Want to cut litigation costs? Get executives involved: effectively defending against a lawsuit requires preparation and participation by senior executives, especially in an era in which huge sums may be at stake over routine items like emails.

• Author: Emory, Jr., Frank E.
• Position: MANAGING LITIGATION

If you think litigation management and cost control are solely the responsibility of your legal department and your outside law firm, consider that what could be seen as a simple case of document mismanagement cost UBS Warburg $29 million.

A jury awarded that amount in Zubulake v. UBS Warburg (Zubulake) in April 2005. The lawsuit was a relatively common employment discrimination case, but the huge dollar amount had little to do with those allegations. Instead, this case and its punishing damages helped define the significance of electronic information in today's litigation environment.

In the case, the judge issued several decisions regarding e-discovery, concluding that UBS willfully withheld and destroyed relevant electronic information despite court orders. As a result, the jury was instructed to treat all missing electronic documents as if they would have negatively impacted the UBS case. This determination ultimately opened the door for the outsized jury award.

Additionally, in December 2005, a clarification to the rules of discovery in the federal courts specifically included electronic information as part of the discovery process. This significantly changed the legal landscape for every business in the U.S.--and made it increasingly important for senior managers to be actively involved in legal risk management.

With the e-discovery ruling, the cost of litigation in civil cases has increased exponentially. Additionally, success in cases like Zubulake has invited a different type of litigation, one that focuses on the strong sanctions associated with noncompliance with e-discovery requests, rather than on the specific merits of the case.

During the three years of litigation in Zubulake, UBS was asked to produce all relevant electronic information and failed to comply, perhaps because of document mismanagement. In reality, an order requiring the production of all relevant electronic documentation is much more complex than it might initially appear. For example, emails may have been forwarded to several people, or even entire lists of people inside and outside the organization.

In a worst-case scenario, which happens all too often, a company may be asked to produce a copy of every version of that email. As you can imagine, that is extremely time-consuming--and that's just one email.

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