Dynamo Holdings Limited Partnership v. Commissioner
In an order dated July 13, 2016, the U.S. Tax Court once again strongly supported the use of Predictive Coding. The case had already featured some notable opinions and orders on the topic. This recent order is a fun read for analytics nerds and newcomers alike, as the Court did a great job of laying out the associated facts and addressing the typical arguments for and against use of the technology. Here are a few items that caught my attention as I read it.
Opposing Party as SME
As I noted in a recent blog post, the use of an SME to train a Predictive Coding algorithm can be an expensive proposition. The responding party here took an interesting approach by allowing the requesting party to serve as their SME. There are certainly cases where parties meet to discuss seed documents, but there are also a fair number in which the parties do not feel the need to disclose use of the technology, never mind the documents used to train it.
I can understand why parties are uncomfortable submitting to their opponent’s discretion. However, Dynamo’s aggressive training approach clearly helped their cause. In fact, the Commissioner’s training of the algorithm was the only process-related factor the Court mentioned when concluding that “[t]here is no question” Dynamo met its discovery obligations. It is an interesting strategy to consider if Predictive Coding is accepted by the court and parties, as it may save you some training costs and bolster the defensibility of your process.
Read more at the Altep blog: My Top Five Takeaways from The U.S. Tax Court’s Emphatic Affirmation of Predictive Coding