Report: Predictive Coding Replaces Sanctions as the Big News in E-Discovery

For the last several years, year-end reports on e-discovery have highlighted sanctions as the lead headline. (For examples from this blog, see Report: Sanction Requests Rise But Awards Hold Steady for 2011 and E-Discovery Sanctions Reach an All-Time High, Survey Finds.) For 2012, however, a different story took the lead spot — the rise of predictive coding.

Such is the conclusion of the 2012 Year-End Electronic Discovery and Information Law Update published by the law firm Gibson Dunn.

In our prior electronic discovery mid-year and year-end reports, the lead story was sanctions, as numerous decisions imposing onerous penalties for real or perceived e-discovery failures caught the attention of the legal community. By contrast, 2012 was the year of predictive coding, and of meaningful rules reform becoming an important step closer.

What made predictive coding the story of 2012, says the report, were the several court decisions that discussed and even endorsed it.

In the absence of judicial approval, many litigants were unwilling to use this technology. That may well change now, following several decisions approving review methodologies involving predictive coding.

Of course, the increasing acceptance of predictive coding and other forms of technology-assisted review was not the only big e-discovery story last year. Among others cited by Gibson Dunn in its report were:

  • Proposed amendments to the Federal Rules of Civil Procedure that would limit the most serious sanctions for failures to preserve to cases where the court finds that the failure was willful or in bad faith, or that it “irreparably deprived a party of any meaningful opportunity to present a claim or defense.”
  • The rise of international e-discovery and the corollary need to deal with foreign data protection and privacy law.  “Foreign data protection and privacy laws have become pervasive and foreign data protection authorities more active in their enforcement of such laws,” says the report.
  • The European Commission’s proposal to replace the 27 data protection laws of the EU member states with a single data privacy regulation — a proposal that has good news and bad news for companies, according to the report.



Sanctions awarded by type and percentage of cases where sanctions granted

Even though the sanctions story is no longer the lead in Gibson Dunn’s year-end report, it is by no means gone away. However, rather than focus on punitive sanctions, courts have shifted towards pragmatic solutions.

“Decisions have increasingly noted that remedial monetary sanctions, as well as other measures such as reopening discovery and hiring forensic analysts to search for spoliated data, are generally fairer and better at making the aggrieved party whole than punitive sanctions such as a default judgment,” the report says.

An area that gained increasing attention in 2012 among e-discovery professionals and courts is the discoverability of social networking information, the report finds.  Courts increasingly face difficult questions about the extent to which parties are required to preserve social media and about whether changes to social media sites constitute spoliation. “One court this year even required a defendant in a trademark infringement case to recreate a Facebook page as it had previously existed, so that the Facebook page showed plaintiff in a photo that displayed ‘infringing trade dress,'” the report explains.

Additional key issues from 2012 identified by the report are:

  • Parties’ preservation obligations in advance of and at the outset of litigation.
  • The scope and meaning of “cooperation” in e-discovery, consistent with the Cooperation Proclamation of The Sedona Conference.
  • The emergence of proportionality as an increasingly important concept in e-discovery.
  • The continued lack of clarity from the courts about what constitutes reasonable efforts to prevent the disclosure of privileged information.
  • Greater emphasis by courts on the government’s e-discovery obligations and a greater willingness to sanction the government for failure to live up to those obligations.

The full Gibson Dunn year-end report is available on the website and in PDF format.


About Bob Ambrogi

A lawyer and veteran legal journalist, Bob advises Catalyst on strategic communications and marketing matters. He is also a practicing lawyer in Massachusetts and is the former editor-in-chief of The National Law Journal, Lawyers USA and Massachusetts Lawyers Weekly. A fellow of the College of Law Practice Management, he also writes the blog LawSites.