Of course, despite the New York Times article, the situation is much worse in court, where a single deposition can cost $1,500 for the transcripts, plus attorneys fees, and document discovery is lengthy and costly.
A large part of the problem is the "fishing expedition" where a party asks for documents that have little bearing on the issues, if they exist at all.
The Federal Rules of Civil Procedure are designed to put some limits on discovery, but the rules have not solved the problem. The basic rule has been in Rule 26, the relevant portion is as follows:
Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).
The rule will change December 1, and the new rule will be:
S Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and
By making specific reference, in the rules, to proportional needs, the amount in controversy, and the burden and expense, we can hope that the will be a reduction in discovery requests which ask for any and all documents relating to every issue and potential issue in the case.
And maybe this will encourage FINRA arbitrators to stop ordering all parties to produce all documents requested. That is not a resolution of a discovery problem, that is compounding the problem.