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eDiscoveryDaily

eDiscovery Case Law: Defendant Sanctioned for Abandonment and Sale of Server; Defendants' Counsel Unaware of Spoliation

An Illinois District Court ordered heavy sanctions against the defense for spoliation “willfully and in bad faith” of documents stored on a server, in a case revolving around damages sought for breach of loan agreements.

In United Cent. Bank v. Kanan Fashions, Inc., No. 10 C 331, 2011 WL 4396856 (N.D. Ill. Sept. 21, 2011), the defendants were found to have hidden and sold (or fabricated the sale of) a server which was subject to discovery. The defendants also misled their own counsel about their discovery procedures with regard to its preservation obligations and the sale of this crucial server. Accordingly, a magistrate judge ruled in favor of sanctions against the defendants based almost entirely on recommendations made in United Cent. Bank v. Kanan Fashions, Inc., No. 10 CV 331, 2011 WL 4396912 (N.D. Ill. Mar. 31, 2011):

  • Although the defendants’ counsel reminded them several times of their obligation to preserve evidence, and the defendants claimed at all times that they were taking the necessary steps to ensure a smooth and correct discovery process, they misled their own attorneys. In fact, the defendants proceeded to sell a server that contained information relevant to the suit.
  • The circumstances associated with the sale were extensive, involving the defendants defaulting on a loan on the warehouse in which the server was stored. When they made plans for foreclosure on the warehouse, they also made arrangements that the bank would purchase the lease on the server, originally held by a different lender, without informing their defense lawyers.
  • When defense counsel learned of the foreclosure and these arrangements, the defendants maintained that they could get access to the server as needed for discovery.
  • Several months later, the court ordered the defendants to retrieve either the server or a forensic copy of its contents for discovery. It was only a few days later that the defendants informed their counsel and the court that the server had been sold by the bank to a business in Dubai.
  • All of the above took place after the defendants had been repeatedly informed of the need to preserve evidence for discovery, and of their obligations with regard to ESI.
  • The circumstances of the sale of the server were so unusual that the court concluded that the defendants had, themselves, had a hand in the sale of the server to Dubai and the removal of the server from the court’s reach.
  • The magistrate judge found that defendants were solely responsible for the spoliation, having deliberately misled the court, the plaintiffs, and the defendant’s own counsel.
  • Defendants were ordered to pay sanctions that include reimbursement of the plaintiff for all costs related to the Motion for Sanctions. Defendants are also “barred from introducing any evidence regarding the data on the warehouse server”. The jury is to be “informed of the Defendants’ abandoning of the server” and instructed that the spoliation of the server “may be considered evidence that the server contained evidence unfavorable to Defendants’ position.”
  • The plaintiff’s request for sanctions against the defense counsel was dismissed by the magistrate judge.

So, what do you think? Have you ever been involved in a case where a similar instance of spoliation took place? Please share any comments you might have or if you’d like to know more about a particular topic.

Marketing a Litigation Support / eDiscovery Department within a Law Firm: Getting New Customers, Part 2
Yesterday, we covered a couple of ‘big-picture’ marketing mechanisms and techniques that work well in a law firm.  Here are a few more:
  • Distribute a newsletter.  A newsletter is a great way to keep your services in the minds of litigators in your firm.  Many law firm litigation support professionals have told me that they would love to do a newsletter, but they don’t have the time.  It doesn’t have to be all that time-consuming!  Here are some tips for creating an effective newsletter that won’t take up too much of your time:
    • Keep articles short and to the point.  Attorneys won’t take the time to read long articles.  If you do write a long article, break it up and publish it across multiple issues (just like I’m doing with this blog series!).  If this is done well, your readers will look forward to your issues.
    • Use a template with a few consistent sections.  Have a section for “News and Announcements’, another for “Articles and Features”, another for “Client Highlights”.  Make sure there’s a section for contact information for you and your staff.
    • Maintain a list of “topic types” to include in your newsletter.  Examples of “topic types” are “How to’s”, “Creative ways to use your services”, “New technology trends”, “Significant case rulings”, “Stories about people in the firm”, and so on.
    • Ask others for articles.  Vendors and consultants you work with would probably love to get their names in front of your litigators, so ask them for articles.  Associates and paralegals in the firm may likewise want the exposure.
  • Create a web site or get some pages on the firm’s internal web site.  Consider these web pages:
    • A page with descriptions of your services.
    • A page with descriptions of the technology tools you make available.
    • A page that describes your staff with bios and location/contact information.
    • A page that describes the physical facilities you have, like training and review rooms.
    • A page with testimonials from attorneys for whom you’ve done good work, and descriptions of success stories
  • Find champions who have influence.  One of the best marketing techniques you can employ is to get people with influence in the firm to market for you.  Establish relationships with senior partners, department chairs, managing partners and rainmakers who support your department and have an interest in seeing you succeed.

Next week, we’ll cover a few more techniques and mechanisms for getting new customers.  In the meantime, we’d really like your input on how you’ve approached marketing in your firm.  How much marketing do you do, and what’s worked well for you?  Please share any comments you might have or let us know if you’d like to know more about a particular topic.

Marketing a Litigation Support / eDiscovery Department within a Law Firm: Getting New Customers, Part 1
Your marketing efforts should be aimed at two goals: getting new customers and keeping existing customers.  We’ll start with marketing techniques for getting new customers.  We’ll cover ‘big-picture’ marketing activities – that is, marketing activities aimed at spreading the word about how your department can help litigators in the firm.  And, we’ll talk about one-on-one marketing to individual attorneys and litigation teams.

‘Big-picture’ Marketing Mechanisms

Here are some marketing techniques and mechanisms that work well in a law firm environment, assuming they are done professionally and with your clients’ needs in mind:

  • Create descriptions of your services.  Describe what you do in writing.  Create simple, professional brochures that you can distribute to litigation department members.  Here are a few tips for creating effective service descriptions:
    • Identify the Problem.  Make sure that each description starts out by identifying the client’s problem or need that the service addresses.
    • Don’t include too much detail.  Attorneys are not likely to read a long document, and — more importantly – if your descriptions raise a few questions, that gives the reader a reason to contact you.
    • Categorize related services together.  This puts your services in a context that will be easier to understand.
  • Offer educational presentations.  There are three keys to making a presentation an effective marketing tool.  They are:
    • You need to get people to come!  Make sure you pick topics that are of interest to your audience and that you do good promotion of it.  One of the best ways to promote an educational presentation is to get buy-in from a senior attorney in the litigation department and have him/her promote it for you.
    • You need to give a good presentation.  Provide useful information.  Use terminology that your audience will know and examples that are relevant to them.  Make sure that the content is well organized.  Stay on topic and on schedule.  Use visuals and provide handouts.  And, make sure that the facility is comfortable (if your audience is not comfortable, they may have a hard time staying focused).
    • You need to do good follow-up.  Your work isn’t done when the presentation is over.  You need to follow-up with attendees.  Solicit feedback after the presentation and find out what other topics are of interest.  Send emails to thank individuals for attending.  Make phone calls to anyone who seemed particularly interested and find out what they are working on and how you might help.

Tomorrow, we’ll cover a few more techniques and mechanisms for getting new customers.  In the meantime, we’d really like your input on how you’ve approached marketing in your firm.  How much marketing do you do, and what’s worked well for you?  Please share any comments you might have or let us know if you’d like to know more about a particular topic.

eDiscovery Strategy: "Command" Model of eDiscovery Must Make Way for Collaboration

Last week’s article on Law Technology News summarizes the message put forward by several speakers at the fifth annual Colorado Association of Litigation Support Professionals E-Discovery Summit, held on October 7, 2011. In her article E-Discovery ‘Command’ Culture Must Collapse, Monica Bay discusses the old “command” style of eDiscovery, with a senior partner leading his “troops” like General George Patton – a model that summit speakers agree is “doomed to failure” – and reports on the findings put forward by judges and litigators that the time has come for true collaboration.

The highlights of the summit as far as a collaborative model of eDiscovery include thoughts by U.S. Magistrate Judge Michael Hegarty and Florida attorney William Hamilton, who say the time has come for adversarial, command-style eDiscovery to be replaced by a collaborative model, even with opponents, to result in a more effective discovery process.

Here is a brief summary of their opinions on the future of eDiscovery.

U.S. Magistrate Judge Michael Hegarty: Negotiation and Early Presentation of ESI are Key

Judge Michael Hegarty, of the U.S. District Court (Colorado), believes that minimal court intervention in discovery is best, but that mistakes are often made early on that cause discovery problems with respect to ESI.

  • He remarked on how common it is for litigators to neglect to mention discovery of electronic materials in early conferences, and how “detrimental” that can be to cases.
  • Judge Hegarty noted that a great deal of eDiscovery is unduly complicated because lawyers don’t understand the scope of what it is possible to do with electronic materials. “It’s easy for a party to say, ‘We can’t do that,'” he said, “but it’s hard to imagine that something can’t be done.” He noted the lack of understanding as a key source of friction, and finds that he often has to wade in and order parties to purchase software that will make it possible for them to conduct complete discovery.
  • The bottom line, according to Hegarty, is that the vast majority of cases never go to trial – surprisingly less than one percent of Colorado cases ever see a courtroom – and that’s the way it should be. “We can’t have discovery disputes sit around for months,” he said. It’s important to facilitate a communication process that includes ESI where appropriate in order to settle cases and move them along.

William Hamilton: Support Staff Make Like Possible for Attorneys

William Hamilton is a partner at Quarles and Brady in Tampa, Florida. He is also a professor at the University of Florida’s law school, Levin College, where he teaches “Electronic Discovery and Digital Evidence”. Hamilton is also dean of an online graduate certificate program in eDiscovery at Bryan University, and chair of the advisory board of the Association of Certified E-Discovery Specialists (ACEDS).

  • Hamilton’s speech focused heavily on the role of support staff, the people who “make life possible for attorneys”. He says paralegals and technology staff have a larger role to play in discovery than ever before, but must be careful not to cross over into unauthorized legal practice as they assist litigators.
  • He pointed out a need for change in the very culture of legal practice, where “[h]ierarchy culture disenfranchises everybody”. Bad decision making results from choices made by: “1) habit, 2) reputation, 3) haste, and 4) ‘pure command decisions”, he noted.
  • “Only 10 percent of lawyers ‘get’ e-discovery,” says Hamilton. It’s time for that to change, he says, as a new paradigm for discovery of electronic materials is born.

Learn more about the Colorado Association of Litigation Support Professionals E-Discovery Summit on the Association’s website or read the complete article on Hamilton and Hegarty’s presentations at Law Technology News.

So, what do you think? Is a top-down approach to eDiscovery still viable, or is there a real need for the process to change to a more collaborative and communicative one? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: U.S. Court Rules on ECPA Protection of Emails in the Cloud
An October 3 decision by the Ninth Circuit Court of Appeals offers new clarity in defining and protecting the eDiscovery rights of non-U.S. nationals using U.S. services online, by ruling that emails stored on servers located within the U.S. are protected by national laws on ESI.

In Suzlon Energy Ltd v. Microsoft Corporation, the court determined that holders of online accounts whose servers are located in the U.S., regardless of their location or nationality, are protected by the Electronic Communications Privacy Act of 1986, commonly known as the “ECPA.” The ECPA ensures that the disclosure of emails by electronic communication service providers is limited and restricted to specific circumstances.

The Suzlon case originated out of an Australian case brought by an Indian company (Suzlon) against an Indian defendant, Rajagopalan Sridhar and put the Ninth Circuit Court’s opinion on the reach of the ECPA to the test.

  • The plaintiff’s legal counsel sought access to emails in the defendant’s Hotmail account, stored on Microsoft servers located in the U.S.
  • The defendant did not provide consent for his emails to be used in discovery, nor did Microsoft consent to release the emails in question.
  • Microsoft’s objection brought the case before the U.S. District Court for the Western District of Washington and later before the Ninth Circuit Court of Appeals, both of which agreed that the emails were protected by the ECPA.
  • Despite the plaintiff’s and defendant’s Indian nationality, and the fact that the suit in question was Australian, the U.S. court ruled in a manner that creates a powerful precedent for future lawsuits related to electronic communication providers whose servers are located in the U.S. As a result of this case, it has become clear that any users with accounts in U.S.-held cloud services will be subject to the same protections under the ECPA as a U.S. citizen.

So, what do you think? Does this ruling offer fair and sensible protect to U.S.-based companies and the users of their cloud services, or does it unnecessarily complicate the field of international eDiscovery? Please share any comments you might have or if you’d like to know more about a particular topic.

Marketing a Litigation Support / eDiscovery Department within a Law Firm: The “Marketing Mind-Set”, Part 3
In the last two posts, we’ve talked about some “marketing mind-set” principles that are appropriate for a litigation support / eDiscovery department.  There’s just one more for you to consider:

In all of the marketing that you do, you need to stay focused on selling solutions to your clients’ problems rather than on selling your services.  Don’t promote products and services.  Promote solutions.

Always be thinking and talking about:

  • How you can make your clients more efficient.
  • How you can save your clients money.
  • How you can make your clients’ jobs easier.
  • How you can free up their time so they can focus on substantive work.

Always focus on the problem you can solve, or the task that you can make easier, or the costs that you can cut.  This will get their attention.  This will peak their interest.  This will be the deciding factor in their choice to involve you in a case.

Selling solutions rather than services should be part of any “big picture” marketing that you do as well as part of one-on-one marketing that you do to individual attorneys and litigation teams in the firm.

The mind-set principles that we’ve covered in the past few posts are critical. Regardless of how many presentations and newsletters and brochures that you do… those activities are likely to fail if you haven’t approached them with these mind-set principles in mind. So, let me recap them here:

  1. Marketing is anything that you do to get a new customer of keep an existing customer.
  2. Whether you realize it or not, you are marketing all the time.  It is not an occasional, planned activity. It is a mode of operation.
  3. Think of your department as a stand-alone company, and think of the litigators in your firm as clients.
  4. Focus on selling solutions to your clients’ problems, not on selling services and products.

Be sure to look for posts in this series next week, when we start discussion of marketing mechanisms for getting new customers. We’d really like your input on how you’ve approached marketing in your firm.  How much marketing do you do, and what’s worked well for you?  Please share any comments you might have or let us know if you’d like to know more about a particular topic.

Marketing a Litigation Support / eDiscovery Department within a Law Firm: The “Marketing Mind-Set”, Part 2
 Last week, we started talking about the right “marketing mind-set” for a litigation support / eDiscovery department.  Here are a couple more mind-set adjustments you may need to make:
  1. Stop thinking of your group as a department within a law firm.  Instead, think of your group as a “stand-alone business” – specifically, a service business.
  2. Stop thinking of the attorneys and paralegals in the firm as your co-workers.  Think of them as your clients.

There’s a really good reason for thinking like this:

It’s appropriate for a litigation support department.

Unlike other departments in the firm, attorneys can choose whether to use your department or not.  Unlike most other departments in the firm, you have competition.  Attorneys can’t go outside the firm to have invoices generated.  They have to use the firm’s accounting department.  They can, however, go outside the firm for litigation support services. They can turn to consultants and litigation support / eDiscovery service and product providers.  You need to take steps to ensure that your department is their first choice.

What does this mean – to operate as a stand alone business — in practice?  There are three key things you need to do:

  1. Stay focused on promoting your offerings to litigators in the firm – both litigators who are using your services and litigators who are not yet using your department.
  2. Make it very easy and painless for your clients to work with you.
  3. Stay focused on delivering premier customer service to your clients.

Over the next few weeks, I’m going to give you tips and suggestions in each of these areas.

We’d really like your input on how you’ve approached marketing in your firm.  How much marketing do you do, and what’s worked well for you?  Please share any comments you might have or let us know if you’d like to know more about a particular topic.

eDiscovery Trends: Service Providers Unite!

While mergers and acquisitions of major eDiscovery providers (such as Symantec’s acquisition of Clearwell and HP’s acquisition of Autonomy) dominate the headlines, the majority of eDiscovery providers are actually small to midsized companies that provide a full range of services from coast to coast.  To enable the small/midsized providers to compete with the eDiscovery “bohemoths” of the world, Jerry Correia and Greg Bayless formed the Legal Service Providers Association (LSPA).

The LSPA’s mission is to help the small/midsized legal service providers grow and thrive by providing access to increased sales and marketing opportunities, training and certification programs, supplier discounts, and human resources support. The idea is that “strength in numbers” can enable LSPA’s members to compete on an equal footing with the “big boys”.

Jerry and Greg have 38 years experience in the legal services industry, managing companies providing services to law firms and corporate legal departments.  They’ve spent the last 15 years to running companies focused on helping vendors in the legal services industry improve and grow by providing training, consulting, staffing and national referral services.  They started the LSPA in January of this year with the belief that small to midsized companies are the best suited for and the most dedicated to providing the service excellence clients have come to expect and demand, but few providers can develop and negotiate the kinds of programs and discounts available to Fortune 500 corporations by themselves.  Through membership in the LSPA, members can benefit from savings including up to 60% from suppliers such as Staples or UPS, which not only benefits the providers, but also their clients where savings can be passed along.

Since announcing its charter member program back in February, the LSPA has added 40 charter members to date.  While all members of the LSPA enjoy benefits such as training and supplier credits and discounts, and sales/marketing and technical support, charter member companies receive additional exposure and branding opportunities through premium placements on their website, emails, press releases and newsletters.

Part of LSPA’s education program includes webinars available to its members.  In the past two months, LSPA has conducted webinars related to understanding the risks associated with collecting ESI (conducted by Jason Park, owner of MD5 Group) and top 10 eDiscovery trends and predictions (conducted by Maura R. Grossman, Counsel at Wachtell, Lipton, Rosen & Katz, and Ronald J. Hedges, former United States Magistrate Judge).

Want to learn more?  Tomorrow, the LSPA is conducting an Informational and Membership Benefits webinar where they will discuss the vision for the LSPA, describe member benefits and discuss how to join the organization.  To register for the webinar, click here.

So, what do you think?  Do you use small or medium providers for eDiscovery services?  Does the LSPA make those providers better?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: CloudNine Discovery is a charter member of the LSPA.

eDiscovery Searching: A Great Example of Why Search Results Need to Be Tested
 In my efforts to stay abreast of current developments in eDiscovery (and also to identify great blog post ideas!), I subscribe to and read a number of different sources for information.  That includes some of the “web crawling” services that identify articles, press releases and other publications such as the Pinhawk Law Technology Daily Digest, which is one of my favorite resources and always has interesting stories to read.  I also have a Google Alert set up to deliver stories on “e-Discovery” via a daily email.

So, I got a chuckle out of one of the stories that both sources (and probably others, as well) highlighted last week:

A+E, Discovery get ready to roll out

The story is about two of the biggest players in the global TV, A+E Networks and Discovery Networks, rolling out their channels into India and Latin America respectively.  The article proceeds to discuss the challenges of rolling out these channels into markets with various requirements and several languages and dialects included in those markets.

This story has nothing to do with eDiscovery.

Why did it wind up in the list of eDiscovery stories returned by these two services?  Because the story title “A+E, Discovery get ready to roll out” retrieved a hit on “e-Discovery”.  Many search engines are generally set to ignore punctuation when searching, so a search for “e-Discovery” actually looks like a search for “e Discovery” to a search engine (keep in mind searches are also usually case insensitive).  So, a document with a title of “A+E, Discovery get ready to roll out” could actually be viewed by a search engine as “a e discovery get ready to roll out”, causing the document to be considered a “hit” for “e discovery”.

This is just one example why search results can retrieve unexpected results.  And, why a defensible search process (such as the “STARR” approach outlined here) that involves testing and refining searches is vital to maximizing your search recall and precision.

BTW, this can happen to any search engine, so it’s not a reflection on either Pinhawk or Google.  Both are excellent resources that can occasionally retrieve non relevant results, just like any other “web crawling” service.

So, what do you think?  Did you see this story crop up in the eDiscovery listings?  Have you encountered similar examples of search anomalies?  Please share any comments you might have or if you’d like to know more about a particular topic.

State eDiscovery Rules: Florida Moves to Adopt New Civil Procedure Rules on eDiscovery
Florida is currently preparing to adopt a set of changes to its Rules of Civil Procedure with regard to discovery of ESI, closely founded on the changes made to the Federal Rules in 2006. Based on the recommendation of the Florida Civil Rules Electronic Discovery Subcommittee, the full Rules Committee voted on implementing changes now rather than waiting until 2013 when these rules would normally be considered.

Florida eDiscovery Rules to Mimic Federal Rules – Mostly

On July 29, the Board of Governors of the Florida Bar accepted the plan to adopt changes as soon as this fall – changes that essentially copy those made to the Federal Rules except for the elimination of the Federal Rule 26(f) “meet and confer” conference, which will not be considered a mandatory part of discovery of ESI by Florida courts.

However, since this type of early conference is required by circuit courts in Miami, Orland and Tampa – three of Florida’s largest judicial areas – that should minimize the risk that issues of major importance regarding eDiscovery will be overlooked, at least in many major business cases. What’s more, Florida has a special rule that mandates early conferences in cases that are considered “complex”.

New Florida Rules

The new rules are expected to have a significant positive effect on Florida courts, for several reasons:

  • The near-duplication of current federal rules for eDiscovery provides Florida courts with much-needed guidance on the role and implications of ESI in discovery.
  • It creates consistency between federal and state rules, important where national corporations may be involved in cases in Florida.
  • It also enables Florida courts to rely on federal precedent, preventing Florida lawyers from the need to “reinvent the wheel,” and allowing them to draw on federal decisions and judgments.
  • Finally, the similarities between the new Florida rules and existing federal rules will prevent plaintiffs from “shopping” courts depending on the rules and regulations assigned to eDiscovery.

With the improvement in clarity of eDiscovery procedures and the strong connection between state and federal rules, these amendments to the Florida Rules of Civil Procedure seem poised to make discovery proceedings simpler and easier in the sunshine state.

So, what do you think? Are the changes to Florida’s eDiscovery procedures positive? Is the omission of something like Federal Rule 26(f) a serious problem, or is it insignificant? Please share any comments you might have or if you’d like to know more about a particular topic.