In Charge of Defining Search Terms? You Could Cost Your Client $6 Million

J0414039  A litigation paralegal's job can often include defining many of the search terms used in e-discovery.  That can cost your client big, BIG bucks as reported today in Ralph Losey's blog, e-Discovery Team.

Apparently, a trial lawyer for the Office of Federal Housing Enterprise Oversight (OFHEO) agreed to an e-discovery search of backup tapes to find relevant information. Unfortunately, that lawyer also agreed to let the plaintiffs define the search terms — big mistake! At the very least, OFHEO should have demanded the right to negotiate the search terms with the plaintiffs. Otherwise, they risked having to collect a ton of material, much of which would likely prove irrelevant.

And that's just what happened. The plaintiffs came up with 400 search terms, which yielded about 660,000 documents. In addition to bearing the IT costs of having to restore and search the backup tapes, the OFHEO then had to hire 50 contract lawyers to go through all those documents to find responsive material.

The cost?  $6 Million big ones.  Yep.  $6 Million and the OFHEO was not even a party to the case. In fact, the six million dollars represented nine percent of its total annual budget, just to comply with a subpoena for electronic documents. Runaway e-discovery costs might be keeping some of our e-discovery vendors and staffing agencies alive in a tough economy but clients must be appalled.

Losey states In re: Fannie Mae Securities Litigation sets a troubling precedent in favor of enforcing exorbitant e-discovery costs.  Although OFHEO clearly had relevant information to the multidistrict litigation against the Federal National Mortgage Assn. (”Fannie Mae”) and the Federal Home Loan Mortgage Corp. (”Freddie Mac”), they were not a party to the litigation. This fact, coupled with the high expense involved in an over-broad e-discovery request, did not seem to concern the court, which is why this decision is troubling.

This case sends a very strong message to the Trial Bar to be very careful about what they agree to in a midst of a hearing. It shows that they should never agree to anything concerning e-discovery without first consulting with an e-discovery specialist, preferably one who is part of a larger tech/law e-discovery team. In fact, this case clearly demonstrates that an e-discovery lawyer (if you can find one) should attend every discovery hearing.

Losey is clear in his message: "Trial lawyers, no matter how smart and skilled they may be, are not qualified to swim in these waters alone. Fannie Mae shows just how dangerous these waters can be. You may think something can be done fairly easily and inexpensively, and later be shocked to learn that it will cost millions, and take months, or even years to do. Apparently the trial judge did not understand how common a mistake this is. I am confident that if the government lawyers for OFHEO had had an experienced e-discovery lawyer with them at the first hearing, they would not have stipulated to the order they did, and all of the disasters that followed could have been avoided. But they did not, and as a result, they were bushwhacked."

Ignorance of technology is dangerous. I recall one attorney who wanted a paralegal to print out the documents in his case simply because he preferred to handle paper rather than view everything on computer.  You can imagine his learning curve when the paralegal explained that printing out the documents would create a paper trail about 15 blocks long.

Paralegals are becoming e-discovery specialists.  Keeping costs down by training attorneys what consenting to hundreds of search terms means can go a long, long way.

One Reply to “In Charge of Defining Search Terms? You Could Cost Your Client $6 Million”

  1. This reminds me of working for a vendor once where their idea of culling a document universe using keyword searching, was so elementary that all they did was compose a list of words separated by “and”.

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