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Judicial Perspectives on Ethical Obligations Regarding Technology, E-Discovery and Information Management

Judicial Perspectives on Ethical Obligations Regarding Technology, E-Discovery and Information Management. October 27, 2009 WMACCA FACILITATED BY: Christina Ayiotis, Esq., CRM Group Counsel– E-Discovery & Data Privacy, CSC Adjunct Professor, George Washington University

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Judicial Perspectives on Ethical Obligations Regarding Technology, E-Discovery and Information Management

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  1. Judicial Perspectives on Ethical Obligations Regarding Technology, E-Discovery and Information Management October 27, 2009 WMACCA FACILITATED BY: Christina Ayiotis, Esq., CRM Group Counsel– E-Discovery & Data Privacy, CSC Adjunct Professor, George Washington University Courtney Ingraffia Barton, Esq., CIPP Senior Discovery Counsel, AOL LLC \

  2. The Honorable John F. Anderson, Magistrate Judge, United States District Court for the Eastern District of VirginiaThe Honorable Rosemarie Annunziata (Ret.), Mediator/Arbitrator, JAMSThe Honorable Herbert B. Dixon, Jr., Associate Judge, Superior Court of the District of ColumbiaThe Honorable John M. Facciola, Magistrate Judge, United States District Court for the District of ColumbiaThe Honorable Paul W. Grimm, Chief Magistrate Judge, United States District Court for the District of Maryland Distinguished Panelists

  3. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html Client-Lawyer Relationship- Rule 1.1 DUTY OF COMPETENCE-A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. • With respect to technology • How familiar should in-house counsel be with their corporation's technology and information environment • Opportunity/obligation for in-house counsel to collaborate with (and even take a leadership role) with information security, records and information management, IT and compliance

  4. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html Client-Lawyer Relationship- Rule 1.1 DUTY OF COMPETENCE-A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. • With respect to information management and discovery • What duties do in-house counsel have with respect to knowing all information sources (all information in the corporation’s “possession, custody or control”) • What is “meaningful participation” in E-Discovery • Chen v. Dougherty, No. C04-987MJP, 2009 WL 1938961 at *2 (W.D. Wash. July 7, 2009): • “Ms. Mindenbergs' inhibited ability to participate meaningfully in electronic discovery tells the Court that she has novice skills in this area and cannot command the rate of experienced counsel.”

  5. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html Client-Lawyer Relationship- Rule 1.1 DUTY OF COMPETENCE-A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. • With respect to information management and discovery • What duties do lawyers have to understand the costs of e-discovery processes(especially when they are not actual parties to a matter) • In re Fannie Mae Securities Litigation, 552 F.3d 814, 384 U.S. App. DC 161 (2009)

  6. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html Client-Lawyer Relationship- Rule 1.1 DUTY OF COMPETENCE-A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. • With respect to information management and discovery • What duties do in-house counsel have with respect to the corporation’s RIM processes • Adams v. Dell, 621 F. Supp. 2d 1173, 1193-1194 (D. Utah 2009) • “Similarly, here, ASUS' system architecture of questionable reliability which has evolved rather than been planned, operates to deny Adams access to evidence. This should not be excused. • ASUS did not have a designed information management policy taking varying needs into account. ASUS offers no statements from management-level persons explaining its practices, or existence of any policies.” (EMPHASIS ADDED) • “Information management policies are not a dark or novel art.”

  7. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html Client-Lawyer Relationship- Rule 1.6 CONFIDENTIALITY OF INFORMATION-(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b). . . . • Attorney Client Privilege/Federal Rule of Evidence 502 • How much is enough for a corporation to be protected • How can technology be leveraged to solve the problem of review costs

  8. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html Advocate- Rule 3.2 EXPEDITING LITIGATION- A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client. • The Sedona Conference Cooperation Proclamation • See Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354 (D. Md. 2008) • Collaboration and cooperation as delineated in the Proclamation • Opportunity/obligation to cooperate with opposing counsel/government in litigation and investigations and how this makes good business sense in a tight economy • How ethical obligations around zealous advocacy are met

  9. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html Advocate- Rule 3.2 EXPEDITING LITIGATION- A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client. • Collaboration Regarding Form of Production: • Covad Communications Co. v. Revonet, Inc., 254 F.R.D. 147, 149-151 (D.D.C. 2008) • “ . . [t]he rules ‘should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.’ Fed.R.Civ.P. 1.” . . . • “Since both parties went through the same stop sign, it appears to me that they both should pay for the crash.”

  10. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html Advocate- Rule 3.3 CANDOR TO THE TRIBUNAL (a) A lawyer shall not knowingly: (1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer; (2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel; or (3) offer evidence that the lawyer knows to be false. . . . Advocate- Rule 3.4 FAIRNESS TO OPPOSING PARTYAND COUNSEL A lawyer shall not: (a) unlawfully obstruct another party' s access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act; (b) falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law; (c) knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists; (d) in pretrial procedure, make a frivolous discovery request or fail to make reasonably diligent effort to comply with a legally proper discovery request by an opposing party; . . . (EMPHASIS ADDED)

  11. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html • Responsibility with Respect to Pleadings • Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 356 (D. Md. 2008): • “ . . . obvious violation of Fed. R. Civ. P. 33(b)(4) (which requires that the grounds for objecting to an interrogatory must be stated with specificity, or else they are waived) . . . “ • “ . . .probable violation of Fed. R. Civ. P. 26(g)(1) (failure to conduct a “reasonable inquiry” before objecting to an interrogatory or document request).”

  12. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html • Proportionality • Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 358 (D. Md. 2008) • “The requirement of discovery being proportional to what is at issue is clearly stated at Rule 26(g)(1)(B)(iii) (lawyer’s signature on a discovery request certifies that it is “neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action”), as well as Rule 26(b)(2)(C)(i)-(iii) (court, on motion or on its own, must limit the scope of discovery if the discovery sought is unreasonably cumulative or duplicative, can be obtained from a more convenient source, could have been previously obtained by the party seeking the discovery or the burden or expense of the proposed discovery outweighs its likely benefit).” (EMPHASIS ADDED)

  13. Model Rules of Professional Conduct http://www.abanet.org/cpr/mrpc/mrpc_toc.html • Reasonable Inquiry/Particularity • Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 359 (D. Md. 2008) • “. . . [t]he very act of making such boilerplate objections is prima facie evidence of a Rule 26(g) violation, because if the lawyer had paused, made a reasonable inquiry, and discovered facts that demonstrated the burdensomeness or excessive cost of the discovery request, he or she should have disclosed them in the objection, as both Rule 33 and 34 responses must state objections with particularity, on pain of waiver. Fed R. Civ. P. 33(b)(4).” (EMPHASIS ADDED)

  14. Duty to Preserve • Goodman v. Praxair Services, Inc., 632 F. Supp. 2d 494, 525 (D. Md. 2009) • Adverse inference for spoliation of CEO’s Data • “ . . . The appropriate instruction would be a general adverse instruction that permits, but does not require, the jury to draw an adverse inference against Tracer/PSI as a result of its violation of the duty to preserve relevant evidence.” • No obligation to preserve data of 3rd party consultant • “ . . . did not have the sufficient legal authority or practical ability to ensure the preservation of documents . . .” PRACTICE TIP– Due diligence for acquisitions should highlight existing discovery requirements and IT transition teams alerted to data that needs to be preserved.

  15. General State of Civility in the Court System • Need for better in house/outside counsel relationships • Balance of risk issues • Who is "on the hook” • Standard for outside counsel from Zubulake • How can corporations keep costs down while providing their outside counsel what they need

  16. Information Inflation/Outsourcing • Need for change and role of in-house counsel • Issue of sheer volume needs to be reviewed • Ridiculously long privilege logs • What is actually privileged • Outsourcing • ABA Formal Opinion 08-451 Lawyer’s Obligations When Outsourcing Legal and Nonlegal Support Services (issued August 5, 2008) • Based on the Model Rules of Professional Conduct as amended by the ABA House of Delegates through February 2008. The laws, court rules, regulations, rules of professional conduct, and opinions promulgated in individual jurisdictions are controlling.

  17. Supervision of Outside Counsel • Bray & Gillespie Mgmt. LLC v. Lexington Ins. Co., No. 6:07-cv-222-Orl-35KRS, 2009 WL 546429 at * 21 (M.D. Fla. Mar. 4, 2009) • Form of Production; Rule 37 Sanctions; Outside Counsel Changing Law Firms; Individual Attorney Sanctioned • “While B & G, as the client, has the obligation to supervise its lawyers, the evidence establishes that B & G's outside counsel made the decision how to produce ESI. Additionally, B & G has already spent considerable time and effort to reproduce some ESI in native format, although problems remain with the form of that production. Under these circumstances, I find that it is not appropriate to require B & G to pay the attorney's fees, costs, and expenses Lexington incurred in filing the motion for sanctions and participating in the proceedings related to that motion. Should B & G fail to monitor its counsel's actions going forward, however, it will subject itself to all available sanctions should additional problems occur.” • “ . . . blindly relying on outside counsel falls short of the duty he has as an officer of the court, as counsel of record, and as an advocate for his client.”

  18. Judge Facciola: You have been a leader for years, including internationally, in educating about these issues. You were the first judge to address RSA and have often indicated a records and information management program should be implemented and audited to be credible. • Assuming, a corporation has in-house counsel with the requisite knowledge, what should they do if the business will not follow their best advice? For example, suppose a business unit head decides that they would rather accept the risk of spoliation than pay for preservation because it may hit his or her bottom line? • What does in-house counsel do if their own colleagues (either in the legal department or a law firm) won't follow competent advice on these issues? Formal Discussion Questions

  19. Judge Grimm: Your opinions are some of the most meticulous and appear to be written with regard to educating attorneys who appear before you (and maybe even the wider legal community) regarding duties of lawyers. • What is the interplay between ethical obligations and the Federal Rules of Civil Procedure, particularly Rule 26(g)? • What is the role of in-house counsel in fulfilling these duties since in-house counsel rarely appear before you? Do you think their participation in court appearances would change outcomes/behavior? Formal Discussion Questions

  20. Judge Anderson: You are a magistrate judge here in our own backyard in the Eastern District of Virginia, where cases move along at a fairly quick clip. Cooperation is clearly a process and can often be iterative, which inherently involves time. • How does one fulfill one’s obligation for cooperation when a discovery schedule is as short as it is in your court? • How does counsel fulfill their ethical obligation when the other party isn't willing to cooperate? • How involved do you want corporate counsel to be? Formal Discussion Questions

  21. Judge Dixon: You were the first judge on the ABA TECHSHOW’s Board and are actively involved in the ABA Judicial Division. • Can you comment on how attitudes have changed in the last few years regarding competency in technology, both for lawyers and judges? • Can you give us some tips for dealing with the ethical considerations surrounding metadata? • How pristine must a collection be for a routine litigation? • What happens when a company can't afford the latest and greatest forensic tools and can get some, but not all, of the metadata? Formal Discussion Questions

  22. Judge Annunziata: Your legal career has encompassed private practice, almost twenty years on the bench, and now arbitration and mediation. • Through that progression, how have you seen ethical obligations around technology and information management change? • Many companies are turning to alternative dispute resolution. Are the ethical obligations we have discussed today, in the context of e-discovery, different for ADR? What about discovery in international arbitration? Are there limits imposed? Are corporations detailing scope of discovery in their contracts on the front end? If not, what do you propose they include? Formal Discussion Questions

  23. Records, Information, Data, Documents, Content, ESI • Full life-cycle management– from creation to final disposition • 3rd Parties and Your Information • Contractual requirements, security, audit • Proper and Thorough Destruction (Media Neutral) • Required Under Privacy Laws among many others Records and Information Management (RIM)

  24. Definition of “Litigation Preparedness” • Normal Course of Business • RIM should be done because it is good for the business or vital to the mission • Consistent, auditable RIM • Legal Hold Process/Management Coordinating RIM Strategy with Litigation Preparedness

  25. Nationally and internationally • Protecting certain data types • Private data, export-controlled data, protected health information, non public financial • Global systems and cross border issues • Configuration management • Incorporating compliance requirements at the front end Meeting Compliance Requirements

  26. Discovery is discovery • Less information = less cost to review • Version control- best evidence • Authenticity/ Trusted Time Stamps – admissibility, SOX compliance, etc. Interplay between E-Discovery and Enterprise Information Management

  27. System of Record • Deduplication • Hashing • Hold Management • Defensibility of Process • Collection (Forensically Sound) • Preservation (In Situ or on Secure Server) • Chain of Custody Interplay between E-Discovery and Enterprise Information Management

  28. Relationship between RIM, IT and Legal • Regular open communication • Strategize before systems are set up to ensure authenticity of content and ease of reproducing it, as well as secure electronic destruction of ESI that needs to be dispositioned • Work with IT to calculate true cost of storage (incorporate cost per gigabyte of attorney review time) Best Practices

  29. DoD 5015.02-STD (April 27, 2007) C2.2.7.6. Destroying Records. RMAs shall: • C2.2.7.6.1. Identify and present to the records manager the record folders and records, including record metadata, that have met the retention period. Records assigned more than 1 disposition must be retained and linked to the record folder (category) with the longest DoD 5015.02-STD, April 25, 2007 47 CHAPTER 2 retention period. Links to record folders (categories) with shorter retention periods should be removed as they become due (parts 1228.58 and 1234.32 of Reference (g) and Reference (y)). • C2.2.7.6.2. Present a second confirmation requiring authorized individuals to confirm the delete command before the destruction operation is executed for records approved for destruction (References (y) and (ae)). SECURE DESTRUCTION

  30. DoD 5015.02-STD (April 27, 2007) C2.2.7.6. Destroying Records. (CONTINUED) RMAs shall: • C2.2.7.6.3. Delete electronic records approved for destruction in a manner that prevents their physical reconstruction using commonly available file restoration utilities (part 1234.34 of Reference (g)). • C2.2.7.6.4. Provide an option allowing the organization to select whether to retain or delete the metadata of destroyed records. • C2.2.7.6.5. Restrict the records destruction commands to authorized individuals (part 1222.50 of Reference (g) and Reference (ae)). • C2.2.7.6.6. Provide documentation of destruction activities. This documentation shall be stored as records. SECURE DESTRUCTION

  31. FEDERAL TRADE COMMISSION PART 682—DISPOSAL OF CONSUMER REPORT INFORMATION AND RECORDS § 682.3 Proper disposal of consumer information. • (a) Standard. Any person who maintains or otherwise possesses consumer information for a business purpose must properly dispose of such information by taking reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal. • (b) Examples. Reasonable measures to protect against unauthorized access to or use of consumer information in connection with its disposal include the following examples. These examples are illustrative only and are not exclusive or exhaustive methods for complying with the rule in this part. SECURE DESTRUCTION

  32. § 682.3 Proper disposal of consumer information. (CONTINUED) • (b) Examples: • (1) Implementing and monitoring compliance with policies and procedures that require the burning, pulverizing, or shredding of papers containing consumer information so that the information cannot practicably be read or reconstructed. • (2) Implementing and monitoring compliance with policies and procedures that require the destruction or erasure of electronic media containing consumer information so that the information cannot practicably be read or reconstructed. SECURE DESTRUCTION

  33. § 682.3 Proper disposal of consumer information. (CONTINUED) • (b) Examples: • (3) After due diligence, entering into and monitoring compliance with a contract with another party engaged in the business of record destruction to dispose of material, specifically identified as consumer information, in a manner consistent with this rule. In this context, due diligence could include reviewing an independent audit of the disposal company’s operations and/or its compliance with this rule, obtaining information about the disposal company from several references or other reliable sources, requiring that the disposal company be certified by a recognized trade association or similar third party, reviewing and evaluating the disposal company’s information security policies or procedures, or taking other appropriate measures to determine the competency and integrity of the potential disposal company. SECURE DESTRUCTION

  34. § 682.3 Proper disposal of consumer information. (CONTINUED) • (b) Examples: • (4) For persons or entities who maintain or otherwise possess consumer information through their provision of services directly to a person subject to § 682.4 16 CFR Ch. I (1–1–05 Edition) this part, implementing and monitoring compliance with policies and procedures that protect against unauthorized or unintentional disposal of consumer information, and disposing of such information in accordance with examples (b)(1) and (2) of this section. • (5) For persons subject to the Gramm-Leach-Bliley Act, 15 U.S.C. 6081 et seq., and the Federal Trade Commission’s Standards for Safeguarding Customer Information, 16 CFR part 314 (‘‘Safeguards Rule’’), incorporating the proper disposal of consumer information as required by this rule into the information security program required by the Safeguards Rule. SECURE DESTRUCTION

  35. NATIONAL ASSOCIATION OF INFORMATION DESTRUCTION • http://www.naidonline.org/join/membership.html • NAID is the international, non-profit trade association of the information destruction industry. Its members are companies and individuals involved in providing information destruction services. NAID's mission is to educate business, industry and government of the importance of destroying discarded information and the value of contract destruction services. SECURE DESTRUCTION

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