The Process of Discovery in U.S. Litigation - and How you Can Prepare for it

Winter 2012 Article


I. Introduction

Litigation in the United States has the reputation of being slow, costly, and frustrating for all parties. And it is all of these things. A principal driver of the cost of litigation is the process of discovery, which is the formal process by which adverse parties in litigation must exchange information and documents in order to identify the evidence by which they will prove their case at trial. As such, and given the fact that most civil cases in the United States settle before trial, discovery is an essential element for preparing your case whether for trial itself or to position the matter for as advantageous a settlement as possible.

Despite this importance, it is common for parties in litigation to fail to take discovery as seriously as needed, both in propounding demands on the opposing party and responding to the opposing parties' demands. To fail to take these efforts seriously is an error and - whether done in an effort to save costs or through simple neglect - can cost a party much more in an unfavorable settlement or jury verdict than it would have spent preparing the case properly.

Although no one wishes to be involved in litigation, there is a possibility that any person or company could be involved in litigation at some time. Therefore, for those unfamiliar with the process, this article provides a basic primer regarding the manner of discovery in litigation in the United States and an explanation of a basic step that can be taken to prepare your company should litigation commence.

II. Methods of Discovery

Cases in the United States take place in either United States Federal District courts ("Federal") or in a state court ("State"). The methods of discovery are largely similar; however, there are significant differences in timing, rules, and limitations of scope. As it is beyond the scope of this article to discuss the distinctions between each of the fifty states, I will instead discuss the federal process. Incidentally, due to Federal procedural rules, it is more likely that a foreign company be involved in litigation in Federal court than in State court.

In general, at both the state and Federal level, the discovery process is meant to be self-executing. Although rules or statutes govern the process, the expectation is that the process will occur between the parties to litigation with a minimum of involvement by the court itself. In federal court, unlike some state courts, however, the parties are required to design a discovery plan at the beginning of the case, which sets forth the timing of disclosures, written discovery, and fact and expert witness depositions. This plan is then "ordered" by the judge and will largely guide the process and limit the scope of discovery.

Federal discovery is governed by the Federal Rules of Civil Procedure ("FRCP"). At the outset of the case, the FRCP requires that the parties exchange basic information through initial disclosures about the case before discovery can initiate. FRCP rule 26 et seq. In their Initial Disclosures, the parties must identify all known witnesses, all documents that support its case, any issues related to insurance coverage, and a computation of the claimed damages (for the plaintiff).

a. Written discovery

After the Initial Disclosures are completed, the parties are permitted to engage in discovery. Generally, parties will first attempt to discover information through written discovery before proceeding to depositions. The primary reason for this is that written discovery can provide the basis for examination in depositions, and can also identify the parties whose deposition testimony will be needed.

The FRCP permits three main types of written discovery: interrogatories, requests for admissions, and demands for the production of documents.

Interrogatories are essentially demands that the other party provide information regarding what claims or defenses it intends to present and the facts that support its claims or defenses. For example, in a case involving an alleged wrongful termination, a plaintiff former employee may ask a defendant company to "state all reasons that the employee was terminated" and to "identify all facts, witnesses and documents that support the identified reasons for termination".

Requests for admissions require the responding party to admit or deny essential facts or to admit the authenticity of certain documents. When serving requests for admissions, the demanding party typically wishes to force the responding party to admit as proven some essential fact, or to explain its reasons for denying this fact. To continue the example from above, the plaintiff in the employment case may demand that the responding party "admit that the employee was terminated as result of his reporting unlawful action to a regulatory agency".

Finally, demands for the production of documents require the responding party to produce for copying or inspection certain categories of documents. These requests are subject to a basic test of reasonability and cannot be served simply to cause the other party to incur cost or burden. However, unless a document is subject to some specific privilege such as an attorney-client communication, a party must produce all documents that are responsive to the demand. For example, the plaintiff above may demand that the employer "produce all written employee evaluations of the employee" or "all communications regarding the employee's termination between executives at the company". When responding to the document demands, a party need only produce the documents in the manner in which the documents are usually maintained by the business.

Various factors limit the effectiveness of written discovery. Responses to written discovery are usually prepared by the opposing attorney, who will object whenever appropriate (and often when not) and craft the answers in a way that he/she believes is least harmful to his or her client. As such, although the party must sign the responses under oath, the answers are often as obfuscating as possible.

Further, some less than professional lawyers will intentionally respond in unsatisfactory ways and force the propounding party to move the court to compel better answers. Although this is ethically improper, it occurs often (and can occur because of legitimate differences regarding the scope of discovery as well), and can drive up the costs of written discovery. In response, courts will often sanction attorneys who abuse the discovery process, but this has done little to deter the practice.

Finally, the parties are limited in number of written discovery requests that can be served. These limits exist so that the discovery process cannot be used strategically as a way to drive litigation costs to unsupportable levels, but it also means that parties must be judicious in their use of written discovery.

b. Depositions

The final discovery method is depositions. Depositions are questioning under oath by one party of a witness (whether a party or not). A court reporter takes a verbatim transcript of the proceeding, and it is often videotaped as well. The deposition can be used as evidence at trial as if the testimony was made in court. Depositions can be taken of an entity itself (in which case the deposing party must identify the topics to be covered in the deposition and the deposed party must produce a person who can testify on the topics) or of individual witnesses who have knowledge of the facts of the case, whether a party or not, and of experts hired by the parties.

The scope of the testimony can cover any relevant information, and can include the introduction of exhibits and documents. Although witnesses are generally prepared extensively for depositions, the deposition is often the best chance to discover damaging evidence as the deponent's attorney cannot coach or advise the witness during the deposition.

III. Document Retention Policies

Given the above, most readers are likely hoping to avoid finding themselves or their companies in litigation. This is understandable but not always possible. Therefore, we advise all readers to take simple steps that can both reduce your exposure and your costs should litigation happen.

First, we would be remiss if we did not offer this simple, but often ignored advice for you and your company: Never write anything in an email that you would not want to have read before a judge and jury. For whatever reason, people tend to treat emails (and now text messages and posts on social media) as if they are no different than conversations. These messages are often saved on servers discoverable for years, and can often lead to serious consequences (as no less a businessman than Bill Gates found out in the U.S. v. Microsoft antitrust case when emails he had written to other Microsoft executives were used as the primary evidence of Microsoft's illegal use of Internet Explorer against Netscape to maintain its operating system monopoly).

Second, all companies should have a document retention policy. There is a legal duty to preserve documents and information when a company is on notice of pending litigation, but few formal laws or regulations that require a company to keep email and other documents for the specific purpose of potential litigation (some documents may be required to be maintained for other reasons, such as tax reporting or securities regulations).

Therefore, a company should maintain and enforce a consistent document retention policy in which the company requires its employees to keep emails and other documents long enough for business purposes, but not longer than necessary. For example, a company could have a policy that says that all emails that are over three years old should be deleted and enforce this practice at regular intervals. A company should also require that all communications for business purposes that are made by email should be made using only company email accounts.

By having such a policy, the company can help prevent stray emails that may cause it damage in litigation from being discovered and taken out of context (or sometimes worse, in context). In addition, by limiting its retention of such documents to a certain number of years, a company will also reduce the number of emails that will have to be reviewed, which can substantially reduce the cost for review by the company's attorneys. Finally, if the company shows that it has a consistent document retention policy that it enforces, it will make it less likely that a court would infer that documents were intentionally not found.

By doing this, a company will be much better prepared should the unwanted happen and it find itself in litigation.

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This article is for information purposes only and does not constitute legal advice. The information contained herein may be outdated or incomplete, and shall in no way be taken as an indication of future results. The transmission of this article is not intended to create, nor does its receipt constitute, an attorney-client relationship between sender and receiver. You should not act on the information contained in this article without first seeking the advice of an attorney.