E-Discovery Trends in 2009 — New developments in e-discovery will affect enterprise general counsel and compliance officers, law firms serving corporate clients, and IT departments

By Christine Taylor, January 9, 2008, 12:10 PM

A few years ago, the Taneja Group coined the term “Information Classification and Management” (ICM) to describe the technology of locating and classifying data throughout the enterprise. ICM covered sub-technology sectors such as e-discovery, compliance, data security control, and data management. However, we saw the term “e-discovery” trump the more comprehensive name as rabid attention turned from ICM to the specifics of civil litigation software tools. We are now seeing the e-discovery term itself take on a fuller usage, more akin to ICM. People do use the term when talking about civil litigation, but are also expanding it to encompass compliance, corporate governance, data classification, and even knowledge management.

In this broad sense we have looked at the trends of the e-discovery market as they impact its largest stakeholders: the enterprise general counsel and compliance officers, law firms serving corporate clients, and IT.

The crux of the matter is that e-discovery and its related areas will be extremely hot for litigation and compliance, especially those related to the financial meltdown. The market increasingly understands the necessity of e-discovery software tools and systems, and will move toward proactive e-discovery adoption. A more reactive approach will remain alive and well as many companies will still avoid implementation until driven to it by a lawsuit or federal investigation. But companies will increasingly understand that the e-discovery solution phenomenon is much more than a litigation aid. It also has major effects on federal compliance and internal governance, and potentially on data management throughout the enterprise.

For more see byteandswitch.com.

Obama Administration Could Mean More Compliance Regs

January 5, 2009
By Drew Robb

Just as accounting scandals earlier this decade led to new regulations like Sarbanes-Oxley, last year’s global financial meltdown coupled with Democratic control of the White House and Congress seems like a recipe for a host of new compliance regulations — and thus more business for storage vendors and more work for storage administrators.

But the changes won’t stop with an Obama presidency and the 111th Congress. The leaders of the Group of 20 industrial and emerging countries (G-20) have been meeting to consider global regulations aimed at raising bank capital standards and regulating hedge funds, with European leaders at the forefront of the new financial market regulation.  While it might be years before all this results in any kind of international consensus, another round of regulation is almost certainly at hand.

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SOX and other regulations like FRCP stimulated interest in the archive and nearline disk market and exposed tape media’s shortcomings for meeting search and audit requests.

“Generally, additional regulation mandates that organizations have to demonstrate their ability to reproduce transactional records within a specified timeframe when requested,” said Brian Kelly, an executive at Ernst and Young Global Ltd. “After the failure of some major organizations to respond to such audit requests, an overhaul of the archival process was mandatory.”

For more see enterprisestorageforum.com.

Judge OKs legal settlement for Mo. gov.’s e-mails

By DAVID A. LIEB

The Associated Press

A judge has approved a legal settlement that requires outgoing Gov. Matt Blunt to hand over thousands of e-mails to investigators, but leaves unresolved the question of whether Blunt’s office violated public records laws.

Under the deal, Blunt’s office must provide 60,000 pages of e-mail documents from the accounts of the outgoing Republican governor and five staffers from a three-month period in 2007. The settlement includes no specific assertion of wrongdoing by Blunt nor any specific exoneration.

A bipartisan pair of court-appointed assistant attorneys general said they believe Blunt’s office broke Missouri law by deleting the e-mails that should have been saved as public records.

But former Democratic Lt. Gov. Joe Maxwell and Republican attorney Louis Leonatti both said it would have been almost impossible to prove Blunt’s office committed a knowing and purposeful violation, which are required elements under Missouri law for imposing civil fines.

That’s because they said Blunt and his top deputies were relying on in-house legal advice _ albeit wrong _ when they asserted in 2007 that e-mails were not public records and did not have to be kept.

Leonatti said there was nothing to indicate any criminal conduct occurred, and he praised Blunt’s former legal counsel, Henry Herschel, for eventually correcting his wrong interpretation of public records laws.

Blunt spokeswoman Jessica Robinson said Democratic Attorney General Jay Nixon _ who will succeed Blunt as governor Jan. 12 _ wasted more than $600,000 of taxpayer money by initiating the investigation ‘with nothing to show for it but false accusations.’

The legal settlement seeks to end an e-mail controversy that has dogged Blunt for the final year-and-a-half of his term. The settlement gives investigators until Jan. 26 to complete a report on their findings, and then gives Blunt until Jan. 30 to attach a response before the report is publicly released.

Reviewing Your Email and Internet Usage Policies

Written by Sue Walsh on January 2, 2009

As the year comes to a close it’s good time to review your Email and Internet usage policies and insure that they are clear and comprehensive. The folks over at SmartBiz have published some helpful tips to assist you. Here’s an excerpt:

As the Internet and email have become a big part of our everyday lives, employers need to make clear the separation between work and non-work. What someone would consider appropriate with friends may be out of line in the workplace. Each practice needs to have a clear, written policy in place to eliminate confusion by the employees on what is and is not acceptable.

Such policies are critical in this day and age. It only takes one email or dubious website to cause your business a lot of trouble in the form of viruses, security or confidentiality breaches, even lawsuits. So keep your policy updated and easily available to all your employees!

Court Enforces Clawback Agreement, Denies Motion to Compel

Bro-Tech Corp. v. Thermax, Inc., 2008 WL 5210346 (E.D. Pa. Dec. 11, 2008)

On the eve of trial in this case in which plaintiffs alleged trade secret theft, the court granted an extension “on urgent party request” so that additional discovery could be accomplished.  The discovery proved to be complex, and the court appointed a special master to manage the electronic discovery issues.  Thereafter, the parties negotiated a stipulation, approved by the court, which included a clawback procedure (“the Clawback Agreement”) to handle the return of privileged documents.  The Clawback Agreement provided that in the event of disclosure of a privileged document, the document was to be returned upon written demand.  If the recipient of the document wished to challenge the privilege claim, they were required to do so in writing, within five days of receipt of the demand for the document’s return.  The special master would then resolve the dispute following an in camera review.

For more see ediscoverylaw.com

25 Percent of Reported E-Discovery Opinions in 2008 Involved Sanctions Issues

Sheri Qualters
The National Law Journal
December 17, 2008

One-quarter of the reported electronic discovery opinions issued in the first 10 months of the year involved sanctions issues, according to a new Kroll Ontrack Inc. study.

The Kroll Ontrack software division of risk consultant Kroll Inc. analyzed 138 reported cases from January through October 2008 for the study. Also, according to the analysis, 13 percent of cases addressed preservation and spoliation issues; 12 percent involved computer forensics protocols and experts; 11 percent addressed admissibility; and 7 percent of cases involved privilege considerations and waivers.

The cases illustrate that judges frequently issue sanctions for mishandling of electronic discovery and lack of document retention policies, said Michele Lange, Kroll Ontrack’s director of legal technologies, in a statement. “It is clear that courts are no longer allowing parties to plead ignorance when it comes to [electronic discovery] best practices.”

Kroll Ontrack’s study detailed several decisions, including a federal court decision in the Northern District of California that required defendants to pay more than $250,000 in fees and costs for discovery conduct “among the most egregious this court has seen,” according to an Aug. 12 opinion by U.S. Magistrate Judge Elizabeth D. Laporte. Keithley v. The Home Store.Com Inc., No. 3:03-cv-04447 (N.D. Calif.).

Lack of policy adds to e-discovery cost and complexity — Large percentage of companies lack legal holds

IT and legal teams must work together to establish e-discovery policies. In fact, one-third of companies lack formal policies and procedures for legal holds, according to a recent poll of attorneys and executives conducted by Deloitte. A legal hold is the process by which companies preserve evidence subject to discovery for lawsuits and other legal and regulatory matters. In this increasingly litigious society, it’s likely IT will have to hand over e-mails and backup files.

“Given the relatively low cost of establishing a policy framework and processes to address legal hold issues, it is surprising to see such a large percentage of corporate America lacking in this area,” says Jeff Seymour, a principal with Deloitte Financial Advisory Services analytic and forensic technology practice.

Respondents indicated responding to discovery requests has become significantly more complicated and costly. And less than one-third indicated their companies are very or extremely effective in managing the readiness aspect of the discovery process. Worse, 5% said the guidance provided to IT on litigation hold polices was unclear and 35% said it was only somewhat clear.

For more see NetworkWorld.com.

Judge Looks Past Inadvertent Disclosure Protection Rule

Shannon P. Duffy
The Legal Intelligencer
December 8, 2008

In one of the first decisions to interpret a new rule of evidence that governs “inadvertent disclosure” of privileged documents, a federal judge has held that if the “reasonableness” of the accidental disclosure remains in dispute, courts should continue to apply the traditional five-factor test to determine whether the privilege has been waived.

In his 21-page opinion in Rhoads Industries Inc. v. Building Materials Corp. of America, U.S. District Judge Michael M. Baylson was forced to resolve a dispute that arose when plaintiffs lawyers accidentally turned over more than 800 privileged e-mails when they provided the defense lawyers with copies of 78,000 e-mails.

The decision is one of the first to apply the newly enacted Rule 502 of the Federal Rules of Evidence, which protects against waiver of privilege if the disclosure is inadvertent and if the holder of the privilege took “reasonable steps” to prevent disclosure and to rectify the error.

But for lawyers, the ruling also serves as a reminder of another rule, Rule 26(b)(5)(B) of the Federal Rules of Civil Procedure, which mandates that lawyers create a privilege log for all documents withheld.

Although Baylson ultimately concluded that the privilege wasn’t waived for all 800 documents, he nonetheless found that the plaintiff’s failure to comply fully and timely with the mandatory requirements of Rule 26 meant that the privilege was waived for 120 documents.

“The obligation to log privileged documents is mandatory under the specific terms of Rule 26(b)(5). Despite Rhoads’s attempts to justify, explain and minimize its failure to log all of its inadvertently privileged documents by June 30, 2008, the court finds that the delay in doing so until Nov. 12, 2008 is too long and inexcusable,” Baylson wrote.

Defense lawyers urged Baylson to rule that the plaintiff had waived the privilege for all of the inadvertently disclosed documents because its process of screening the documents was “grossly insufficient.”

For more see law.com.

Things You Should Never Put in an E-mail

Posted Dec 3, 2008, 12:37 pm CST

By Molly McDonough

Over at the Wichita Eagle blog What the Judge Ate for Breakfast, there’s a caution about e-mail during office hours on office computers.

Courts reporter Ron Sylvester quips, “My wife says you should never put anything in a company e-mail that you don’t want to be shown to 12 strangers on a big movie screen.”

His wife’s an employment lawyer, so she should know. The post notes that lawyers are increasingly searching company e-mail and files during e-discovery.

So what are they looking for?

Roger Matus, over at the blog Death by E-mail, reproduces a top 10 list.

Here are a few that will likely raise red flags for e-discovery sleuths:

• “Delete this email immediately.”

• “I really shouldn’t put this in writing.”

• “We’re going to do this differently than normal.”

• “I don’t want to discuss this in e-mail. Please give me a call.”

• “Don’t ask. You don’t want to know.”

Matus then advises, “If you find yourself typing one of these phrases, perhaps you should delete the entire e-mail.”

U.S. Federal Rule of Evidence 502

Ronald J. Hedges – December 2nd, 2008

The Federal Rules of Evidence have now been amended to include a new Rule 502 [PDF], which should represent a sea change in the law of waiver in the United States. Rule 502 is intended to introduce uniformity in the law of waiver of attorney-client privilege and work production protection throughout the United States courts and, through operation of the Commerce Clause of the United States Constitution, among State courts.