Outside counsel, the New FRCP and Client Due Diligence

Though decided in 2006 before the new e-discovery rules were in effect, it is worth republishing this one to remind those gearing up for the Brave New World of E-Discovery. In the U.S. District Court for the Southern District of New York, Judge Baer sanctioned a law firm for not doing adequate due diligence on its own client’s handling of electronically stored information. Law firms better to do their homework before making Rule 26(g) delarations…

The court found that the law firm failed to do a “methodical survey” of its client’s computer systems. The missing data or ESI was buried on a hard drive. Even though, as the undisputed expert in that case said, a user “would have no way of knowing of its existence,” the district judge held the law firm’s failure to discover and disclose the ESI “consitute[d] gross negligence.” The court also said the client was “at the least negligent in carelessly representing to counsel” information about its computers.

PHOENIX FOUR, INC. v. STRATEGIC RESOURCES CORP. 2006 U.S. Dist. LEXIS 32211.

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