E-Discovery Nightmare Arises on BP's Horizon
law.com
By Amy Miller
Corporate Counsel
June 07, 2010
The legal strategies for BP and other companies involved in the Deepwater Horizon disaster have yet to be revealed. But one thing is certain. Their in-house legal departments are in the midst of an expensive and Herculean task -- discovery.
"All of these organizations are well aware of the need to preserve and collect key information," said Jim Wagner, CEO of DiscoverReady, a discovery management service. "But few organizations have ever confronted the scale of discovery that they are likely to have to undertake."
The companies are under document hold demands, subpoenas, and other requests from federal agencies, including the Justice Department, which announced this week that it has begun civil and criminal investigations into the massive oil spill in the Gulf of Mexico. They're also subject to court orders in pending litigation.
So the companies' legal teams are likely sifting through and collecting massive amounts of data in both electronic and paper form, information that may go back decades. There may be physical evidence to collect, which may be have been destroyed. Meanwhile, the companies' lawyers are also likely dealing with cross-border privacy issues that make the discovery process even more complex.
"Welcome to discovery 101 in 2010," said Laura Kibbe, who helped build Pfizer's e-discovery system in 2005 as senior counsel. In the 1990s, she was also an in-house attorney at Texaco, where she dealt with the legal aftermath of oil spills. She's now senior vice president of document review services at Epiq Systems.
"Even under the best of circumstances, discovery is a labor-intensive, time-consuming process," Kibbe said. "And it never goes as fast as government investigators or corporate counsel would like."
Figuring out what data is out there, and who has it, is the first step. That entails conducting interviews with employees and working with IT professionals to see what data can be retrieved and from where.
Producing these documents under intense public scrutiny adds one more layer of complexity, legal experts said. The companies will have to be transparent and communicate regularly with government agencies about their processes. That will be key to the companies' legal defense, and their public image.
"Any mistakes they make will be magnified 100 times," said Craig Carpenter, general counsel of Recommind, an e-discovery software provider.
Some documents are easier to get than others. Much of the recent information the government wants about how companies immediately responded to the disaster will be electronic, Kibbe said. But government investigators may also want decades-old paper documents about construction and equipment, such as the now-sunken oil rig.
Finding those paper documents will be hard if the people involved are no longer employed at the companies. "Everybody who knows anything about those products is gone," Kibbe said.
There's also the challenge of getting employees to retain information after document hold notices have been issued. It could be tricky for in-house lawyers if the companies face criminal charges. So-called "bad actors" could delete information that might get them in trouble, said Wendy Curtis, chair of Orrick Herrington & Sutcliff's e-discovery Working Group. "They need to be cognizant of that level of risk and put steps in place to prevent people from doing that," she said.
To make the task even more arduous, some of the information companies that London-based BP will need could be located overseas in the European Union, where stricter privacy laws make it harder to send information to the U.S. That will likely become an increasingly important issue as more lawsuits are filed involving employees who may be located all over the world, said Amor Esteban, a partner at Shook, Hardy & Bacon with an expertise in e-discovery and data management.
And some overseas companies that could be involved in lawsuits later on may not understand their discovery obligations under U.S. law. "The bigger concern, frankly, are the parties we still don't know about," Esteban said.
However, the EU's stricter privacy laws don't prevent discovery in the U.S., said Sanjay Bhandari, a partner at Ernst & Young in London. They just make it harder and more expensive. Documents can be obtained by getting consent from data custodians, for example. Or personal information can be scrubbed from databases. "It's a tension that every international business has to manage," Bhandari said.
In the end, how much will these discovery efforts cost? A lot. The price tag could top $100 million, said Carpenter, who like many predicts that litigation related to the spill will go on for years. "It's going to be Enron on steroids," he said. |
