If your company has ever been involved in any type of litigation, you may have been advised at one point or another that regardless of the merits of your case, costs would make pursuing or defending the case prohibitively expensive. No litigation activity has more potential to drive up costs than discovery. The need to collect, review and produce tens or even hundreds of thousands of pages of documents, respond to intricate and detailed interrogatories and make numerous employees available for depositions has the potential to put serious strain on your company’s litigation budget or rainy day fund. Having to respond to discovery can also result in serious disruption to everyday operations.
The trend over the past decade and a half has been toward electronic document and email discovery, which many have identified as a major driver of increasing costs. While the electronic storage of documents and use of email have grossly expanded the number of records that must be searched to satisfy an opposing party’s document demand, it is also the breadth of material that could potentially be responsive to broadly worded demand that makes discovery so expensive.
Both federal and New York courts have recently taken steps to reduce the cost of discovery by introducing the concept of proportionality. Proportionality requires parties and courts to restrict the scope of discovery so that it fits within the size, scope and importance of the litigation. Proportionality rules recognize that it does not make sense for parties to spend $100,000 completing discovery where the plaintiff only seeks $150,000 in damages, and they give courts and parties a basis to take steps that restrict the use of discovery devices where appropriate.
On Oct. 5, the preamble of the discovery rules for cases filed in the state’s Commercial Division was amended to read in part: “The Commercial Division is mindful of the need to conserve client resources, encourage proportionality in discovery, promote efficient resolution of matters, and increase respect for the integrity of the judicial process.” Parties arguing for the addition of proportionality language believe that this guidance, along with previous rule changes limiting the use of interrogatories and depositions, will reduce discovery costs in New York courts.
More substantial changes will soon go into effect in federal courts. Beginning Dec. 1, the scope of discoverable material in federal court will no longer be all material that is “reasonably calculated to lead to the discovery of admissible evidence.” Instead, the Federal Rules of Civil Procedure will soon limit discovery to “non-privileged matter(s) that (are) relevant to any party’s claim or defense and proportional to the needs of the case, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”
While both amendments should have a positive effect on the costs of litigation overall, it is too soon to tell how much of an effect they will have on individual lawsuits. Discovery is still likely to be a major litigation expense, and cases will still settle to avoid that expense. However, many business owners could benefit from these recent efforts to lower litigation costs.
Curtis A. Johnson is an associate in the Rochester office of Bond, Schoeneck & King PLLC where he practices in the areas of commercial litigation and creditors’ rights.
10/9/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email email@example.com.