Cost Allocation Of E-discovery In NY Trial Courts

The Manual For State Trial Courts Regarding Electronic Discovery Cost-Allocation, authored by the Joint E-Discovery Subcommittee of the Association of the Bar of the City of New York, is required reading for any New York state court litigator involved in e-discovery.  The Manual is intended to assist New York State judges and court personnel in managing issues relating to the cost of discovery of electronically stored information, or "ESI’.  As  state court decisions on e-discovery cost allocation are likely to reference the Manual, practitioners are well-advised to familiarize themselves with the Manual now.  The authors cite one study that found that between 58% and 90% of litigation budgets are devoured by document review.  The issue of who pays for  e-discovery–the requesting party or the responding party–often involves sums of money above and beyond the damages sought by the claimant.  As a result, litigation costs drive cases to settle that should not settle on the merits.  Although New York law mandates that the requesting party pay the costs of discovery, there is authority in New York law for requesting parties to seek protective orders aimed at shifting all or part of the ESI costs to the producing party.

Of interest to practitioners outside New York, the Manual provides an overview of ESI burden and expense, and cost-shifting rules, adopted in states across the country.  This discussion, as well as a review of federal case law, suggests that New York is not "going it alone" but is drawing on the principles developed at the Sedona Conference and in leading cases such as Zubulake, which provides a seven-factor balancing test for determining cost allocation.