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The Hefty “Costs” Of Not Following e-Discovery Best Practices - Part 1

Part 1 (read Part 2 here)

A significant cost award - £578,444.17, was handed down by the British High Court of Justice against MGA Entertainment after it notified the court that it missed producing approximately 84,000 disclosure documents three weeks prior to the start of trial in a patent claim brought against it by Cabo Concepts. In handing down the decision, the judge criticized both MGA and its legal representative, Fieldfisher, for not following e-Discovery best practices.

At the heart of the issue was a dispute between the parties over the expertise of MGA’s in-house IT team. Counsel for Cabo Concepts accused Fieldfisher and its in-house document review provider, Condor Alternative Legal Solutions of “inadequate supervision of the e-disclosure process.” The court agreed noting that Fieldfisher “ought to have applied a more rigorous approach to examining the assurances from its client that it had the necessary expertise.”

The judge explained, “This lack of supervision appears to lie at the root of the problems that then occurred, not least because, as it turns out, MGA’s in-house IT team did not have the necessary levels of experience or knowledge of best practice required for the conduct of a substantial disclosure exercise of this type, involving in excess of 1 million documents.”

Of additional concern to the court was that Fieldfisher did not question the information they received from MGA as to the expertise of its IT team and nor did they instruct an e-disclosure expert (whether Condor or anyone else) to consider the approach that MGA intended to take to the identification and collection of documents and whether that approach was in accordance with best practice.

Smith J stated in her judgment that the identification of an email that was not disclosed should have, a the very least, prompted the law firm to re-run that data collection. The court noted that given Fieldfisher’s responsibility to ensure the preservation of data, it ought to have been aware of the detail of the litigation holds put in place by their client and, if it had, there would have been no question of forming the view that the re-run might not reveal the missing email.

The judge ordered that Cabo should have its costs on account in the amount of 45% of its total legal costs incurred in preparation for the trial. As the total cost of the preparation was £1,285,431.49, MGA Entertainment was ordered to pay Cabo £578,444.17.

Courts are consistently holding up e-Discovery best practices as the standard to which counsel and parties in a litigation must adhere to. It is clear from this decision that courts expect legal advisors to have the expertise to advise their clients on the e-Discovery process or at minimum to diligently supervise external vendors with appropriate expertise. The decision also highlighted the potential risks of having internal IT teams lead the e-Discovery process when it may not be IT’s true area of expertise. Data identification, collection, processing and analysis can be tricky. Not having the right expertise in place can clearly be a costly mistake.



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