Andrew Cuomo, B of A and eDiscovery in the “Tens”

Yet another financial industry bombshell was dropped yesterday when New York’s Attorney General Andrew Cuomo  hit Bank of America’s former CEO Ken Lewis and former CFO Joe Price with civil fraud charges.  The charges allege that B of A essentially hid massive losses at Merrill Lynch from B of A shareholders – and even B of A lawyers – as part of the bank’s shotgun wedding with Merrill Lynch at the peak of 2008’s financial crisis.  Ironically, the suit was filed on the same day the SEC announced that it had come to a tentative agreement with B of A in settling its suits against the company, which includes a $150 million penalty to be paid by B of A; stay tuned, however, as  the settlement must still be approved by a sure-to-be-skeptical judge who has already scuttled one proposed settlement with some harsh words for the SEC.

This whole situation has more layers than an onion, from Cuomo’s ‘unrelated’ candidacy for Governor of NY to much of the political elite’s desire to vilify those involved in the financial system bailout to the ever-present public outrage over banker bonuses in the face of a massive recession which was arguably caused by…the same bankers now receiving such bonuses.  More close to home, however, is the eDiscovery data point this case represents as we settle into the decade of the “tens”, namely that proceedings are more complex, have far more potential downside for parties, involve far more ESI than what was considered “average” even two years ago and require much quicker response times in order to get ahead of events…lest one be run over in the court of public opinion.  We see this “new normal” forcing several important changes to how eDiscovery is done.

• Big is the new normal.  The size of any given proceeding is dictated by several factors, including amount at issue, size and sophistication of the parties, complexity of the case and strategies chosen by the parties.  But there are several macro trends under way that have and will continue to expand the size of the average case, namely 1) the continued growth in data of myriad types (think email + IM + blogs/wikis + web content + Twitter + texts) and 2) the semi-toxic environment in which every case finds itself as regulators have no incentive to settle before extracting their pound of flesh.  Think Andrew Cuomo’s nascent gubernatorial candidacy will be furthered by settling the B of A case quickly?  Probably not.
• ECA is all about getting to the facts QUICKLY.  Early Case Assessment (ECA) can be done a number of different ways and by many different practitioners, some in-house, some with outside counsel and some with third party providers.  But no matter how ECA is conducted, it absolutely requires near-instantaneous analysis of the key facts of the case.  Put another way, there is simply no way B of A’s outside counsel can wait for ESI to be identified, preserved and collected by the company, then sent to a third party to be processed, then sent back in-house or to yet another third party to be loaded up into a culling box or linear review platform of some sort before they can even begin the keyword search-based process of finding key documents and building a response…all of which typically takes many weeks if not months.  Waiting months to address bet-the-business proceedings is not an option anymore; key documents need to be found within hours, not months, and can’t involve multiple steps and parties in the process.
• Preservation, collection and ECA are inextricably linked.  Because 1) ECA is all about getting to the facts quickly, and 2) due to the high potential for eDiscovery sanctions in litigation in the tens (i.e. the analysis of what ESI was preserved/collected and what ESI was not preserved/collected, but perhaps should have been), ECA and legal holds are inextricably – and irrevocably – joined at the hip.  For outside counsel, part of assessing the strength/weakness of one’s case (aka ECA) is assessing the response made by one’s client; as the legal hold and collection processes are typically the most critical aspects of any response, ECA simply cannot be conducted outside of the legal hold and collection process.
• Continued ESI growth paving the way for Predictive Coding.  We have no idea how much data will be examined in the B of A case, but odds are good it will not be a trivial amount given the aforementioned political environment and growth in data types and sources (think terabytes if not tens of terabytes).  But the one thing which simply cannot continue to grow in lock step is the corporate legal budget in a linear document review world.  This is why Predictive Coding™ has been getting so much attention lately: it not only reduces eDiscovery costs and timelines, but actually results in a superior review.

An old proverb (which sounds a lot more like a curse) states “May you live in interesting times”; whether we like it or not, we are clearly living in very interesting times indeed.  Recognizing how the eDiscovery world is changing and how we must all adapt to meet these changes is more important than ever.