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Court Issues Doomsday Sanctions, Finds Counsel Lacking eDiscovery Competence

The nature of a lawyer’s duty of competence has been the subject of debate ever since the ABA revised its definition of competence almost four years ago to require lawyers to understand “the benefits and risks associated with relevant technology.” Since that time, much ink has been spilled advocating the importance of technological competence for lawyers, particularly in the area of eDiscovery. For example, last year the California State Bar published a blockbuster ethics opinion regarding the impact of eDiscovery on a lawyer’s duty of competence. Significantly, the opinion clarified that “a lack of technological knowledge in handling e-discovery may render an attorney ethically incompetent to handle certain litigation matters.”

Sell v. Country Life Insurance Company

Despite the need to be eDiscovery competent, courts continue to find that lawyers lack basic practice skills and acumen.  Just this month, a court spotlighted a lawyer’s failings in the discovery process as justification for its order of default judgment against the defendant insurer. At the heart of that order in in Sell v. Country Life Insurance Company was the court’s determination that the insurer’s in-house counsel failed to conduct a proper search for relevant information.

Counsel represented to the court that he undertook a “reasonable search” for information responsive to the plaintiff’s document requests. Nevertheless, the extent of that search was apparently limited to retrieving the plaintiff’s claim file. No effort was made to identity emails regarding the insurer’s denial of the plaintiff’s insurance claim. Worse, counsel had little if any knowledge regarding the company’s information retention system. This includes the sole repository the company had ostensibly established to preserve emails subject to a litigation hold:

For an experienced company attorney who plays a primary role in responding to discovery requests to claim he just recently became aware of the company’s only source of preserved email communications defies common sense. It also represents a disturbing pattern . . . It suggests that Mr. Anderson’s typical response to discovery requests for email communications during litigation is to simply, and falsely, assert that a reasonable search was performed and that no such communications, other than what was in the claim file, were found.

While the court eventually ordered the search and retrieval of pertinent emails, the order arrived too late to prevent much of their destruction. This finding, together with findings of false deposition testimony and false privilege claims, ultimately led the court to enter default judgment.

Competence in the Age of eDiscovery

The Sell decision should serve as a wake-up call to lawyers who hope the issue of eDiscovery competence will simply go away. Sell properly raises the question of what steps a lawyer should take to satisfy the duty of competence and adequately represent the interests of clients in discovery. At a minimum, a lawyer should understand the extent of a client’s legal obligations surrounding the discovery process. This includes knowing when a litigation hold is triggered under common law, the nature and extent of a reasonable search under Federal Rule of Civil Procedure 26(g), and the impact of newly revitalized proportionality standards on preservation and production duties. Lawyers should also understand the nature of a client’s information systems to facilitate the preservation and production of responsive materials.

Beyond these baseline expectations, there are several additional steps that counsel can take to become eDiscovery competent. Nevertheless, having an understanding of just these basic issues and taking proactive steps to ensure compliance with the law will enable clients to satisfy their discovery obligations in many instances. Indeed, such a course of action could very well have prevented the spoliation and resulting sanctions in Sell.

Philip Favro
Philip Favro
Philip Favro acts as a trusted advisor to organizations and law firms on issues surrounding discovery and information governance. Phil provides guidance on data preservation practices, litigation holds, data collection strategies, and ESI search methodologies. In addition, he offers direction to organizations on records retention policies and the need to manage dynamic sources of information found on smartphones, cloud applications, and social networks. Phil is available to serve as a special master on issues related to electronic discovery. Phil is a nationally recognized thought leader and legal scholar on issues relating to the discovery process. His articles have been published in leading industry publications and academic journals and he is frequently in demand as a speaker for eDiscovery education programs. Phil is a member of the Utah and California bars. He actively contributes to Working Group 1 of The Sedona Conference where he leads drafting teams and serves as the Steering Committee project manager. Prior to joining Driven, Phil practiced law in Northern California where he advised a variety of clients regarding business disputes and complex discovery issues. He also served as a Judge Pro Tempore for the Santa Clara County Superior Court based in Santa Clara, California.