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Special to the DCN/JOC: eDiscovery Preparedness Part Nine: Cost-effective document disclosure in arbitration

Martin Felsky

This is the ninth article in a series that explores practical tools and strategies to proactively manage costs and effectively navigate through the eDiscovery process for litigation, internal investigations and regulatory matters. The series provides practical tips on document management, data mapping, discovery planning, custodian interviews, document processing and hosting, eDiscovery technology, and explores proposed arbitration rules and alternative dispute resolution.

There are four rules-based approaches to document disclosure in legal disputes.

From broadest to narrowest they are:

1. Relevant: Each party discloses all documents relevant to the issues in dispute.

2. Responsive: Each party discloses documents responsive to requests by the other party.

3. Material: Each party discloses only those documents that could have an impact on the outcome of the dispute.

4. Reliance: Each party discloses only those documents upon which it intends to rely.

Each of these approaches is often supplemented by two underlying principles: first, a party can always be ordered to produce a document the arbitrator deems relevant, which enhances fairness but expands disclosure, and second, all disclosure models may be subject to proportionality so that the cost of disclosure does not overtake its value to the parties. While the intention of proportionality is to provide a means of keeping disclosure reasonable, logically it could be applied to enlarge the scope of disclosure where a party is being too parsimonious.

Because the first two approaches (relevant, responsive) can result in massive volumes of data disclosure, rule makers, thinking that the volume of documents disclosed is what determines cost, limit disclosure using one of the other approaches (material or reliance, or both).

Another innovation, the Redfern Schedule, is thought to help pare things down, but it is more accurately viewed as a disclosure management tool, based on the “responsive” model. While it can help focus the parties on priority issues and track the disclosure process as it plays out in the arbitration, its use alone may not have any impact on the volume of disclosures. For a modest proposal to refine the Redfern Schedule, see Heuristica Proposes Better Disclosure Rules for Construction Arbitration here.

It may seem logical that disclosing a limited set of documents would be less expensive than disclosing a large set. This is only partly true, because no matter how small the disclosure itself, parties must still identify, preserve, collect, process, analyze and review all potentially relevant documents in order to disclose a set of any size. All the work that it takes to find “key” documents exists because the universe of data is not affected by the applicable rule of disclosure.

The problem exists not just because the starting point for data volumes is enormous, but because digital information is fundamentally different from paper records. Paper records were usually managed in a central filing system. Digital records such as email are managed by the individual custodian, even though the email technology platform is provided to all users by the business.

Emails are stored in a database and linked in conversations or threads. Attachments, including digital photos, drawing, videos etc., proliferate and are stored in multiple places, not only in centralized server shares or document management repositories, but on laptops, USB keys, or cloud services.

Recorded video conferencing meetings now comprise another set of digital records that must be reviewed. Modern business executives and construction workers in the field use text messaging on their smartphones, whether sanctioned by their employer or not. Pulling together all potentially relevant digital information about a single project, or within a single timeline, is no longer simply a matter of pulling open the right file cabinet drawers.

Construction disputes share many characteristics, but they also fall into different categories. From an evidentiary point of view, there is a big difference between a dispute about certain decisions or incidents, which can be isolated and proven with scant documentation, and a dispute that touches on the longstanding conduct of a project or a series of relationships. While the former type of dispute can be settled with reference to the classic “smoking gun,” or a handful of key documents, the latter can only be settled by telling a story through years of communications.

The goal of all disclosure rules is to achieve a fair resolution. Important evidence must not be missed, and unimportant evidence should be withheld. The problem is that data does not self-identify as important or unimportant. This is true even though all data used in the ordinary course of business is stored and managed by programs dedicated to the purpose.

To deal with disclosure effectively therefore requires the choice of a rule that best reflects the nature of the dispute, but more importantly, effective planning, project management and use of technology. The costly part of the disclosure process happens long before the disclosure itself.

Martin Felsky is senior counsel at Heuristica Discovery Counsel LLP. Heuristica has offices in Toronto and Calgary and is the sole national law firm whose practice is limited to eDiscovery and electronic evidence.

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