Thanks to e-discovery, auxiliaries under various names are becoming commonplace in litigation
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Thursday, June 2, 2011 Multiven is the self-proclaimed world leader in affordable internet maintenance. Cisco is a huge digital networking player. If any two parties could be expected to conduct efficient e-discovery, it would be those that make electronic communication their business.
If only it was so simple.
After it had filed an antitrust suit against Cisco in San Jose, CA, Multiven decided in June 2009 to reduce its e-discovery costs by foregoing the services of a vendor. It hired five laywers to review documents that federal district Judge James Ware called a “giant mass of information.”
This strategy backfired.
With a Sept. 27, 2010, e-discovery deadline looming, Multiven, which has about 50 employees, estimated it still needed up to three months to complete its internal review of the documents. Adding to its pressure was a motion to compel production that Cisco had filed. Judge Ware had adopted the recommendations of the Magistrate Judge requiring Multiven to hire an outside service provider, which the company had sought to avoid doing.
Are outside providers and auxiliaries becoming indispensable?
The Multiven incident is by no means unique. As e-discovery costs become a greater factor in litigation in all courts, is litigation heading down the road where it cannot be conducted without the services of outside service providers and auxiliary personnel to help courts and litigants navigate through the many duties that e-discovery requires?
Enter the e-discovery special master, a court-appointed figure who has begun appearing in courts throughout the United States to resolve e-discovery disputes.
Neutral third-party viewed as potential cost-saver
“There is a huge litigation risk in the whole area of e-discovery because it’s not an area that is well-defined either by case law or by experience,” said Mark Raymond, managing partner at Broad and Cassel, in Miami, who has served as an e-discovery special master by federal court appointment. “I’ve found that judges are inclined to get special masters involved to alleviate the problems that can be associated with e-discovery, as well as getting it off their docket.”
“They don’t have the time or the specialization,” he continued. “Courts are pretty burdened as it is, and this is complex stuff.”
As the culling, collection and disclosure of electronically stored information becomes commonplace in even the most routine disputes, the enlisting of neutral third parties or "masters" – as authorized by Federal Rule of Civil Procedure 53 – to assist in assuring compliance with electronic discovery requirements and address complex issues beyond the expertise of a district judge or magistrate judge has opened a professional avenue for e-discovery specialists.
In the Multiven case, the magistrate judge recommended the appointment of an e-discovery special master to help select an outside vendor to expedite the manual data collection and review of the plaintiff. Cisco offered to pay half the cost. George Fisher, a lawyer who was appointed special master, reported that the case was settled before he started his work.
The December 2006 revision to Rule 26 of the Federal Rules of Civil Procedure, which brought e-discovery to the forefront in federal litigation, has prompted some federal judges to use special masters in the preliminary “meet and confer” stage competing lawyers must conduct.
In Pittsburgh, which is in the federal Western District of Pennsylvania, the use of special masters in e-discovery has been notable.
The February issue of The Federal Lawyer, the monthly magazine of the Federal Bar Association, highlighted the special master initiative in an article by US District Judge Nora Fischer and co-authored by Richard Lettieri, a Pittsburgh lawyer. They explained that special masters participate in the “meet and confer” sessions to address preservation procedures and production formats, identify potential witnesses and custodians, develop privacy measures and ESI search methods, and locate sources of possibly relevant material.
“As a facilitator,” the article states, “the e-discovery special master has the opportunity to resolve ESI issues early in the processs at a lower cost to the parties and less disruption to the court.”
Neutrals and mediators: auxiliaries often go by other names
Pilot programs and trade associations have begun analyzing auxiliary persons who perform tasks similar to those of special masters with the goal of facilitating and making more efficient the tasks that are involved in e-discovery.
In November 2010, the federal judges for the Western District of Pennsylvania approved a list of qualified attorneys to serve as special masters, as well an application process that candidates would follow, which probes specialized experience in mediation and technological capacities. In tandem with the e-discovery special masters program, the federal court also offers seminars on mediation, promoting continuing education.
Similar efforts are underway outside the courts. To facilitate the identification and vetting of persons who may assist in resolving ESI disputes, Peter Vogel, a partner at Gardere Wynne Sewell in Dallas, and attorney Allison Skinner of Sirote & Permutt in Birmingham, established the American College of e-Neutrals in March 2011. It is the first attempt to compile a free directory of third-party facilitators for courts and litigants to draw upon in e-discovery disputes.
Skinner, a full-time neutral in trial and appellate courts, said that the response to her association, which aims to offer candidates well-versed in alternative dispute resolution and e-discovery, has been positive.
Parties, she said, view e-neutrals as safety nets against undue costs at any point in litigation, while courts burdened by budget cuts look to shift the discovery workload.
The organization, which Skinner says has 20 "fellows" in its directory, will meet in September to finalize the standards that a successful candidate must meet.
Seventh Circuit paves way for 'liaisons'
A better-known effort that may give life to another e-discovery auxiliary occupation is the Seventh Circuit Electronic Discovery Pilot Program in Chicago. Led by a US district judge and a federal magistrate judge, the program has enlisted some 60 private and public sector experts from various disciplines to examine the entire e-discovery process and recommend improvements. Now in its third year, the program has initiated the use of "e-discovery liaisons” in federal cases in Illinois, Indiana and Wisconsin, which constitute the Seventh Circuit.
Sean Byrne, CEDS, counsel at Project Leadership Associates and the program’s Technology Subcommittee Co-Chair, describes e-discovery liaisons as “qualified, knowledgeable individuals who could talk about the party’s IT universe and the ESI you are potentially dealing with, as well as the different ways that ESI might be collected, searched, culled and produced early on in the process.”
Like a special master that is provided by the parties and not appointed by the court, e-discovery liaisons have been helpful in moving the electronic discovery process along and facilitating cooperation. Twelve of the 13 judges participating in the pilot project said the new position is having a positive effect on the ability of counsel to resolve discovery disputes before requesting court involvement.
“We put the liaison principle in place because there were a great many attorneys who were coming to court with a lack of technical expertise regarding ESI,” Byrne said. “We noticed that there was an increased reluctance to discuss it ahead of time when the parties could reach a reasonable agreement.”
The program is midway through the second of three phases, and will likely issue its final report in two to three years. The second phase has been extended by a year.
Questions about accountability, proportionality and fees linger
Still, while proponents tout their value in e-discovery settings, some complicating factors may limit the effectiveness of the e-discovery special master, especially in the early stages of litigation.
“The biggest problem is somebody’s got to pay their fee,” said John Barkett, a partner at Shook, Hardy & Bacon in Miami and a special master appointed to Everglades cleanup litigation in 2003.
Barkett said he has seen fees in e-discovery disputes of as high as $70,000 for larger antitrust cases. Compensation, in the end, he said, depends on the length and monetary stakes of the dispute.
“I’ve been a special master for $12,000 to $14,000 and I’ve been a special master for $100,000,” Raymond said. “That’s the whole problem. It all depends on how well organized the party is that’s handling it.”
Either way, parties absorb the cost, which raises the pressing issue of proportionality: how do the courts and parties decide if a special master will make the process more efficient by defining the scope of discovery?
“I can’t answer that,” Barkett said, noting that the appointment of a special master almost always stems from the inability of the parties to agree on terms of e-discovery as opposed to a dearth of technical expertise.
Rule 53(a)(3) of the Federal Rules of Civil Procedure states that in appointing masters, “the court must consider the fairness of imposing the likely expenses on the parties and must protect against unreasonable expense or delay.”
In reality, the process is often less nuanced and boils down to a judge wanting to move his or her case calendar along.
“The judge says, ‘you can’t work it out and I’ve tried,’” Barkett said. “He or she isn’t going to worry about the special master’s fee. Don’t get me wrong – they won’t be unreasonable. But the amount won’t bother them.”
Though parties generally recommend to the judge the person to be selected as special master, there are no standards by which to gauge a special master’s effectiveness. Judges must approve the payment of the special master’s fees, which, Barkett said, at least provides an opportunity to object to the special master’s performance.
According to Raymond, there is no procedure to review or rate a special master’s performance, and in his role as a special master, no judge has ever rejected his recommendations.
“The next time somebody’s looking for a special master, the smart people will call both parties and ask [about the special master’s effectiveness],” Raymond said. “Like everything, it all comes down to reputation.”
The ‘exceptional condition’ wrinkle
Successfully requesting the appointment of a special master isn't always a formality, a caveat that further cloud's the positions utility. A federal judge in the Western District of Pennsylvania recently denied a plaintiff’s request on the grounds that it did not constitute “some exceptional condition” as required by Federal Rule of Civil Procedure 53(a)(1)(i).
Raymond says such a ruling is uncommon.
“The only ‘special expertise’ required… is an understanding that e-discovery has become a necessary and sometimes costly function of civil litigation,” wrote Judge Terrence McVerry in a May 6, 2011, opinion addressing the taxation of e-discovery costs to losing plaintiffs, adding that special masters are only appropriate under some circumstances and only then at the beginning stages of the discovery process.
While courts continue to sort out the dilemmas brought by e-discovery, the special master, if yet in a fully defined role, is finally starting to live up to its name in the world of ESI.
