Addressing Electronic Database Discovery – Challenging yet Rewarding
It is naïve to think that any complex commercial case can be run competently without involving data bases used by your client and/or your opposing party. This short article provides the initial information needed to get you started on the correct course.
Imagine litigation in which the sales and profits of a particular product or in a particular region were at issue. Such questions are commonplace in commercial litigation. Other than accepting your opponent’s word regarding the amounts reported in an interrogatory response, how would you determine this information? Or, imagine you wish to assemble information regarding a particular type of transaction, but your opponent claims that such information is not accumulated in the ordinary course of its business reporting. Both of these information requests involve business databases. You will almost certainly need the assistance of a data processing professional, but it is still the lawyer’s job to get this data in discovery.
It is naïve to think that any complex commercial case can be run competently without involving data bases used by your client and/or your opposing party. Databases are used in most transactions with major companies. For example, in a modern data processing environment, bank statements, phone bills, price lists, and practically all accounting records are extracts from databases. In spite of this importance, when designing and responding to discovery, most lawyers focus on a document-centric approach that ignores the databases that control and record the transactions at issue. Under a document-centric approach, discovery is slower and more expensive.
Using a document-centric approach, the relevant data may not be obtained at all. This occurs because document discovery generally does not require opposing parties to create new documents in response to inquiries. In today’s business processing, the relevant “documents” do not exist until they are requested on a real-time basis. This requires legal counsel to embrace the technology used by clients and opposing parties to get the information you need.
Database Unique Challenges
Lawyers with a document-centric approach are frustrated when using databases because of the lack of an existing “hot doc” which already presents a desired fact. Until presented in a report format, structured data is organized as seemingly boring rows and columns that efficiently arrange data. Such structured data encompasses a wide variety of information ranging from basic spreadsheets to relational database management systems.
Databases are a subset of structured data. In a relational database, multiple tables of rows and columns exist. Each table may (or may not) be related to all of the other tables. When relationships exist, there is at least one common piece of data so that information from different tables can be reconnected or linked. Reports (output) are generated from a customized query or programming that extracts data (usually from multiple tables) in response to whatever information need exists. Recurring queries are saved, so that information is consistently extracted.
Electronic discovery often focuses mainly on email and electronic documents, despite the fact that structured data sources frequently contain critical evidence. Structured data tends to get neglected during discovery because it is more complex, and its subsequent use requires special computer skills. Nevertheless, structured data is powerful because of its ability to perform compilations and related analysis.
The data contained in a database is only understandable by its relationship to all other data within the file, whether by formula, calculation, or link. The only reasonable means of providing useful information is through reports. Consequently, parties often agree on the production of a report created from a database. However, when a report is produced without the underlying data, the receiving party is unable to (i) test what is being produced, or (ii) understand (absent additional discovery) the details of how the report was produced.
TIFFs and PDFs Do Not Work with Databases
Historically, parties produced documents in paper form or electronically “printed” using a TIFF or PDF format. Documents that originated electronically were often either printed and re-scanned, or batch-converted to TIFF or PDF. This allowed parties to have an unchangeable record of what was produced, with each page controlled through a production or “Bates” number. However, this process is also expensive, because of both the outside vendor costs for processing, and the additional lawyer time caused by inefficient subsequent content review.
In contrast, production of databases using native files is efficient because the information remains in the format that it was designed. However, using native files makes Bates numbering problematic since native files cannot be meaningfully printed or used in a printed form. Nevertheless, printing of databases is done regularly by recalcitrant producing parties, or for non-vigilant, poorly-advised receiving parties. When this occurs, the requesting party wastes its time and resources.
Rule 34(b) of the December 1, 2006 amendments to the Federal Rules of Civil Procedure made the default obligation to produce a document “in a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable.” Consequently, unless the requesting party makes a poor choice in its format request and/or agrees to a different format, production of databases in their native form should occur automatically. Unfortunately, in current practice, this rarely occurs.
Although not precisely a native file, production of data usable in computer-executable instructions is usually an acceptable alternative. In such event, the receiving party will need to load the data into their own database software so that the information can be analyzed. When these file formats are used, it is important to identify the fields of data that are being delivered so that the receiving party can understand what is being produced. These file formats will contain dividers (often called delimiters) that need to be communicated. Common file formats used for this purpose include:
1. CSV (aka a “comma delimited file” or a “character separated file”),
2. DAT (aka a data file), and
3. TXT (aka a text file).
How to Get Database Discovery
When working with your client’s data, involve your client’s information technology or data processing personnel. When addressing an opposing party’s data, you will similarly need to have communications with the person(s) most knowledgeable about your opponent’s data systems. For more information, see Getting the Discovery you Need. .
In all cases, this should be done in the early phases of the case. Your inquiries will need to address the following:
1. What documentation exists that will facilitate leaning about the relevant systems?
2. What data retention policies exist?
3. What date ranges are relevant to the dispute? In what format and/or system does data exist for these date ranges?
4. What specific data (called fields) are captured by the information technology systems?
5. What hardware, software, and recoding media are used for the relevant data? Are these supported by the party’s current technology infrastructure?
6. What reports (including online reports or inquiries) does management use to understand and control the processes at issue?
From the very beginning, you will benefit from assistance from a technology expert. In simpler situations, client resources may be sufficient. But most commercial cases involving an opposing party’s data require too much attention to realistically expect sufficient dedicated time from a client’s internal resources. Perhaps more controlling, the sensitive nature of an opposing party’s detailed information usually involves protective orders that prevent the exclusive use of client-provided internal personnel. To ensure that the end product will be what is desired, the technical resources ideally will be from the same group that will perform whatever analysis is needed using the data set.
If you are the receiving party, you will need to address the trust that you have in your opposing party. The opposing party’s production will often involve data selections (called queries) that your opposing party ran in response to production demands. Producing parties usually want to limit production to a record subset that directly pertains to the dispute. Receiving parties understandably want to detail test or otherwise supervise the selections that their opponent is making. Once data is initially produced, it needs to be scrutinized to ensure that (i) no data is corrupted, (ii) all data is complete for each transaction or record, and (iii) to ensure that the data set is complete, grand totals from the entire data set agree to other reports and/or systems.
To avoid or resolve impasses, a technical special master can oversee the data selection and attest to its completeness. See Special Masters and Court-Appointed Experts Save Electronic Discovery Costs for additional information. In this writer’s experience, a special master or other discovery dispute can be avoided by allowing the data geeks from both sides to directly communicate and cooperate. Assuming the producing party legitimately wants to provide requested relevant information, legal counsel’s additional oversight and objection in this area often causes additional and unnecessary problems.
ABOUT THE AUTHOR: David Nolte
Mr. Nolte has 30 years experience in financial and economic consulting. He has served as an expert witness in over 100 trials. He has also regularly served as an arbitrator. Mr. Nolte has achieved the following credentials: CPA, MBA, CMA and ASA.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.