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‘To Preserve and Collect’: Oil Spill a Discovery Nightmare for Lawyers | Corporate Counsel

June 4, 2010 By Leave a Comment

The legal strategies for BP and other companies involved in the Deepwater Horizon disaster have yet to be revealed. But one thing is certain. Their in-house legal departments are in the midst of an expensive and Herculean task — discovery.

“All of these organizations are well aware of the need to preserve and collect key information,” said Jim Wagner, CEO of DiscoverReady, a discovery management service. “But few organizations have ever confronted the scale of discovery that they are likely to have to undertake.”

The companies are under document hold demands, subpoenas, and other requests from federal agencies, including the Justice Department, which announced this week that it has begun civil and criminal investigations into the massive oil spill in the Gulf of Mexico. They’re also subject to court orders in pending litigation.

So the companies’ legal teams are likely sifting through and collecting massive amounts of data in both electronic and paper form, information that may go back decades. There may be physical evidence to collect, which may be have been destroyed. Meanwhile, the companies’ lawyers are also likely dealing with cross-border privacy issues that make the discovery process even more complex.

“Welcome to discovery 101 in 2010,” said Laura Kibbe, who helped build Pfizer Inc.’s e-discovery system in 2005 as senior counsel. In the 1990s, she was also an in-house attorney at Texaco, where she dealt with the legal aftermath of oil spills. She’s now senior vice president of document review services at Epiq Systems.

“Even under the best of circumstances, discovery is a labor-intensive, time-consuming process,” Kibbe said. “And it never goes as fast as government investigators or corporate counsel would like.”

Figuring out what data is out there, and who has it, is the first step. That entails conducting interviews with employees and working with IT professionals to see what data can be retrieved and from where.

Producing these documents under intense public scrutiny adds one more layer of complexity, legal experts said. The companies will have to be transparent and communicate regularly with government agencies about their processes. That will be key to the companies’ legal defense, and their public image.

“Any mistakes they make will be magnified 100 times,” said Craig Carpenter, general counsel of Recommind, Inc., an e-discovery software provider.

via ‘To Preserve and Collect’: Oil Spill a Discovery Nightmare for Lawyers.

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Show Us the Love to Avoid Discovery Fights, Attorneys Urge | National Law Journal

May 12, 2010 By Leave a Comment
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Attorneys were blunt during a litigation conference at Duke University School of Law about what they need from judges and opposing counsel to fix trial practice in federal courts.

“We’d all be a lot happier if we had some romancing foreplay pre-trial and left the rough stuff for trial,” said Ariana Tadler, a partner in the New York office Milberg LLP.

Tadler, speaking about cooperation between attorneys “on both sides of the v.,” participated in a six-member panel discussion of what works and what doesn’t in the federal courts. The presentation took place on Tuesday, the second and final day of the 2010 Conference on Civil Litigation, sponsored mainly by the U.S. Judicial Conference‘s Advisory Committee on Civil Rules.

The conference focused on whether changes to the Federal Rules of Civil Procedure are needed to resolve cases more efficiently and justly. The consensus emerging among conference participants was that large-scale revisions to the rules are not necessary. Rather, most practitioners agreed that what’s needed is better judicial management of cases. Many also wanted to see a tailoring of procedural rules according to the specific kind of case — so-called nontransubstantive rules.

Pfizer Inc. general counsel Amy Schulman agreed that cooperation between opposing counsel helps all parties, but she said that corporate defendants involved in high-stakes cases are often mischaracterized.

“There’s this fundamental notion that we don’t want to play fair,” Schulman said to the crowd of about 150 federal judges, large-firm defense counsel, plaintiffs attorneys and legal scholars. Schulman said her position when confronting a lawsuit against the company was simple: “Sometimes we do things wrong. When we do, we settle cases.” In cases that have “grey areas,” she said, “we want is to know that the system is operating fairly.”

Plaintiffs and defense attorneys in attendance repeatedly urged judges to take a more active role in guiding discovery, especially electronic discovery.

via Law.com – Show Us the Love to Avoid Discovery Fights, Attorneys Urge.

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Risk Management and E-Discovery: Qualcomm Revisited | Legal Intelligencer

May 12, 2010 By Leave a Comment

Almost three years ago, we wrote about the tension between a lawyer’s defense of his own professional conduct and his duties of loyalty and confidentiality to his client. The issue was presented in Qualcomm Inc. v. Broadcom Corp., a California patent infringement case involving cell phone technology.

During trial, the court learned that Qualcomm and its counsel did not produce more than 200,000 pages of relevant electronic documents. As a result, Qualcomm was ordered to pay Broadcom’s hefty legal fees ($8.5 million), and the district court judge referred the matter to a magistrate for consideration of further sanctions. The magistrate found that Qualcomm intentionally withheld thousands of documents that had been requested during discovery and that certain of the withheld documents directly contradicted one of Qualcomm’s key arguments. In addition, the magistrate sanctioned Qualcomm’s attorneys based upon the premise that they failed to conduct a reasonable inquiry into the adequacy of Qualcomm’s document production.

Those sanctions were vacated by the district court, and the matter was remanded to the magistrate to provide counsel the opportunity to defend themselves. On April 2, 2010, the magistrate ruled that the attorneys should not be sanctioned, as the record demonstrated that they took significant steps to comply with the original discovery obligations. While the attorneys were vindicated, the court’s decision provides important guidance on discovery practices, as well as how to maintain both objectivity and integrity in our relationships with clients.

First, the magistrate took issue with counsel's failure to personally meet with the Qualcomm custodians whose documents were being collected. In today’s technological society, despite the fact that we are constantly connected to one another through electronic media, nothing replaces the face-to-face meeting. Language can be misread out of context in an e-mail, and the ability to see the confusion (or conversely, understanding) on someone’s face is completely lost when your interaction is limited to a 13-word text message. Thus, it is critically important to get face time with the client, as it allows for a clear explanation of all the relevant issues.

Second, the court was appalled that there appeared to be no concerted effort by counsel to understand the technical aspects involved in the collection of the client’s documents. There was no clear understanding of where the e-mails and other electronic information were stored, nor of any backup or file transfer protocols. Knowledge of the physical location of the relevant data is a requirement for a thorough search. Without an understanding of the client’s information technology systems and services, documents, e-mails, and other information is bound to be missed.

The court also took issue with the fact that there appeared to be a breakdown in the chain of command with respect to the discovery; no attorney was ultimately responsible for the supervision of the entire collection. Thorough collection, inspection, and production requires clear structure and methodology; and inherent in such a system is a chain of command in which one attorney is responsible to another for clearly defined tasks. Without accountability, the quality of the work product inevitably declines.

via Law.com – Risk Management and E-Discovery: Qualcomm Revisited.

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Ruling on confirmatory discovery: defendant’s attorney must be present during collection of ESI | Lexology.com

May 10, 2010 By Leave a Comment

During a recent telephone conference regarding a discovery dispute in Roffe v. Eagle Rock Energy GP, et al., C.A. No. 5258-VCL (Del. Ch. Apr. 8, 2010), Vice Chancellor Laster ruled from the bench that confirmatory discovery—like formal discovery—requires the defendant’s attorney to be physically present during the collection of electronically stored information from his/her client; selfcollection by the client is not permitted.

On February 9, a class action and derivative lawsuit was filed by a public unitholder of Eagle Rock Energy Partners, L.P. (Eagle Rock) in the Court of Chancery of the State of Delaware against the partnership, the partnership’s general partner, Eagle Rock Energy GP, L.P. (GP), and certain affiliates of GP. The complaint alleged, among other things, that (1) the previously announced proposed recapitalization transactions are unfair to the partnership’s public unitholders, (2) the preliminary proxy statement filed on January 14 in connection with the proposed recapitalization transactions contains material misstatements and omissions, and (3) the defendants breached their fiduciary duties to the partnership’s public unitholders in connection with the proposed recapitalization transactions. During confirmatory discovery, a dispute arose regarding collection of emails from the Conflicts Committee, which consisted of three members of the Eagle Rock board of directors.

Defense counsel informed the court that two of the three members had self-collected and foldered documents relevant to the transaction at issue. Counsel argued that it would be unnecessary to collect from the third committee member because he was simply copied on all the same emails sent and received by the other two members. Counsel stated that, aside from being redundant, it would be costly and burdensome to collect records from the third member, who was located in an area of the country remote from Delaware (Tulsa, Oklahoma) and had a habit of keeping emails related to the matter on his personal computer interspersed with personal and other business emails.

Vice Chancellor Laster ruled that confirmatory discovery is discovery, and that attorneys may not rely upon a defendant to search his/her own email. The Vice Chancellor held that attorneys appearing before the Court of Chancery have an affirmative obligation to go wherever the electronically stored information is located, to be physically present to ensure that the collection is done properly, and to collect relevant documents even if located on a personal computer.

With regard to preservation, the Vice Chancellor expressed concern as to whether adequate measures had been taken to ensure that relevant electronic information had been properly preserved. The Vice Chancellor recommended (but did not require) that defense counsel take additional steps to image the computer drives in question, perform forensic checks, and conduct searches, to make sure that relevant data had not been lost. He further advised counsel to check auto-delete settings during the course of the collection process.

via Lexology – Ruling on confirmatory discovery: defendant’s attorney must be present during collection of ESI.

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Flexibility, Directness Key In E-Discovery: Judges – Law360

April 25, 2010 By Leave a Comment

To ensure a successful resolution to electronic discovery disputes while staying on a judge’s good side, be forthcoming with information and willing to compromise with opposing counsel, magistrate judges advise.

Three magistrate judges detailed their views on important discovery rules and attorney conduct during discovery Friday at the annual conference of the American Bar Association’s litigation section in New York.

Magistrate Judge Esther Salas of the U.S. District Court for the District of New Jersey said opposing parties in a case must talk early on in the discovery process about key issues, including the format in which they want the documents to be produced, so conflict can be avoided down the line.

If the parties reach an impasse, they should get the judge involved to work out a compromise, she said, adding that “I’m the type of magistrate judge that wants to know early on if there’s going to be a problem.”

Specificity is a virtue in e-discovery, Judge Salas said, so she does not look kindly upon counsel who provide vague data or fail to give a reason for their objections to discovery requests.

“If you say it would be too expensive and I say, ‘How much will it cost?’ and you say, ‘I don’t know,’ that’s a problem, guys,” she said.

The judges on the panel said they often liked to hear from the information technology staff members of a company involved in a discovery dispute, since their expertise can clear up arguments.

via Flexibility, Directness Key In E-Discovery: Judges – Law360.

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‘They Can Sue You’: Navigating the Foreign e-Discovery Mine Field | Corporate Counsel

April 21, 2010 By Leave a Comment

Handling electronic discovery in a foreign country means navigating a mine field of competing legal interests, in-house lawyer Alexander Shapiro told a group of in-house and outside counsel last week.

Shapiro, managing director and senior managing counsel at The Bank of New York Mellon Corporation, spoke at the 2010 spring meeting of the American Bar Association Section of International Law in New York. Prior to joining BNY Mellon, he spent 10 years as a government lawyer, including as an assistant U.S. attorney in New York.

“Private communications in the workplace are a fundamental freedom in Europe,” Shapiro warned. “You have a duty of privacy to your customers in the foreign jurisdiction, and to your employees. They can sue you if you violate it. And some of these foreign laws have criminal provisions.”

One unidentified lawyer in the audience pointed out that in Europe both a company’s in-house lawyer and outside counsel can be charged for violating those laws, as well as the corporation itself.

In addition, Shapiro said some countries have a blocking statute that bars a bank from sending documents out of country for a pretrial proceeding.

So what if you have a U.S. judge demanding discovery of bank documents in Germany? “Your job is to navigate the competing pressures,” Shapiro said. He advised talking to all parties and judges involved, and trying to obtain privacy waivers from employees in a form consistent with local law.

via ‘They Can Sue You’: Navigating the Foreign e-Discovery Mine Field.

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Court Orders Monetary Sanctions for Production Delay Resulting from Counsel’s Failure to Become Familiar with Plaintiff’s Retention Policies and Systems : Electronic Discovery Law

April 14, 2010 By Leave a Comment
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In re A&M Fla. Props. II, LLC, 2010 WL 1418861 (Bankr. S.D.N.Y. Apr. 7, 2010)

Where plaintiff’s counsel “failed in his obligation to locate and produce all relevant documents in a timely manner” by failing to gain a sufficient understanding of plaintiff’s computer systems resulting in significantly delayed production of relevant documents, the court declined to impose terminating sanctions or an adverse inference but ordered monetary sanctions against plaintiff and counsel in an amount to be determined.

Upon plaintiff’s production of requested discovery, defendant was surprised by the lack of internal emails produced.  Thereafter, plaintiff retained new counsel who, in an effort to settle the issue, ordered plaintiff to perform a “company-wide” search for responsive information.  The search was conducted under the direction of Deborah Garfinkle, plaintiff’s Chief Technology Officer.  Unfortunately, counsel was “uninformed on the detailed workings of [plaintiff’s] computer system and email retention policies.”  Specifically, counsel was unaware of the existence of archive folders to which employees regularly moved emails.  The archive folders were therefore not searched.

Eventually, defendant brought the lack of email production to the court’s attention.  The parties thereafter agreed to jointly retain a forensic expert to search plaintiff’s computer system.  Because plaintiff’s counsel remained unaware of the archive folders, the forensic search did not include them.  When certain emails were not found in the forensic search, defendant suspected intentional spoliation.

Responding to the accusation of spoliation, Garfinkle informed defendant’s counsel of the existence of archive folders.  Upon plaintiff’s own subsequent search of those folders, additional responsive emails were found.  Plaintiff argued that the situation could have been avoided had defendant included archives in its search request.  Defendant argued that plaintiff should have known to search the archives.  Both sides agreed to a second search by the forensic expert, including the archives.

Following the second forensic examination, plaintiff’s counsel’s “mistaken impression” regarding the methodology for production of the recovered ESI resulted in a two-month delay in the production of certain responsive emails to defendant.

via Court Orders Monetary Sanctions for Production Delay Resulting from Counsel’s Failure to Become Familiar with Plaintiff’s Retention Policies and Systems : Electronic Discovery Law.

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Avoiding Sanctions over Duty to Preserve Evidence | Duane Morris LLP – JDSupra

April 13, 2010 By Leave a Comment

In late 2009 a federal District Court sitting in Orlando, Fla., sent shockwaves through the in-house general counsel world. The case, Swofford v. Eslinger,1 is the first reported case to sanction in-house counsel for spoliation of electronic evidence.

In Swofford, while in pursuit of two suspects, deputies from the Seminole County Sheriff’s Office (SCSO), encountered an armed Robert Swofford on his property, and shot him. Mr. Swofford’s attorney served the sheriff’s office with a letter requesting that all evidence relating to the shooting be preserved in its original condition. Thereafter, Mr. Swofford’s attorney sent a second letter to the office directing it to preserve all evidence of the shooting, including “firearms, clips, and ammunition, training records and electronic evidence.”2

Please see full article below for more information.

via Avoiding Sanctions over Duty to Preserve Evidence | Duane Morris LLP – JDSupra.

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International Arbitration Loses Its Grip – Magazine – ABA Journal

April 7, 2010 By

Arbitration was supposed to be the solution for international companies seeking to resolve disputes without expensive and drawn-out court battles. But it is starting to look more like the problem.

Once a swift, cost-efficient method of resolving international commercial disputes, the process is now often bogged down in long and costly legal proceedings.

“It now takes longer, costs more and has many more steps in the procedures,” says Joseph R. Profaizer, of counsel to Paul, Hastings, Janofsky & Walker in Washington, D.C. “There is now broader discovery, larger damages requests, longer briefing schedules, much bigger briefs, far greater reliance on experts and their testimony, and more procedural challenges to the arbitration.”

If that sounds suspiciously like U.S.-style litigation, well, that is exactly the problem. Arbitration of international commercial disputes has taken on many of the characteristics of litigation in U.S. courts. And this has upset many companies that rely on arbitration to resolve cross-border business disputes.

“There’s been an increasing chorus of voices that international arbitration is getting too expensive, mostly because it is taking too long,” says Richard W. Naimark, senior vice president of the American Arbitration Association’s International Center for Dispute Resolution.

A growing number of businesses appear to be turning away from arbitration and resolving their international commercial disputes the old-fashioned way—in the courts.

In a targeted survey of corporate counsel published in 2006 by the School of International Arbitration at Queen Mary, University of London, only 11 percent of in-house counsel said they preferred litigation to settle international disputes. In a follow-up survey conducted two years later, that figure rose to 41 percent—only slightly less than the number who prefer international arbitration.

Many businesses, attorneys and international arbitral organizations lament an Americanization of international arbitration. But they are often themselves to blame.

“It’s the parties who are causing the problem,” says one expert who spoke on the condition that he not be identified. “They’re the ones picking counsel and deciding how the arbitration is to be run. They’re asking the arbitral associations to stop the parties from bringing the problems on themselves.”

Profaizer agrees. “If arbitration is to commit suicide, it will do so of its own choosing, because the parties have chosen to make it more expensive, time-consuming and more like litigation.”

via International Arbitration Loses Its Grip – Magazine – ABA Journal.

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Court Rules Communications with Attorney Using Work Computer are Protected as Privileged : Electronic Discovery Law

April 3, 2010 By

Stengart v. Loving Care Agency, Inc., 2010 WL 1189458 (N.J. Mar. 30, 2010)

In this employment litigation, the Supreme Court of New Jersey addressed whether employees have a reasonable expectation of privacy as to attorney-client privileged emails sent and received on a work computer.  The court held that under the circumstances presented, the employee/plaintiff did have a reasonable expectation of privacy as to emails with her attorney.  Additionally, the court remanded the case to the trial court to determine what, if any, sanctions should be imposed upon defense counsel for reading and utilizing the emails at issue, despite indications that they were protected as privileged.

Maria Stengart, plaintiff, utilized her employer-provided laptop to access a personal, web-based, password-protected email account through which she communicated with her attorney regarding her situation at work (which eventually resulted in filing a complaint).  Emails sent from her attorney indicated their privileged status.  Upon leaving her position and filing her complaint, Stengart’s former employer, Loving Care Agency (“Loving Care”), hired experts to create a forensic image of Stengart’s laptop.  The emails, which had been stored in the laptop’s temporary files, were recovered, passed on to counsel, and eventually utilized in the course of discovery.  Upon learning of defense counsel’s possession of the emails, Stengart’s counsel demanded their immediate return. Defense counsel refused, and the issue went before the court.  The superior court decided in favor of Loving Care and held that there was no breach of attorney-client privilege “because [Loving Care’s] policy placed Stengart on sufficient notice that her emails would be considered company property”.  The appellate court held that the policy upon which the trial court relied could allow an objective reader to conclude that not all personal emails were company property and reversed the trial court.  The issue was then appealed to the Supreme Court.

The Supreme Court found in favor of Stengart.  Beginning its analysis with an evaluation of the policy addressing an employee’s personal computer use, the Supreme Court determined that the scope of Loving Care’s written policy was “not entirely clear.”  The ambiguity resulted from the policy’s failure to specifically address personal emails, from the lack of warning that the contents of all emails were stored on the users’ computers and could be forensically retrieved and read later, and from the policy’s explicit statement that “occasional personal use [of email] is permitted.”  The court next considered the oft-cited policies underlying the attorney-client privilege, namely the benefit provided to the public by sound legal counsel “based on full, candid, and confidential exchanges.”

via Court Rules Communications with Attorney Using Work Computer are Protected as Privileged : Electronic Discovery Law.

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