Judge Paul Grimm, Chief United States Magistrate Judge for the U.S. District Court for the District of Maryland, is a thought leader and at the forefront of knowledge in the field of electronic discovery. Judge Grimm has authored multiple case opinions that have become the basis for rule changes to the rules of civil procedure. He continues to be an expert in the field and he graciously took some time to talk to Discovery Brain about his knowledge and experience.

Missed Part 1? Read it here.

Part 2 of 3:

Discovery Brain: Do you think the increasingly high costs of eDiscovery is preventing certain parties and law firms from bringing certain cases to court because of a lack of financial resources to bear the costs of eDiscovery?

Judge Grimm: In my Hopson decision, I actually found data about how the amount of money spent on ESI experts in ten years have gone from costing the U.S. $20M to an estimated $10B. That’s a huge direct line that goes from south to north over time. I have heard lawyers at many programs and in testimony before the rules committee and read in a variety of sources that there are lawyers who will say that they’ll tell a client that this case is only worth $100,000 and they will settle it because the cost of eDiscovery is just too great to move forward. What they’re saying is that it’s a common perception by a lot of lawyers that smalls cases may not be worth the cost of litigation. If you have a lawsuit for $250,000, but the cost of getting that case litigated is $100,000, that’s a third of the cost of the value of the case. Of course, there are some cases that can’t be measured by values. If it’s a civil rights case or a huge claim involving some new theory or some new issue, then you may be beyond the ability to price it. However, most cases are to recover damages and you can pretty effectively estimate the value of a case. So once you know what a case is worth cost wise, then you have to start making some value judgements. If a case is worth $0 to $2M, how much money should you spend on resolving that case. Should you spend 50% on it, 30%, 20%? There’s no hard and fast answer.The rules of discovery are very broad. All facts that are not privileged or work-product protected or from sources that are reasonably accessible and not unduly costly as related to the claims are discoverable. That can be so broad, so imagine a case with 100 fact witnesses or events that go back 5 years. You can see how it adds up really fast. What you’re left with is a belief by many lawyers on an anecdotal assessment, that they don’t quarrel too much with the proposition that the cost of proceedings and litigation has become so expensive that there are either cases they have not brought that they otherwise thought were meritorious or cases they settled that they thought should have been litigated because the cost of litigating is much more expensive than the cost of settling.

Discovery Brain: How do you prevent money from being the deciding factor of who litigates in court?

Judge Grimm: If you look at the past, money will always be a deciding factor of who litigates in court. People behave in a way that they perceive to be in accordance with their economic benefit. If you have a classic case of a plaintiff’s lawyer who takes a case on a contingency basis, that lawyer will typically pay the transaction costs and fees upfront. They often have an agreement with the client that the client will have to pay those costs at the end if they win. Very few lawyers ever expect a client to pay if they lose. Their fees usually comes out of the recovery. The plaintiff’s lawyer doesn’t have any incentive to spend any time and effort on excessive motions. They want to get the facts and try to settle it. They have an economic incentive to not run things up unless they believe that the party being sued can be induced to settle a case if the cost of litigation is so one-sided and so great that the cost of litigation will be so great. In these cases, they may coerce settlement. On the other hand, the typical way in which defense counsel handles litigation is they go on the hour – dollars per hour times number of hours. You now have an incentive for a lot of hours. Which is better in terms of economic incentive – to cooperate and avoid disputes and settle quickly and efficiency, or object and file motions to keep the clock running? However, clients are now beginning to realize that they too have power. Clients are increasingly saying to lawyers: “You’re going to get me a discovery budget and then you’re going to stay in that budget. If you go beyond it, we’re not going to pay you.” With that, there is an economic incentive for counsel to be efficient and cooperative and get the information quickly. I think the economic issues have always been there but when lawyers were making 25 bucks an hour, it wasn’t that great as to how it is now.

Discovery Brain: Why do you think there’s an increase in eDiscovery sanctions? Is it because there’s more cases involving eDiscovery, or is it a lack of attention to the rules and regulations?

Judge Grimm: If you look at the number of discovery motions for sanctions and sanctions issued as a percentages of motions filed and ordered by courts across the US and federal courts, the number of sanctions is less than one percent of the motions filed. However the perception among lawyers is that there has been a dramatic increase in the number of sanction motions and the number of cases where sanctions have been imposed. Those that share that perception say that it’s sometimes the threat of sanctions, or sanction motions that are filed but never ruled upon, etc. It is true that in recent years there have been some highly publicized cases imposing sanctions. In 2010, we dealt with spoliation. You had a number of cases that dealt with big areas of issues associated with ESI discovery and some pretty eye-opening sanctions were imposed. I think as a general matter, courts are becoming aware with the concerns associated with these cases. You have people like Judge Facciola who is often known to say that we have a confident competence requirement, but that lawyers seldom look at technical expertise in dealing with ESI as a competency issue. Lawyers view it as do whether or not they know the law, jurisdiction, rules of procedure and evidence. Many times when you see cases that have gotten to a point of sanctions, it turns out that there were some technological knowledge where you wonder if counsel had not known more about the things they were talking about or representing to the court than what they actually said. What has clearly happened is lawyers have been put on notice that they have to know how their clients’ systems operate, whether there are controls in place, if they put a litigation hold in place, if they did cluster data appropriately, monitor it, etc. It is not sufficient for a lawyer to not know about the technology that they use in eDiscovery. There are also many people that say lawyers have to know the technology intimately like the distinction between server-based systems and cloud-based systems. You have to know how social media operates, the technical issues associated with it and since the answer to the issues (procedurally and substantively) depend on it, lawyers can’t avoid it. Rather than just a generalist approach to law, lawyers have to know all these things as they relate to digital media to appropriately counsel a case.

Part of the issue deals with the rapid changes in the way technology changes, part of it is the need for lawyers to be technologically and legally competent, need for judges to manage their cases effectively hands-on and the need for clients to appreciate what their responsibilities are what they have to do. They all got to be on the same level and function appropriately to avoid sanctions.

 

In the third and final part of the interview, Judge Grimm speaks more on sanctions and talks industry trends. Check back in the next few days for the interview’s conclusion.