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Are Changes to the FRCP Increasing the Cost of Litigation?

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Wednesday, April 16, 2008

Are Changes to the FRCP Increasing the Cost of Litigation?

Over the past year, in pursuit of everyone trying to figure out the best way to address all of the issues created by the changes to the Federal Rules of Civil Procedure and all of the resulting changes to state and local rules, I have worked with litigators from over 75 different law firm, litigation services professionals from 50 different service providers, technologies from 50 different litigation technology vendors and the General Counsels, Associate General Counsels and related IT professionals for over 25 Fortune 1000 companies. In addition to an incredible education of the current state of the litigation market and all of the associated technologies and new service practices, what I have taken away from this journey is a sense that we are still in the middle of a paradigm shift that is rocking the industry to its very core.

As such, I believe that the answer to the question about whether or not the changes to the Federal Rules of Civil Procedure and all of the resulting changes to state and local rules, is going to be different depending upon who you are asking.

Following are the results of the answers that I have gotten from the various groups that I meet with:

Litigators
Litigators are reporting that the changes to the FRCP and all of the resulting changes to state and local rules have required them to "go back to school" and learn a more about the technology and science of litigation and Electronically Stored Information (ESI) then many of them ever cared to know. I can tell you that the CLE classes on the effects of the changes to the FRCP that I teach have been full with a lot of very attentive attorneys.

In addition, litigators are now learning that litigation has gotten much more complicated and much more expensive. And, they are realizing that they are now required to solicit the assistance of technology and process experts are the very beginning of case to participate in pre meet and confer strategy sessions.

Further, whether they have been caught off guard or not, many litigators are finding that it is making more financial sense to settle their cases out of court due to the extreme cost of just getting prepared for trial.

Finally, although I am not a liberty to discuss the details of any of the cases that I have been involved in, I believe that there are an alarming number of new suits being filed against corporations by savvy litigators in which the "end game" is to force a settlement out of court due to the high cost of preparation and initial response.

Litigation Service Providers
As with Litigators, Ligitation Service Providers are reporting that the changes to the FRCP and all of the resulting changes to state and local rules have required them to "go back to school" and learn a more about the technology and science of litigation and Electronically Stored Information (ESI) then many of them ever cared to know. Having started in the legal services business providing copying services, the current surviving providers had to successfully make the transition to the world of imaging, coding, translatoin and hosting over the past several years. They are now faced with the even more daunting task of making the next leap to the world of Electronic Data Discovery and Computer Forensics. For a variety of reason, many of them will not be successful unless they embrace the eDiscovery Paradigm Shift, form new partnerships with technology vendors and consultants that can help them with the new paradigm and change their clients perceptions of what they can bring to the new ESI table. It is my opinion that based upon this classic paradgim shift, there is a tremendous opportunity for the Litigation Service Providers that successfully make the transition and a blunt reality of failure waiting for those that do not.

Litigation Technology Providers
As alluded to in my overview of how the changes to the FRCP have effected the Litigation Services Providers, we are in the midst of a classic market paradigm shift which casuse fear, uncertainty and doubt on the buyer side. As such, and is the case in any market where this occurs, it is an open season for technology providers to step in and fill the requirements gaps with new solutions. Since many of the posts on my Blog deal with my my opinions of all of the wonderful new technologies, I am not going to go into any detail in this post. However, I would like to mention that I believe that the biggest technology winner that will emerge from this opportunity will be the Software-as-as-Service (SaaS) deliver model. Its lesss expensive to develop and deliver, less expensive to use and enables very rapid and incremental updates.

The Fortune 1000
The changes to the FRCP and all of the resulting changes to state and local rules have had the most profound effect on the way in which the Fortune 1000 now have to manage with all things related to litigation. Frist and foremost, they can no longer ignore the whole area of what I am going to refer to as ESI Management including the development and implementaiton of a proper rentention policy and the asssociated infrastructure without taking on the liability of severe financial consequences for no compliance.

In addition, ESI no longer includes just information on servers, desktops and lapstops. It now includes information stored on corporate issued thumb drives and other external storage devices, Blackberries and other PDA, cell phones and even information stored with third party email providers and a list of information that may be stored with applications delivered via a Software-as-as-Service (SaaS) model. And, since collection is no longer an option, IT departments may no longer have the expertise or experience to keep up.

Further, courts are becomming less and less tolerant of ignorance and/or inaction and therefore management of preservation notices and actual preservation have also become an area riddeled with the rick of sanction and servere financial consequences.

In summary, with the changes to the FRCP and all of the resulting changes to state and local rules, the Fortune 1000 can longer afford its IT departments to like its fathers corporate IT departments. The externally mandated compliance and litigation preparedness requirements are much greater and the consequences of non-compliance are server.

So, my conclusion is that the changes to the FRCP and all of the resulting changes to state and local rules probably seems like it has had a net result of making litigation more complex and much more expensive for everyone involved. And, with our country heading into a ression or a least a downturn, conducting successful litigation under the new requirements being impossed by the changes to the FRCP may seem like it has become out of reach financially for many. And, it may be for some time.

However, in the long these changes will enable our legal system as a whole and the individual participants more accurate and equal access to justice. Only time will tell.

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