Court endorses predictive coding.

• Position: E-DISCOVERY

Predictive coding appears to be growing in popularity throughout the legal community. Of course, there are some opponents who contend it is an unreliable and unproven technology that can result in excluding some documents appropriate to the case. Recent case law, however, indicates that courts approve of its use.

The U.S. Tax Court recently gave predictive coding a stamp of approval when it overruled the Internal Revenue Service's (IRS) objection to a petitioner's request for permission to use the technology to review documents. (See Dynamo Holdings Ltd. v. Commissioner of the Internal Revenue Service, 143 T.C. No. 9 [2014].) As noted by Bracewell & Giuliani's Daniel Meyers in a recent issue of the JDSUPRA Business Advisor, the e-discovery rules in the U.S. Tax Rules of Practice and Procedure are very similar to those in the Federal Rules of Civil Procedure (FRCP).

In the Dynamo case, Dynamo requested permission to use predictive coding to review volumes of data contained on backup tapes, explaining that a completely manual review would be time--and cost-intensive. The IRS suggested Dynamo produce all the files on backup; the IRS would sign a "clawback" agreement that would allow Dynamo to withdraw any protected documents. Not surprisingly, Dynamo was not comfortable with that option...