Marcus R. Chatterton and Elizabeth J. Flachsbart, Js.
Last summer, the State Bar of California issued groundbreaking Formal Opinion 2015-1931 explaining that the ethical duties of competence and confidentiality require proficiency in e-discovery. Although this opinion is the first of its kind around the country, it is part of a greater movement in the legal profession recognizing that, while understanding and practicing e-discovery was once a “cutting-edge skill,” it is now fundamental to the practice of law. In 2012, for example, the American Bar Association updated Model Rule of Professional Conduct 1.1 on competence to include a requirement that lawyers keep abreast of “changes in the law and its practice, including the benefits and risks associated with relevant technology.”2 Lawyers who fail to appreciate the importance of preserving, collecting and producing electronically-stored information (“ESI”) are putting their practice, their cases and even their own pockets at risk on a daily basis. This article will examine the recent California ethics opinion as well as real cases to illustrate the potential ethical risks at each stage of the e-discovery process.
California Bar Ethics Opinion 2015-193
The State Bar of California’s Formal Opinion 2015-193 emphasizes that a lawyer’s age-old duty of competence must evolve with changing technologies.3 Today, nearly every case involves some form of evidence stored electronically–in databases, email servers, cell phones, social media networks, the cloud and more. The California bar makes it clear that it is no longer an option for lawyers to plead ignorance in the face of new technology. Instead, the modern duty of competence requires a lawyer, at the outset of every new case, to assess the e-discovery needs of the case.4The lawyer then must decide if he is capable of handling the e-discovery burden. If, after conducting that assessment, he finds that the e-discovery demands are beyond his ability, the California bar offers him three options: (1) acquire the skills necessary to handle the e-discovery, (2) consult or associate with a lawyer or technology expert who possesses the requisite knowledge or (3) decline the representation.5Understanding electronic discovery is so essential that even a lawyer who is an expert in the legal issues of the case may risk an ethical violation by accepting the representation, if he is not also equipped to handle the ESI.
a. California Bar’s Nine Essential E-Discovery Skills
Many lawyers today may still be asking themselves what exactly it means to “handle” e-discovery. The California bar lists nine essential skills which a lawyer, either on his own or in conjunction with a more knowledgeable colleague, must be able to perform in order to competently manage his client’s e-discovery: • Initially assess e-discovery needs and issues, if any;
• Implement/cause to implement appropriate ESI preservation procedures;
• Analyze and understand a client’s ESI systems and storage;
• Advise the client on available options for collection and preservation of ESI;
• Identify custodians of potentially relevant ESI;
• Engage in competent and meaningful meetings and confer with opposing counsel concerning an e-discovery plan;
• Perform data searches;
• Collect responsive ESI in a manner that preserves the integrity of that ESI; and
• Produce responsive non-privileged ESI in a recognized and appropriate manner.6
The California bar uses a hypothetical situation to illustrate the obligations and risks related to these nine skills. In the hypothetical, Attorney represents Client in a case against the client’s chief competitor.
The other side demands e-discovery, but Attorney refuses, causing a frustrated judge to order the parties to come to a joint agreement on e-discovery.8The parties agree to a plan whereby a vendor selected by opposing counsel will conduct a search of the client’s network using agreed-upon search terms.9 Opposing counsel also offers a claw-back agreement for any inadvertently produced, privileged ESI.10
Client informs Attorney that all ESI on its network has already been shown to Attorney in hard-copy form.11 Relying on this, Attorney allows the vendor direct access to the client’s network without any supervision or further instruction.12 Following the search, Attorney receives an email copy of all the data retrieved by the vendor’s search.13 Believing that it will match the hard-copy documents he has previously reviewed, he saves the file to his computer without opening it.14
A few weeks later, Attorney receives a letter from opposing counsel accusing him of spoliation.15 Unable to figure out how to open the file of data from the search, Attorney hires an e-discovery expert who informs him that there are large holes in the produced data due to the client’s ongoing document deletion routine.16 The expert also discovers that the broad search terms led to a number of both privileged and proprietary, irrelevant documents being produced.17
The California bar noted that the lawyer in the hypothetical potentially breached his ethical duties of competency and confidentiality multiple times in his theoretical case. Although fictional, the California bar’s hypothetical is a reality for many lawyers. Real lawyers have made costly, accidental missteps in preserving, collecting and producing ESI. What follows is a look at the ethical pitfalls waiting around the corner of each of these stages of discovery, as demonstrated by real cases and the California bar hypothetical.
Four of the California bar’s nine essential e-discovery skills involve preservation of electronic data: implementing appropriate ESI preservation measures, understanding a client’s ESI systems and storage, advising the client on collection and storage of ESI and identifying custodians of potentially relevant ESI. The latter three skills are essentially preparation skills which allow a lawyer to issue the “appropriate ESI preservation measures” contemplated by the first skill. One of the most common and important preservation measures is a litigation hold.
A litigation hold is a “directive issued to, by or on behalf of a client to persons or entities associated with the client who may possess potentially relevant documents (including ESI) that directs those custodians to preserve such documents, pending further direction.”18The duty to preserve relevant documents, and thus the duty to issue a litigation hold, is triggered as soon as a party “reasonably anticipates litigation,” which can occur far in advance of an actual complaint.19 At that point, the lawyer must familiarize himself with the client’s data retention procedures so that he may take appropriate steps to ensure that any potentially relevant documents will be preserved for litigation.20 In addition to issuing a litigation hold to all custodians of relevant documents, the lawyer must also ensure that the client adequately halts the routine or automatic deletion of responsive data–either by suspending its auto-delete policies,21 or preserving a sound copy of all ESI that is within the scope of the litigation hold. Failure to issue a litigation hold, as well as failure to enforce it, may subject a lawyer to sanctions.
a. Duty to Issue Litigation Hold
Even absent bad faith, a party can be sanctioned for failing to issue a litigation hold. Take, for example, the plaintiffs in Fidelity National Title Insurance Co. v. Captiva Lake Investments, LLC.22 Fidelity genuinely believed it did not need to issue a litigation hold, given that the company had a “document collection procedure” in place.23 As a result of the lack of litigation hold and the client’s failure to understand its own document policy, unknown numbers of emails were deleted from the client’s system.24 The Eastern District of Missouri found that the failure to issue the litigation hold, in and of itself, was sufficient to show the necessary intent to impose sanctions.25 As a result, despite the absence of bad faith, the court issued an adverse inference instruction for the deleted documents, ordered Fidelity to pay half the cost of the consultant appointed by the court to inspect the company’s computer system and required Fidelity to pay attorney’s fees for the cost of the sanctions motion.26
In another case, the general counsel of the plaintiff company, Scentsy, Inc., did not issue a written litigation hold, but instead gave verbal instructions to certain individuals in custody of relevant information and requested that they not delete documents.27 These conversations took place around the...