FEDERAL TRADE COMMISSION

Agency decision

Ask Donna

What actually matters in this document.

Text

I N D E X

WORKSHOP:

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FEDERAL TRADE COMMISSION

In the Matter of:

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WORKSHOP ON ELECTRONIC RECORDS.

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JUNE 3, 2002

Room 332

Federal Trade Commission

6th Street and Pennsylvania Ave., NW

Washington, D.C. 20580

The above-entitled workshop came on for

comments, pursuant to notice, at 2:05 p.m.

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APPEARANCES:

ON BEHALF OF THE FEDERAL TRADE COMMISSION:

MICHAEL G. COWIE, Assistant Director, Mergers IV

D. BRUCE HOFFMAN, Associate Director for Regions

DENNIS F. JOHNSON, Attorney, Mergers III

GREG BROWN, Computer Specialist

Federal Trade Commission

6th Street and Pennsylvania Avenue, N.W.

Washington, D.C. 20580-0000

(202) 628-4000

PANELISTS:

JANET MCDAVID, Hogan & Hartson

MARC SCHILDKRAUT, Howrey, Simon, Arnold & White

ROBERT COOK, Drinker, Biddle & Reath

JAMES W. LOWE, Wilmer, Cutler & Pickering

RICH KORBIN, Applied Discovery

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P R O C E E D I N G S

MR. COWIE:

Good afternoon.

This is the first of seven merger best practice

workshops.

to have a merger remedies workshop on June 18.

The mergers workshops are a response to

This is a great turn out.

We're also going

criticism about the burden, the burden of the second

request process.

burden while at the same time ensuring that the FTC gets

the information it needs to make an accurate and

reasonably complete substantive assessment of proposed

mergers.

We are seeking ways to reduce the

Today's workshop will focus on electronic

records.

comment, including criticism, from all of you.

do you have input, we would appreciate you identifying

yourself and the company or organization you're with,

and you could stand up to share your remarks or you can

come to the podium, if you feel more comfortable that

way.

This session is being transcribed.

We welcome

If you

Leading this workshop on the FTC side is Greg

Brown, an information technology management.

benefit of not being burdened with a law degree or

economics degree, so he could have some original

insights for us.

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He has the

Bruce Hoffman is associate director for the

regions, and Dennis Johnson is an attorney in the Bureau

of Competition with substantial second request

experience.

MR. HOFFMAN:

Well, hello, everybody.

As Mike

said, this is the workshop that we're doing on

electronic records.

discuss specifically kind of two aspects of the world of

electronic and electronic records and the second request

process.

What we wanted to do today was

And we've actually broken this down a little

more, but in general what we wanted to talk about was,

on the one, hand the impact of the increasing volume of

electronic documents including Email, word processing,

spreadsheets, presentations, databases, et cetera, on

the process for complying with the second request,

including how people search for records and obtain them

and some of the issues that have seemed to come up with

increasing frequency in the actual production process.

So on the other side of the coin of the

electronic records is how -- or really not so much

records but the role of electronics is how people

produce things to us, i.e., the format a document

originally existed in, whether electronic or paper, how

we're getting it in terms of producing by way of

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electronic image or by file or paper production of

electronic documents, electronic production of paper

documents, whatever it may be.

Our goal here today is to listen to your input.

We've identified some specific sub topics.

I think

we've now reduced it to three that relate to these

issues, so what we're going to do is quickly outline

those, kind of lay each of them on the table.

And then after we introduce these general issue,

we're going to turn the discussion over to you, starting

by calling on some individuals who we know have had some

recent experience with these issues, who we asked to

come here today to share some of their thoughts on these

documents and then opening up the floor to a more

general discussion.

And then we're going to try to hold each topic

to about half an hour.

or so.

We have about an hour and a half

As Mike said, when you speak, please identify

yourself so that we know and so that the court reporter

can keep track of who's talking so we can get all this

transcribed, and we can then use it in the future to try

to hopefully get some good outcomes and make our process

work a little bit better.

Let me briefly introduce folks who we've

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specifically asked to prepare to address these

topics:

Schildkraut from Howrey Simon; Bob Cook from Drinker,

Biddle; Jim Lowe from Wilmer Cutler; and Rich Korbin

from Applied Discovery.

Janet McDavid from Hogan & Hartson; Marc

With that note, let me go ahead and introduce

our first topic, which is the impact of electronic

documents on the search process, and after I

lay it on the table, I'm going to ask our five sort of

starting speakers to share whatever thoughts they may

have, and we'll see if we have something to add.

This general issue is:

How should parties

search for electronic documents?

secret here obviously that the second request process

has generated or appears to be generating in some ways

almost exponentially larger productions because of the

fact that people have exponentially larger sets of

documents lying around and most of those things are in

the forms of various kinds of Email word documents, et

cetera, that people store that are very hard to get rid

of.

I don't think it's a

Searching for these things, as you all know

better than I, can be really difficult, and it raises

sort of the question of do you do it by term searches?

Do you do it by physically reviewing everything that

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exists on a company's servers?

How do you physically go

about finding the documents, and what should the role of

the Commission be?

And that one specific issue that comes up, if a

party wants to do a term search as opposed to reviewing

every document that appears on his server and in the

hard drives of laptops of its employees, should the FTC

be proposing the terms or granting formal modifications

of the second request to specify that searches conducted

using certain protocols, certain systems, certain terms

will be substantially compliant, or should the FTC

simply review the terms and point out deficiencies

without saying anything else about it or have no role at

all?

All these things have almost an infinite number

of possibilities, and having set that out on the table, I

would like to now turn it over to our first set of

speakers to say what they may have to say about this

aspect of the electronic documents, if anything.

don't know if you all have any particular order you

would like to go in.

MR. COWIE:

Why don't we hear from Marc

Schildkraut from Howrey Simon.

MR. SCHILDKRAUT:

I think in my experience, we

have done this three different ways, and I tried it a

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fourth way, and that hasn't worked.

Three different ways that I think I've done this

is, one, I've just had everything printed out, and it's

then reviewed as a document.

with that is the expense.

been absolutely enormous to do something like that.

The problem, of course,

In some cases the expense has

The second way I've done it is have essentially

staff attorneys basically review everything on screen.

If we have the software that's capable of doing that, we

can then select off the screen and, in fact, give it to

the FTC in electronic form if necessary.

The third way I've done that is, I've done this

once, it wasn't in a merger matter, is I essentially

said, I will just give you all my Emails and I'll give

you a search engine and I'm not even going to search for

privilege, and it's a small company.

lawyer in-house.

privilege anyway, and I just gave the FTC three

gigabytes of data, and they can do whatever they want

with it.

They didn't have a

There wasn't going to be much

The fourth way I proposed.

And I've never had

anyone accept this, is we come up with search terms that

the FTC would agree to and I was -- I've been unable to

get the FTC to come up with those search terms, and I'm

unwilling to take the risk myself of doing something

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with search terms, so I have to -- you have to do a full

review under the circumstances of all the Emails.

A substantial problem with most of these

approaches is duplicates.

Email can go to 20, 30 people at a time.

attempted to eliminate duplicates, but it turns out that

that means that the FTC is getting potentially hundreds

of thousands, I guess in an extreme case, I haven't

counted -- it could be millions of documents that are

duplicates.

MS. MCDAVID:

If you send an Email out, an

I never

This is Janet McDavid Hogan &

Hartson.

described first.

third because of the issue of privileges.

matters have involved companies with in-house counsel or

had other ongoing litigation, and I don't want to risk

waiving the privilege.

We have used the two techniques that Marc

I've never been willing to try the

Most of my

We have proposed using search terms, and it's an

irony that here we have a giant database capable of

being searched by term in a way that might reduce the

burden on both the company and on the staff, and we've

never been able to arrive at a way of doing so.

We proposed search terms for staff and offered

them to allow whatever terms they would like.

recent matter we estimated that it would have reduced

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In one

the burden of Email production or the volume of Email

product by approximately 25 percent.

But I agree with Marc that in the absence of

agreement I essence on the part of staff that this would

constitute substantial compliance, no one is prepared to

take that kind of a risk so one will have to go back and

do the search again.

MR. COWIE:

All right.

MR. COOK:

This is Bob Cook Drinker, Biddle.

guess my experiences are very similar.

we found is that the practice of actually searching can

have a big effect on the ways of searching.

One thing that

There's two ways of searching someone's E mail.

One is get a bunch of people in a room with computer

screens and read it to see if it's responsive.

ends up being much more time consuming than having the

person there helping you go through the Email.

It's very difficult to get that kind of

That

involvement in other types of electronic documents

because you know if you have folders where you have X

subject and it has nothing to do with the subject on the

second request, it's highly unlikely that -- you can

certify.

responsive, then you don't have to go through every

document in that folder.

If you as a person can certify that that's not

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And then whereas if you have just people coming

and looking at your Email, they have to look at every

document in there in order to determine if it's

responsive, and that ends up being a huge burden and

then in the system, increases the number of documents

that have to be processed and searched for things like

privilege, which can again increase.

for privilege increases the burden tremendously in

complying with the second request.

Having to search

So every document that is put into the system

must be reviewed by somebody to determine if it's

privileged.

be an easy matter to go ahead and just produce

everything, so that every extra document creates this

extra time, and it ends up being a huge burden and a lot

of I guess friction in a sense in the engine to make

people produce documents that don't have to be produced

and arguably are necessary.

MR. COWIE:

If it were not for that, I think it would

Am I understanding you three

correctly that we should think more flexibly about

accepting Email productions based on defined search

terms?

this problem?

Is that what you're proposing as a solution to

MR. SCHILDKRAUT:

I don't know that there's any

one solution to the problem.

I think search terms are

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important, are one potential way to go.

Another way to

go is simply to cut down very substantially on the

number of people who's Email you're going to look at.

You can only look at so many people's Email in

any event.

down in terms of number of Emails, people's Emails

you're going to look at, you will cut down radically on

the size of the second request response.

I mean, I think if you just try to cut that

MS. MCDAVID:

You could also significantly cut

back perhaps on the time period covered for Emails

without cutting back on the time period for other

textual sorts of documents.

For example, for strategic planning documents,

it may be perfectly reasonable to go back for a longer

period of time.

become stale since they tend to deal with ongoing

current events, so you have a shorter search period.

might also significantly reduce the burden, although I

do endorse Marc's notion of reducing the number of

custodian searches.

Emails tend to be much more likely to

We have also had some recent experience in using

technology to de-duplicate E mail production files, and

only to eliminate absolutely identical Emails because as

has been pointed out, the exact same Email will show up

in the files of every recipient either as a to or cc or

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even a BCC, and that reduced production in one estimate

by as much as 30 percent but at some fairly significant

expense.

MR. HOFFMAN:

My question about that, Janet,

is:

Does the benefit to you, of the parties, of

producing duplicate justify the cost that's involved?

MS. MCDAVID:

Bruce.

I don't know the answer to that,

I think it's quite possible.

MR. SCHILDKRAUT:

There is one reason with me --

I've never done it, but there was one reason we thought

of doing it, and it's an ironic sort of reason.

have 20 Emails saying the same thing and it's a

privileged Email and you have different people reviewing

for privilege, you could stop the 19th time and 20th

time, it will still get through, so that's the reason

we've actually thought of doing it.

do with the money.

MS. MCDAVID:

If you

It has nothing to

Plus you have to log it 20 times

on your privilege log.

MR. LOWE:

Jim Lowe from Wilmer Cutler.

We've

had experience de-duping where it was about a 30 percent

cut as Janet said, and in a large production the most

expensive thing is the reviewing time.

expensive than the technology, and it is therefore --

you can save a lot of money for the parties in review

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People are more

time and obviously the privilege issue that Marc and Jan

raised.

The issue that was raised to us by the staff,

and we ultimately didn't do it, was the issue of being

able to find documents for the individual who sent them

because you don't know which copy is going to get

re-dupped and which copy is actually ultimately going to

be reproduced.

At least the output, the output is a recoverable

problem because the medi-data is readable, and

indexable, so you can simply create an index from all

Email from X person even if they're showing up in Y

files.

that information will be available to the Commission.

Particularly if you're producing electronically,

MR. BROWN:

I think when we're talking about

duplicates, I want to mention, everybody has to be

talking about the same thing, and to just throw out the

term generically duplicate, I don't think it is

necessarily accurate to say the text is the same and

that electronic message is the duplicate.

I think there are some vendors here probably

that may be able to speak to that.

At some point we can

talk about what truly -- what are we considering when

we're saying it's a duplicate.

same text?

Are we saying it's the

Are we saying the medi-data throw, that out

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and we're just looking at the text, the relationships,

the time at which someone may have opened an Email?

Those may or may not be factors, but we should

at least make sure that we're talking about the same

things when you get to a discussion.

MR. COOK:

Well, our experience de-dupping is

the same, but sitting hear listening to this

conversation, I think there may be another way of

addressing the Email, and I reserve the right to say I

was completely insane when I said this because it just

came to me.

But for people who are not at the highest level

of the organization, this same technology that allows us

to de-dup would allow you just to produce for lower down

people the Emails that were to or from or copied to

certain people within the organization rather than all

Emails they have because frankly the Email traffic among

people that are three or four tiers down within say the

sales organization is not going to be necessarily very

probative on an antitrust matter.

It's going to be the stuff that get circulated

higher up, and that may be a way of filtering

information without having to rely on things like search

terms that make people uncomfortable.

MR. JOHNSON:

What you're saying is to do

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something like Marc Schildkraut was suggesting,

basically reduce the number of people you're searching

for.

MR. COOK:

Even if you didn't completely reduce

the number of people, you could search completely the

top level of the organization, and then for levels down

you could take only the Email that has someone at the

top level of the organization or one of your key people

that's been selected in the negotiating process, only

those Emails and not Emails that involve persons who

aren't on the hit list assuming that the hit list has

been agreed to.

That would be a way of reducing the amount of

raw Email that was produced and has to be processed.

MR. COWIE:

We have a question from the back.

MS. LLEWELLYN:

My name is Virginia Llewellyn.

I'm a colleague of Rich Korbin Applied Discovery, whom

you introduced.

I think the thing that's interesting about this

conversation is the fact that something that surprises

me -- actually it sounds like a lot of people having

this discussion have already made that leap from talking

about paper document review to talking about some form

of electronic review, and the type of service that a

company like ours provides is well the state of the art

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technology that allows the review team to get through

this information much more efficiently than the old

paper review but also accomplishes some of the things it

sounds like you're trying to accomplish with what is

sort of a halfway there electronic review, it sounds

like.

And certainly correct me if I'm wrong, but it

sounds like most of the people in the audience who are

trying some form of electronic review are doing that in

the native format, of the file type, so I think Outlook

Email is the most common example.

that in a Microsoft program and try to use the

functionality or the features of that software to get

through the review.

further than the paper review, but it still presents a

lot of problems.

A lot of people use

Now, I think that that's one step

The real state of the art technology would

encourage you to review all file types no matter what

type of document it is, whether it's an Outlook Email, a

Word document, an Excel spreadsheet, no matter what it

is, review all those electronic file types in one

standard format.

And the most common format and the format that's

accepted by courts, should you have to go to litigation

at one point, is PDF, and the good thing about

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searching, and the reason that's really relevant to this

first topic that we're discussing, is the fact that PDF

preserves 100 percent of the text of every original

document.

It doesn't matter whether it's an Email, a memo,

a letter, a spreadsheet.

You can search all of that material very quickly with a

sophisticated search engine.

medi-data.

down the scope of the documents you have to review very

quickly by simply entering a search term and pressing a

button instead of conducting a manual review.

It doesn't matter what it is.

You can search the

You can search the text.

You can narrow

So while certainly it's ideal to narrow the

scope of the custodians you're looking at, narrow the

scope of the time period, the fact is the technology

exists to really allow you to do that much more cheaply,

much more efficiently than a lot of the processes that

are currently in use.

MR. COWIE:

In that regard, let me assert a

proposition and invite some you out there to tell me why

I'm wrong or oversimplifying things.

the case that companies for risk management reasons are

becoming more effective in forcing employees to delete

Email.

It appears to be

Companies are getting better at imposing

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involuntary record retention systems.

As a result,

we're often confronted with situations where a company

has only two or three or four months of Email.

At the same time, it seems like a number of

companies have relatively sophisticated back-up or

storage systems.

company is essentially taking a picture of all the Email

at different points in time.

Sometimes these are situations where a

So we might be gathering fact pattern where we

evaluated a second request negotiation and we see the

company has two or three months, only two or three

months of live Email.

of information on back-up or storage tanks.

Yet they have two or three years

That being the case, it seems rational if not

perfectly sensible for the FTC to insist on looking at

the storage records as well as live Email.

something flawed with that approach?

MR. SCHILDKRAUT:

Is there

Well, Marc Schildkraut.

It's

the cost.

half dozen years, the FTC and the DOJ has not required

search of the back-up systems because every time I've

gone through this, the cost estimates of what was

required to do that are absolutely enormous.

Most of the time over the last I would say

This requires restoring back-up tapes, then

reviewing those back-up tapes and what you have when you

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have back-up tapes some people are doing back-up tapes

once a day, some once a week, once a month, and they

have to rest the system so you may have daily back ups

for 30 days and then monthly backups and then semiannual

and things like that.

You get, first of all, an enormous amount of

duplication because people haven't deleted things from

their system and it's backed off every day.

have the exact same chain of Emails 30 days in a row.

The last time I had to go back ups and go to the back-up

tapes, the company had multi years of back-up tapes.

I had to build a computer center, of course,

You can

several million dollars.

that center.

computers continually, and their only job was to push a

button that basically said print, and it then went to

hundreds of staff attorneys in order to review that

information, most of which was going to be duplicative

of other information.

I had 30 to 40 computers in

I had 30 to 40 people manning those

The good news is people don't do that much

anymore.

It tends to be the case now that when I talk

to companies, they only have about 30 days worth of

backups, and the purpose of the back-up is essentially

to restore from a catastrophic loss, not to create an

archive so that people can go back to these back-up

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tapes in almost all systems.

People find Emails that they want to save, they

can save them themselves to their hard disk, and those

we've always offered to provide to search if people had

thought it important enough to save a particular Email.

The extent of doing back ups is just so enormous

I find it hard to believe that the benefit for the FTC

is great enough to force that cost on people.

MS. MCDAVID:

Let's remember that this is not a

cartel investigation.

investigation, so let's keep it in context.

points that Marc made are absolutely valid.

We're talking about a merger

All the

The issue of back-up tapes comes up not just in

the circumstance you've posited, Mike, but also in the

situation in which the company has purged its Emails,

has Emails going back a year, two years, three years,

and you can understand that the back-up tapes are a

great big bin into which everything for that time period

has been thrown, not just the Emails of the 35

custodians that you want to have searched but

everything.

And therefore you first have to restore the

back-up tapes and then go through the process of

identifying the custodians whose data are on those

tapes.

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There also have been, in my experience, fairly

significant technological problems in restoring these

back-up tapes adequately.

where a client attempted to restore a back up tape, they

found to their horror that they didn't actually contain

anything usable after some significant expense of

attempting to do so.

MR. JOHNSON:

In at least one instance

The back-up and archive issue is

sort of the second topic that we wanted to get into

here, and it's already been sort of introduced, but let

me try to lay out in general the issues we would like to

have people focus on here if we could.

With the increasing prevalence of back-up and

archive copies of electronic materials now, along with a

wide variation among companies and document preservation

policies, what we would like to try to figure out is

what the Commission's general approach should be to

letter searches of back-up and archive materials and in

particular what kind special or unusual circumstances

might warrant a departure from those general approaches

one way or the other from whatever they might be.

We would be interested in focusing you on how

the Commission should evaluate party claims and value of

expense.

need to be thinking about clearly.

Clearly you've indicated those are issues we

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We would like to know how likely it is important

information will exist only in back-up tapes or are

they -- is the information accessible in other -- in the

regular files as well, and are there approaches that can

account for both the parties' interest in avoiding

unnecessary burden and expense in this regard and the

Commission's need to make sure it has access to all the

important information and documents that we need?

Just on a related note, we would be interested

in finding out how the Commission should handle

situations where a party -- at some point in the

relatively recent past we upgraded or changed its

information system resulting in some documents that had

data that presided only on legacy systems rather than on

existing system.

Bob?

MR. COOK:

This is Bob Cook.

I would just give

you my opinion on the back-up issue, and I would think

the legacy system issues are very similar, similarly.

All that's really appropriate I think in the second

request context, my opinion, is to have a tape or a

closed set of tapes that should be maintained.

There may be back-up tapes.

There may be

hundreds of back-up tapes for various systems within a

company.

It's not practical to search them.

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It could

never happen.

And there are -- the real interest to the

investigation is an uncovering I think things that are

related to the transaction in the second request context

because if in the ordinary course of business people do

not maintain a certain type of document, that wouldn't

be preserved anyway, and it's part of the document

retention policy that all companies have.

It's reasonable to want to go back at some point

and look for it, and that's why maybe a monthly back-up

tape, whatever the main back-up tapes are, to have those

preserved, but to require companies to stop overriding

any back-up tapes on an ongoing basis could be very

burdensome as far as the cost of the tape itself.

And the new back -- the new Email, people aren't

generating Emails once the second request goes out that

say, Let's increase price and reduce output, so it's

really only for a second request.

immediately prior to the antitrust lawyers getting

involved are really the only ones that could possibly be

interesting in my opinions, and measures to have huge

document retention obligations or huge searching

obligations other than that I think are simply adding

cost.

MR. HOFFMAN:

Documents that are

Let me try to make sure you're

trying to propose -- you're saying, what we ought to be

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doing is whether it's in tape form or whatever mag tape

or whatever the format is, whatever the last snapshot is

prior to the HSR filing, you just kind of hold on that

while the company goes ahead with its standard practice

of reviewing further archives as part of second sweeps.

MR. COOK:

Typically these things are rotated.

You might have 12 tapes that you rotate through a month

or through a year, so you wouldn't jump in necessarily

right away.

because that snapshot would be preserved because you

would be overriding the one from before you even

considered the transaction the day say before the second

request was issue the day after.

You would still have the grace period

MR. HOFFMAN:

removing that tape.

MR. COOK:

You're talking about physically

You have to take it on the rotation.

These tapes aren't cheap because in itself, but because

that's burdensome but less burdensome than trying to

store an entire company's Email system.

MR. HOFFMAN:

You said your proposal is a search

-- that it's not required to substantially comply.

MR. COOK:

I would suggest not.

I would suggest

that it would be more appropriate to have it available.

If, in fact, litigation commences it would be necessary

to do the discovery.

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MS. MCDAVID:

It seems to me that the

presumption should be against back-up tape restoration

absent some extraordinary circumstance that justifies

some deviation from that presumption.

MR. COWIE:

Janet, this is Mike Cowie again.

sounds like we're hearing two reasons for the

presumption.

used only for cartel investigation.

One is you suggested that Email should be

MS. MCDAVID:

No, I didn't suggest that.

I said

remember that this is a merger investigation, not a

cartel investigation in which you're looking for

evidence of coordination between the companies.

MR. COWIE:

The implication is that Email might

say, Meet me in the hotel room so we can fix prices, and

for a merger investigation we should be less interested

in that kind of chatty Email type conversation.

the premise that we might pause to consider.

That's

Arguably people are using Email today to make

presentations to senior management, to make high level

sales pitches to customers, to summarize expansion

plans, so that's one issue, how are people using Email

and is Email merely something we should use for cartel

investigations or are they pertinent to mergers

investigation?

MS. MCDAVID:

I never said use it only in

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cartel.

misconstrued what I said.

What I said was let's just

remember the context here.

This is not a criminal

proceeding.

You're being a good litigator, but you've

The point I made was that Email tends to be more

time sensitive and are less likely to be the place in

which a company will memorialize truly important

business discussions, which are more likely to be found

in other kinds of the electronic or written documents.

And under the circumstance, I didn't say ignore

Email all together.

time period for your search for Email than you might

have for a three-year time period that is the norm for

document production in response to a second request.

MR. COWIE:

I said try considering a shorter

Janet, your view has been stated

repeatedly by others to us as well, and I certainly

don't intend to minimize its importance.

serious view for merger investigations we should be

focused on data, not Email.

worth considering.

There is a

I think that is something

The other reason I heard for presumption

articulated by Marc Schildkraut is just the cost, is the

cost.

to be an empirical question.

It's too costly to do back-up tapes.

That seems

I would be interested in hearing from any

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vendors or Greg Brown, from Greg Brown or anyone else

that has any input in this data empirical question.

MR. KORBIN:

Rich Corbin for Applied Discovery.

What we typically see for back-up tapes ranges in a

thousand dollars per restoration of the tape.

take longer obviously depending on hourly billables that

are in systems.

It can

One of the things you have to keep in mind

though is that back-up tapes are not just for Email.

They're also for the server, and the server could

contain all different kinds of lose files which would be

Word documents.

A lot of people do back-up their information not

to much on their local hard drive but on the server of

the company, so it's just Emails.

Keep that in mind.

I do agree with Bob Cook though that it's not

necessary to go back and look at all the back-up tapes

for a year.

weeklies and we can de-dup off.

dailies, you're just piling Emails on for a new day on

top of that last back-up tape.

What we typically do in our cases is we do

If you're doing

And we can go and take off all the old data so

you're only getting the new data off of that new back-up

tape so we recommend to our clients to do it about once

a week or if they're going back six months, do the

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monthly tapes but usually that cuts down the cost and is

more sensible to the clients.

MR. BROWN:

I would like to mention I think in

general we've had these discussions of burden, and we've

run across a situation where there is a claim this is

too oppressive a task to take on.

experience that we do go through some level of

negotiation in trying to reduce the cassette tapes,

trying to target a particular time frame that may give

us the snapshot that we're looking for.

It's been my

Ultimately you have to have knowledge of what an

organization's policies are, what their retention

policies are, what their back-up policies are, what

their disaster recovery plans are if you're going to

make the genuine effort at negotiating some of this

burden down, and I would just like to say that many

cases are unique for a variety of reasons, but the most

important thing to me would be that in the process, that

the IT people responsible for these back-ups or

responsible for the underlying support services for the

organization could talk with the IT people here and come

to an understanding of what is possible, what is

reasonable, what maybe can get us to this point together

where the agency can feel confident that they are

getting the data they need to perform the investigation

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and the burden that is placed upon the parties to

minimize as much as possible.

MR. LOWE:

Jim Lowe again.

I want to address

the latest question because we haven't touched on this.

In the post Y2K situation, we have a lot of companies

that completely switched out their systems in a

relatively recent period of time, and in many cases we

have found there are no people left at the company that

know how to operate the prior systems, and those systems

are not available to the company either at all or

certainly not in the ordinary course.

And I think that the Commission should be --

should very rarely and even then have thought very

carefully about asking for people from systems where the

computer does not have access to those terms in the

ordinary course, namely that for them to restore them

for themselves could be enormously burdensome.

asking a tremendous amount of the company to restore

those systems when they would not have access to that

data anyway because they no longer have the employees or

the systems to locate that data themselves.

That is

They just are pack rats and happen to keep tapes

around from a preexisting system which for whatever

reason, I think many of us have found that companies do

even when you say to them, why did you keep the tapes

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and they say, because, and there is no reason.

And I think that that same question goes in some

way as to the back-up tapes.

distinction between back-up materials that are available

depending whether you want to call them a hot site or a

semi hot site which is intended to be backups that are

available to restore the system should there be a

crisis.

There is increasingly a

Of course back-up tapes that are stuck in some

warehouse somewhere do require often more burden to load

than the stuff that is back up for a hot site or

equivalent set up, and there may be substantially

different costs in those things and some explorations

can be done of that.

I agree with the notion of having the

conversation very early between technologically

knowledgeable people rather than the lawyers can be very

useful to get this resolved, but it does not to get

resolved.

And one of the things Marc and Jan was getting

at earlier, one of the reasons why a number of us have

not tried the search term method is that the notion of

negotiating for a long period of time over the search

terms without any clear notion that we'll be able to

reach agreement, and meanwhile time is passing, it is

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simply not worth it to most of our clients to sit there

and spend that time.

They would rather go ahead, print the stuff out

and have us review it than have us say, We don't know

whether we can reach agreement on that, and it may take

three or four weeks to have this discussion.

never occur unless the Commission is prepared to make

decisions and put them on people and say, We are going

to stand by this in terms of substantial compliance.

MR. COOK:

That will

Following up on that, this is Bob

Cook again, it's important to remember when we're

dealing with electronic documents that the pipeline

takes longer for the documents to go through before it

gets to the Commission because more processing is

involved.

quickly once you collect it and copy it and reviewing

papers and having people review it and then producing it

on paper.

days relatively easily.

Paper actually you can go through pretty

That probably could be done in a week to ten

The pipeline for electronic stuff could be done

in maybe ten days to three weeks.

weeks.

get accommodations on what I call the 14-day refreshment

rule in the second request because it can take longer to

process documents electronically and prepare them for

It takes longer.

It takes maybe two

You need really -- often you

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production in electronic format if you're doing that.

And it's also more cumbersome to make changes

midway, so once you start talking about not knowing when

you start what you're going to be doing can get into

more trouble when you're dealing with electronic

documents even than you do with paper.

MR. HOFFMAN:

Let me turn back to the search

terms again for a second because we sort of went around

that a little bit.

terms, and I've seen cases recently where search terms

have been used with varying results but I would ask this

to everybody.

There's a lot of advocacy for search

Obviously with second requests there's

information asymmetry between what the parties know and

what the Commission staff knows.

negotiating scope of search by people, by focusing on

people whose titles we can recognize and talking to the

parties about what they do and so on and so forth so

that a relative short period of time and also with

additional industries that we're more familiar with, for

example, in theory we ought to be able to reduce the

scope of the search pretty quickly and pretty

effectively.

We deal with that when

Term searches to me seem to be a little more

difficult in that regard because particularly as the use

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of electronic documents and Emails has mushroomed, the

terms that people use to describe things have changed

pretty fast, and I don't have a lot of confidence that

we have a great deal of understanding about the internal

terminology that we use to describe things, and for

example, where parties refer to their rivals by like

their stock ticker symbols and stuff like that and you

have a very difficult time thinking of a term search

that would come up with critical documents.

On the other hand, it seems to me that a

physical review of a number at the gigabyte set of

servers every single time you do second request would be

pretty burdensome.

things?

scope of search reductions for people to come up with

some methodology for using term searches that we can

live with that wouldn't put large risks on the

Commission?

really frankly would have no way of knowing whether we

were after it or not.

MS. MCDAVID:

How do we reconcile these two

How do reapply the lessons we've learned about

We would be agreeing to things that we

Certainly one possibility which is

also relevant to all of the negotiations or the scope of

the second request is the extent to which the parties

have been cooperating with the staff prior to the filing

and prior to the 30 day waiting time.

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If the staff has been given a lot of data by the

companies during that period to get them down the

learning curve, then they are in -- they are in a

position to agree on a set of terms than they would be

if they were totally in the dark, and anything in

between might be possible, but in a circumstance in

which there has been production from a substantial

number of documents in advance, witnesses may have been

available for interview, counsel have been available on

the phone along with business people, over the 30-day

time period, it seems to me to be more reasonable to ask

staff to add to a set of search terms.

Bob made an interesting point, which I think we

didn't hadn't focused on here and that is 14-day

refreshment rule.

documents than it is for hard copy documents.

from a requirement to refresh your search, which is

something that I also find fairly objectionable in

circumstances in which we are undertaking production of

documents, but let's park that for a moment.

That is a bigger issue for electronic

If you

You can leave a box on the executive's desk and

tell them to put things in it as things happen over the

period between when they were searched and when you have

the refreshment, you can't do that with electronic

documents unless you ask them to print everything so it

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requires revisiting the clients' offices and researching

their files at significant additional expense and cost

and time and it's certainly something you should take

into account in terms of the refreshing requirement of

electronic input.

MR. COOK:

On that 14-day rule, I have twice at

least been able to convince people here at FTC and also

the DOJ that if we're going to do a rolling production,

which is better for the agencies but it's more costly

but it's cheaper to do it as one production, then it's

reasonable to say once I produce Jane Doe's files and

they're complete and fresh, when I produce them then,

that I shouldn't have to go back and research Jane Doe

although there may be certain people within the

organization that they're going to want refreshed.

I mean, I personally think that few people start

to create nasty Emails and documents after the second

request goes out so I'm not sure if it serves a great

function anyway.

in the company, but I'm not sure that that's a really

useful thing.

It might be for the top three people

It's probably more of a hardship.

MS. MCDAVID:

There probably needs to be some

understanding that compliance would be in a reasonable

time frame so all production is reasonably fresh, but

under those circumstances I agree with Bob completely,

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and in fact the merger process handbook that the ABA

wrote with the assistance of the agency describes this

no requirement to refresh as a modification that is

routinely granted but it is is an act.

MR. LOWE:

In response to Bruce's question, I

think one of the things that the Commission might think

about is identifying certain people in the search group,

particularly lower level people that it is willing to

accept search terms searching for because those people

are less likely to have responsive Email or that any

Email they may have that is of import from a perspective

of the investigation would be found in the Email of

higher level individuals where you might not accept

search term searching for those individuals.

But it's important to note and this is the

context of the back-up tapes.

The burden on the Email

is not the production of the Emails.

review of the Email for responsiveness and privilege

where enormous expense comes in, so the effort to reduce

that not only reduces the volume of paper that the

Commission gets which as people noted here is often in

the Email case duplicative across all the individuals in

the search group, but also reduces the volume of the

paper for both sides to deal with at the end of the

process.

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It's also in the

MR. HOFFMAN:

Recognizing that, it sounds to me

like what the general consensus is for Commission staff

to be willing to agree to a modification along the lines

if you run a search in your database, whatever form it

may be, using the following terms and connectors and if

you need some software to run the search because you

have cross platform searches, that sort of thing using

this software, that would be deemed substantially

compliant without regard to what you might find.

In other words, it's kind of a methodological

search that says even for example -- the underside of it

is if we were wrong about these terms, and we have

missed huge categories of important stuff, that's okay,

you're still going to be in substantial compliance.

There is a significant risk there.

I think what

Jan is suggesting is a way to alleviate that risk, but I

have some question about how well that will work, and I

would like to get as many people's thoughts on that as

possible.

Another possibility is to say the Commission can

take the position -- staff lawyers can take position on

particular transactions that this is kind of be at your

own risk type method which I know has generated some

negative feedback, so far but I want to hear more of

about this.

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We won't rule out a term search and if you feel

reasonably comfortable, the parties feel reasonably

comfortable you're going to capture the bulk or

sufficient documents to be in substantial compliance,

that's fine, and we'll work with you to formulate it to

the extent that we can, but we can't sign off on it as a

modification because we don't have enough information to

know if the terms to which we are agreeing are the terms

set out at the beginning point of the production leaving

aside again what you could do with the first 30 days.

Which of those two approaches, let me ask this,

is the second approach workable at all or is it simply

never going to work?

MS. MCDAVID:

MR. SCHILDKRAUT:

You have to understand what

substance compliance is.

It's full compliance unless

you have an excuse and which the agency accepts.

mean, how is our using a search term going to be an

excuse which the agency will accept?

you can do that.

MS. MCDAVID:

Never going to work.

So I don't see how

The risk to the parties in that

circumstance is the next day or worse three weeks later

into the 30-days the staff comes back and says, Got

you.

Now, go do it again.

MR. GLEKLEN:

John Gleklen from Arnold &

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Porter.

discussion is something in particular in front of the

Commission that this is not the same thing as civil

discovery.

able to produce these documents.

I think the thing missing from this entire

This is not the last time you're going to be

The point here is to find enough information to

know whether you should be able to go to court and

particularly given the standard applied in the case of

the Federal Trade Commission for getting preliminary

injunction, the idea that there might be one three year

old Email out there that you're not going to get if you

do search terms, you're not going to go to court or not

go to court based on finding that one Email.

Doing a reasonable list of search terms, there

are ways we can do this.

what the parties agree to do is, Look, we will give you

all of the documents for let's pick five people in

different areas of the organization.

the documents and we'll use these documents to agree

upon a search list, so you'll know if the parties are

using stock ticker symbols or acronyms and things like

that.

MR. COOK:

In regular civil litigation

We'll give you all

I would agree with that.

One problem

is that it's possible in some cases at least that the

time required to negotiate the search term could be

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perceived by the parties in the transaction as

disadvantageous because these are multi billion dollar

transactions often that get investigated through this

process and create these problems.

And although these are huge burdens and people

hate them, they would rather undertake the burden than

to see this huge deal crater, and at stake is often the

viability of the target because if you have a huge

second request, it delays things, a lot of uncertainty

and people start to leave, and then it doesn't go

through.

It can actually hurt the competitive bidder of

the target and end up creating harm to competition

because the transaction did not go through, so that's

something to consider.

MR. HOFFMAN:

Why don't we switch gears on that

note to the third topic that we talked about a little

bit, which is the format of production,, hopefully we'll

be able to talk about that and have time after that to

get thoughts from anybody on all the topics, but I

wanted to have Greg lay out on the table some of the

issues that we've been experiencing on how things get

provided to us.

MR. BROWN:

Over the past I guess several years,

we've been receiving productions that have been

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increasingly electronic in their nature.

We've gone

from entire paper in the traditional investigation to

investigations where the second request response has

some electronic files included along with the paper that

we had.

We've also moved to areas where we image -- the

entire production has been actually scanned and imaged

with graphic data captured by the vendor and provided to

the Commission.

summaries and load files to be able to place it into a

litigation support application, for instance, like

summation.

documents that have been used that are actually off

site.

proprietary software to look at the universe of

documents as they're imaged as in their native formats.

We have particular issues and discussions that

deal with Email and whether or not we get Email that is

printed or we get Email in its native format and how is

the child parent relationship preserved with

attachments.

entirely electronic and they're CDs of PowerPoint,

Excel, Outlook, Word files, anything that they've had

and they've just had hundreds and hundreds of CDs come

in.

The graphic information are document

There are certainly repositories of

We've used that in some matters and we've used

We've gotten some productions that are

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We've attempted to shortcut this in some

instances by having productions made to large archives

that will send out -- give us information, but there's

issues of indexing, of how we know what's there, how you

know what you've given to us, how are these files usable

both to the Respondents and to the agency itself.

So we're looking for ideas for best practices in

this area, particularly when companies and Respondents

have realized the benefit of providing image in

electronic productions when they have to produce to

multiple parties or if the States are involved in some

say, certainly an opportunity to cut costs but how do we

get the information that we need to look at the

document, what kind of problems are you having in

producing those?

MR. COOK:

This is Bob Cook.

We did a massive

production that was paperless earlier this year and late

last year where I guess we had a consultant who is not

present here SV Technology which set up with a vendor

that they used an Internet site that the FTC staff could

use the Internet, log into a secure site.

I think we had two log ins and view documents

that were rendered in a format that was in appearance

similar to a printed say Outlook Email or just the

native Word format for spreadsheets, and these were also

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electronic documents text searchable which relieved us

from our indexing requirements because of the text

searchability.

The feedback that we got was that this worked

for the staff.

reviewing documents in multiple locations, say three

locations, maybe four in the U.S., and if you've ever

done that and had to ship Fed Ex boxes all over the

place, it's $100 a box, and they drop them and they

burst open and you have all kinds of nightmares like

this.

It worked for us because we were

You really don't want to do that.

It's very

expensive.

If you think about every piece of paper

being copied costing a certain amount of money, it's

much better to do it electronically.

The primary advantage to me in negotiating the

second request modifications for the system that we use

which was Internet based was that it did not require

special equipment or special software on the FTC's side

so that it was something we could sell.

They could try it out.

We also offered to

produce in the first batch paper as a fall back.

important too because nobody wants it if it doesn't

work, and it ended up that it did work.

That's

I think the advantage for the government for

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this is there's no paper, and everyone knows what it's

like going through those halls and seeing the paper

piled up to your shoulders and your head, and everybody

knows what it's like on the private side.

It's depressing being in the document room for

months at a time, and the documents accumulate, and it's

not conducive to good work habits I think, and ways of

eliminating the paper from the system are probably to be

encouraged.

MS. LLEWELLYN: Virginia Llewellyn from Applied

Discovery again.

taking that one step further is the concept that

everything is really moving toward the Internet and

again in speaking with the people at the Federal

Judicial Center who educate our federal judges and

talking about where the courts are going with this as

well I think most people have gotten over that initial

fear of is this secure, is this protecting

confidentiality, et cetera, I think we all know the

securities are there now just as they are in banking and

et cetera in the legal work.

I think what Bob said and I think

I think taking what Bob has said one step

further, the place the Commission ought to go is the

place to one system accessed by both attorneys

representing the company and the Commission, the staff

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attorneys who have to have a way to access information

very quickly.

And what everyone is offering here is saving

time and saving money, and that's the thing that's also

been different from litigation.

There isn't as much posturing in the same way,

and the concept of having one centralized location for

documents can be accessed really within a matter of days

through a secure access, as much security passwords,

tokens with numbers could change every 30 seconds,

whatever you need to make your client comfortable.

That technology exists and can save time or

money for everyone involved and it is really current

what's happening in a lot of cases in the private sector

and what ought to be happening here as well.

MR. COOK:

One thing that we found in doing this

Internet production was that it was an issue that we

anticipated that would arise in negotiating with staff,

and it did arise.

looking at so that what we did is we had a fire wall and

we had actually two servers that had the documents.

We didn't want you to know what we're

We had our server that we were using for review,

and then once documents had been reviewed, we could

redact for privilege on the screen and things like

that.

Then these would be transferred over to the

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production server which had an entirely different staff

at the vendor level so that we didn't have any access to

it, and this was good and the way to do it, it didn't

actually add time because it probably took a day to take

the documents and move them from one server to another

because when you are redacting it and marking documents

as entirely privileged, you have to make sure you're not

putting it on the production server.

And that took some time but that's what we ended

up having to do for a fire wall.

MR. COWIE:

I take it the purpose of that is to

ensure the FTC can review and print without the parties

knowing.

MR. COOK:

Exactly.

That was the purpose of

that.

MR. JOHNSON:

We've also had situations where

we've had submissions made on a number of CDs where

documents have been imaged and then OCR and then given

to us as part of our submission that way.

to know what you think the benefits are and

disadvantages are of the two types of approaches that --

the one you just mentioned as well as providing us CDs

where we utilize submission or another software program

to read the data.

MR. COOK:

I would like

My only experience with the CD thing

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you're talking about was when I was at the FTC when it

was unworkable because it just didn't work

technologically but this was ten years ago.

know at the -- it might work fine today.

there I think is that it requires equipment to work, and

the distinction between that and the Internet based is

that all you need is a browser.

I don't

The problem

We did provide -- on loan we provided some

monitors that provided more real estate because it does

require a large screen to do this effectively.

we provided ten 17 inch LED monitors.

were using in-house though were 21 inch huge TV screens

just because it had more capability.

MR. SCHILDKRAUT:

I think

I think what we

I think, Dennis, you were

describing my submission to you in Chevron Texaco.

MR. JOHNSON:

Among others.

MR. SCHILDKRAUT:

Which was all CD.

The thing

that made that workable for us at the time, this was

last year, was the fact that we had to also provide

these materials to half a dozen states but otherwise it

would have been cheaper to produce -- it was only a

single production to the FTC.

cheaper to do it all by paper.

It still would have been

We OCR'd it as well as providing the scanned

version because both the agencies -- both the agency and

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the States asked for the OCR as well as the scan, and we

provided the software, which was a cost to us, but the

cost was small compared to the cost of producing six

sets of a million documents, so that was the entire

reason we did it that way, and I have to say it's nice

however to walk through the FTC and see a clean hall

sometimes.

MS. MCDAVID:

hands on an important point.

production, even in hard copy, is already grossly

expensive, and what we're looking at is something in any

way significant will increase that cost.

think about that very hard, whether that to be something

that is an option for the parties to take on or an

obligation imposed by the second request.

I think these guys have put their

A second request

We need to

We're talking millions of dollars for the

average second request already, and I don't know how

much more that costs, Marc, but if the break point was

you didn't otherwise have to copy six copies of a

million pages, that's a lot more money.

MR. COWIE:

Jan, in assessing the cost, Dave

Scheffman made an interesting observation for me.

informal view is the real cost is not in collecting and

treating and reviewing of the paper.

time.

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It's in that

His

Real costs to the company is the time associated

with the compliance process, so in his view it would be

a significant difference between say a 300 box second

request that could be done in two or three months versus

300 box production that takes seven or eight months.

MS. MCDAVID:

I don't think those are the right

kinds of break points.

would save us at although by doing this in this way.

guess is that it doesn't save significantly at all.

have to still undertake reviews of the documents and

that's where the time comes from.

MR. COOK:

I'm not sure how much time it

It does have problems, too, because

if you're doing an electronic production and you're

someone like me who wants to change things as you're

going like, Well, let's do these people first instead of

these people and changing -- it's very difficult to do

when you have this series of information technology

processes that have to be performed on the information

before you get to the FTC because once it gets in the

pipeline, you can't really move up.

You have to go through.

It's easier to make

changes than to be free formed with papers once you

start to do these it's more -- it was more time

consuming to do things like that.

MR. SCHILDKRAUT:

I think there are two

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responses I have to David's point.

First is electronic

production simply is no faster.

time in the production is the review of documents, and

that's what costs the majority of the money.

doesn't save any time to do this electronically at all.

Second point is I was just sort of thinking back

The massive amount of

Now, it

over my second requests over the last half a dozen

years, and by and large, it was not the document

production that resulted in the time delays at the end

of the day.

the staff still wanted to either investigate for six

months or I had to negotiate consent orders for six

months.

I would finish the document production, and

I mean, it was all those kinds of things that

ended up creating the delays in the process, and if

you're dealing with one of these very large mergers,

it's a minimum amount of time that staff needs to go out

and interview people, do depositions and things like

that, and it's not really the document review that's

forcing this thing to take a year rather than three

months.

MR. BROWN:

I think I would be interested in

hearing from other folks who may have experience with

this about their feelings about the cost and the effect

in doing this electronically.

I don't know that we are

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equally applying technology in our particular cases, and

I'm certainly willing to say I'm in need of more

education myself because we're always looking to see

what's out there.

Technology is changing, so I think it's

important to have other people speak up who may have had

different experience and different opinions on this.

Rich?

MR. KORBIN:

I just wanted to say that I may be

the only one in the room that thinks this, but we've

done quite a few of these cases, and I haven't see any

instances where doing it electronically hasn't been the

quickest and cheapest way to do this.

done 15 million pages of printed documents and someone

said, Review these documents and produce them to the FTC

in 30 days, they would be pretty hard pressed to get

that done in a law firm today and we've done that.

I think if I have

We do quite a few of these cases, and we've seen

that the hard problem of what does it cost to print, in

New York City it's 15 cents, and our technology is

around the same price.

electronically, I agree the review process make take

longer, but if you're reviewing paper documents, what's

going to take longer, reviewing every single paper of

the paper or doing a search term in a system?

When you're doing

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It's hard to say that that isn't a faster way of

doing it when I could run five search terms and have the

two million documents that respond to that instantly.

There are other costs I know associated with that, but

we have seen productions through our system that have

never been done on paper, so that's why we can see in

the end that it was cheaper.

We've had people tell us "our very first second

request that we did the client told us they saved $2

million on that request.

after the fact.

seen that across the board.

year.

productions.

They gave us those numbers

We thought it was substantial.

We've

We've been doing it one

Paper productions are faster than electronic

I know everybody has their own opinion on that

but we're seeing some pretty hard facts in our company.

MS. MCDAVID:

I think we have to distinguish

between documents that exist in native format in

companies files, in hard copy that are required for

production native format in the company electronics.

Those I suspect might be much faster to produce in

electronic form, but if you have got 500 boxes of hard

copy and to make them electronic one has to push them

through a machine and photograph them, then we're just

talking about a different version of the same

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production.

And those documents will not be searchable in

that format unless they're scanned simultaneously in a

way that's probably not reliable for search, so I think

you have to distinguish between the time and the cost

involved as to what the nature of the for was.

MR. KORBIN:

I agree with that.

I was talking

about documents, originated form.

Paper documents are

always going to be paper documents we've seen that

decreased over time as far as how many paper documents

are produced, but I can agree that it's a better way to

doing it versus paper production, but purely electronic

data starts electronic that takes into the system

directly electronically.

as opposed to printing.

MR. SCHILDKRAUT:

That to us is no doubt faster

Not substantially because the

vast majority of the time is reviewing it unless the

agency is going to allow something like search terms.

Most of the time in the process it is not the production

of the pieces of paper.

paper, hiring -- sometimes I've had to hire up to 400

temporary attorneys to review these documents.

It's reviewing those pieces of

In one merger I had -- we essentially had to

create a site with massive warehouses with 20

port-a-johns with 300 attorneys at a single site with

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golf carts that moved people back and forth across the

site with trucks on a particular schedule moving

everything around.

the review.

That's what takes all the time is

MS. MCDAVID:

The human -- someone has to review

each piece of paper and determine whether it is or isn't

responsive.

avoided unless we can go back to search terms.

That's the part of this that cannot be

MR. HOFFMAN:

But it seems to me even with

search terms you're not going to be able to eliminate

that problem.

which that kind of review has to be applied.

experience with scanning productions is that they take a

little longer and cost a little more on the front end

actually than producing things in paper.

You just reduce the scope of terms to

You get savings to some extent at the back end,

depending on how many times you're going to use them and

how much you're actually going to use them.

second request context, it might be never again.

might never want to look at them.

After the

You

The other thing you might be doing multiple

productions to different regulators, things like that,

that's where those things seem to be pretty cost

effective from a parties' standpoint leaving aside

accessible to the regulator.

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Anybody else have any thoughts on any of these

issues so far?

MR. COWIE:

Let me supplement that.

Feel free

to address issues that are only loosely related to

electronic discovery but nonetheless related more

generally to second request process.

MR. SCHILDKRAUT:

I have two proposals that I

think you ought to think about, and this relates to

electronic discovery and all other forms of discovery.

One is is I have found over the last half a dozen years

or so that we really haven't advanced the ball much in

terms of cutting back on second requests, and I think

that there needs to be more of a shared experience, and

I think the way the agency can do that is by doing

retrospectives in second requests.

And I think the way you go about doing that is

figure out as you went through the process what I cut

back, what you didn't cut back, and then what you

actually use and try to come up with a methodology that

you can apply second request after second request to

identify areas where you're requesting information and

then don't use it.

I don't know whether that will work or not maybe

every second request is actually sui generis, but it is

possible that you may find that there are ways of

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cutting back that are not going to be particularly

harmful to you because at the end of the day if you're

-- you know, if you request that you get a thousand

boxes of documents, you're still only going to use

probably a thousand documents total that are going to be

useful to you in the investigation, so you've obviously

requested a lot more than you need, and there may be

better ways of doing it, so that's one idea that I think

people ought to think about.

A second idea that I think people ought to think

about though I'm not sure it will work is making the

appeal process more transparent.

to encourage people to use the appeal process and then

to publish the decisions on the appeal process.

What I mean by that is

I can think of very few cases where I actually

would have used the appeal process, but there is one

where I would have used it and it was actually something

that actually led to there being an appeal process.

there may have be a few occasions where people would use

it.

I think you should take the decisions that have

already been made and ask them, put them on up on the

Internet site.

now, but over time I think you'll see more of those, and

that will sort of spread the knowledge around where

I know there are only a couple of them

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cutbacks are acceptable, things that we can do.

MS. MCDAVID:

An issue that is not even remotely

related to electronic production is the issue of

transcript of depositions, and it's a particular painful

point for the private bar, is extraordinarily

inefficient and costly for the parties and their counsel

to have to have associates sit in the room and take

detailed notes of a deposition.

It means that we are less effective in dealing

with you on the merits if when we prepare papers for

you, we are not able to cite to a page and a line of a

deposition, but simply paraphrase something that a

deponent may have said.

The only basis that has ever been articulated in

the Commission's rule which is quite notably different

than that applied by the antitrust division with

concurrent jurisdiction in exactly the same kind of

investigations, essentially assumes obstruction of

justice on the part of companies and their counsel.

Federal Courts have managed to lumber along

since the 1940s when Judge Clark first drafted the

Federal Rules of Civil Procedure by allowing parties to

have copies of transcripts in litigation.

The antitrust division "most other agencies do

so.

I would urge you in the strongest possible terms to

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revisit this question because it's inefficient, costly

and obvious issue.

MR. GLEKLEN:

John Gleklen from Arnold &

Porter.

At the risk of being the one who points this

out, I think the reality of a lot of the things that we

have discussed today is the Commission's fear that

parties are going to screw them at the end of day on

time and where a party comes to you up front and says,

We're not going to jam you up on time, we will give you

60 days or whatever you need in order to do your

investigation or a rolling 60 days or whatever, that

that is the time to be reasonable about searching

back-up tapes, about scope of search.

I have done thousand box productions and

received 950 of them back with the tape uncut, and that

is not because there's nothing interesting in there.

was because the search list got extended because you

were afraid that you wouldn't have enough time.

the parties are willing to give you enough time and will

commit to that, why create money for the photocopying

vendors or the document imaging vendors and the contract

lawyers?

Where

Why not let's focus on what's important?

You'll have the time you need and instead of

just us all producing documents that we know will never

get read or back-up tapes that we know will never be

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printed and read, that's my suggestion to you.

MR. COWIE:

What is it that you think we're

focusing on that is not important?

MR. GLEKLEN:

This is my experience.

In my

experience there has never been a legitimate need to

look at back-up tapes in the second request.

of search in terms of the number of people that need to

be searched, if the idea of a Hart-Scott second request

investigation is to figure out which products compete

which products constrain the price are one another,

unless there are 50 different products, it's just hard

to imagine how you need to search more than a couple

dozen people, and that is the exception rather than the

rule.

MR. LOWE:

The scope

Mike, the other thing I would

strongly suggest is this is my best practices, that the

two agencies talk to another about these productions,

there's a divergence of products between the two

agencies, a modification of second request.

There's a divergence of practice on how issues

of compliance are handled on the back end, and the two

agencies need to get together and talk to one another

more than they clearly do or at least they need to agree

more than they clearly do on practices and responding to

the second request.

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Other than the discussion among us this morning,

there was an agreement that there is a distinction

between the agencies and a number of these questions,

one of which is certainty of modifications upfront where

the division seems to be more willing to agree to

modifications and stick with them rather than to simply

defer things or also make decisions quicker that allows

more certainty and frankly results in them probably

receiving less paper because if we can't be certain that

a modification will be accepted, we're going to produce

rather than wait.

And there is a distinction and the two agencies

really need to talk to each other about these issues.

MS. MCDAVID:

The division has recently adopted

a method of operating in which the parties and the

agency can agree with the schedule up front in which

specific dates are assigned to specific kinds of

events.

Dennis and I had a matter in which that kind of

schedule was used with some success and some lack of

success on the back end.

deadline at which point it fell apart.

us doing things that we agreed to do by a certain date,

that worked.

It worked up until the

But in terms of

The agency agreed to do certain things in terms

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of telling us their issues of concern by a certain day.

That certainly it would be worth exploring with the

division the experience they've had since Charles

announced those modifications to their processes last

October.

MR. COOK:

The one biggest difference between

the way the second request looked is the indexing

requirement where the FTC requirement is specification

by specification indexing, and I'm not sure how usable

that is.

I'm sure it's somewhat -- I know it's somewhat

useful, but I also know that the Federal Rules require

them to be produced as kept in the ordinary course of

business, and it is burden some to create that.

If you're going through, the one skill set for

people who are doing documents might be to spot one

that's privileged.

person who is good at figuring out if it's an 18 A or a

7 B.

That's not necessarily the same

That's just -- that is more difficult to do it

and it does add time and it makes it more difficult to

produce them within 14 days or 30 days.

MR. COWIE:

That's another difference between

FTC and Justice Department practice.

MR. COOK:

Yes.

Models of the two agencies

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differ on that one point.

matter of production.

MR. GLEKLEN:

The indexing requirement and

John Gleklen again.

In relation

to the normal course of business this is not something

I've had personal experience with, but I know other

attorneys in my firm have, and they asked me to raise

this, and that is the requirement that the parties

produce electronic information in the form in which it

is not normally kept by the parties.

In one case, in a supermarket merger they, were

actually told, We're not going to deem you to be in

substantial compliance unless you go out and buy this

data for us.

Parties should only have to produce data that the

parties actually have.

available from some third-party market research firm,

the Commission should go buy it.

That seems to me to be outrageous.

MR. COWIE:

If the Commission wants data

All right.

Does anyone else have

any comments or criticism, constructive or otherwise?

No?

MR. HOFFMAN:

MR. COWIE:

Don't be shy.

Criticize Michael.

This was very helpful.

As I

mentioned earlier there are other sessions as announced

on our web site.

We're expecting papers from some large association

We also encourage written comments.

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groups, and we would like to state anything in writing

that is welcome.

Thank you.

(Time noted: 3:25 p.m.)

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C E R T I F I C A T I O N

O F

R E P O R T E R

CASE TITLE:

WORKSHOP ON ELECTRONIC RECORDS

WORKSHOP DATE:

JUNE 3, 2002

I HEREBY CERTIFY that the transcript contained

herein is a full and accurate transcript of the notes

taken by me at the hearing on the above cause before the

FEDERAL TRADE COMMISSION to the best of my knowledge and

belief.

DATED: JUNE 5, 2002

DEBRA L. MAHEUX

C E R T I F I C A T I O N

O F

P R O O F R E A D E R

I HEREBY CERTIFY that I proofread the transcript

for accuracy in spelling, hyphenation, punctuation and

format.

DIANE QUADE

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.