Discovery Symposium 3.0 Program Announced

Our annual Discovery Symposium (now in its third year) for corporate legal departments is a real labor of love for several of us here at Counsel On Call. A lot of time and consideration -- much of it with our in-house clients -- goes into the creation of the sessions, identifying the proper experts to speak and attorneys who will get the most out of the program, as well as creating an environment in which in-house attorneys are comfortable sharing their stories of trial, success and failure.

We're very excited about this year's program and our group of attendees. Some of the highlights:

  • Leading off with a panel on the challenges presented by Social Media today and tomorrow. Our knowledgeable friends from FedEx and International Paper, along with Barry Willms, will lead the discussion.
  • Search Validation, Intelligent Coding and Smartly Reducing Data Sets, a panel that has been in development for some time and a topic we've addressed in previous events. But this year there's certainly a heightened interest/debate about this topic due to the New York Times article on the subject that went viral, so we're looking forward to getting deep into this subject.
  • Breakout sessions led by Cox Communications, Fidelity Investments and Southwest Airlines, as well as a session led by some of our Team Leaders, who will get into the finer points of creating effective, cost-saving discovery processes.
  • Ten-minute 'snapshot' presentations from six of the leading in-house attorneys who oversee discovery processes at their respective companies. Each will offer at least one 'lesson learned.' 
  • Our annual discussions on relationships with outside counsel, pricing structures, budgeting and technology tools. We get a lot of 'stories from the field' during these sessions and there's always ample audience participation.

The format/size we've created -- small panels, 40 corporate legal departments, 65-75 attendees -- truly seems unique in the dialogue it generates and best practices it fleshes out. It should be another great event and we're excited to host everyone in Nashville again.

The "Zubulake" of Legal Holds

The Judge of Zubulake fame (various decisions in 2004 and 2005 which became the handbook on e-discovery obligations and the precursor to the amended Federal Rules of Civil Procedure in December 2006), has written a lengthy opinion outlining the obligations of parties to issue a properly worded, written legal hold to employees who might be relevant to an anticipated litigation.

In late 2003, plaintiffs’ counsel was retained for a lawsuit, which was filed in February 2004. The case was stayed for a number of years and finally a document production was made in 2007. This was found to be deficient and having gaps in what should have been produced.

While the Judge did not grant defendants’ motion to dismiss the case, she did grant an adverse jury instruction, stating that plaintiffs were grossly negligent and that relevant ESI had been destroyed, which the jury may presume was favorable to the defendants. She also imposed monetary sanctions of reasonable costs, including attorneys fees for dealing with the declarations, added depositions and this motion.

So what was the evil done by plaintiffs in their preservation efforts?

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Lessons Learned Can Benefit Chinese Drywall Defense

Asbestos then tobacco then pharmaceuticals. Each an extensive and expensive litigation. Now comes Chinese drywall, which could very well be the next tidal wave.

We have already been out in the field working on the Chinese drywall matter and have spoken to several clients that are in the beginning stages of strategic development. If you aren’t familiar, the issue involves the installation of drywall imported from China during the housing boom from 2004 to 2008, as well as after hurricanes Katrina and Rita. During that time, there wasn’t enough supply of U.S.-manufactured drywall to meet demand, so builders were forced to import it. The Chinese drywall in question has proven to be high in sulfur compounds that could potentially cause property damage, emit a “rotten egg” odor and be hazardous to one’s health, although there is undoubtedly much debate to be had about the claims. Initial estimates say that it costs more than $90,000 to rid a residence of the drywall and/or its toxins; as many as 100,000 homes are estimated to contain it (at least partially).

The lawsuit is multi-district litigation; since May 2009, more than 20 defendants have been named in more than 1,000 civil actions filed by homeowners. These are mainly the builders at this time, but everyone from insurance companies to architects to suppliers are likely to be involved at down the road. So this is almost assuredly just the tip of the iceberg, although it’s hard to imagine it being as large as the tobacco litigation.

So what have we learned from past civil actions such as these? I was fortunate (or unfortunate, depending on the day) to work on both the tobacco and pharma litigations, and what we’ve done for our Chinese drywall clients is take a comprehensive view of the past to see what worked, extract best practices, adapt them to the current circumstances, attack the problem and, we anticipate, build some repeatable processes.

One thing I witnessed during both the tobacco and pharma cases was the inefficiency of having dozens of law firms requesting, processing and reviewing the same data; millions upon millions of dollars were likely lost during the process. Constant education of reviewers and outside counsel, no chain of information and consistency were constant concerns. All of this can be easily avoided in the Chinese drywall matter.

Here is a glimpse of the comprehensive planning that’s required as well as a few of our recommendations:

  1. Be proactive. Decide early on to handle the documents head-on and upfront. Don’t wait to start because you think it might go away; it won’t and you’ll only be behind.
  2. Create efficient processes. The proliferation of technology is a true aid versus prior civil matters of similar or larger size, but working with partners who have repeatable, proven protocols is also key.
  3. Budget properly. This is tied closely with #2. With the implementation of repeatable processes, accurate budgeting is a wonderful byproduct.
  4. Collaborate. There is no substitute for collaboration between the discovery team and outside counsel (as well as the client). If it’s not a central component of your planning, then it’s next to impossible to build the processes that are essential in achieving consistency and efficiency.

Streamline, budget, collaborate. These are a few of the hallmarks of successful document management in these large cases. These steps certainly put the client in the best position to handle the many multi-jurisdictional lawsuits.

As I mentioned, we are already working on this matter and will have a lot to report back in the coming months as this issue heats up even more. We anticipate a lot of redundancy and that our discovery team is going to provide efficiency and streamlined processes to each of our clients that face this litigation.

Pilot Program to 'Play Nice' in E-Discovery

As we all know by now, in 2006 the Federal Rules of Civil Procedure were amended to standardize how litigants should deal with their electronically stored information (ESI). Soon thereafter, courts at both the Federal and State levels started putting out their own rules (See Tom Allman's Article and a listing of links to state e-discovery rules.)

In addition to the rules themselves, the various courts are trying to find implementation language and protocols that govern the specifics of what the opposing sides must actually do. One example is the 2007 Administrative Order 174 in the Middle District of Tennessee, which spells out what the judges want to see happen at the meet and confer and during the whole discovery process.

Then in 2008, The Sedona Conference published its Cooperation Proclamation in an attempt to codify the steps that opposing counsel should take on the intricate and expensive matters related to identifying, preserving, collecting, searching, reviewing and producing ESI.

Now the 7th Circuit has taken the next step and announced a Pilot Program to last from October 1, 2009 to May 1, 2010, whereby selected cases will have to follow specific principles of cooperation.

The stated purpose is to assist the courts to, among other things, “promote…the early resolution of disputes regarding the discovery of electronically stored information (“ESI”) without Court intervention.” Basically, the Courts are tired of dealing with the lawyers who don’t play nice on matters of e-discovery.

The proposed standing order contains the following (paraphrased) duties: (1) Attorneys not cooperating will be sanctioned; (2) ESI requests should be proportional to the case; (3) Duty to meet and confer, including discussions on identifying ESI and format of production; (4) Identification of an e-discovery liaison to handle disputes; (5) Creation of appropriate and specific preservation requests; and, interestingly, (6) a friendly reminder that the attorneys should become familiar with ESI prior to filing an appearance in one their courtrooms.

First came ESI and the high cost of e-discovery; then came the rules; now comes cooperation and specific actions to follow … all in an attempt to lower costs, deal with the huge influx of discovery disputes and have lawyers play nice.

It's Your Fault! No It's Your Fault!

I decided I would begin my Lawdable blogging career with a look at a somewhat light piece of e-discovery case law … if there is such a thing. I do follow case law and I hope that my future posts on the subject will offer more of a “this is the potential bottom-line effect” versus a strictly academic viewpoint – I find that to be much more practical (and interesting). In the meantime, I look forward to your suggestions or thoughts. Here we go:

Lawsuits are about conflict and not always just between the parties. Is there a client that hasn’t complained about its attorney, or a lawyer who hasn’t bemoaned the actions of his/her client? It’s just part of human nature. But what happens when one or both of you fail to fulfill your preservation obligations, and this leads to sanctions? Who pays the piper?

The obligations of the client and the lawyer are clear: you must preserve Electronically Stored Information (ESI) that is relevant to the case at hand. The lawyer must provide the legal advice on what is potentially relevant and the practical advice on how to preserve it – and then monitor the client’s implementation of that advice. Having and implementing consistent best practices will be your best shot at fulfilling this obligation.

In Green v. McClendon 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009), ESI was lost when the client had “the son of a friend” re-install the operating system on her computer. The lawyer apparently did not properly implement a litigation hold and did not properly inspect and search for relevant ESI on that computer before the son of a friend “helped out.”

The court sanctioned both the client and the lawyer for the costs of the motion to compel and noted that if the court found out later that bad faith was involved in the loss of the ESI, the court would impose an adverse inference.

The final issue for the court was this: how to allocate blame between the client and the lawyer? The court concluded that they should work it out amongst themselves and present the court with a plan. (Really, how do you think that conversation went?) If, however, they are unable to agree on cost allocation then they could present the issue to the court “for determination.” (If that were to happen, does anyone else see any potential conflict there?)

The bottom line is this: the lawyer and the client must understand their obligations to preserve ESI. The lawyer and the client must work together to implement the plan. Working together and following best practices to fulfill the preservation obligation will keep your side moving in the right direction and prevent sanctions – instead of battling each other when sanctions are imposed.