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E-Discovery Update - by Fios Inc.: Choosing An E-Discovery Vendor

By Conrad J. Jacoby, Published on December 17, 2006

As more and more legal disputes involve the discovery of electronically stored information ("ESI"), more and more companies have started offering ESI processing services in an effort to capture some piece of the $1.6 billion that law firms and their clients spent last year on ESI-related services. From the consumer's perspective, competition is a great thing; per-unit ESI processing rates have plummeted in the past year, and it is likely that prices will continue to drop for basic processing services. At the same time, however, competition may be creating some problems, as consumer complaints about the quality of the services received from e-discovery service providers have shot up sharply.

Complaints about ESI processing have become more visible for many reasons. First, and obviously, many more cases now involve ESI than previously, so it is inevitable that more of them will run into difficulties. When e-discovery horror stories are particularly awful, it's easy to overlook the fact that something occurred only once in the past hundred projects a vendor has handled. Second, while law firms and their clients are becoming increasingly sophisticated in their understanding of electronic discovery issues, the tight deadlines in even a typical litigation matter make it easy for clients and vendors to talk past each other when setting up a project, creating miscommunication and incorrect expectations on both sides. And finally, of course, the Gold Rush of newly-minted e- discovery vendors also means that some service bureaus lack the experience, training, or even equipment to properly work with a client's digital materials. Identifying-and avoiding-such vendors is an essential part of a law firm or client's vendor selection process.

Especially under the amended Federal Rules of Civil Procedure, litigants have a strong duty to act reasonably in managing their discovery documents. Asking a few basic questions as part of the vendor due diligence process can quickly identify vendors who are struggling to successfully work with ESI. In addition, working through a structured due diligence process will also help insulate a litigant from liability if a project is awarded to a vendor who subsequently has difficulty meeting project requirements.

I. How Long Has The Company Been Providing ESI Services / How Experienced Is The Staff?

In matters relating to electronic discovery, experience counts, and one easy check in evaluating e-discovery vendors is researching how long they have been providing services related to ESI. "Providing services" is a deliberately vague term: e-discovery is a moving technological target, and cutting edge services from even a few years ago may be quaint and inefficient by today's standards. However, the longer an organization has been providing ESI-specific services, the more likely that it has had a chance to experience-and resolve-many of the common issues that arise when working with digital archives.

It's important to separate the overall longevity of a company from the amount of time that it has been working with electronically stored information. Many long-standing litigation support service bureaus moved slowly into the area of e-discovery (for any number of reasons), and it is quite possible that a well-established company may still have limited experience with electronic information. Careful due diligence should focus on the specific services that a vendor is providing and the expertise that the vendor has with those tasks.

Corporate longevity isn't the only indicator that a company providing electronic document processing services is competent, of course. Established companies go bankrupt, shatter into splinter companies, or change names in corporate re-organizations. A brand new company can offer quality ESI processing services, especially if it has an experienced and competent production staff. A quality vendor should never be scared of sharing the qualifications and relevant experience of the top production staff with a client. For competitive reasons, a vendor may not be comfortable sharing the names of its key e discovery specialists, but it should be able to provide sufficient detail for the due diligence process. Young companies with inexperienced staff are the most likely to miss potential processing issues, though this should never be considered an absolute statement. Careful, consistent quality control procedures and proactive project management can compensate for a lack of expertise, though a litigant may still opt for a more seasoned operation.

II. Does The Vendor Have Experience With Your Type Of ESI?

It's important to match a service provider's expertise to a specific project. A number of well-regarded companies have developed significant expertise in particular e-discovery tasks. One company may have invested significantly in tape restoration hardware; another may have developed unique software for managing Lotus Notes archives. However, ESI includes many different types of data and storage media, and not all service providers have the specific expertise that a project demands. Accurate due diligence should gather information about similar projects that the service bureau has performed in the past. A good vendor will freely admit its limitations or lack of experience and suggest a solution-perhaps partnering with another organization-that will provide the exact mix of processing services required. Such solutions can work out well for everyone if they are properly managed. Litigants should be somewhat skeptical, however, if a service provider states that it can complete any ESI project in a timely, cost-efficient way using only its internal resources. Even the biggest and best-regarded vendors recognize the need to bring in outside specialists to assist in some projects. It simply isn't economically rational to handle things any other way..

III. Is The Vendor Using Proprietary Or Off-The-Shelf Processing Solutions?

When e-discovery first emerged as part of the litigation process, no company had automated ways to process digital information. Individual service providers each had to create their own ESI management solutions, with decidedly mixed results. Today, an increasing number of technology developers offer "e-discovery in a box" software and hardware solutions for sale to members of the legal community. Such standardized solutions make it possible for new or existing businesses to quickly deliver ESI processing services that-theoretically-deliver accurate and consistent results. Early "box" systems were notoriously unreliable and were sometimes accused of corrupting almost as much data as they processed. Virtually all of those problems have long since been resolved, though some of this reputation continues.

Today, it's somewhat of a religious debate over whether proprietary ESI processing systems are superior to commercially available systems. Proprietary systems can potentially offer the greatest flexibility because in-house programmers can update the software as bugs are discovered or as new functionality is requested. Proprietary systems may also have been designed to take advantage of large multi-processor or multi-workstation hardware farms, making them faster and more efficient for larger projects. Commercially available systems, by contrast, were originally designed to process smaller amounts of ESI, and until recently, did not share the distributed processing functionality that some proprietary systems already had. However, commercially available systems offer the unique selling point that their output can easily be verified by a distrustful requesting party. For a litigant concerned with the admissibility of processed ESI, this may be an important point.

Most processing solutions in use today, whether proprietary or off-the-shelf, have the potential to do a reasonably good job-or better-if they are properly configured and used. For a litigant conducting its due diligence, this means that it's probably more important that the vendor have qualified staff running its e-discovery operations than it is that a vendor use a specific processing system. Commercially available systems offer some advantage in this regard, as virtually all developers offer certification programs for all software licensees. In practical terms, this means that vendors using these systems can point to training certificates as evidence of competence. The value of these certifications can vary; some developers require only journeyman competence, while others require near-mastery of the system. Service bureaus using proprietary systems may have to demonstrate the experience of its staff through employee CVs and other anecdotal evidence. It's a slightly less streamlined demonstration of staff competence, but it can be equally informative.

IV. Are Clients Willing To Speak On The Record About Their Experiences?

A final step in the due diligence process is to ask the vendor for several references that involve similar projects. This can sometimes be a bit challenging for a service bureau, as vendors are often asked to sign confidentiality agreements that bar them from disclosing the name of a client. However, prospective clients should be suspicious if the vendor cannot provide the name of even a single client who is willing to speak on its behalf.

For even deeper due diligence, it can be helpful to ask the service bureau to describe a project that did not work out as smoothly as was planned. Many times, the mark of a reliable vendor is not that all their work is perfect-everyone makes mistakes-but in the way that they resolve problems when they do occur. Vendors may be very hesitant to share the names of these clients, though they should be willing to describe such projects in general terms, including the steps that the vendor took to resolve the problem.

Conclusion

The field of e-discovery is in a period of constant flux, as new forms of electronically stored information come into use and new technologies are developed to process materials. It's important to recognize that all e-discovery projects will have glitches of some sort. Working with the right service provider, though, can control these problems and minimize their impact on the legal team and on successful management of the case as a whole.