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Finding an E-asy Solution

How to manage eDiscovery challenges in construction-defect lawsuits to lower costs and minimize disruption.

September 11, 2020 Photo

Like any large industry, construction companies face their share of lawsuits. Construction-defect lawsuits are among the most common in the industry, accounting for thousands of lawsuits each year, of which a large majority (about 95 percent) end up settling, according to the Contractors State License Board Report to the California legislature.

Despite the regularity of these lawsuits, companies often lack a standard process for responding to them when they happen. This means that customary parts of a lawsuit, such as the electronic discovery process (in which both parties identify, collect, review, produce, and share with each other any electronically stored information that’s relevant to the case), often cause a major disruption to a company’s day-to-day business. Employees rush to locate and compile data buried on hard drives, laptops, employee cellphones, and proprietary databases, all under a tight timeframe—creating an expensive, chaotic, and stressful process.

There is a better way, although it requires a little more effort to create the process at the outset. Once established, though, handling eDiscovery as a standard business process will ultimately lower your costs and minimize disruption to your business.

Below is how you can incorporate eDiscovery into your normal business routine.

Create a Comprehensive Plan

If you don’t know where your company’s data is stored, or if you make other avoidable mistakes in discovery, you might very well lose a lawsuit that rightfully should have gone the other way. An organized, company-wide eDiscovery plan should start with a comprehensive inventory of all your existing data, including where it’s stored and who has access to it. This goes beyond mapping out your company’s internal servers. Electronic information is everywhere, and with many employees working from home during the COVID-19 pandemic, the line between work devices and employees’ personal devices has been largely obliterated. Relevant information for a case could be contained in text messages on an employee’s cellphone, on a Facebook or Instagram account, in personal emails, or in documents stored in the cloud.

For construction companies in particular, the list of potential data sources is even longer. It could be residing inside construction-management software; building-information modeling; virtual reality software; or other proprietary systems, solutions, and databases.

To start the process of documenting every possible place where company data could be residing, who has access to what data, and how they use it, we recommend using a custodian questionnaire, which should contain specific questions about where data is located for the matter at hand, as well as situational questions to inform on the facts of the case. After you have a map of all your data, you need to develop a repeatable method for collecting and preserving it. Although much of this can be automated using the right software, a short amount of dedicated time might be required on the part of some of your employees. Be sure to document every step of your processes—from collection to review to production—to make sure that they’re consistent each time. If you work with an eDiscovery partner, that partner should be able to help you outline workflows that are tailored to your business.

As you consider the actual nuts and bolts of incorporating a standard eDiscovery process, decide whether your staff is equipped to handle this extra responsibility, and whether the size and formatting of your company’s data might require tailored software, or even an outside vendor to oversee the process.

Choose the Right Platform for Your Needs

All of this data needs to go somewhere, but it can’t go just anywhere. You’ll need an eDiscovery platform—or two, depending on your specific needs and preferences—that can be used for targeted data collection, legal holds, culling and processing, preservation, review, and production. The various platforms have their strengths and weaknesses, but all will feature some form of early-data analytics that can remove duplicate documents, system data, and other digital detritus with a high degree of precision. The earlier in the process you can eliminate irrelevant data, the more time you’ll save and the less money you’ll spend on attorney review: the most costly phase of discovery.

A centralized platform can also provide a safe place where data can be stored for reuse after going through the document-review process. In addition, a centralized platform empowers you to reuse notes, tags, and privilege calls that you have made before, saving money, leveraging your legal spend, and increasing consistency across all your legal, regulatory, and investigatory matters.

Depending on the platform you choose, you might receive additional useful features such as data analysis, data visualizations, or technology-assisted review—a form of artificial intelligence that uses input from the user to make increasingly educated and automated decisions about which other documents are relevant and which are not.

Managing your data company-wide data in this way not only makes it easy to sort through what you have, but also helps eliminate confusion caused by the complexity of construction projects. A typical job might involve multiple parties, including owners, general contractors, subcontractors, architects, engineers, surety companies, law firms, and insurance companies, creating a large amount of overlap.

Even within a construction company itself, lack of data centralization can lead to unnecessary headaches. In one case my company worked on, a large construction company permitted each of its divisions to hire its own law firm, causing a great deal of redundant work and money needlessly spent. Here’s an example of how it unfolded over three successive legal matters:

  • In Case No. 1, data was collected from three custodians and sent to the law firm, as well as the firm’s eDiscovery vendor.
  • A short while later, the company became involved in Case No. 2, which required data collection from 10 custodians. A different law firm handled this case, not realizing that three of the custodians were also involved in Case No. 1.
  • Not long after that, Case No. 3 was handled by yet another law firm. The same three custodians from Case No. 1 were involved, as well as five from Case No. 2. But because the three law firms weren’t in communication, this data was collected for the third time in six months from some of the custodians.

This inefficiency resulted in highly sensitive internal data being stored in several different locations outside the umbrella of the company’s security systems. In addition, each law firm was applying different criteria for coding-privileged documents, as well as using its own set of protocols for other aspects of eDiscovery, meaning that there was no uniformity to the data or the results.

Keeping all your data in one place helps to eliminate this inconsistency and redundancy. Rather than putting your data in places where security protections and protocols might be substandard, make sure that any law firms working on your cases work within the platform that you have vetted and selected.

Keep Review Costs Down

The biggest corporate eDiscovery cost, by a significant margin, is manual attorney review, which accounts for about 73 percent of the total, according to a 2012 Rand study, “Where the Money Goes.” This cost can be reduced in a number of ways, some of which (targeted data col-lection and early analytics) have been touched on above.

Once data has been reduced as much as possible, another way to keep review costs at a manageable level is for companies to decide how they’ll handle attorney-document review. The big choice to be made is whether to hire contract attorneys for each individual case or to establish a fixed team of review attorneys, who could be either in-house or outsourced.

There are clear advantages to using the same legal team for document review across multiple cases. The team will gradually build up institutional knowledge, allowing it to quickly and accu-rately determine which data is important and which is irrelevant. The team will also develop a working relationship with you and become familiar with your company’s preferences. Because the team won’t be starting from square-one each time, the review process will become much smoother and more predictable as time goes on. And the decisions, from relevancy to privilege, will become standardized and reliable across all your matters.

It’s also important to set a threshold for bringing in additional attorneys to handle review so that your legal team does not become overburdened. This threshold could be based on a certain number of documents, or even certain types of cases.

Legal matters are a fact of life in the construction industry. It is simply smart business to treat data collection and eDiscovery not as an occasional inconvenience to work around, but as an ongoing effort that requires a consistent, professional response. By building a workable, repeatable process for data collection and review, you can ensure that your company is prepared to defend itself in any future legal matter as efficiently and effectively as possible.

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About The Authors
Barry Schwartz

Barry Schwartz is senior vice president of advisory services at BIA. 
  bschwartz@biaprotect.com

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