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“E-Discovery: The End Can Justify The Means”

Inside Counsel By Steven V. Hunter

The enormous cost of electronic discovery can sometimes be justified by the information it yields. Today’s business is conducted electronically. In 2010, 2.9 billion e-mail accounts, 2.4 billion instant messaging accounts and 2.2 billion social networking accounts churned out 107 trillion e-mails, 25 billion Tweets and 30 billion pieces of Facebook content, and at least 25 percent of it was business-related. (Radicati, S., “E-Mail Statistics Report, 2010”, The Radicati Group, Inc.). In 2001:

1. Ninety-three percent of all business documents were created electronically

2. More than 50 percent of those documents were never printed

3. Seventy percent of all written data was stored in electronic form

More important to litigants than the increase in the volume of the information available through electronic discovery, however, is that the very nature of the information has fundamentally changed. In the age of electronic discovery we have “moved beyond collections of highly edited and carefully prepared memoranda and official records to the palpable intimacy and prolixity of e-mails, instant messages and social network chatter.” (Hamilton, W., Litigation, "Sampling Helps Keep Relevance Relevant"; Vol. 37, No. 4). Most of us don’t have to look much further than our own sent messages, deleted messages and text history to find correspondence we probably should not have sent. Welcome to e-discovery!

In recent years the informal, unedited and presumptively confidential data recovered from litigants has played a pivotal role in some of this country’s highest-profile civil disputes:

1. The SEC’s fraud case against Goldman Sachs and Fabrice Tourre, a group director, involved electronic data recovered containing e-mails from high-level Goldman Sachs employees, including:

  • “The whole building is about to collapse anytime now. Only potential survivor, the ‘Fabulous Fab’ [Fabrice Tourre]...”
  • “All these complex, highly leveraged exotic trades…[that I created]…without necessarily understanding all the implications of those monstrosities!!!”
  • “There will be very good opportunities as the market goes into what is likely to be even greater distress, and we want to be in position to take advantage of them."

2. The Fen-Phen diet drug cases, where a low-level executive mused to his CEO, “Do I have to look forward to spending my waning years writing checks to fat people worried about a silly lung problem.”

3. In the suit for ownership interest of Facebook, the plaintiff claimed CEO Mark Zuckerberg sent him a series of e-mails, including one indicating:

  • "According to our contract I owe you over 30% more of the business in late penalties, which would give you over 80% of the company.”

However, Zuckerberg’s computer forensics team analyzed and concluded in August 2011 the e-mails are entirely fake (Rouhana, R., “The Case of the Smoking Gun”).

As you consider how much of your litigation budget to allocate to electronic discovery, you should keep in mind that the proverbial “needle in a haystack” of electronic documents is significantly sharper than the ones you’re accustomed to finding in a warehouse. This is especially true of cases in which the intent of your opponent is an issue (e.g., contract formation, fraud and other business torts).

Although for now the cost of a full-fledged analysis of your opponent's data can be cost-prohibitive, in the near future all litigants in all cases will benefit from the information that only the largest and most expensive cases enjoy today.

Originally published on Inside Counsel, November 2, 2011

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