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	Feature Article: Under New Rule of Evidence 502, Cooperation Is the Winning Strategy
	Litigation Minute: Navigating the Subprime Crisis and Financial Fallout
	News & Events

Feature Article

Under New Rule of Evidence 502, Cooperation Is the Winning Strategy
Many attorneys view their client-advocate role as necessarily requiring them to take a stance in opposition to the other party; however, attorneys with that mindset may find themselves at a disadvantage when it comes to dealing with e-discovery. Lack of cooperation between opposing parties can influence the cost of litigation, and when that cost exceeds the value of a case—a very real risk in cases involving e-discovery—the case may not ever be argued. Further, three out of four experienced trial lawyers recently surveyed believe that litigation cost is a factor when settlement is under consideration, ultimately driving cases to settle that should not settle on the merits.

In response to the rising costs of litigation, the federal government recently enacted Federal Rule of Evidence 502, which aims to decrease the growing costs associated with e-discovery by providing protections against privilege waiver in the event of inadvertent disclosure.

The most powerful tool that Rule 502 provides is the ability to enter into binding agreements and to seek court orders governing privilege waiver. Prior to Rule 502, counsel could enter into privilege agreements or obtain a stipulated court order. However, these agreements and orders provided very little assurance to the producing party that their privileged documents would, in fact, be protected, as they were not binding on third parties or in subsequent proceedings. Accordingly, prudent practitioners continued to conduct exhaustive privilege review to minimize the risk of privilege waiver, resulting in increased costs.

To this end, Rule 502 may decrease the costs associated with privilege review when the parties cooperatively enter into a privilege agreement. Rule 502(d) provides that a federal court may order that privilege is not waived by inadvertent disclosure, an order which is then binding on third parties and in other federal and state proceedings. This means that by cooperatively entering into agreements and seeking an order, parties can protect their privileged documents while at the same time decreasing the costs and time associated with more exhaustive review. Additionally, such agreement may also decrease the likelihood of a future costly dispute over waiver.

Rule 502(e), in contrast, provides that party agreements not incorporated into a court order are binding only on the parties to the agreement. Accordingly, counsel should attempt to obtain a Rule 502(d) order to protect against privilege waiver whenever they enter into a privilege agreement. In the event that a court declines to issue a 502(d) order, however, parties should consider entering into a party agreement under Rule 502(e) as the agreement will still provide significant waiver protections.

A word of caution may be appropriate here: the common law prior to the enactment of Rule 502 provides that negotiated non-waiver agreements did not excuse parties from undertaking reasonable pre-production privilege review. See Hopson v. Mayor & City Council of Baltimore, 232 F.R.D. 228 (D.Md. 2005). So while it is clear that Congress' intent in Rule 502(d) and (e) is for the use of privilege agreements and orders to relieve the costs associated with privilege review, it is doubtful that a court will incorporate a privilege agreement that provides for less-than-adequate review. Accordingly, counsel should negotiate reasonable search protocols and continue to be thorough in their privilege review because once the cat is out of the bag, there is no getting it back in.

During a recent interview, Magistrate Judge Paul W. Grimm stressed that attorneys need to "focus on their role as advocates to get the best results for their clients and not as adversaries to create conflict." Reaching agreement as to privilege issues and other e-discovery issues, such as the scope of discovery and search protocols, significantly benefits both parties. The full interview is available at http://www.legaltalknetwork.com/modules.php?name=News&file=article&sid=297.

In the age of voluminous electronic information, a party can easily get bogged down in the data and become unable to discuss the merits of a case. Under these circumstances, an adversarial mentality may not be the best option for clients. Rule 502 calls on the legal profession to work in collaboration and advocate for cost-effective privilege review. As Magistrate Judge Grimm stated, a "paradigm shift in how you fight smart for your client" is needed.

Litigation Minute

Navigating the Subprime Crisis and Financial Fallout
The current economic conditions affecting everyone from Wall Street to Main Street have roots in what has become known as the subprime mortgage crisis. While analysts debate the cause of this crisis, there has been general agreement that it will result in a tsunami of lawsuits and investigations.

To effectively navigate this crisis, businesses need to prepare themselves by designating a task force of individuals with a range of relevant expertise to manage the company's subprime crisis response. The following are necessary considerations for a thorough understanding of the issues and roles of the numerous stakeholders:

• Analyze and investigate the situation. An effective response starts with a solid understanding of the situation as a basis for making informed decisions.
• Forecast losses. Organizations need to understand how the financial fallout will impact their portfolio.
• Determine exposure. Where applicable, gather facts relating to fraudulent or irregular investment or lending practices.
• Avoid spoliation sanctions. Locate, collect and preserve relevant information in accordance with a defensible data preservation plan.
• Produce responsive materials to requesting parties. Prepare for the initial conference and follow best practices through the e-discovery process.
• Understand your jury. Determine effective case strategy and conduct tactical voir dire with the assistance of a jury consultant.
• Prepare to tell your story. The complex factors that contributed to the subprime crisis must be clearly and effectively explained to jurors.

To learn more about the factors that lead to the subprime mortgage crisis, potential juror perceptions of the crisis and more, you can download a complimentary, comprehensive whitepaper titled The Subprime Mortgage Meltdown & Financial Fallout: From Foreclosure to the Courtroom at www.krollontrack.com/subprime/.

News & Events

#1 E-Discovery Provider 7th Year in a Row
Kroll Ontrack has been named the #1 electronic discovery provider in the 13th Annual Am Law Tech Survey. This survey, appearing in the October issue of Law Firm Inc., marks the seventh consecutive year that Kroll Ontrack has been awarded this honor. Of the firms surveyed, 62% of the respondents identified Kroll Ontrack as their electronic discovery provider of choice. Polling CIOs and IT directors from the largest 200 law firms in America since 1995, the Am Law Tech Survey aims to reveal information about hardware, software, budgets, new developments and the latest legal trends. For the full story, please visit www.krollontrack.com/news-releases/.

Corporate ESI Policies Are On the Rise, But So Are E-Discovery Risks
A recent independent study of 403 in-house counsel—203 from the United States and the remainder from the United Kingdom—reveal in-house counsel understand the value of ESI preparedness but still struggle to gain executive support. The survey reported that 70% of US companies and 53% of those in the UK now have ESI policies in place, still leaving 28% of US and 40% of UK organizations at risk for substantial reputation damage and financial loss during litigation or investigations that involve the exchange of electronic evidence. The survey points to a lack of time and resources among corporations as the most common barriers to executing ESI policies. To download your complimentary copy of the survey, please visit www.krollontrack.com/esitrends/.

Last Chance to Attend Redesigned Certification Course in 2008
The industry's legal technology thought leader has revamped its E-Discovery Certification Course for 2008 with updated topics, additional speakers, and dual track, customizable sessions to appeal to beginner, intermediate, and advanced learners. The redesigned course curriculum is ideal for legal and technical professionals of all levels, including in-house counsel, law firm attorneys, litigation support professionals, paralegals and IT staff. Due to overwhelming response, we have decided to offer an additional course in December. For more information and to register, visit www.krollontrack.com/certification-courses/.

Meet our representatives at the following events:

Visit www.krollontrack.com/upcoming-events/ for more information on these events and others.

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This newsletter was written by Gina Jytyla and Joni Shogren, Kroll Ontrack Staff Attorneys, with assistance from Kelly Kubacki and Meridith Socha, Kroll Ontrack Law Clerks. Ms. Shogren can be contacted by writing to jshogren@krollontrack.com.

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