Parties and lawyers who are content with the long and drawn out slog of civil litigation in federal court are about to get uncomfortable. But those eager for innovation, efficiency and change are rejoicing, “It’s about time!” On June 1, 2017, the Northern District of Illinois became the second federal court (District of Arizona was the first) to implement a Mandatory Initial Discovery Pilot (MIDP) project to test the use of “robust mandatory discovery as a means of reducing cost and delay in civil litigation.” By all accounts, other federal district courts will soon follow, and if the intended impact occurs, it is our impression this program will be expanded. Though the MIDP has been publicized and discussed in small measures in various legal circles and periodicals, it has not received close to the amount of “splash” it is entitled to, as it is poised to be a true game changer when it comes to incentivizing parties to assess litigation early and resolve cases quickly where appropriate. Simply put, the MIDP is a trap for the unwary and a boon for those prepared for and ready to embrace it. More importantly, the MIDP screams out for three simple words we have been chanting religiously: Early. Case. Assessment.
Background: The MIDP, through a Standing Order, requires parties to all but a few exempted civil cases (like patent cases and cases under the Private Securities Litigation Reform Act, for example) to exchange initial discovery responses and disclose both favorable and unfavorable information and documents relevant to the claims and defenses, regardless of whether the party intends to use the information in presenting its case. Most notably, these disclosures must be made within 30 days of the responsive pleading to a complaint. That means that within 51 days of a case being filed (21 days to respond, and 30 days after the responsive pleading), the mandatory disclosures are due. If the favorable and unfavorable information comes in the form of electronically stored information (ESI), the production is due 40 days after the initial disclosures. So at the outer limit, within 91 days of service of a case, all parties will need to have gathered, reviewed and produced all documents relevant to the case in any way.
Extensions? Nope. If you think you will be able to extend your way out of these deadlines, think again. To ensure that the dates hold firm, parties cannot extend the responsive pleading dates – defendants are now required to answer a complaint even if they are moving to dismiss (except in limited circumstances, like where the motion alleges lack of subject matter or personal jurisdiction). Only two exceptions to the mandatory disclosure dates apply: (1) no need to comply if the parties jointly certify that no discovery will be needed, and (2) one 30 day extension of the mandatory disclosure date is available but only if both parties certify that they are in active settlement discussions and settlement is likely to occur within the 30 day period. Strict enforcement of the rules is in order according to the guidelines, and failure to comply will give rise to a host of sanctions under Federal Rule of Civil Procedure 37(b)(2).
So Why Is This a Game Changer? Under the old regime, document production rarely began in earnest until months (sometimes a year) after a case was in full swing – typically after motions to dismiss were resolved and the parties got around to serving written discovery and then negotiating extensions of time to respond to them. Actual production was also done in a piecemeal fashion, with multiple rounds of production after successive requests to produce were served at various points as cases crawled forward. Under the old model, the production of information has been entirely reactive — driven by the specific document requests served by the other side. Responses are tailored to produce only that information expressly requested. If, for example, there was a proverbial “smoking gun” that could doom a case but the opposing party, likely unaware of its existence, didn’t artfully draft its document requests to encompass it, it could be legitimately withheld. Not so anymore.
The MIDP has shifted the playing field so disclosure of information is now proactive. Rather than allowing the parties to wait to produce relevant documents based on whether they are requested, the mandate is clear — produce both favorable and unfavorable information from the get go. Let me say that again: both favorable and unfavorable information. If the existence of relevant information is not reasonably known until after the initial deadline, disclosures must be supplemented within 30 days of learning of the new information. Again, failure to comply with these requirements is sanctionable, and the sanctions may include the inability to use certain documents or call certain witnesses. Translation: if there are terrible documents you were hoping could be hidden until months or years into the case and would only have to be produced if directly asked for, um, not so much.
So What Can You Do to Prepare? A lot! All parties must be prepared to gather, review and produce the information set forth in the Standing Order, Part B (information like witness names and other information pertinent to the case) and all documents in very short order after a case has been filed. Plaintiffs certainly have the advantage for two reasons. First, because they determine when a case will be filed and can wait to file (assuming no statute of limitations issues) until they are prepared to comply with the initial disclosure deadlines. Second, savvy Plaintiffs who have a choice of the venue in which to sue could opt to sue in the Northern District of Illinois or District of Arizona to take advantage of the MIDP requirements. That means that for Defendants who are often unaware they are going to be sued, particularly those sued in but not located in one of the participating districts, it is imperative to have systems in place NOW so they can timely and effectively comply with the MIDP mandates even if a lawsuit is filed without prior notice. All parties must be prepared to:
- Immediately preserve and collect all relevant documents and information from all custodians with relevant information. (Note that the initial disclosures require an identification of all relevant information, even information not in the party’s custody or control, though the obligation to produce does not extend to documents not in a party’s reasonable custody and control).
- Conduct a first-level review of all documents to review for relevance and privilege (the MIDP requires a privilege log unless the parties agree otherwise) and coordinate the production within the proscribed time limits.
- If there is ESI, the parties must meet and confer on production, search terms, etc., and they have 40 days from the initial disclosure date to produce ESI instead of at the time of the disclosure for hard copies and the other information.
- Assess the impact of the production on the strategy of the case going forward.
This last step is the most crucial, and the one that will be the downfall for most litigants. In fact, it is this step that will likely be overlooked or ignored by most, to their detriment. Why? Well, if numbers 1 and 2 above are performed by those who are not responsible for or actively engaged in determining the strategy for the litigation — perhaps because of the use of outside e-discovery vendors or contract attorneys, it is quite likely that no one will be poised to effectively assess the impact of the documents that will soon be in the possession of the other side. This is a huge mistake, as cases often rise and fall on the documents (yes, facts matter), and strategies must be adjusted based on what the facts actually show. Failure to assess the nature and strength of the case at this early point is a missed opportunity that will likely prove to be costly.
Also, failure to navigate the new requirements may unwittingly open parties up for sanctions or provide pitfalls that can hinder a case and provide tactical advantages to the other side.
Change Is Good (Usually), and Early Case Assessments: What do you do in the face of a game changer? Shift your own game to your advantage. At Valorem Law and ValoremNext, we have been singing the song of prevention. The MIDP cries out for prevention. The easiest and most cost efficient way to do that is to implement a mandatory early case assessment (ECA) program for all cases facing MIDP (actually, you should do it for all cases, but at the very least, all cases facing MIDP). What does this mean? You need to design an early case assessment system that can be employed repeatedly and effectively, like clockwork.
Shameless plug: Valorem can help you design and implement an Early Case Assessment program and can conduct ECAs for a fixed fee to not only comply with the MIDP deadlines, but to also utilize the information gleaned to drive the strategy of the case, including early resolution. Our ECA program includes:
- Designing a system to enable rapid first level review of all collected documents for relevance and privilege;
- The creation of a privilege log (required by MIDP);
- In depth review and analysis of all documents to identify key documents, key issues, strengths and weaknesses based on a comprehensive review;
- Interviews of 1-2 key witnesses;
- A proposed strategic plan for the litigation based on the assessment, including recommendations of early resolution where warranted; and
- The ECA can be augmented/supplemented after a review of the opposing party’s MIDP documents to determine if any modification to the strategy are in order.
Litigants best suited to immediately distill the nature of their documents to determine if there is exposure, and if so, to drive the appropriate strategy, will be the biggest winners. In a sense, the MIDP is a gift to those who prefer not to spend hundreds of thousands of dollars in legal fees before learning that the case should be settled. With the collection and production of all relevant documents so early, parties have every incentive (and ability) to analyze and assess the strengths and weaknesses of their cases and drive those that should be settled to early settlement while playing the long game for those whose facts warrant it.
Similarly, because the initial disclosure requirements are mutual, those best equipped to quickly review and analyze the documents being produced by the other side will be in a position to determine their own strategy based on what they are seeing. This may mean taking depositions in a different order based on what the documents show, or focusing on a different theory if the early disclosures illuminate it. For Plaintiffs, it is a chance to see if their theory holds up early on. Similarly, for Defendants who know a case is coming (even though it has not yet been filed), implementing an ECA program in advance will allow the avoidance of a lawsuit with the appropriate pre-litigation resolution.
This Will Just Drive Up Expenses. Nope Again. While parties may fear that complying with the MIDP will be more costly than before it will actually save money in the end. The cost spent reviewing and analyzing documents does not differ from it was under the old regime, the expenditure will just come earlier. Also, a comprehensive review and assessment done right (and efficiently instead of in drips and drabs) and at the beginning will cause cost savings. Most crucial though, the review and assessment will be done before hundreds of thousands of dollars are spent on potentially unwarranted legal fees — costs that can and should be avoided for cases that should be settled early. For those looking to capitalize on the new rules and use them to their advantage, committing to spending the time and money up front to engage in early case assessment will be the true game changer. And for those who think that they can just ride out the MIDP pilot test out until it goes away, think again – the test will run for three years and our prediction is it will be expanded and extended. Time to change your game!
Nicole Nehama Auerbach is a Founding Partner of Valorem Law Group, LLP and ValoremNext, LLC. Valorem Law Group is a nationally known litigation boutique that started the conversation about Alternative Fee Arrangements when it formed in 2008. ValoremNext is its sister-company, focused on prevention through consulting with companies and law firms to drive savings, efficiencies and innovation.