In practice, the most significant change in modern litigation has been the dramatic increase in electronic discovery costs. As the amount of electronically stored information has skyrocketed over the past two decades, the burden on parties (chiefly businesses) to retain, review, and produce that information in litigation has exponentially increased as well.

Recognizing that reality, the federal Judicial Conference’s Advisory Committee on Civil Rules has recently issued a preliminary draft of proposed amendments to the Federal Rules (pdf) that, if adopted, would take some modest steps towards ensuring greater balance in the discovery process.

A number of interested parties will make their views known through the public comment process that must take place before proposed amendments to the Civil Rules are finally approved for transmission to Congress.

Earlier today, a subcommittee of the Senate Judiciary Committee joined the debate by holding a hearing on the proposed amendments. The title of the hearing reflects a certain point of view: “Changing the Rules: Will limiting the scope of civil discovery diminish accountability and leave Americans without access to justice?”

Our colleague Andy Pincus (who often posts on the blog) was asked to testify about the proposed amendments from the perspective of a lawyer who represents businesses that are concerned with e-discovery. As Andy explains in his testimony (pdf),

  • The cost of the U.S. legal system – which is growing significantly as a result of electronic discovery – is increasingly producing outcomes unrelated to the merits of cases, but rather tied to the defendants’ litigation costs. A key barrier to foreign investment in the United States is the concern, expressed repeatedly by leaders of non-U.S. businesses, about excessive litigation costs in our country. These costs also make it more difficult for U.S. companies to compete with businesses headquartered in other countries.
  • The tremendous growth in electronically stored information – combined with discovery rules formulated for the typewriter-and-paper era – have produced an exponential growth in discovery-related litigation costs. A recent independent study found a median cost of $1.8 million per case for producing electronically stored information, and companies must incur additional costs, in the millions of dollars, to preserve electronic information that might be demanded in discovery.
  • The principal proposed amendment relating to the scope of permissible discovery simply moves a standard already in the Rule – requiring that discovery be proportional to the needs of the case – in order to give it increased emphasis. As the Advisory Committee observed, “[t]he problem is not with the rule text but with its implementation – it is not invoked often enough to dampen excessive discovery demands.” The proposal is designed to remedy that deficiency, and hopefully it will have that effect.
  • The amendments also would modify the provisions of the current rules establishing presumptive limits on some forms of discovery, modestly reducing existing limits on depositions and interrogatories and establishing a new presumptive limit for requests for admissions. The proposed limits are based on information regarding the norms in most federal court litigation, and the Advisory Committee’s eminently reasonable conclusion that “it is advantageous to provide for court supervision when the parties cannot reach agreement in the cases that may justify a greater number.” Nothing prevents a court from allowing a greater number of discovery requests upon a proper showing.
  • Finally, the current vague and uncertain standard for determining when sanctions should be imposed for failure to preserve electronic information is forcing companies to incur very substantial costs to “over-preserve” electronic information. The proposed amendments address this problem by replacing the existing rule with a new, somewhat clearer standard. Two modifications to the proposal would significantly increase the chances that it will have a significant effect in reducing the over-preservation costs that now plague businesses and other organizations.

We’ll continue to watch the progress of the proposed amendments to the Civil Rules, which (if adopted) hopefully will have a salutary impact on the e-discovery costs that businesses face when defending against class actions.