth capturing electronically. I do not think it is as simple as that. There are some variables to consider:

  • Is this the original population or the population after removing duplication and irrelevant documents? How will you achieve the latter discrimination?

  • How meaty are they – some document collections are information-rich with a high proportion which raise questions, and need flagging, annotating or coming back to, whereas others just need to be listed and checked for privilege.

  • The more there is to record, the greater the value in storing them electronically. Apart from scanned paper (whose every detail must be typed in by hand), the extraction of more data does not much increase the per item costs.

  • How long will you need to have the documents around? Who will you share them with? Will it help to be able to refresh your memory from them six months hence from outside the office?

  • What price do you put on the disaster recovery benefits of having them available from anywhere?

  • How familiar is your team with the concepts and how quickly can they get the data in? An exercise which may be of marginal value if they are learning on the job might be cost-effective if they do it as a matter of course. In other words, familiarity breeds efficiency and the more you do you more you can do (and, as an aside, the greater the possibilities for favourable deals with suppliers).

  • What are the cost implications? Part of your cost may be fixed regardless of volumes and part of it is variable with the number or size of your documents. The more the costs are weighted towards volume the less significant are the fixed start-up costs.

  • Lastly, don’t forget that these documents have to be handled somehow and that a cost will be incurred whether you scan / import them and put them on the web, or employ clerks in mittens to copy them with quill pens. The cost you are interested in is the marginal cost, if any, of recording them electronically and it is that which you weigh against the added benefits.

Which software should I buy?

Don’t buy anything. Rent it. I put that first because other conclusions flow from that decision. Most litigation software is available on a transactional basis and a short rental period would be enough to know if it measured up to expectations. Quite apart from anything else, rental will help to define your expectations, which may be less than perfectly formed at the outset.

  • Find out if it works for others – one other will do if their requirements are similar to yours and you trust their judgement and objectivity. US and Australian disclosure rules may be different but the basic requirements of disclosure software are the same. The similarities between core functions in different products are far greater than the differences. Your case may have special requirements, but it is hard to distinguish between the standard and the special when everything is new. Few cases have requirements which are wildly different from others.

  • Have demonstrations, preferably before the same in-house team. Pay more attention to your gut instincts about primary functions than to comparative minutiae, but do ask the demonstrator to focus on how his product is different from others.

  • Get references as to support and the responsiveness of the developer (not just the front-line support company).

  • How much do you want to be able to do yourself? This is a free-standing question, covered below, but it is also relevant to the choice of software. If you are content to delegate the whole process of administering and looking after the database, then the existence of user facilities for this is irrelevant. If you want to keep the admin in your own hands, then you need to know what can be done and how easy it is to do it.

  • Get users trained properly. You will get the expense back in time and costs saved later. This is a cost which has to be replicated if you choose a different application next time, but if you write 50% of it off against the case and treat 25% as an investment in developing an understanding of a new way of doing things, the wastage is minimal – especially when set against the risk implicit in making the wrong long-term buying decision.

Host it in-house or externally?

If you are just starting out, don’t host the case yourself. If you doubt me on this, ask your IT department where on their priority list your new and (to you) mission-critical application will lie (somewhere south of the General Office sweepstake records probably). Also consider the following:

  • External hosting is the way the world is going, for the experts as well as the novices. You are going with the flow, not establishing a dangerous precedent, by keeping it outside. Do make sure, however, that you know where it is hosted. There is more to this than a cosy sense of geographical proximity – jurisdictional and data protection implications may arise if your data goes outside the UK.

  • If it is hosted externally it will be available to anyone you choose to admit, at any time when the Web is available.

  • The question below as to what work is done in-house and what is done externally is answered independently from the question as to hosting. There are companies whose sole or main business is pure hosting of data prepared by another – and the ‘other’ might be you if you are happy to do the work yourself but do not also want the burden and responsibility of keeping it available 24/7. Their fee structures vary but it is common to have a fixed component plus one which varies with the size of your case.

Getting the data in and maintaining it

Do you do the work yourself or send it out? There are several factors here, not least the firm’s general approach to contracting work out. Some focus narrowly on the practice of law and send almost everything else out. Others treat every aspect of a task as a profit centre. Both are valid approaches as long as you can justify the result on a costs assessment.

  • Do you have the requisite skills and equipment in house? Will they be available when you want them? What is the true cost of keeping such skills relative to the invoices from an external services provider? Where is the dividing line between mere data-handling and fee-earning work?

  • How much will your chosen software do for you and how much must be done externally? – some applications need carefully constructed load files; anything new needs someone reasonably skilled to manage it, but such skills can be hired by the hour.

These are not questions to which there is a one-size-fits-all answer. The mere recital of all this makes it sound complicated but it is usually obvious, and I flag it as something to consider in choosing the software (above) and the services provider, if any (see below).

Which support services provider is the best and/or is right for me?

These come in all sizes. They work from glossy offices in EC2, in tacky sheds on industrial estates and at kitchen tables. Size and post code is not necessarily an indicator of quality nor of the size and importance of their cases. They will undertake any part of your litigation support exercise, from scanning a few pages to running your whole disclosure and exchange for you.  Who you choose depends in part on what you want from them.

If your document population is large relative to your in-house skills and particularly if it includes a lot of paper, then you may need a specialist company with high-volume scanners, teams of coders, sophisticated conversion and de-duplication software and rigorous QA procedures, headed by people who will take the whole problem off your hands. If you just want some scanning done, a high street bureau will do, or your print room might learn some new skills.

Many of those to whom this article is addressed will not know what they want from a services provider. There are many permutations – of your skills, your case and requirements, the software, the external services available.

This, you may well say, is not good enough from an article purporting to offer a guide to the first steps in e-disclosure. My reticence derives from this: my own experience has been almost exclusively at the top end of the service provider market – not necessarily only on the largest cases nor exclusively for the expert firms, but always with the handful of high-end providers. I know from my own data work, which often consists of remedying other peoples’ defective data, that there are a few providers out there whose data is embarrassingly awful and whose quality control is non-existent.

So for now, if you were to ask me for advice, and if I thought it necessary to involve a third party at all, it would be to follow the recommendation of someone you trust, and that size does not matter if the recommendation is strong. If you do not know anyone to ask, then stick with the big names. Ring them up. Outline your requirements, invite their comments, and ask for a rough figure. They will tell you if they think that your requirements might be better served elsewhere. They won’t necessarily be cheap, but you are not cheap either and what you are trying to establish is what is the most cost-effective way of serving your clients’ interests. Cost-effectiveness embraces quality – not necessarily Ferrari quality, but a quality which matches yours. You get what you pay for.

Keeping the costs down

My first article generated the suggestion that the support providers ought to be able to bring their costs right down for a ‘good enough’ electronic first pass through the documents which would allow users to make a quick appraisal of the issues and assess the strength of a case before issue.

It is not in fact my case that the providers’ costs are too high in general for what they provide. They have high staff, training, rent and equipment costs, they provide a high level of quality assurance and they are on call 24/7. There are (as I have said above) expensive ones and cheaper ones and the quality does not necessarily march in step with the price. Is there, however, something less which they might offer at a lower cost?

There is no doubt that many are put off by a quantified up-front cost and I took the opportunity in New York to get views from all over the market-place. I got a broad range of reactions.

A serious user in a big firm described the search for a low-cost start-up as the ‘Holy Grail’ and thought that the marginal saving was not likely to be big enough to justify the downsides of a ‘good enough’ first pass. He cited various factors, one of which was that by-passing the expensive bits (such as the documents which did not fit to a standard pattern) meant an unacceptable degree of risk that the key evidence might lie in them. He was not impressed by my suggestion that the providers could contract with the lawyers, and the lawyers in turn with their clients, on the basis that there was such a risk but that the saving warranted it. This perhaps follows from his conclusion that the saving would not be very big anyway, plus the additional costs of a full second pass if the case proceeded.

A couple of providers, hosters and software suppliers, had a different view – that although they were not often asked for a less than complete start-up, they could do less, seal off functions and limit data access, perhaps for a limited period, and charge less for it. Their reward might come (my theory rather than their assertion) by actual reduction of their own costs, by some weighting to later stages if the case proceeded and, one hopes, by new business won as a result of their initiative.

These are interesting times for vendors and users alike. There will be new entrants into the supply chain. Interesting and important though the sophisticated stuff is – multiple jurisdictions, multiple languages, ever more clever tools and algorithms – there will be increasing awareness of straightforward e-disclosure products and services for new clients. This conclusion results from two pressures from opposite ends of the market. From the supply end, the existing market will not feed all those competing for their business. There is only one way to go – out to new user firms. I don’t necessarily predict dramatic price cuts but I do think we will see more effort put into educating and wooing the second-tier firms.

From the user end there must, sooner or later, come a reported case in which a judge punishes a firm of solicitors for inadequate disclosure. At the moment, there is a quiet conspiracy between some firms – ‘I won’t ask for all your e-mails if you don’t ask for mine’. That is acceptable up to a point; that point comes where the motive for avoiding the subject crosses the line from justifiable proportionality to apparent suppression of evidence and negligently applied signatures to disclosure statements.

I do not think we will see a repeat of the US experience. There, discovery has become a battleground of its own, with punitive awards for defective disclosure out of kilter both with the offence and with the case. The key difference is the magic word ‘proportionate’. But the stakes are rising, and proportionality arguments will not save a firm who, in an expanding and more educative market, claims to think that the e-Disclosure rules only bite on those who choose to play by them. E-disclosure is a method of dealing with the rules not an optional alternative to them. For cases of any size, it is no longer optional.

Chris Dale qualified as a solicitor in 1980 and has been engaged in litigation support consultancy, software development and data handling since 1993. His web site at www.chrisdalelawyersupport.co.uk includes comment on the work of the LiST and other aspects of e-Disclosure. His telephone number is 01865 463033 and his e-mail address is chrisdale@chrisdalelawyersupport.co.uk