Wednesday, May 12, 2010

When E-Discovery Is Used as a Weapon

From "The attorney-client privilege is perhaps the oldest of the privileges for confidential communications known to common law. But the privilege is not available to a client who seeks legal advice to commit an ongoing or future crime or fraud. To prevent those abuses, courts have fashioned a limited exception to the privilege known as the crime-fraud exception.

Most attorneys understand that if they advise a client on how to rob a bank or perpetrate a fraud, their communications will not be shielded by the privilege. Yet, few attorneys realize that there is an increasing risk that their adversaries in litigation may use the crime-fraud exception to strip away the privilege protecting attorney-client communications in civil discovery. Most attorneys would view such an intrusion as an assault on the basic structure of the privilege. Without a strong, clear standard against such efforts in the civil arena, we expect there to be more attempts to expand the application of the crime-fraud exception to collateral litigation-related conduct in civil cases: particularly in the fast-evolving area of e-discovery and the unfamiliar and intimidating realm of information technology.

The strategy works as follows. The attorney planning to strip the privilege serves a typically overbroad set of document requests. She then follows up with a Federal Rules of Civil Procedure §30(b)(6) (or state law equivalent) deposition of the company's representative to determine the failures or weaknesses in the company's preservation, search, and production of electronically stored information. Technological advances have significantly increased the ways in which ESI can be saved, including but not limited to folders on various network drives that reside on different servers, hard drives, laptops, hand-held devices, home computers, and external storage applications. This increasing complexity is compounded by hardware and software that is constantly being updated or replaced. Personnel changes can also result in leaving no one with knowledge of each employee's record-keeping habits. Faced with a broad-ranging document request, an attorney's task of preserving and locating all relevant data becomes extraordinarily challenging. To make matters worse, the opposing counsel may then move to compel the production of documents under the low threshold of what is discoverable, which does not require proof of actual relevancy or admissibility at trial. The purpose is to create the impression that documents are missing or have been withheld.

Attorneys opposing this sort of motion to compel then face the difficult task of proving that all relevant documents were in fact preserved and produced, while at the same time ensuring the judge understands the company's technology infrastructure. Notwithstanding an attorney's reasonable and good faith effort to preserve and produce relevant documents, sources of potentially relevant data will inevitably go undiscovered. Or, the scope of preservation will be inadequate. If the opposing counsel obtains a sanctions order, it will characterize the discovery-related conduct as a "fraud," and seek to pierce the attorney-client privilege by invoking the crime-fraud exception. ..."

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