Legal: E-headache - Pharmaceutical Executive

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Legal: E-headache
Document production has always been a tedious and costly part of litigation. Now, with new rules governing electronic information, pharma companies must brace for a whole new set of associated costs.


Pharmaceutical Executive


Supporters also have issue with the loss of metadata and searchable text caused by printing or imaging. They say metadata, data about an electronic document (e.g., author, date created, date modified) that is generated by the underlying software application and resides in the unseen areas of the native electronic file, may have legal significance in certain cases.

Similarly, a party can search the text of native electronic files, like Microsoft Word documents or e-mail message files, using a computer, but not if the files are printed to paper or converted to digital images. Those in favor of the new rules argue that one-dimensional printouts and images hamper their ability to wade through large volumes of ESI and prepare their case. The goal, they claim, is to bring order to the fight over the production of metadata, searchable text, and related production-format issues. The amendments require that ESI be produced either in its "native" format or that in which it is ordinarily maintained (a .doc file is the native format for a Microsoft Word document, for example), or in a reasonably useable format—which implies that production of native files may not be necessary, but that printouts and bare digital images may not pass muster.

A likely compromise that has already found favor in a number of courts is the production of digital images with corresponding metadata and searchable text. This is preferable to native-file production because a company's outside counsel can redact patient-identifying information, which the company is required by law to protect, and proprietary trade secrets, such as information about other drugs in development.

The rub for pharmaceutical clients is that metadata is often difficult and costly to preserve, collect, and produce. Metadata can be easily and innocently changed or lost in the course of regular business activity. Also, collecting metadata requires information technology experts with high-tech equipment. These experts may bill at higher rates than some attorneys. However, the cost of retaining forensic experts may be less than the sanctions a company may face for failing to preserve ESI and its metadata.

The new amendments to the Federal Rules will likely have other indirect and unwanted consequences for pharmaceutical litigants. The new rules are riddled with vague and subjective phrases, like "reasonably useable," "not reasonably accessible," and "good faith." Various federal jurisdictions will interpret these phrases in many ways, yielding conflicting standards. Federal law in New Jersey, for example, may be very different from federal law in North Carolina.

Similarly, the promulgation of new federal law often triggers state legislation. Look for state legislators to enact laws addressing ESI, but do not expect uniformity among the varying state laws. This means that pharma companies, forced to comply with varying federal and state standards, will incur significantly higher costs.

The Bright Side

The new amendments to the Federal Rules are not all bad news for the pharmaceutical industry. First, the Federal Rules acknowledge that collecting some types of ESI is too expensive and burdensome to mandate. The amendments classify such ESI as "not reasonably accessible." Experts hypothesize that backup tapes and databases—areas that requesting parties have traditionally exploited because of the undue burden and expense to the producing party—may be declared off-limits.

Further, the amendments provide a "safe harbor" against sanctions for the loss of ESI through the routine, good-faith operation of an electronic information system. In practice, however, prognosticators doubt this amendment has teeth, as judges have other navigable paths to punish a party. For example, the safe harbor only protects a party from sanctions "under these rules" and does not restrict the court's inherent right to sanction a party.

Finally, the new Federal Rules offer some protection against the inadvertent disclosure of privileged documents, a common result of pharmaceutical companies attempting to comply with fast-track discovery orders. With the amended law, a producing party may "claw back" privileged documents in certain situations.

Despite these bits of good news, pharmaceutical companies are already experiencing the chill of the new rules, as some judges rushed to apply the new law before December 1. Now that the date is officially here, that chill may be a harbinger of a long, cold winter for pharmaceutical litigants, as they feel the costly sting of responding to more numerous and more complicated demands for ESI production.

Jeffrey Brown is a principal with the law firm of Wright, Robinson, Osthimer & Tatum. He can be reached at

Mark Yacano is a principal with the law firm of Wright, Robinson, Osthimer & Tatum. He can be reached at


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