The German-American “Justice Conflict” and the Burden of Discovery

[German version]

One of the most well-known differences between the civil (or Roman) law tradition of Germany and the United States is the strict obligation to produce documents and other information in fact discovery.

Because the costs of U.S. discovery can be enormous, there have been efforts for decades to modify the Federal Rules of Civil Procedure. Suggestions include limiting discovery so that it is proportional to the amount in controversy or proportional to a party’s resources. Despite these efforts, little progress has been made.
In addition to other strategic concerns, any client should discuss discovery and its costs with counsel as soon as possible. This should include targeting the most important information, anticipating your opposing party’s discovery requests and their costs, and developing a cost-effective discovery plan.

The standing committee on procedural rules of the Judicial Conference of the United States, which frames policy for the federal courts, recently proposed changes. Comments closed in February 2014.

Under Federal Rule of Civil Procedure 26 and its equivalent in every state, a litigant in the United States must be prepared to disclose not only documents and information that are admissible as evidence but also those which “appear reasonably calculated to lead to the discovery of admissible evidence.”

In consequence, the scope of American discovery is broad and its costs are onerous. These costs can far exceed the value of a case and may fall disproportionately on the pocketbook of one party or the other.

American discovery imposes obligations that are inherently difficult to predict. An opponent can take advantage of discovery to extort a favorable settlement regardless of the merits of a case. This has been recognized for decades, but little has been done to curb the potential for abuse. In fact, although it is frequently decried, it does not really count as abuse of process in the American system. An attorney who zealously represents a client would be remiss not to press an advantage created by asymmetrical discovery obligations.

Anke Meier of Noerr LLP in Frankfurt has noted that American discovery is part of a deutsch-amerikanischer Justizkonflict. The German- American Lawyers’ Association dedicated the bulk of its 2012 Newsletter to this topic (where Anke Meier’s article appears), and the demands of American fact discovery are frequently covered in the Legal & Tax Newsletter of the German American Chamber of Commerce.

The conflict is not limited to German lawyers and clients and includes many Americans. In 2010, the U.S. Chamber Institute for Legal Reform, Civil Justice Reform Group, and Lawyers for Civil Justice submitted survey data on the litigation costs of Fortune 200 companies. This study found that multi-national corporations spent a disproportionate amount on litigation in the United States compared to foreign jurisdictions.

The companies surveyed spent four to nine times more on litigation in the United States than in non-U.S. jurisdictions, and discovery costs accounted for at least 25% of the legal costs these firms paid in the United States. The number of pages of documents that an opponent can force a litigant to produce is likely to bear little or no relationship to the number of pages actually used as evidence at trial. In fact, the average ratio exceeded a thousand to one.

As an example, in 2008, a Fortune 200 company could expect to produce 4,980,441 pages of documents in a case that went to trial in a United States court. On average, however, only 4,772 pages would actually appear in court as evidence.

Reforms have been proposed before, but the Judicial Conference has, as yet, not been able to resolve abuses that are now entrenched in the practices of the U.S. legal profession. The current changes proposed to the Federal Rules of Civil Procedure can be found here.

It remains to be seen what changes will be adopted and, if so, whether they will be effective. The American practice of discovery is as deeply engrained in the United States legal profession as it is exceptional among the world’s justice systems.

What some German lawyers see as a deutsch-amerikanische Justizkonflict will likely continue.