Cost shifting is the concept of shifting the expense associated with your discovery obligations, in whole or in part, to the party requesting the material. The concept is not new, but it is historically underused, in part because courts and third party decision makers have been hesitant at best, to grant costs shifting requests in the past. This is primarily because traditionally, litigation expenses, and discovery related expenses in particular, are born by the party who has the data and is producing it – this is both rule based, but also very much culturally based as well.
However, there is starting to be a sea change as data volumes continue to grow exponentially and discovery costs grow with it, and there is a growing sentiment that in some situations, it is unfair and overly burdensome for a producing party to bear certain costs. What this means for you is that any assertions, requests, or arguments to shift costs away from you are now more likely to be considered and granted then ever before. I have noticed this in my practice working with clients, who are not only requesting cost shifting more than ever before, but being successful at it as well. The rules makers are embracing this trend as well. The new draft Federal Rules of Civil Procedure include modifications to Rule 26 allowing protective orders to be issued for good cause to protect against undue burden or expense and can include provisions allocating expenses, which can include cost shifting. The courts are likewise picking up on the trend. In the context of third party subpoena requests and Federal Rules of Civil Procedure Rule 45, the Ninth Circuit Court of Appeals endorsed, and seemingly mandated, cost shifting in some circumstances, in its decision Legal Voice v. Stormans, Inc., 738 F.3d 1178 (9th Cir. 2013), ruling that if the subpoena imposes expenses and those expenses are significant, the court must shift enough costs so that the expense is no longer significant for the responding party.
Making an effective cost shifting argument, particularly to a court or some third party neutral, is dependent on the case you can make regarding the burden and expenses, and nothing does that better than time and cost metrics that demonstrate what the dollar impact and burden would be; increasingly, courts are unwilling and unsympathetic to mere assertions that something will cost a lot or be unreasonably burdensome. Having the facts to back up your statement will add to your credibility and make it much more likely you will win a cost shifting argument. How you develop those metrics and cost points of reference depends. For my clients, I keep detailed metrics on many different data points allowing my team to provide collection, processing, review, and production costs per document, per custodian, per GB and a variety of other measures. Working with client we then develop cost affidavits that can be presented to the opposing party or the court and that have proved quite powerful.
Pragmatically, Why not ask? The other side may say yes, you may get some if not all of your costs shifted, and at a minimum, it may make the party requesting the data carefully tailor and narrow their request for what they truly want and need knowing they may have to pay for it. Worst case is that they say no and you are then in about the same position as if you had not asked. I have found it is best to first make an informal request to shift the costs form the party itself (which will cost very little time or money), and if that is unsuccessful, consider making a formal request to the third party decision maker if you feel you have a good claim and reason for doing so.
Particularly for third party subpoena’s I work with some counsel who make that their standard negotiating stance. As soon as they get the request, they reach out to counsel for the requesting party, let them know how much it will cost and ask them who we should bill for it. Often they do not get any push back, and suddenly, the request for five custodians’ data shrinks to one or two; when they are bearing the cost burden, the requesting party suddenly does not need every potential source of data under the sun, and only ask for those that are most likely to contain relevant data.