In This Issue:

	Feature Article: Corporate Counsel and IT are Partnering to Reduce Cost, Mitigate Risk and Prepare for Litigation
	Case Law Updates for Corporate Counsel
	News & Events

Feature Article: Corporate Counsel and IT are Partnering to Reduce Cost, Mitigate Risk and Prepare for Litigation

Introduction
The role of the corporate attorney has traditionally involved counseling principals across the organization in an effort to avoid or at least mitigate corporate risk. Generally speaking, corporate lawyers have focused their attention on legal issues involving such areas as human resources, financial reporting, contracts, tax and regulatory compliance. However, in a rapidly evolving digital age, the corporate attorney has been forced to expand their role. Technological innovation has stretched corporate counsel's sphere of responsibility to include creation and implementation of corporate litigation preparation strategies and policies. Those strategies and policies are imperative in order to quickly and efficiently respond to requests for electronically stored information (ESI), whether made in the context of a civil suit or regulatory investigation. Until recently, corporate attorneys have routinely—almost reflexively—deferred to Information Technology (IT) professionals on issues involving electronic data. In fact up until a few years ago, legal's interaction with IT was mostly limited to requests for help-desk assistance. This is no longer the case.

Corporate attorneys are now teaming with IT to tackle such topics as data archiving, accessibility and collection. The disastrous economic conditions of the past two years have forced corporations to slash discretionary spending including expenses relative to information management and responding to litigation. In this new environment, corporations are creating and implementing policies to routinely purge needless data and safeguard information that is necessary for business continuity and legal purposes. They are also investing in infrastructure and new technology to optimize management of ESI, including that which is potentially responsive to litigation. Such actions are a necessary response to forces beyond the boardroom, where, for example, judges are becoming decreasingly tolerant of corporations that fail to preserve electronic evidence when a claim should have been anticipated or even after receiving a notice of preservation.

With heightening economic pressures and judicial expectations as a backdrop, corporate attorneys and IT professionals have risen to meet the challenge, locked arms and forged ahead in an effort to reduce expenses while still effectively minimizing risk. Working together, legal and IT have created internal policies to reduce and organize volumes of stored corporate data as well as prepare for and respond to litigation and investigatory inquires. There is no question that the partnership between IT and legal is yielding beneficial results. However, there continues to be numerous instances where the courts have concluded that corporate planning and response efforts have fallen short.

Recent Case Law: Failure to Preserve
The case law is peppered with examples of legal and IT departments that did not effectively work together and consequently incurred sanctions for failing to properly safeguard potentially responsive ESI. In the July 2009 case of KCH Services., Inc. v. Vanaire, Inc., Judge Jennifer Coffman, of the United States District Court in the Western District of Kentucky, granted the plaintiff manufacturer's motion for adverse-inference sanctions, holding that the defendant's failure to preserve ESI after the receipt of a preservation letter evinced a "continued unwillingness to place a meaningful litigation hold" on potentially responsive data. In the same month and about 800 miles to the west, Magistrate Judge Paul Cleary of the Northern District of Oklahoma ordered that the defendant staffing company in the case of Pinstripe v. Manpower fund a program on litigation holds for the Tulsa County Bar Association after it failed to implement a litigation hold that had been drafted by outside counsel retained for that very purpose.

In a recent Delaware patent-infringement suit, Micron Technology, Inc. v. Rambus, Inc., a defendant microchip technology manufacturer authorized "shred days" where relevant documents were destroyed after litigation was deemed "inevitable" and "reasonably foreseeable." The court found the defendant's destruction of documents to have been in bad faith and imposed the sanction of declaring the patents unenforceable against the plaintiff. In another recent patent-infringement case in Utah, Phillip M. Adams & Assocs., LLC v. Dell, Inc., a software manufacturer argued that e-mail servers were not designed for archival purposes and encouraged employees to locally preserve e-mails of long-term value (as determined by each individual employee). The court held that the defendant's "irresponsible data retention practices [were] responsible for the loss of significant data," but delayed the decision of whether sanctions were warranted until after discovery closed.

Conclusion
The corporate union of legal and IT is still novel and rather immature. Calamitous economic conditions, advancements in technology and heightened judicial expectations have forced legal and IT to create and implement solutions that economize and minimize the risks associated with data management and litigation. Together, legal and IT have risen to the challenge and are creating and implementing processes that increase the efficiency of corporate ESI management protocol, litigation preparedness and responses to legal requests. Recent case law reveals that there are still instances when corporations fall miserably short in preparing for or responding to requests for ESI. However, the merging of these formerly-disparate professions is promoting economy, efficiency and better outcomes for corporations that must respond to legal and regulatory requests for ESI.

Case Law Updates for Corporate Counsel

Court Sanctions In-House Counsel for Failure to Issue a Litigation Hold and Ensure Preservation
Swofford v. Eslinger, 2009 WL 3818593 (M.D. Fla. Sept. 28, 2009). In this §1983 claim asserting excessive force, the plaintiffs sought sanctions, alleging the defendants destroyed key evidence, including a laptop and e-mails. Despite receiving preservation notices from the plaintiffs, the defendants' in-house counsel only forwarded a copy of the letters to senior-level employees (who did not ensure other employees complied with the defendants' preservation obligations) and failed to issue a litigation hold. Citing Zubulake V, the court found that it is insufficient for in-house counsel to simply notify employees of preservation notices, but rather counsel "must take affirmative steps to monitor compliance" to ensure preservation. Finding sanctions appropriate for the preservation failures, the court issued an adverse inference sanction for the laptop wiping and deletion of e-mails. The court also awarded attorneys' fees and costs to the plaintiffs, holding the defendants and in-house counsel jointly and severally liable.

In-House Impact: Corporations must take affirmative steps to safeguard and preserve relevant electronic information upon reasonable anticipation of litigation. While "reasonable anticipation of litigation" remains a question of fact, there is no excuse for instances when a corporation fails to preserve potentially relevant data after it receives a preservation notice. When a party files suit or sends notice that a claim is impending, corporations and counsel must take specific measures to see that relevant information is preserved or potentially face severe sanctions.

Court Finds E-Discovery Service Provider's Fees Recoverable, Taxable Costs Against Corporate Plaintiff
CBT Flint Partners, LLC v. Return Path, Inc., 2009 WL 5159761 (N.D. Ga. Dec. 30, 2009). In this patent infringement action, the defendants filed a motion to tax the costs associated with using an e-discovery vendor to aid in the production of 1.4 million electronic documents and six versions of source code. Objecting, the plaintiff argued that fees associated with the collection of documents for production are not taxable under 28 U.S.C. §1920. Although noting a judicial division of opinion exists as to whether U.S.C §1920 allows recovery, the court cited the highly technical nature and necessity of e-discovery services in the electronic age to overrule the plaintiff's objection and hold the $268,311.22 in costs to be recoverable. In supporting its finding, the court reasoned that the "[t]axation of these costs will encourage litigants to exercise restraint in burdening the opposing party with the huge cost of unlimited demands for electronic discovery."

In-House Impact: Corporations must be aware that courts are becoming increasingly intolerant of parties that make expansive demands for ESI and as a result, incur unnecessary time and expense. Judges are holding litigants and counsel accountable and requiring that prevailing parties be reimbursed for expenses incurred as a result of having to respond to overly-broad requests for discovery. Corporations should work closely with outside counsel and, if necessary, third-party experts to craft requests for ESI that are designed to uncover information relevant to the merits of the case but limit the discovery of irrelevant ESI. Corporate counsel should also be aware of available tools, such as early case assessment technologies, that may provide an early window into case data and enable counsel to craft requests for ESI that are narrowly tailored to uncover facts that are most important to the case.

News & Events

Kroll Ontrack Litigation Technology Workshop at LegalTech New York 2010
Join Kroll Ontrack at LegalTech NY on Tuesday, February 2, for the Litigation Technology Workshop track. Learn how advanced electronic discovery technology can support electronic data management from preservation through review and production. In addition, gain a better understanding of the ethical challenges of e-discovery. Attend one, two or all three sessions. Attendees to all three sessions will earn up to 4.5 CLE credits, inclusive of 1.5 ethics credits, and a Kroll Ontrack ESI technology certificate. To register or for more information, visit www.krollontrack.com/LT2010workshop.

Download Kroll Ontrack's Recent Podcast, "2009 Year in Review, Upcoming Trends for 2010 & Contempt Sanctions"
Curious to know what e-discovery developments occurred in 2009? In this edition of the ESI Report, host Gina Jytyla, Managing Staff Attorney in the Legal Technologies division at Kroll Ontrack, welcomes Andrea Marshall, Legal Consultant with Kroll Ontrack and Tracey Stretton, Legal Consultant for Kroll Ontrack in the UK office, to discuss hot topics and themes that emerged from 2009 case law and upcoming trends for 2010. In the Bits & Bytes Legal Analysis segment, Kroll Ontrack Legal Correspondent, Kelly Kubacki will take a look at the discovery order issued in TR Investors v. Genger. To listen to the podcast, visit www.krollontrack.com/redir/0110_2009YIRpodcast-IHA.asp.

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This newsletter was written by Kelly Kubacki and Kelly Runkle, Kroll Ontrack Law Clerks, with assistance from Regina Jytyla, Kroll Ontrack Managing Staff Attorney. Ms. Kubacki can be contacted by writing to kkubacki@krollontrack.com.

For more information about electronic discovery and computer forensics services, contact Kroll Ontrack at 800 347 6105 or visit www.krollontrack.com.