E-discovery has become an integral part of the litigation process but the issues surrounding electronic document retention do not arise only once a lawsuit has been launched. In March, Canadian Lawyer InHouse held a roundtable on e-discovery in Canada, sponsored by LexisNexis Applied Discovery, with a group of experts in the field from private firms, corporate legal departments, and the judiciary. They were clear that advance planning, preparation, and policies are also integral to managing litigation down the road . . . not to mention a whole shift in the way opposing counsel work together.
The topics discussed around the table included the areas of proportionality, privacy, cross-border litigation, and the ways in which legal departments manage e-discovery. Here are some excerpts from the lively debate.
• Justice Colin L. Campbell, Ontario Superior Court of Justice
• Alan D’Silva, partner, Stikeman Elliott LLP
• Kelly Friedman, partner, Ogilvy Renault LLP and chairwoman of Sedona Canada.
• Laurie MacFarlane, senior counsel, litigation, CIBC Legal Department
• Melanie Schweizer, senior counsel, Bell Canada
THE CHALLENGES OF PROPORTIONALITY
For me . . . one of the questions is at what point in the litigation should that discussion arise, and I tie it a lot to the meet and confer because I think the time to have the proportionality debate is at the meet and confer stage. Once you’ve produced the documents and you are arguing about whether you over or under-produced but at that point, I see, as in-house counsel, one of the challenges . . . is convincing outside counsel it is a valuable exercise to meet and confer early in the litigation, because it goes against normal litigation strategy instinct to have that. So would collaborative discussion early on in the litigation, but as in-house counsel, that is when you want it to happen. You want to have some assurance when you are investing this money in doing e-discovery process and doing an exhaustive one, that your opponent is going to be doing the same thing, and you have a meeting of the minds on these issues before you engage further.
LAURIE MACFARLANE: Lawyers have to have a different mindset of proportionality, making strategic decisions at the
beginning of the case and not just saying, I need to see every single document that might be within the universe of documents. What are you going to do when you get those documents? What are the key issues in the case? What key issues are related to documents and do I really need to see them to advance the interests of my client?
KELLY FRIEDMAN: It is really a cultural change for litigators to make a cost-benefit analysis where the benefit is to the ends of justice as opposed to their particular case or their client’s interests alone, and that is going to be the biggest challenge. That is the kind of mental shift that needs to happen amongst opposing counsel.
ALAN D’SILVA: I will add a bit in the context of class actions. I think the proportionality issue is very interesting because the rules talk about proportionality in and the courts taking into
account the cost and the time of having to produce a document. So do the Sedona Principles, but on the other hand the Sedona Principles talk about the obligation of preserving electronic documents which may be potentially relevant, to that one step before being relevant. In the typical class action product liability cases or securities case or drug case, you’re dealing with dozens, if not hundreds, of employees who have potentially relevant documents electronically, and typically, we’re spending a lot of time preserving those documents very early in the process and making sure that nothing gets lost. So the question of proportionality, I think, comes later on when you get into the exchanging of those documents.
SCHWEIZER: I think it should come up earlier. As a client, I think class actions is a very good example of a very tough case, because you get a class action and it may appear to be without merit in a case that is clearly not certified, and if it is going to be certified, the discovery phase is never going to arise. So in a case like that, to incur the obligation, and in some cases it is very significant, the cost of just preserving the data, for example, if you’re looking at billing records of hundreds of thousands or millions of customers over a long period of time. But in-house counsel and a company looking at potentially spending millions of dollars preserving data that may not ever end up being relevant, we need to talk about the proportionality issues. JUSTICE COLIN CAMPBELL:
[T]here is, in Ontario and in four other provinces in Canada, and indeed throughout the common law world, an overarching recognition of proportionality. It’s been in the rules forever, but it has now come to the fore as an overarching consideration. While I agree with Alan that perhaps there is a different concept of proportionality that comes at the stage of production, more and more, I’m seeing situations in which decisions have to be made very, very early on.
FRIEDMAN: The reality is that clients like Melanie will force their external counsel to help them make the proportionality decision at the preservation stage, especially in a class action, because there is really no incentive on plaintiff’s counsel in a class action to give any leeway in terms of what should be preserved. I think that the result is that for private practitioners like myself, we have to step up and help our clients make those kinds of decisions. It’s a business risk like any other, informed by case law, legal knowledge, as to what is a reasonable thing to do.SETTLEMENT VERSUS LITIGATION
FRIEDMAN: I try to tell major corporate clients that is where access to justice comes in for them. . . . Access to justice is getting your case heard on the merits, not paying ransom, not paying $400,000 because you know it is going to cost $1.4 million to do the preservation and production properly, and they are only asking half a million, so pay them off. . . . Whether you have the money to finance litigation or not, you ought to have a right to be heard on the merits and determined on the facts, not on the costs of the e-discovery.
SCHWEIZER: [I]nvest some money and time in having a good in-house e-discovery process so that you can do it efficiently in a defensible way, efficient and cost-effective. It won’t eliminate all the problems.
MACFARLANE: We want to be fair and fight on principal where it is required and resolve where we don’t need to look at the 3,000 documents because we know the facts.
CAMPBELL: I think we have an opportunity here to try to do something else and get some level of co-operation earlier on, but from what I’m seeing, we still have lawyers and clients, perhaps not at the big level, I keep coming back to the smaller cases, that don’t know any of this, so they don’t do anything at the beginning, and that is where I think part of the culture has to change.
D’SILVA: In addition to having the good document retention policy and management systems, when the litigation starts, not to — again I’m talking mostly class actions — when you send a memo around to the people in the company, not to send off alarm bells unduly. I think that is both don’t send it to everyone in the company because not everyone in the company has relevant documents, and we have certainly rewritten a number of these memos because somebody thought it would be a good idea saying, as you know we have been sued in a $500-million class action which will, in all likelihood, put us in jeopardy of our survival. These alarm and you say, hang on a second, slow down. So, I think those are the two aspects. Don’t send it to everybody and tone it down, because it is pretty standard stuff, making sure everyone keeps their documents and nothing gets destroyed.
A NEW ‘MEDIATIVE PROCESS’
CAMPBELL: One of the problems under our system in Ontario, and true in most of the Canadian provinces, is getting access to a judge or master at a very early stage to get some help. When I say help, I don’t mean by way of formalized motion. I think if I look forward five years, if there isn’t a private enterprise group that does this, the courts are going to have to assist in what I call a mediative process to drive consensus at an early stage, because we can well see that, as we move from this area that has been adversarial to a more co-operative area, you need some neutral assistance to drive a consensus and perhaps agreement. That hasn’t been the traditional role and it is so very difficult for a court, ahead of time, to make some kind of black and white ruling. That’s almost impossible, but what we can do is help people get to agreements on their own which then can be incorporated into court orders. I have been doing this in several instances, and I find that the corporate clients are quite amenable to having that kind of judicial help that ends up having them drive agreements. So, if I look forward, hopefully, we have got problems with resources and the ability of judges who have backgrounds to be able help with that, but that is where I hope we get to.
FRIEDMAN: The reality is, we’re probably going to have to have a system where the parties pay for a special master-type system, that some states have that works quite well, where some masters or some other officials have some expertise in the area, but their time is paid for by the parties, which again, is very difficult in class action context.
SCHWEIZER: It is certainly more palatable to do it at that stage than to incur the cost of the e-discovery process and get to arguing refusal motions and production motions, which in and of themselves can turn into monstrosities. But you have already also incurred the cost of doing it one way, only to find out that perhaps the decisions you made were not the right ones, and you could have saved a lot of money earlier.
PROTECTION OF PERSONAL INFORMATION
MACFARLANE: I think, in a lot of lawsuits, people overlook the privacy issues. And most organizations are governed by either federal or provincial privacy legislation and generally, it says you cannot produce a person’s personal information unless compelled by law. Documents will be produced for expediency without redaction and you have to think of those third parties that may be unwittingly dragged into a lawsuit. People have to be alive to thinking about the privacy concerns and not just defending the lawsuit.
D’SILVA: The related issue is, no matter how many times you tell people that their work e-mail is for business and not personal, every injunction I have done, every forensic review I have done of e-mails, it is clear people use business e-mails for personal. Some of them, I don’t know how they have time to do any work. I think there is a number of things. One is just try to reiterate to people that the business e-mail is business e-mail. I think you have to keep reiterating that and assume that people are going to still write a lot of personal e-mail, so you have to vet it before you produce it.
FRIEDMAN: I try to immediately locate and identify the domain names, the e-mail addresses of people’s family members and exclude that data. So, you have an executive’s e-mail, his wife, his daughter, best friends, they’re not business-related. The whole idea of the review is going to be to capture business interactions.
D’SILVA: It is still amazing in this day and age, the number of people who think that because they have deleted e-mail or they think because they have sent it from PIN to PIN, that — you see them saying different things from PIN to PIN than they would say in an e-mail, and they think everything is fine because they have deleted all the really bad e-mails, and of course forensic experts come in and do their magic and you see the whole field. It is still surprising how people still think that way.
CAMPBELL: This is still a problem for the court system because one of the difficulties is, we’re still operating in a paper world where people turn the electronic information into paper, append it as exhibits to affidavits. It gets filed in the court. No staff person, or judge for that matter, is going to think of privacy unless it is raised by somebody else, and if it is raised, the cat is out of the bag so to speak. It’s a problem.
FRIEDMAN: Laurie raised the focus to date has been on the cost of privilege review, the cost of privacy review is really coming to the forefront. The cost of redacting for privilege, people have grumbled about, but the cost of redacting for privacy can be monstrous.
MACFARLANE: The other way to handle the privacy issue is to try to do the confidentiality order over the file. And the perception is it is easier to get those protective orders in the United States than Canada. The United States courts regularly issue them for business confidential information and perhaps in Canada, you may see more of those orders used, as privacy issues become more of a forefront, to say this is personal information and then file.
CAMPBELL: It is difficult. There is a decision that I made that put a whole bunch of stuff in boxes under a confidentiality order, that the Court of Appeal said you’re OK to do that, but you should have gone through all that and really seen what was and wasn’t confidential. I rarely disagree with the Court of Appeal, but I wasn’t about to willingly undertake that task and here’s the problem. But we have got to come to some way of having some assistance, whether it is done in-house or by a neutral or, I hope not, the court, to protect that kind of information, because among other things, we have said in our country that the court system is less open, in one sense, than the United States because you don’t have to file all your discovery transcripts or all the exhibits, and that is how they get to the confidentiality area easier. We’re willing to assist. I sit on the commercial list and it happens all the time. My bigger problem is I see people don’t think about it.
THE IMPORTANCE OF DOCUMENT-RETENTION POLICIES
D’SILVA: I think having a consistent document-retention policy is the key. You pick 10 employees and they all will have different approaches to e-mail. One will delete them every day, and the number of cases we have been involved with where people have such a strongly held view that, everyone knows you can destroy them after six months. Where did you get that from? They are convinced that they heard it somewhere, and someone else will be keeping it for seven years, but if you have a consistent policy, it will avoid any suggestion, in the middle litigation, there was an intentional spoliation of documents or evidence.
MACFARLANE: I believe that is a big misunderstanding people have. Certain regulatory regimes have specific record retention policies for documents, but apart from that, it is based on whatever the company has dictated as their own practice, and other lawyers will say it says in such and such an act you have to keep it for 10 years, but most record-retention policies are based on what a company thinks is a reasonable period of time.
CAMPBELL: Consistent policy is the thing judges will look for. Up to this point, we have been seeing situations in which we get an affidavit from a big organization that says it is going to take us two years and cost a million dollars to respond to what the plaintiff wants, with no particularity to it, with nothing that provides us with anything of what the policy is. They just simply say, assuming that some judicial officer is going to agree, it is not proportional to do this. But from my point of view, you are going to need more. . . .
FRIEDMAN: I query, with this discussion, about the employees who act off-policy. What will we do as lawyers and what will the courts do? There is always going to be a situation where you can find something, especially in the electronic world, and that’s where proportionality comes into play. Our policy says that it is deleted. You have no right to it. It ought to be gone. If that witness slipped up and didn’t follow the policy, you shouldn’t be able to benefit from that. I just query that. It is an interesting debate I can see happening.
SCHWEIZER: That argument might have more traction if you can show you have taken steps to audit the policy and measure compliance. It’s not just a piece of paper that nobody has read. Document retention is becoming more important because of the links between that policy and the cost containment issues on e-discovery. So when you can make a business case how it is going to save the company money to have a very efficient document retention policy, there may be some more resources thrown at that issue than in the past where it was a nice thing to do but what is the benefit in doing that.
CAMPBELL: The difficulty in talking about the big cases, I look at the little cases, and part of my concern is that where you may see some of the court decisions that become problematic for the areas in which you are involved because, think of the companies, and they may be reasonable size but not huge, that don’t have an in-house IT person, don’t have an in-house counsel and maybe cloud computing for servers, and they have got a major piece of litigation and they don’t have a policy. What is the court going to do? And all the rest of it. We have got a spectrum of companies, and unlike our Rules of Civil Procedure, you can’t state that there is one thing that should happen for everybody. And I think that is where the real problem is going to be.
DEALING WITH CROSS-BORDER ISSUES
D’SILVA: [In] our experience, class actions, a proceeding in Canada often involve offices in Ontario and New York at the same time. I think there are two issues. One is the rules for relevancy and privilege are not the same in other U.S. jurisdictions. We’re in the middle of a motion where to produce these documents in Canada would not in any way be waiving privilege, but we have opinions from the U.S. lawyers who are saying that if these documents get produced in Canada, then there is going to be a waiver of privilege in the proceeding in the U.S., which is being hotly contested because the other U.S. lawyers are saying that is not the case. The other issue is what happened in the IMAX case, where you have got certification proceedings going on in Canada and moving ahead towards certification or leave in the class action, and the action in the States has been stayed because there is a motion to dismiss. The action is not going anywhere and the U.S. lawyers, in conjunction with the Canadian lawyers, are trying to get access to the Canadian documents and cross-examinations and discovery transcripts to get at the whole issue. Are these documents subject to the implied undertaking rule? How do you enforce implied or deemed undertaking rule on U.S. lawyers, or is it an appropriate case for the court to make an order sealing the file?
CAMPBELL: In the insolvency field, we’re now well used to having co-operation between courts and, in fact, there is a cross-border protocol entered into with the bankruptcy court in the U.S. and the Canadian courts across the country that even allows for court-to-court connection. But there is another interesting feature of that, part of the Canadian insolvency regime, that’s a court monitor or sometimes trustee, and that allows for the U.S. court to get an understanding and going to where Alan is talking. I think, if not done in an adversarial way, if you can reach an American judge, or we, as Canadian judges, can understand the differences in the regime and find a co-operative route to achieve the proportionality that is now in everybody’s rules, that’s the way to go. But we’re not there yet, and there is going to be a number of bumps along the road.
MACFARLANE: Frequently there’ll be subpoenas from U.S. courts where the lawyer will send a subpoena saying, please give me all your records. And once again, they have to protect privacy. We can’t do that, so we direct them to go to the letters rogatory process where they can get the order blessed in Ontario to get the records, but the U.S. says, I don’t want to have to get an order in Ontario, and back and forth. Once again, you have to make sure you are compelled in the jurisdiction to produce the records. You can’t act on foreign subpoenas or court orders if the records are located in Ontario.
CAMPBELL: Some of those folks — I have got a couple of letters rogatory issues that I’m dealing with, haven’t got to the proportionality stage yet on those because the court order doesn’t put any limit on it. So it’s a foreign court order that says, produce everything and I said, well, not quite, in our jurisdiction.
ELECTRONIC INFORMATION STORED OUTSIDE CANADA
FRIEDMAN: It is certainly an issue getting the data out, sometimes, from a jurisdiction that has a blocking statute or privacy legislation, from European countries. . . . You often spend time negotiating with the privacy commissioners of various jurisdictions to say, this is what we’re going to do before the clawback or take the data out of the jurisdiction. We’re talking X, Y, and Z steps to protect private information before we do that. I think that those issues definitely do come up. I think that the privacy review has to happen locally, I think, but it doesn’t always.
SCHWEIZER: I don’t know if there is any judicial consideration of the appropriateness of the lawyers doing privacy privilege relevance reviews when they are not licensed to practise in the jurisdiction. That is an issue that will have to be dealt with at some point.
FRIEDMAN: I don’t know if the in-house counsel around this table has had the experience — a lot of my clients worry about the Patriot Act data going to a U.S. vendor and housed in the U.S., in reach of the U.S. government. But I’ve seen concerns but never seen a problem.
SCHWEIZER: I haven’t. The issue comes up and the concern and the preference would be keep the data housed in the country for that reason. But I haven’t seen an example of it going the wrong way.
CAMPBELL: There is another area related to this that you won’t have seen on the e-discovery issue but I have and others in the judiciary have and that’s, I think, there is getting to be a growing recognition of the transparency of borders for certain purposes, but a recognition, as Kelly pointed out, that where information initiates locally, that place should be the best determiner of what happens, and it is coming because of things like child porn. And we have got very good co-operation from Internet service providers where the police or private organizations have come to the court asking for assistance to get help from the court in which that service provider originates or the domain name came from. More on the criminal side. But they are seeing it as a growing co-operation of saying, you know what those issues should be dealt with best by, at least in the first instance, and a recognition under a comity basis, that is the best place to go. But that is in its infancy and there’s lots more to come.
PREPARING AHEAD FOR E-DISCOVERY ISSUES DOWN THE ROAD
SCHWEIZER: Speaking personally, we have certainly learned something from each e-discovery project that we tackle, but I’m not going to give the advice to companies to be sued regularly to gain that expertise. But there is something to be said about the experience. You learn what works and what doesn’t. Even in-house counsel potentially involved in managing litigation should know, just on a rudimentary level, what their company’s practices are with respect to storing electronic data, e-mails. Is it backed up? Is it overwritten? Those sorts of things. Having contact in key departments so you can go — rather than, on a Friday afternoon, panicking — because you have to immediately put a litigation hold in place and you have no idea how to do it. So giving some thought to those basic things needs to happen across the board.
BUILDING TIES BETWEEN IT AND LEGAL
SCHWEIZER: Especially if you’re looking at doing some of your electronic discovery in-house. It can’t be something imposed by the legal department. You absolutely have to have the buy-in of the IT department and the support from them because they are the ones who control access to the server, who control the e-mail exchange server. So that is absolutely crucial.
MACFARLANE: Someone can develop expertise in your IT department the same way you leverage off expertise from internal lawyers and not always have to deal with external lawyers. You can have the internal resource knowing the system. If you have to bring in an external expert, that’s going to give you a big leg-up in efficiency, and someone understands what the external expert will be looking for.
FROM CRISIS MODE TO PLANNING MODE
FRIEDMAN: We talked about lawyers needing to have a cultural shift. I think a cultural shift internally in corporations for e-discovery is changing it from crisis management to readiness planning. I do some work in the product recall area and most companies that have commercial goods have product recall plans for what they have to do if they have to recall a product. If they don’t, they are in complete crisis mode and that’s what happens in the e-discovery realm.
MACFARLANE: It will be interesting to see how the law of spoliation develops in Canada. Is it going to be similar to the U.S. or different? Are we going to be able to take comfort from the fact we have known this stuff up front and put a reasonable plan in place or is it more of a trap? It will be interesting.
CAMPBELL: I hope we don’t go down the route we have in the U.S. I think we can avoid it, because I think the one thing that Canadian lawyers are attuned to is our obligation to reduce relevant documents, whereas in the U.S., their rule is you only produce what you are asked for. And I think that is what drives a lot of their confrontation. . . . So the big knock on what we’re all doing is, are we destroying civil litigation? We have invented industries to take care of the growing amount of information that is available. It does have to be controlled and tamed, and I think I go back where Melanie started, with the meet and confer, changing the culture right at the beginning, so people don’t feel that it is so adversarial. I’m looking to find a way to nail them on spoliation, but rather, I can be satisfied and tell my clients that they have done what was reasonable in these circumstances. Big task, but hopefully we’ll get there.
FRIEDMAN: I spoke at a conference about major business agreements. I thought it was odd they brought in a litigator, and I started doing it annually because I enjoy talking to corporate lawyers or securities lawyers about what you see as a litigator. They don’t know about what you see from their drafts and what ends up coming to you, really opens their eyes and makes them think about how they practise, prepare for the IPO; what they do with drafts; how they communicate internal drafts; what goes to the other side. So I think part of the readiness is making non-litigators understand how their work product can turn into evidence.
MACFARLANE: It gets into the privilege point if you are anticipating a lawsuit like a product recall situation. You have to think, how do you maintain litigation privilege. How am I going to prove to a court it was intended to be privileged and it is privileged, and after the fact, how do you extract all the privileged information after the fact?
CAMPBELL: I think, as courts look at things, they are going to look . . . to what extent is the problem dealt with by normal and ordinary practices that have been in place for a while as opposed to looking at crisis mode?
D’SILVA: The client is much more prepared for the second class action. The first one, they are not so prepared. They learn a lot.
SCHWEIZER: An interesting question that is going to arise, become more prominent, is the question of when the preservation obligation is triggered, and it’s a very tricky issue, especially when you are a larger company. It is easy to measure it from the date the statement of claim arrives on your desk, but if you are looking at an earlier time period, that is where it gets more tricky. I hope we don’t go too crazy with the obligation to preserve and when it is triggered, because I think that would have negative consequences.
There’s more online
Visit canadianlawyermag.com/inhouse for videos from the roundtable, to be posted each Monday in June.
Video 1: Dealing with proportionality
Video 2: Protecting privacy
Video 3: International and cross-border issues
Sedona Canada publications are online at www.thesedonaconference.org/publications_html?grp=wgs170
Ontario Bar Association e-discovery information page, which includes Quebec case law, is at cba.org/dev/oba/en/main/ediscovery_en/default.aspx
Government of Alberta e-discovery information: www.im.gov.ab.ca/index.cfm?page=imtopics/ediscovery.html
E-discovery Canada page from LexUM: www.lexum.umontreal.ca/e-discovery/
Wortzman Nickle e-discovery blog: www.wortzmannickle.com/ediscovery-blog/