Lessons from Applied Discovery Proportionality panel in Toronto

It sounds a bit flippant to say that I went to Toronto for breakfast. It certainly would not do as an answer to the immigration official asking the purpose of my visit. Readers with long memories may recall two earlier occasions when I nearly made it to Canada and failed. Since then, I have been back to Australia, and spoken in Singapore and Hong Kong, leaving Canada as a big gap in my close-up view of the common law jurisdictions which require discovery of documents in litigation (the other gap is New Zealand, which I hope to remedy soon). I jumped at the chance when Applied Discovery invited me to a breakfast panel session in Toronto called Understanding Proportionality.

Canadian flag and CN TowerThe moderator was Crystal O’Donnell of Applied Discovery, whose white paper entitled Proportionate Litigation was launched at the event. What you need to know from that, by way of introduction, is the new Rule 1.04 s 1.1 which took effect on 1 January and which says this:

In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

If you are tempted to think that this is just a statement of the obvious, you may care to read the 17 pages which Lord Justice Jackson devoted to the subject of proportionality in his Final Report on Litigation Costs starting at page 27. He says this (at paragraph 5.16) à propos his proposed changes to the UK rules:

“The rules should also provide that the fact that costs were necessarily incurred does not make them proportionate. This should be stated explicitly….”.

Once you see a distinction between costs “reasonably incurred” and those which are “proportionate” you see more to proportionality than merely being reasonable.

Crystal O’Donnell had assembled a first-rate panel. Master Calum MacLeod of the Ontario Superior Court of Justice occupies a position as judicial thought-leader equivalent to that of Master Whitaker in the UK. Kelly Friedman of Ogilvy Renault is Chair of Sedona Canada. Susan Nickle is from Wortzman Nickle a specialist ediscovery practice which describes itself as “the go-to law firm in Canada, assisting corporations and their counsel to find practical ways to meet their ediscovery obligations”.

One of the themes running through the session was the need to find the “golden nuggets”. I propose to adopt the same approach to reporting on the session, picking out, without attribution, the passages with the widest general application. Unsurprisingly, they are ones which recur in every relevant jurisdiction.

Proportionality imposes real limits on discoverability. Hitherto, charges of abuse were the only remedy. Now discovery must be proportionate and relevant. We must now focus at the pleadings stage.

There must be an ongoing dialogue with opponents from the beginning. Most lawyers do not speak to their opponents.

What is the cost? What is the impact? Proportionate to what? Not just the value of the claim – there are other factors.

The lawyers and those who instructed them ought to know what order of costs are likely to be incurred. Arguments about the inclusion of foreign language documents, for example, ought to take account of the cost of translating them.

Lawyers need a better understanding of technology. You do not need to be a forensic expert, but you do need to know what questions to ask and to have some sense of what the law requires. You need meaningful discussions with opponents or you cannot protect your clients against outrageous demands from opponents.

You need to know when to call someone in to help. It is bad enough, but merely expensive, to have to redo things; it is devastating if you cannot actually redo something because the data had been lost or altered.

More clients, and not just big ones, are setting up pre-emptive measures, usually after a bad experience – this subject moves up the To Do list when there has been a disaster. You do not necessarily need to have a complete overhaul with new software; “baby steps” are better than nothing.

Privacy cuts into proportionality when a party is forced to produce private information which was not really needed. Much more then has to be redacted, which may itself makes the whole exercise disproportionate.

When negotiating the terms of a discovery plan, you need to think about what you really need. What will you argue tooth and nail for? People begin negotiations wanting everything. Where is the most likely and most accessible information?

You need to have your own house in order. If you have old and difficult-to-access systems you might as well get that out up front.

Without discussion, you could spend a lot of money producing something the opponents do not want.

We must not allow the discovery plan to become the problem.

Involve the clients before agreeing to a discovery plan.

If there is one thing corporations can do it is to improve record-keeping. Get rid of transitory non-business records. Keep them for as long as you need them. If they are deleted when there is no prospect of litigation that is not spoliation.

Review is expensive. Sedona Canada suggests a mix of technology and lawyer review. If only 1/100 documents is being coded as relevant, something has gone wrong. Collection and processing costs have come down and there are new review applications coming out all the time, so it is important to keep abreast of what tools exist which may help.

You would never send a lawyer into a room full of paper which had been just thrown in anyhow, so why do the equivalent with electronic documents?

A large organisation will not be able to say any more “we cannot restore it because it is not proportionate”. That is like saying “we decided not to keep a filing cabinet”. One should not run proportionality arguments about something one could easily have done. One will not be able just to say “I cannot find them in this morass” because the court will say “You are expected to have a system for this”

Modern technology enables you to estimate the effect of adding or removing search terms. When opponents demand additional search terms, it is helpful to be able to say that they will add another 750,000 documents and to estimate the costs of that to both parties. That information is an essential element in assessing the proportionality of the demand.

“Proportionality” is going to replace words like “unreasonableness”. There is a real risk of having to bear costs which you force the other side to incur, unless you can show that this was done by agreement.

You cannot now say that there are no electronic documents. E-Disclosure is not somehow different from traditional disclosure.

It is often smaller firms who are tech savvy

You might think that it is cheaper and easier to save everything. The cost, however, includes the cost of finding what you need later (or the implications of not being able to find it). We used not to keep 27 drafts of paper documents unless it was necessary to show the drafting process.

Most of this would be common sense in any jurisdiction, that is, does not depend on the rules in Canada or anywhere else. Some of it has particular parallels elsewhere. Compare, for example, the statement:

A large organisation will not be able to say any more “we cannot restore it because it is not proportionate”. That is like saying “we decided not to keep a filing cabinet”. One should not run proportionality arguments about something one could easily have done. One will not be able just to say “I cannot find them in this morass” because the court will say “You are expected to have a system for this”

… with this passage from the UK case Earles v Barclays Bank:

One expects a major high street Bank in this day and age of electronic records and communication with an in house litigation department to have an efficient and effective information management system in place to provide identification, preservation, collection, processing, review analysis and production of its ESI in the disclosure process in litigation and regulation.

A “discovery plan” is a formalised version of the outcome of a “meet and confer” under the US Federal Rules of Civil Procedure and of the discussions required under the UK e-Disclosure Practice Direction 31B CPR. HHJ Simon Brown QC, the author of the Earles judgment referred to above, once said that “A case management conference is a business meeting. We do not wear gowns and wigs. We are determining the most efficient and proportionate way of conducting the business of litigation”.

The reference to involving the clients in a discovery agreement strikes two chords with me. In the US In Re Fannie Mae litigation, counsel agreed to a set of activities, compliance with which cost his client $6 million or 9% of its turnover. I once heard a bank complain that its lawyers had agreed without consultation to a course of action involving external providers which the clients could have dealt with themselves at a fraction of the cost if they had been given a slightly longer time-scale.

The reference to “a mix of technology and lawyer review” recommended by Sedona Canada should be a comfort to those lawyers who are feel that their duty requires them to read every document. This can no longer be done, whether or not proportionality comes into it. See paragraph 27 of Master Whitaker’s judgment in Goodale v Ministry of Justice, where he says:

this is a prime candidate for the application of software that providers now have, which can de-duplicate that material and render it down to a more sensible size and search it by computer to produce a manageable corpus for human review – which is of course the most expensive part of the exercise. Indeed, when it comes to review, I am aware of software that will effectively score each document as to its likely relevance and which will enable a prioritisation of categories within the entire document set.

Being “aware” of such technology is all that is required – it is not incumbent on the lawyers to understand how it works as long as they understand (and use) the facilities for sampling and testing the output.

If I was asked to pick one statement out of all those set out above as a spur to better understanding, it is the observation that, without a certain level of knowledge, “you cannot protect your clients against outrageous demands from opponents”. Many lawyers are strangely immune to the suggestion that they might do their own work better or more efficiently; the fear that a more skilled opponent may run rings round them adds an extra level of motivation.

My thanks to Crystal O’Donnell and Applied Discovery for the invitation to attend this seminar. I will be back, and next time for longer than breakfast.

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About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
This entry was posted in Applied Discovery, Canadian Courts, Discovery, eDisclosure, eDiscovery, Electronic disclosure, Litigation, Litigation costs, Litigation Support. Bookmark the permalink.

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