March 21, 2017
By Jeffrey A. Wieland
Jeff Wieland is a Shareholder in the firm’s Construction Law and Commercial Litigation Department, licensed to practice in Minnesota and North Dakota. Jeff can be reached at 612.359.7605 or firstname.lastname@example.org
Disputes are about what happened; trials are about proving it. Because the different parties to a dispute rarely agree on exactly what happened, it is up to the judge, jury, or arbitrator to decide whose version of the story is closest to the truth. It is the lawyer’s job to convince the tribunal that his or her client’s story is the one to be believed. The two main tools lawyers use to do that are persuasion, which is largely a function of the lawyer’s experience and skill, and evidence. In construction disputes, documents are commonly the key evidence used. Today, those documents are largely electronic and growing at a seemingly exponential rate. The subject of this Briefing Paper is how to economically access, process, and produce electronic documents at a cost that won’t overwhelm the underlying dispute.
A few hundred years ago, documents were relatively rare because they could only be created or copied by hand by the literate few. Think of scribes working by candlelight in a monastery. But computers have made it so easy to create, copy, modify, and transmit documents, that it is now routine to have disputes that involve thousands, and often millions, of documents. That has caused an explosive increase in litigation costs because the lawyers have to sift through all of those of documents to find the evidence they need to prove their client’s case or to disprove the other side’s story. In many instances, the costs incurred during discovery to manage the documents becomes the biggest expense the client pays. This Briefing Paper presents four ways that industry clients can save money in the discovery phase of litigation.
This sounds like the advice that we get from our doctors to eat right, exercise, and get enough sleep – easy in concept, hard in practice. Nonetheless, organized electronic filing of project documents in one place will save you money in at least two ways. First, it makes it easier for the lawyers to collect the documents. During discovery, each side usually sends subpoenas or formal discovery requests that require the other side to produce, more or less, all documents created during, arising from, or related to Project XYZ. The attorneys have ethical and professional obligations to make sure that all required documents are produced. Copying the files from a single server is much less expensive than trying to find all the required documents on several employees’ laptop computers, filing cabinets, desk drawers, and email in-boxes. Second, it makes it easier for the lawyers and clients to find the exact documents they need. The less time you and your attorney have to spend looking through all communications to and from parties about Pay Application #7 or Change Order #2, the lower your bill.
The chart below is a checklist of typical documents that would likely be relevant in a construction dispute. Whatever filing system you use, these types of documents should be retained, organized by project, and readily available.
Paper documents, while sometimes necessary in the working world, are expensive in litigation. They are easy to lose, bulky to store, difficult to transport, and hard to share. Imagine a typical construction project using paper documents. The documents will likely fill several filing cabinets. When the attorneys need those documents, they have to be boxed up and shipped. When the attorneys get the boxes of paper, finding the correct document is time-consuming. Then when the needed document is found, it usually has to be copied – another expense.
Ironically, although computers are largely to blame for the explosion in discovery costs, they are also our best hope for controlling those costs, as will be discussed below. But computers can’t do much with paper documents. They have to be scanned into a computer, before they can be processed by software. But once the documents are in electronic form, lots of cost-savings appear. Transporting the documents from the field to the attorneys is as easy as putting a thumb drive in the mail, or even just uploading the files via the internet. Finding documents is easier using software search tools. Sharing documents just takes a couple of clicks. Scanning documents in the field, and then properly filing them, is much less expensive than dumping a bunch of paper on the lawyers.
Clients sometimes try to save money in a lawsuit by limiting the documents that they turn over to their attorneys. They just hand over the seemingly important documents, reasoning that the fewer documents the attorney has to look through, the lower the bill. It is counterintuitive, but that strategy almost always increases the cost of the litigation. Leaving aside the ethical issues of an incomplete production, the problem is that the two sides to the dispute almost always have radically different ideas about which documents are important. A hypothetical example will illustrate.
Coyote Enterprises is in a dispute with Acme, Inc. over some allegedly defective rocket-propelled roller skates. Both sides served discovery requests asking for all documents, including emails, related to the transaction. Acme, trying to save money, only gave its attorney the emails that it considered important. Coyote’s attorney, being a wily fellow, compared the emails that his client sent to Acme with the emails that Acme produced. He found several instances of emails that his client sent to Acme and to which Acme responded that Acme did not turn over in response to Coyote’s discovery request. Now the fight in front of the judge is no longer just about the merits of the case. It is also about Acme’s failure to comply with lawful discovery. Coyote’s attorney gets to ask, “They didn’t produce these emails, so what else are they hiding?” The resultant discovery fight will cost both parties money, but just as importantly, it costs Acme credibility with the judge or jury.
Additionally, it puts Acme at risk of outright losing the case. Judges can impose a variety of sanctions against parties that do not comply with lawful discovery. Those sanctions can include restrictions on the evidence that you are allowed to present at trial to support your case or an “adverse inference,” which is an order from the judge saying that because you did not produce a document so that we can look at it, we will assume that it says nasty and horrible things about you. Variations of this hypothetical example happen frequently. The simple way to avoid those discovery fight costs is to give your attorney access to all your documents and records, not just the ones you think are important.
Discovery in document intensive cases can be a monumental undertaking. Sifting through the thousands or millions of documents in the case to find those golden nuggets that prove your claims, or disprove the other side’s, can be difficult and expensive. But the cost to perform document discovery is largely driven by the tools and processes each firm uses. As a client, you can control your exposure to discovery costs in litigation by choosing to work with a firm that focuses on cost-effective electronic discovery. Here are some questions to ask before hiring an attorney to handle a construction case:
The diagram below is a top-level representation of how we handle discovery and document management at FWHT. Our process has two goals. First, starting with the complete universe of documents in a case, we need to cost-effectively funnel down to those select few documents that will help us win. Second, we need to respond to the other side’s discovery requests ethically and defensibly without giving away privileged or otherwise protected information.
We start the funneling process by reaching agreements with opposing counsel on how we can limit the documents in a case. Usually, we can agree on who the key people in a dispute are and to limit document productions, at least initially, to just those key people. We almost always want to see the emails from the project manager; we rarely need to see the emails from a second-shift laborer. Similarly, we can restrict the size of the data set by agreeing on date limits. We typically don’t need to see every email ever written by a key person, just the ones during a project. And if you’ve filed emails by project (see point #1), the task becomes even easier.
After we’ve collected the documents that meet the parameters that we’ve agreed to with opposing counsel, we load the documents into a software package called Relativity. This is a powerful database package that allows us to perform sophisticated searches and to efficiently cull the data. Loading all the different types of files that we encounter (pictures, spreadsheets, PDFs, Word, email, etc.) into the software is itself a challenging task.
The advantage to using software like Relativity is that it can help us reduce the number of documents that we have to review to find the “golden nuggets” that win the case. For example, consider an email between two people that is copied to eight other people. That means that there could be ten copies of the same email in the data set. The software can flag the nine duplicates, so the reviewer only has to look at that particular email once. Email threading is another technique that reduces the volume of documents to be reviewed. As an email conversation bounces back and forth, each reply creates a new document. But if you just look at the last email in the chain, you can see all of the previous parts of the conversation. The software can flag the intermediate documents so that the reviewer can concentrate on the single document that contains the entire conversation, thereby eliminating examination of several redundant documents. There are numerous other techniques using text and metadata searches that can help the attorneys find the important documents. The software helps winnow the data set so that the attorneys are only looking at documents that are more likely to be important.
Many firms use Relativity or software that is similar to it. This is an area where there is vast disparity in cost, though. Some firms use Relativity, but they don’t own it. They have to rent it, and then they pass that cost on to the client. Many firms have to outsource loading the data into the software and they pass that cost on to the client, too. Storage of the data is another cost. Many times clients are charged a monthly fee per gigabyte of data. Because cases can often take years to be resolved, that can become a huge expense. All too often, these costs don’t become apparent to the client until they are in the middle of litigation and changing to another firm with a better cost structure would be difficult or impossible.
At FWHT, we’ve taken a different approach so that we can contain costs as much as possible for our clients. We invested in hardware and software so that we can keep the discovery process in-house. We charge a nominal one-time start-up fee at the beginning of the case, and we charge only for our technician’s actual time spent loading and processing the data in the software. We don’t charge our clients every month for use of the software or storage of the data. We don’t charge the client for every document loaded into the software or Bates-labeled in a production. Unlike many other firms, we made the conscious choice not to treat management of the huge amounts of data inherent in construction cases as a profit center.
Construction is a document-intensive business and that means that construction disputes will often involve expensive document discovery. Clients can save money by electronically filing their documents and performing a broad and inclusive initial search for documents. But the biggest savings occurs before the case even starts. Before you hire an attorney to fight for you, ask questions about how that attorney handles discovery and management of all those documents. Your bottom line depends on it.
 Fights over the scope of such requests are common. The Rules of Civil Procedure used in court allow very broad discovery, although there have been some attempts lately to limit it using the concept of proportionality. See, e.g., Fed. R. Civ. P. 26(b)(1) (“Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”). The scope of discovery allowed in arbitration can vary widely.
 This list is not all-encompassing, but rather is a starting point. Your particular work may involve other document types.
 There are instances where it is important that you retain original documents. Your attorney can provide guidance on what paper documents you need to retain.
 This type of dispute even played a role in the recent presidential election, proof that the consequences of failure to produce everything can have not just economic consequences, but historic ramifications, too.
 Each case is unique and we adjust our approach based on the needs of each case.
This discussion is generalized in nature and should not be considered a substitute for professional advice. © 2017 FWH&T