Litigation costs time and money. The time and energy required to litigate a complex case, added to the financial cost, can be a deterrent to vigorously pursuing your claim or defense. To address these concerns, several aspects of the Federal Rules of Civil Procedure (the “Rules”) were amended with the aim of reducing the burden and cost of litigation by (1) limiting unduly burdensome discovery conduct that increases the cost of litigation, (2) increasing efficiency in the management of cases, and (3) encouraging cooperation between parties. Below we highlight the effects of these changes.

These rule changes, which took effect in December 2015, are expected to create greater efficiency in the resolution of federal actions by expediting the initial stages of litigation. But even more notably, they also seek to establish limits on the scope of discovery so that expansive discovery will only take place in cases where it is merited. This may, in turn, reduce the number of discovery disputes – easily one of the primary culprits of exorbitant litigation costs. Litigants not only finance the cost of litigating these discovery disputes, but they also bear the cost of collecting and complying with discovery requests, the cost of reviewing all discovery submitted and propounded by the opposing party, and the cost of preserving their own Electronically Stored Information (“ESI”). In many cases, discovery costs comprise more than twenty percent of the total costs associated with litigation, second only to the cost of going to trial. The Rules address these issues in multiple ways.

1. Requiring Proportionality

The most noteworthy change to the Rules is the update to Rule 26, which governs the discovery process in federal litigation. Amended Rule 26 emphasizes the concept of “proportionality” in the discovery process by mandating that the scope of discovery permitted by the court take into account the needs of the case, the importance of the issues at stake, the amount of money at issue, the parties’ resources, and the burden involved. By giving the court the authority to reduce discovery and discouraging parties from propounding overly broad discovery requests, these amendments will help drive down discovery costs so long as the Amended Rule 26 is enforced.

To date this amendment appears to be an early success. Since the enactment of the Amended Rule, dozens of courts have cited to the Amended Rule and parties have also begun invoking the objection that discovery requests are disproportionate to the needs of the case. Early case law shows many courts have conducted a proportionality analysis and some judges are now focused on proportionality when deciding whether to grant or deny motions to compel discovery. By enforcing the standards on proportionality, courts are reducing litigation costs and curbing discovery abuses.

2. Defining Document Preservation Obligations

Another potential cost-reducing amendment to the Rules is found in the Amended Rule 37, which governs the failure to cooperate in discovery. Amendments made to Rule 37’s provisions regarding spoliation or the failure to preserve ESI should make the courts’ treatment of the parties’ document preservation obligations more uniform.

Discrepancies in the courts’ treatment of these requirements resulted in increased costs in two ways. First it led to more discovery disputes because litigants were unable to agree on the applicable standard for retaining documents or the consequences for non-compliance. Second, inconsistent rulings caused many litigants and potential litigants to create expansive record retention policies, or implement overly broad litigation holds necessary to preserve countless records in fear of being subjected to sanctions.

Amended Rule 37 clarifies that parties who fail to preserve ESI should only be subject to harsh sanctions in exceptional circumstances where they have intentionally sought to hinder the opposing party’s case. Parties that attempt to preserve information in good faith, such as those who lose ESI due to routine good faith operation of IT equipment, may be subject to lesser consequences. By establishing guidelines and standardizing the consequences for spoliation of ESI, the Amended Rules have eliminated potential discovery disputes thereby reducing the overall time and expense of litigating a claim. Furthermore, potential litigants should consider contacting a qualified attorney or outside counsel to help refine their record retention policy, to determine what parameters will work best for your business, and thereby reduce daily operations costs.

3. Increasing Efficiency

As mentioned, several of the Amended Rules operate to promote efficiency in the early stages of litigation. In particular amendments to the Rules on service and pre-trial scheduling have shorted the deadlines for which the courts and the parties must act. One rule for instance requires the court to issue an order within 90 days after serving the complaint. Another amendment decreases the time with which a plaintiff has to serve the defendant(s) with the complaint. Together these rule changes reduce the amount of time an action can sit with no activity or without active court management. In addition to reducing delays at the inception of the case, these Amended Rules will minimize misunderstandings resulting in quick resolution of the early discovery disputes, assist federal judges in taking an earlier and more active role in case management and facilitate more progress towards resolution earlier in the case.

4. Fostering Cooperation

Finally, an underlying thread in many of the Amended Rules is the purpose of increasing cooperation between parties and their counsel. Increasing collaboration and professionalism between attorneys has been found to decrease client costs. Consequently a number of the Amended Rules not only clarify the scope of the parties’ responsibilities but also require greater communication between them. By giving more prominence in the Rules to the parties’ obligations to work together, the court now has a standard that judges can use to encourage more efficient and cooperative behavior.

Despite the substantial costs of litigation, efforts have been made to reduce the time and expense necessary to resolving a claim. While it is still too early to tell if the Amended Rules will achieve the desired effect, the changes to the Rules are promising. By requiring more cooperation between parties and expediting the early stages of case management, the court will be able to reduce many of the early delays. Similarly the changes to proportionality and more active case management by the court will enable the court to avoid access and waste during discovery resulting in a more efficient and less expensive experience for litigants.