A financial services organization is a party to a litigation in which plaintiffs are seeking information concerning business practices that impacts a number of the organization’s customers. The organization does not want to provide private and confidential information about the organization’s customers, particularly those not impacted by the alleged business practice. Some of this information may be protected by various federal and state laws, and some is not necessary for the prosecution or defense of the litigation. But that private and confidential information is intermingled with responsive non-private, non-confidential information and is contained in a variety of data formats, including very large spreadsheets. The organization is evaluating its options for protecting this private and confidential information while at the same time complying with its discovery obligations and controlling its costs.
How Electronic Data May Alter the Balance of Risks & Costs Associated with Redactions
Organizations are regularly challenged to balance their need to comply with discovery obligations and their desire to control discovery costs and protect against the unnecessary disclosure of private or confidential information. However, the proliferation of electronic data sources, coupled with the sheer volume of information contained within those electronic data sources, has had a profound impact on the costs of controlling disclosure. Historically, litigants have addressed the problem by redacting the private or confidential information prior to production: the documents in question are “TIFFed” (i.e., creating an image of the electronic document), the private or confidential information is manually redacted and then the documents are produced.
But while manual redaction of a few hundred or few thousand simple documents, like Word or hard copy documents, may be feasible and cost-effective in some instances, manual redactions of tens of thousands documents, especially when it involves more complex data types like spreadsheets, present more challenges. In addition to the increased time and costs involved with the redactions—as well the costs associated with TIFFing data types that are often produced in native format (like spreadsheets)—more complex data types often lose significant functionality when converted to TIFF format. Increasingly, the time and costs involved with attempting redactions on a large scale are prohibitive and often offer little if any benefit to the resolution of the legal matter.
Consider Whether a Court Order is Sufficient
There is a temptation under these circumstances to simply enter into a stipulated confidentiality agreement, have the agreement so-ordered by the court and produce any private or confidential information (including non-responsive information), with the expectation that the so-ordered confidentiality agreement will suffice. The requesting party is, and certainly most courts are, likely to support this approach. And in some instances, a court-ordered confidentiality agreement may very well be the sufficient to address an organization’s concerns.
Yet in other instances, the protections provided by a court order may not sufficiently address risks to the producing party. Those risks include: (i) the potential negative impact to the organization’s reputation or customer relationships if it becomes known that the organization is willingly producing non-responsive private or confidential information in response to legal requests; (ii) the ongoing risk that the organization may be liable for a data breach if the receiving party or its counsel violates the confidentiality agreement or experiences its own data breach; (iii) the potential for additional legal obligations to provide notice or obtain consent before providing such information; (iv) the business concerns with producing proprietary information to a competitor; and (v) the strategic concerns associated with producing non-responsive information that may be used against the organization in other contexts. Thus, whether a court-ordered stipulated confidentiality agreement offers sufficient protection in a particular case, as well as an organization’s options if the protections are considered insufficient, should be carefully considered by the organization and its counsel.
Be Aware of the Pitfalls of Native Redaction
TIFFing documents for production, especially spreadsheets, may cause difficulties both with the redaction process and with understanding the data itself. As a result, many e-discovery vendors are working to develop tools that would allow the redaction—or removal—of private or confidential information from native documents (either manually or automatically) in a forensically sound manner. This may be a viable option in some cases. However, organizations and their counsel must keep in mind that these tools, like any tools, must be tested and vetted in each case to determine whether the tool is effective for the data type, complexity and volume at issue. Some of the challenges to keep in mind:
Consider Creative Negotiation Strategies
Ultimately, the most effective production strategies may be aggressive negotiation and creative problem solving. For such a strategy to be effective, an organization and its counsel must be prepared to demonstrate the burden imposed by traditional redactions, the need to maintain the privacy or confidentiality of the data at issue and the viability of the alternative solutions. Plaintiffs or regulators may be willing to cooperate on mutually agreeable solutions, and courts may be more willing to support alternative production arrangements, if they understand the nature of the problem and the data at issue. Some potential strategies include:
New discovery challenges often require new discovery strategies. And rarely, if ever, does one strategy work for every legal matter. By carefully assessing both the business and legal concerns associated with the potential production of private or confidential data in the context of each legal matter, an organization may be able to manage the risks and costs associated with the prospect of voluminous redactions of electronic data.
For inquiries related to this Tip of the Month, please contact Anthony J. Diana at or Therese Craparo at .
Learn more about Mayer Brown’s Electronic Discovery & Records Management practice or contact Anthony J. Diana at , Michael E. Lackey at , or Ed Sautter at .
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