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Special Masters And Court-Appointed Experts Save Electronic Discovery Costs

Expert Witness: Fulcrum Inquiry
When databases, computer forensics, or other large collections of electronic information are at issue, discovery challenges can be best handled with hands-on assistance from a neutral party. Courts lack the time and technical capabilities to cost-effectively get the job done. We summarize the reasons why special masters can save money, and summarize the authority for their appointment.

In litigation between competitors, protective orders alone are an insufficient means of solving confidentiality issues. This is particularly true when large databases and other collections of electronic information are at issue. For example, theft of trade secret lawsuits between employers and their former employees continue to increase. The proliferation of electronic data, and the ease of personal storage devices that allow such data to be copied and removed (see Personal Storage Devices Create Workplace Challenges) contribute to the frequency of these allegations.

Computer forensics is a tool of choice in these cases, particularly when concerns about data erasure exist. However, the strength of forensics as a discovery tool also creates privacy and relevancy concerns that limit computer forensics’ uncontrolled use. Once a mirror image of a disk has been made, the party in receipt of the copy has ALL information on the disk – include other proprietary information and private data that has nothing to do with the allegations at issue.

Special masters solve discovery challenges

Even though obtaining the forensic copy is relatively inexpensive and quick, reviewing the data before it is given to the opposing side is not. In these circumstances, the use of a neutral special master provides the best way of providing relevant discovery at the least cost. This occurs because:

1. A special master can perform more timely in camera review of documents, since the trial judge likely has a heavy case load that makes such timely consideration difficult. Similarly, some cases require a comparison of data contained in plaintiff and defendant records (for example, customer lists). Typically, neither party wishes the other to see what is contained in their records. A neutral party can perform the comparison of electronic records quickly and inexpensively, and produce more narrow but still acceptable discovery based on the limited group of matched records.

2. A special master can provide technical knowledge that assists in the speed and effectiveness of discovery.

3. Use of a neutral special master eliminates the contention that a privilege waiver has occurred. For example, The Sedona Principles for Electronic Document Production specifies in Comment 10c that:

“Comment 10c - Use of Special Masters and Court-Appointed Experts to Preserve Privilege

In certain circumstances, a court may find it beneficial to appoint a “neutral” person (e.g., a special master or court-appointed expert) who can help mediate or manage electronic discovery issues [citations omitted]. … One immediate benefit of using such a court-appointed ‘neutral’ third party is the probable elimination of privilege waiver concerns with respect to the review of information by that person. In addition, the ‘neutral’ may be able to speed the resolution of disputes by fashioning fair and reasonable discovery plans based on specialized knowledge of electronic discovery and/or technical issues with access to specific facts of the case.”

Authority for special masters

Practically all state laws provide for the use of special masters and/or court-appointed experts. For example, see California Civil Procedure Code sections 638 and 639. In federal matters, the court may appoint a special master to “address pretrial and post-trial matters that cannot be addressed effectively and timely by an available district judge or magistrate judge of the district.” See FRCP 53(a)(1)(C).

The Federal Judicial Center’s Manual for Complex Litigation, Third indicates:

“As complex litigation increasingly involves issues calling for scientific, technical, or other specialized knowledge, and judges are confronted with contradictory opinions from opposing experts, interest in court-appointed experts has grown. Such experts may serve a number of purposes: to advise the court on technical issues, to provide the jury with background to aid comprehension or to offer a new trial opinion on disputed technical issues. The court has broad discretion to appoint such an expert, sua sponte, or on request of the parties … in appropriate cases, appointment of a neutral expert can be beneficial:

• Court-appointed experts can have a great tranquilizing effect on the parties’ experts, reducing adversariness and potentially clarifying and narrowing disputed issues.
• They may facilitate settlement or at least stipulations.
• They can help the court and jury comprehend the issues and the evidence.”

The California Judicial Council’s Desk book on the Management of Complex Civil Litigation contains similar advice (see, for example section 2.05).

Computer-based discovery will inevitably overtake conventional discovery as businesses increasingly use computerized information. Electronic discovery is criticized as being costly, time-consuming, and more complicated than paper-based discovery. However, much of this cost is avoidable through proper management of the discovery process, avoidance of overly stringent privilege reviews, and the early identification of potential challenges and related solutions. If sensibly employed, electronic discovery has the potential of reducing costs while at the same time increasing the amount of relevant information. Special masters are a tool to help accomplish these goals.

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.

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