Information Governance: Upcoming 2015 FRCP Amendments (Part 2) - Rule 26 and Cost Allocation

iStock_000002588980Small.jpgAs mentioned in my previous post, Part 1: Rule 26 and Proportionality, there are substantial benefits to be gained utilizing Proactive Information Governance (PIG) under the pending FRCP rule changes, which will take effect in December, 2015.  The amendments that are under consideration reflect nearly a decade of use, and in some cases abuse, of the rule changes enacted in 2006, which were intended to help United States courts address the growing relevance of electronically stored information (ESI) in litigation.

 

What started out innocently enough, stating that ESI was allowable evidence in court, and that parties had to produce such evidence upon demand by opposing counsel, has, over the course of the last eight yearsgrown into a multi-headed hydra of cost, complexity, subterfuge and sanctions. In turn, lawyers, companies and the courts have tried to interpret these rules in the era of social media, mobility and cloudification.

 

Notably absent from the 2006 amendments was any guidance on how litigants were supposed to pay for all of this discovery.  Regardless of how much ESI an organization had, if opposing counsel asked for it, you were compelled to find it and produce it.  In the absence of guidance on how this was to be paid for, the requestee ended up paying, rather than the requestor. 

 

This led to the somewhat nefarious tactic of hitting opposing counsel with a titanic request for ESI discovery, one which would cost millions of dollars to meet, and then waiting for the opposition to cave in at the bargaining table.  Opposing counsel’s case may be all squeal and no bacon, but it was easier and cheaper to NOT comply with a discovery request, and settle, rather than make your case on the merits.

 

The pending FRCP rule changes related to Cost Allocation seek to change this situation.  They also support the case for using PIG to not only reduce your information management costs, but also to gain tactical and strategic advantages in litigation.  Let’s briefly view how PIG can help with the Cost Allocation equation.

 

Cost Allocation in eDiscovery: A Rational Approach

As stated above, the presumption in Federal Courts is that each party bears the costs of selection, review and production of discoverable information, including attorney’s fees associated with the effort.   Advocates for producing parties have long pushed for a modified “requester pays” approach.  Such an approach leads to more rational behavior by all parties involved, and also removes the adverse incentives behind excessive discovery demands.

 

In recognition of the need for this change the FRCP Review Committee proposes to amend Rule 26(c)(1) to acknowledge that a protective order issued for good cause to protect against undue burden or expense may include, as a term in such order, the “allocation of expenses.”  Basically, this means that going forward, the court MAY (but notably, not MUST) allocate some or all of the cost of discovery to the requesting party, rather than to the requestee. While this may seem to be a somewhat half-measure, it is certainly a step in the right direction as it gives judges the leeway to honor a requesting party’s need for ESI to make its case while also giving them the ability to apply some rationality to the process.

 

Implications of Pending Rule Change

1. Proactive Information Governance lowers costs thresholds for all parties

With PIG, a party to a case can rapidly respond to discovery requests at substantially reduced costs. This allows a party to be responsive to court orders without undue burden or the appearance of stonewalling.

2.  PIG provides resonance between proportionality and cost allocation

If your organization can meet a given request at substantially less than your opposition claims, then THEY are placed in the position of defending their cost to comply.  As a result, opposing counsel either appears to be uncooperative, out of control of their data, or both.

3. PIG reduces the total size of your data store, making your share of the cost allocation more affordable

Since PIG constantly pares away unused and non-responsive information, your ongoing and incremental costs are lower.  Hence, whatever proportion of your opponent’s discovery costs you are responsible for will be less costly, less time consuming and less complicated.

 

HP has created some of the most powerful proactive information governance technologies in the world. Leading companies are currently using these technologies to greatly reduce their information management costs. The benefits of PIG extend into the courtroom, where attorneys who leverage PIG gain advantages of speed, efficiency and transparency which greatly enhance their ability to argue their clients’ cases on the merits.

 

In the next installment of this assessment of the pending FRCP rule amendments, we’ll look at the changing requirements for data retention, and how the ‘delete’ button may soon become an attorney’s best friend.

 

#HPIGB

 

Read more:
Information Governance: The Trend Continues x2 - Leadership in eDiscovery and Archiving Portfolio by George Tziahanas
Information Governance: Upcoming 2015 FRCP Amendments: Strategic Advantage of Information Governance by Chris Surdak
Information Governance: Simplifying Legacy Data Cleanup with HP Autonomy Professional Services by Joe Garber

 

Image source: iStockphoto.com

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About the Author
Chris Surdak is a Subject Matter Expert on Information Governance, analytics and eDiscovery for HP Autonomy. He has over 20 years of consul...
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