E-discovery sector has room to grow: experts

Canada’s legal industry continues its shift into the world of electronic discovery, and the group of specialized firms helping to manage the transformation has room to grow with it, according to experts.

Dominic Jaar, CEO of Ledjit Consulting Inc., says e-discovery specialists have broken into different areas of the e-discovery reference model, which moves along a continuum ranging from information-management practices to courtroom presentation techniques and services.

“We’re really a minority of people and we sort of informally, without necessarily agreeing, went with our preference and chose different parts of the [reference] model to specialize in,” says Jaar. “It happened naturally and it’s a good thing because I think we’re covering the whole spectrum.”

Jaar’s firm focuses on the first two steps of the e-discovery process: information management and document identification. Ledjit helps companies develop document-retention policies and implement relevant technologies, for example.

The identification step comes into play after a company has been sued and must determine what materials are potentially relevant for discovery purposes and find a way to preserve and collect it.
For the preservation and collection step, companies typically retain e-discovery vendors such as Commonwealth Legal Inc. and H&A eDiscovery to process the data. This helps trim the volume of information collected by eliminating duplicates and other redundant data.

Firms like Toronto’s Wortzman Nickle Professional Corp. and LexLocom are next on the scene. They specialize in the document-review stage of the reference model by providing the team of lawyers required to review the massive set of information that remains. Jaar says mainstream law firms are the main handlers of the fifth stage, which involves the production of documents.

Meanwhile, the final stage - presentation of evidence in courtrooms - remains largely unrepresented by Canadian businesses. Canada may look to the United States for guidance when it comes to this aspect of the e-discovery process, says Jaar, who notes that several companies south of the border have started to help law firms present electronic evidence to judges in a more compelling way.

Jaar and Oakville, Ont., legal technology consultant Martin Felsky offer that service, but no Canadian firms focus solely on this step of the e-discovery model, a situation that may not last much longer.

“Preparing evidence for trial has a budget that is as important, if not more important, than the process of collecting and reviewing the documents,” Jaar says. “That’s really where you convince the judge, so that’s where you should spend energy.”

Most large law firms, meanwhile, have what Jaar calls e-discovery gurus who lead the way within the litigation department. He suggests most Canadian firms continue to develop their internal processes for e-discovery and have yet to reach the point of actively marketing their services in this area. Firm gurus often turn to outside help from boutiques offering e-discovery services to help them on significant cases, says Jaar.

Susan Wortzman, founder of Wortzman Nickle, attests to the high volume of work emanating from law firms. Upon opening shop in 2007, she and partner Susan Nickle assumed the bulk of their work would come from corporations and other clients looking for someone with very specialized knowledge of e-discovery.

But many of their retainers come from law firms that refer work to Wortzman Nickle or come to them for advice on complex cases.

At the same time, Wortzman says rule changes in Ontario earlier this year, which introduced the principle of proportionality, have prompted some clients to take a more active role in the e-discovery process. Many are cutting out third-party vendors for the collection and preservation of documents, instead opting to keep that work within their own IT departments.

“It’s both a cost issue and a practical issue,” says Wortzman. “You’re saying, ‘We need the e-mail boxes of 10 individuals at the company.’ They’re saying, ‘Our IT department can just make a copy of those, and we’ll send you a CD in an hour with that information loaded on it.

Why do you need to retain somebody else to come in and start getting into our confidential systems?’ So clients are pushing back on that and frankly, it’s been cost-effective and faster.”

Some large organizations, such as banks, large utilities, and energy companies, have even established their own e-discovery departments, says Felsky. Such companies already have a process in place should they face litigation and will work with their outside counsel to respond to the matter, thereby blunting the need for consultants like Felsky to get involved in the process.

But luckily for him, “The number of organizations in Canada actually in a position to do that is very, very small. They tend to be the very largest organizations, and most mid-size and large companies, and certainly small businesses, really aren’t going to do that and aren’t going to begin to do that.

So I think that there’s still going to be a growing market for advice on how to handle litigation as it happens.” That’s because it simply doesn’t make sense for organizations that rarely get sued to invest in that type of e-discovery preparedness, according to Felsky.

At the same time, he believes the threat of large law firms squeezing e-discovery experts out of the market is also unlikely since very few lawyers are experts on technology.

“So while lawyers are just now starting to get up to speed on the new rules in Ontario and starting to get into e-discovery in other provinces, they really are never going to be in a position to keep up with all the developments in technology from their clients’ perspective,” Felsky says. “The role of a technology consultant for litigation is going to become a permanent one. Some of the clients that I’m working with are beginning to realize that fact.”

In the meantime, Jaar believes it’s crucial for firms to raise their games when it comes to the document-review process. Most continue to review documents in a linear fashion, methodically looking over each one individually. While thorough, that process requires a lot of manpower and time, thereby raising costs significantly.

In the years ahead, technology will play a more prominent role in the document-review process, says Jaar. That will open up a flood of opportunities for lawyers with in-depth knowledge of how that technology works.
“Instead of taking three months and 10 lawyers to review the volume of documents, they’re going to be in a position to do the same document review with five lawyers within two weeks,” says Jaar.

“But that really means understanding the technology and not only understanding the process of e-discovery, which is what we see in the market right now. Lawyers know the Sedona Principles, they know what they need to do next but they don’t know how to do it. So that’s a set of skills I think needs to be developed in the Canadian market.”

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