Robert A. Gallagher, Jane Fox Lehman and Michael I. Frankel | Pepper Hamilton | October 2, 2019
Success in construction litigation often turns less on counsel’s ability to craft legal arguments and more on counsel’s ability to gather, master and present the often complex set of facts underlying the case. In construction matters, most of the key facts are found in documents: contract documents, drawings, plans and specifications, schedules, submittals, progress reports, daily logs, change orders, invoices and payment records. Nowadays, these documents will almost certainly be created, exchanged and stored electronically; many will never exist in hard copy. As such, timely collection, organization and analysis of electronically stored information (ESI) is crucially important in construction litigation.
The construction industry has always involved a large quantity of records. Today, the majority of those records exist only as ESI: Design professionals use computer-aided design (CAD) software to create construction plans. Construction managers use Primavera or similar software to create schedules and workflows. Estimators use job cost control programs. Innovative firms capture digital photos of the project, from mobilization through the punch process.
Because ESI is created and exchanged at a higher rate than hard-copy documents, ESI has facilitated a dramatic increase in the volume of records associated with construction projects. Further compounding the increase is the proliferation of mobile devices. With a smartphone in every pocket, ESI creation has moved out of the home office and the site trailer and onto the site itself. As the volume of ESI expands, so too does the time and expense associated with storing, processing, reviewing and producing these records. This article will cover strategies for balancing time and expense with the requirements of the rules and the needs of the case.
Preserving Documents
The first and most important consideration in a thorough document collection is document preservation. In general, the duty to preserve documents arises when a party knows litigation is pending or likely. Construction practitioners should carefully consider when this occurs: The duty may arise as early as the time of the first differing site condition or change order, or as late as the service of the complaint. As soon as possible after the duty arises, counsel should devise and send a “litigation hold” to project personnel, instructing them not to delete ESI or discard hard-copy documents that may be relevant to the case. In a construction case, the litigation hold may need to cover personnel who are no longer actively working on the project, as projects often span multiple phases and several years.
The hold also may need to cover mobile devices, as project personnel, particularly those on site, commonly communicate via text messaging and voicemail. Preserving mobile device data can be tricky. Personnel may use their personal device — or devices — for work; they may lose, update or upgrade those devices; and they may store their data in the cloud. Preserving mobile device data is also expensive, as imaging a single device can cost a few hundred dollars. But these devices may hold facts critical to your story, such as photos that depict progress at a critical juncture, text messages that demonstrate constructive notice, or voicemails that evidence another party’s admission. Further, the failure to properly preserve, collect and produce discoverable mobile device data can subject a party to sanctions, up to and including dismissal of the case.
Collecting Documents
Today, it is standard for parties on large construction projects to use a dedicated server or share a cloud-based electronic document management (EDM) storage system to store, review, annotate and exchange project documents, including submittals, construction drawings and correspondence. These databases, which are typically hosted by the general contractor, can be a rich source of key documents for litigation. As such, the party hosting the databases should be aware that the database contents will almost certainly be the subject of discovery requests directed to them. Nonhosting parties may not have access to certain database contents unrelated to their scopes of work, or their access may have been severed after a contentious termination. For this reason, it likely will be the hosting party’s responsibility to export the contents for production. The hosting party should take care to preserve the database contents to avoid any charges of spoliation of evidence.
In addition to shared online document repository databases, parties on construction projects typically keep individual project files, which are internal repositories of all project documents. These too will almost certainly be the subject of discovery requests. As parties often have legal counsel (both in-house counsel and outside counsel, sometimes from multiple law firms) advising them at various stages of the project and on a variety of issues (including regulatory, permitting, land use, procurement, contract and litigation issues), parties should take care to segregate attorney communications, work product and similar documents from their files during the course of the project.
Parties should also conduct thorough screens of their project files for attorney communications, work product and similar documents before producing them to any other party. As parties often use third-party, nonlegal professionals, such as engineers, to assist attorneys in drafting contracts, permit applications and other documents, thorough screens require an understanding of the relationship between the attorneys and the nonlegal professionals to determine whether the presence of a third-party, nonlegal professional on an attorney communication destroys its privileged status.
Reviewing Documents
Construction practitioners now rely on advanced discovery technologies to limit the number of documents they collect and produce and the attendant costs to process, host and review those documents. Technology-assisted review (TAR) can reduce — or at least prioritize — large document volumes through deduplication, email threading, topic analysis and predictive coding. But practitioners should keep in mind that current TAR techniques rely on the text content of documents to reduce document volumes. As such, certain records common in the construction industry are poor candidates for TAR, including records that have no text, such as photographs and diagrams; records that have minimal text, such as schedules and drawings; and records that have text not in narrative form, such as spreadsheets and charts. These documents should be identified using available metadata (e.g., file extension or document name) and sequestered for human review.
Construction practitioners also frequently negotiate ESI protocols as a way to make discovery more efficient. Such a protocol might limit document collection from a particular custodian to the tenure of his or her time on the project. Or it might limit collection to those documents that hit on specific keywords, such as the project name, contract numbers, project acronyms, project locations and the names of other parties involved on the project. Using keywords to limit document collection can cut down on costs, but it does carry the risk of excluding relevant documents, as dedicated project personnel may not identify the project by name in their communications, especially informal communications.
Using keywords carries the risk of over-inclusivity, too. Construction personnel, especially at the management level, often have responsibilities across multiple projects, and so a keyword search for a particular project name may capture a substantial number of documents that cover more projects than the one at issue. Depending on the sensitivity of this “other project” material, care may need to be taken to identify the material and either redact it or withhold it. Counsel may also consider stipulating to a procedure for designating and protecting such documents as part of an ESI protocol.
Conclusion
Even as ESI has improved the quality and availability of documents associated with a construction project, it has dramatically increased the quantity of these documents. This increase in quantity has made collection, organization and analysis of documents more challenging, more time-consuming and more expensive. Fortunately, there are strategies available to ensure a proper, thorough and efficient process that will set the construction practitioner up for successful litigation.