by Steve Sawyer - FRONTEO on November 30, 2016
Under the Hart-Scott-Rodino Antitrust Improvements Act, both parties involved in a transaction must file a “Notification and Report Form” with the Federal Trade Commission (FTC) and the Antitrust Division to obtain approval for before mergers, tender offers, or other acquisition transactions.
After review of the original notification documents, the FTC or the Antitrust Division may request more information in the form of a “Request for Additional Information and Documentary Materials,” more commonly referred to as a “Second Request.”
The FTC and DOJ report that less than 5 percent of filed transactions incur a second request. For those few, the demands can be onerous, often involving large-volume productions of documents related to the financials, product and manufacturing details, industry participants and competitors, business plans, strategies, sales data, and other information related to the merger.
In my role as an e-discovery project manager, I have supported a large number of second request reviews. On the EDRM continuum, second request projects are quite similar to e-discovery for litigation, but they present several unique challenges. Below I’ll describe what challenges can await you, and offer some tips and practices that may be effective in ensuring success with a second request review.
#1: Second requests often have very short timelines.
Parties may be required to deliver productions within 30 days of the request. To meet rigid timelines for response, work within the organization needs to be prepared in advance. Corporations should have information governance systems that are clearly documented and followed. Current data maps allow the legal team to stay on top of a wide variety of information related to their data and technology, including:
- Quickly identify the desktops, cloud applications, network servers, email, and even legacy backup tapes and their content.
- Stay informed on organizational ownership of data—which divisions or departments own what data, where it is located, and when it was last modified or even accessed, which may be part of a record retention program.
- Know what cloud applications, hosted off-premise by third parties, are in use, and what data resides in them.
- Have a preservation plan and effective legal hold process.
#2: There’s no Meet & Confer to negotiate scope of discovery.
The requesting agency defines the deliverables. Hurriedly producing documents without full compliance can lead to penalties, and risk the potential rejection of the merger transaction.
Parties must fully understand the specifications for the second request. The FTC updated the Model Request for Additional Information and Documentary Material in 2015, and issued a guide to Best Practices for Merger Investigations. A sample second request document is available on the DOJ website.
Plans must be communicated promptly. The DOJ and FTC expect that you are familiar with the data and how to best comply. Agencies may allow you to propose a ‘Quick Look’—a defined scope including key custodians and issues. It is suggested to read the best practices guide to understand how to communicate and negotiate scope and methodologies for document production.
A party in receipt of a second request may request a conference with the Bureau of Competition. The recipient may also petition the General Counsel of the FTC to hear an appeal on unresolved issues. These processes are outlined in the model request document.
#3: The mix of documents increases in complexity with mobile & cloud data.
Though you may not know the exact timing for a review project, corporate legal does have a long view of M&A timelines and can anticipate a second request. Even prior to receipt of a second request, the legal team can work with outside counsel to scope the project. This is also the time to meet with the e-discovery service provider who will host the review, conduct analytics, and manage the review process, if applicable. The review protocol can be developed, and the provider can implement its elements within the review platform.
Expect and plan for rolling collections. Timelines are tight; the service provider should have a process that allows ingesting, rapid processing, and availability of new docs to reviewers on a rolling basis. All project team members need to know what collections are coming in, what’s in review, and what’s being produced.
#4: Multi-language content can complicate review.
Global acquisitions will often require production of foreign language content. A full-service provider with experience in global e-discovery will be well suited to handle the entire review. When a single provider manages multi-language review, communication and consultation between native language reviewers raises the overall understanding of the data set. As an example, in a recent e-discovery review project with documents in both English and Japanese, there were English and Japanese native language reviewers working side by side in the review center, where they can quickly resolve any translation or interpretation questions that arise.
#5. It's tough to find relevant documents quickly, but analytics and predictive coding can help.
A second request project can often make rapid progress with the use of analytics and technology-assisted review (TAR), or predictive coding. Working in combination with the e-discovery project team to agree on technologies and workflow for the project, in most cases, ECA, analytics, and/or TAR will lead to reduction in time and cost. Communicate up front with the federal agency to clearly explain your planned approach. Most agencies welcome the use of advanced technologies.
The antitrust agencies see increased value in the use of predictive coding for second requests. The FTC includes specific guidelines in its latest Model Second Request Outline, indicating that the party “provide all statistical analyses utilized or generated by the company or its agents related to the precision, recall, accuracy, validation, or quality of its document production in response to this request.”
In another recent case, the team worked with an initial data set containing more than 500,000 records. We advised our client from the outset to design a workflow leveraging concept analytics, language identification, and near-duplicate detection. We were able to prioritize review of the most responsive documents, divert non-English language documents to a concurrent Japanese language review team, and reduce the set of documents requiring linear review.
Second requests or ‘merger reviews’ are demanding and at times a burdensome process. Communication between the recipient, outside counsel, federal agencies, and e-discovery providers is the best insurance against errors. Advance preparation, end-to-end management, and advanced analytics and TAR can help pave the path to success.
Steve Sawyer is manager of review services for FRONTEO, and is a member of the Data Science & Strategy team. Mr. Sawyer is a Relativity Certified Review Specialist, and works with clients to implement review workflows leveraging analytics and customized reporting to deliver efficient, defensible productions.
This article was originally published on the FRONTEO Blog. It's an informative look at what sets second requests apart from other types of e-discovery projects. Check out the original version here.