Turning Legalese Into Tech Speak: Legal Holds in 2015

Transcription

1 Turning Legalese Into Tech Speak: Legal Holds in 2015

2 Meet the Panelists Moderator Karl Heisler Co-Chair of the Electronic Discovery and Information Governance Practice Katten Muchin Rosenman LLP Panelist Ken Reiss Corporate Counsel Litigation Northrop Grumman Panelist Matthew Baker Associate, Litigation and Dispute Resolution Practice* Katten Muchin Rosenman LLP Panelist Benjamin Robbins ediscovery & Information Governance LinkedIn Panelist Lily Chinn Co-Chair of the Electronic Discovery and Information Governance Practice Katten Muchin Rosenman LLP *Candidate for Admission to the California Bar 1

3 Turning Legalese into Tech Speak: The Path Forward Preservation Obligations Creating a Defensible Legal Hold Program Guidance for Implementing a Legal Hold Program Advice for Executing a Defensible Legal Hold Program Common Failures and Pitfalls War Stories and Practical Tips 2

4 3 Turning Legalese into Tech Speak: Preservation Obligations

5 Preservation Obligations What is the duty to preserve? When does the duty to preserve arise? What should be preserved? When and how to involve IT? What steps are required to preserve? When does the duty to preserve end? What are the consequences of failing to preserve? 4

6 Preservation Obligations: Common Law Obligations Arises when litigation is reasonably anticipated or at the outset of litigation. Factors to consider include: The specificity and source of warnings or concerns; Whether conduct has typically or historically triggered an investigation; Pending Investigations of companies in the same industries; and The commencement of an internal investigation. 5

7 Preservation Obligations: Common Law Obligations Common triggering events: Demand letters or Cease & Desist letters; Summons/Complaints/Indictments; Subpoenas; Formal investigation letters; Notice that evidence is relevant to litigation; Accidents (gray area); or Complaints (gray area). 6

8 Preservation Obligations: Amendments to FRCP 16(b) & 26(f) Rule 16(b)(3): Permitted Contents. The scheduling order may: (iii) provide for disclosure, or discovery, or preservation of electronically stored information Rule 26(f)(3): Discovery Plan. A discovery plan must state the parties views and proposals on: (C) any issues about disclosure, or discovery, or preservation of electronically stored information, including the form or forms in which it should be produced 7

9 Preservation Obligations: Amendments to FRCP 26(b) Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any non-privileged matter that is relevant to any party s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties relative access to relevant information, the parties resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within the scope of discovery need not be admissible in evidence to be discoverable. 8

10 Preservation Obligations: Amendments to FRCP 37(e) If ESI that should have been preserved... is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced..., the court may: (1) Upon a finding of prejudice..., order measures no greater than necessary to cure the prejudice; or (2) Only upon a finding that the party acted with the intent to deprive another party of the information s use in the litigation; (1) Presume that the lost information was unfavorable to the party; (2) Instruct the jury that it may or must presume the information was unfavorable to the party; or (3) Dismiss the action or enter a default judgment. 9

11 10 Turning Legalese into Tech Speak: Creating a Legal Hold Program

12 Creating a Legal Hold Program: Tips for Creating Policies/Programs Developing legal hold policies/programs Best to document all policies and programs; Understand the architecture of the company s systems; Understand the sources of ESI; Draft a data map; Develop policies with business operations in mind; Incorporate regulatory retention requirements; and Draft a legal hold checklist to consistently follow. 11

13 Creating a Legal Hold Program: Tips for Training Employees Employee training (and re-training): Consider onboard and annual training on document retention and legal hold policies; Include legal obligations in plain language; Include consequences to both the company and the individual to reinforce importance of compliance; Train consistently across all level of employment; and Identify a point of contact for questions or comments. 12

14 Creating a Legal Hold Program: Tips for Integrating the Policies Develop an associated plan for implementation Buy-in from management and other business units Identify a Legal Event team (e.g., Legal, IT, HR, Counsel, Vendor) Allows for all involved to consistently and cohesively communicate (e.g., Legal understanding IT). Consistency is key for a defensible program 13

15 Creating a Legal Hold Program: Tips for a Technology-Assisted Program Consider utilizing legal hold software (Internal license, vendor provided, SaaS) Helps facilitate the legal hold process; Enables automated legal hold placement; Tracks recipient and acknowledgment; Tracks complex custodians on multiple legal holds; Most platforms also allow for preservation and collections; and Creates transparency and audit trails. 14

16 15 Turning Legalese into Tech Speak: Guidance for Implementing Legal Holds

17 Guidance for Implementing Legal Holds: Scope and Implementation Factors to determine scope: Nature of the issues raised in the matter; Accessibility and probative value of the information; and Relative burdens and costs of the preservation effort. Obligations for implementing a Legal Hold: Oversee and monitor compliance; Counsel must take steps to identify and place on hold all sources of potentially relevant information. 16

18 Guidance for Implementing Legal Holds: Drafting a Legal Hold Above all, communicate clearly and simply Determine scope of claims and initial recipients Provide advice on likely sources of information, including prospectively created information Include brief custodial questionnaires 17

19 Guidance for Implementing Legal Holds: Drafting a Legal Hold Incorporate general advice on preservation efforts Stress importance of compliance and potential consequences of non-compliance Point of contact for questions/comments 18

20 Guidance for Implementing Legal Holds: Custodial Questionnaire Consider use of custodial questionnaires as a standard form that assists with the identification process; Accompanies the Legal Hold; Seeks basic information: Employee identifying information; Identification of company-issued devices/accounts; Common data usage; Identification of hard copy information; and Identification of additional custodians. 19

21 Guidance for Implementing Legal Holds: Role of Counsel Determine when litigation/investigation is anticipated Employee threats/complaints are greyest area; Look to extent of incident and threat level; and When in doubt, issue a legal hold. Determine initial recipients Avoid company-wide distribution; and Craft list from immediate complaint and surrounding groups. Remain active in dissemination of Legal Hold 20

22 Guidance for Implementing Legal Holds: Role of Counsel Identifying initial custodians/legal hold recipients: Start with the complaint; Talk with managers and primary parties; Consider third parties within your control; Ask for additional custodians through Custodial Questionnaire; and Look to organizational charts and business groups. 21

23 Guidance for Implementing Legal Holds: Role of IT Coordinate preservation efforts Immediately suspend routine document retention policies and functions; Track and memorialize all preservation efforts; and Discuss strategies for preserving unique or ephemeral data: Dynamic databases; Wikis/SharePoint sites; Instant/text messages; or BYOD. 22

24 Guidance for Implementing Legal Holds: Role of IT Coordinate collection efforts Maintain proper chains of custody; Targeted collection v. Full Image Collection; and Prepare for departing employees. Understand architecture of ESI sources Advise counsel on likely sources of ESI 23

25 Guidance for Implementing Legal Holds: Legal Hold Life Cycle Verify receipt and confirmation of Legal Hold (memorialize tracking efforts) Determine timing interval and scope of reminder notices Update legal hold scope with evolving litigation; Update custodians/recipients; and Reminders not too often, not too seldom Helps to reinforce preservation obligations, including information prospectively created data Encourages custodians to ask questions 24

26 Guidance for Implementing Legal Holds: Legal Hold Life Cycle Determine release of legal hold Requires legal analysis not a perfunctory exercise; Customary to release holds after the conclusion of the matter, but consider overlapping obligations for certain custodians; Can be released by agreement; and If unsure, weigh the benefit of continued preservation with the burden of carried data (data that may be available for unrelated, future litigation). 25

27 26 Turning Legalese into Tech Speak: Common Failures in the Process

28 Common Failures in the Process: Spoliation Spoliation: destruction of evidence or the failure to preserve property for use as evidence in pending or reasonably foreseeable litigation. Spoliation can lead to: Monetary penalties; Criminal liability; Jury instruction/claim dismissal; or Loss of cooperation credit/reputational damage. Amended FRCP 37(e) provides instructions to the courts when facing spoliation claims. 27

29 Common Failures in the Process: Spoliation Pension Committee of University of Montreal Pension Plan v. Banc of America Sec., 685 F. Supp. 2d 456 (S.D.N.Y. 2010): Attorneys have a duty to effectively communicate a litigation hold that is tailored to the client and the particular lawsuit, so the client will understand exactly what actions to take or forebear, and so that the client will actually take the steps necessary to preserve evidence. The Pension Comm., 685 F.Supp.2d at

30 Common Failures in the Process: Practical Examples Failure to: Update the legal hold throughout the evolution of the matter to include additional issues and custodians; Issue reminder notices; Document the process; Suspend routine document retention policies; Preserve and collect information created after the legal hold notice dissemination; and Preserve and collect ephemeral or unique data. 29

31 Common Failures in the Process: Practical Consequences for Employees Important to provide an overview of consequence to employees for failing to preserve potentially relevant information: Corporate and individual criminal liability (e.g., obstruction); Corporate and individual civil sanctions; Lost evidence critical to litigation (increased liability exposure); Employee reprimand; or Termination. 30

32 31 Turning Legalese into Tech Speak: Tips for In-House Counsel

33 Tips for In-House Counsel: Insulating Company Liability from Rogue Employees Issue legal hold early; Thoroughly interview suspect custodians early; Document all processes; Preserve and collect known problematic employees early; Re-collect, as necessary; and Implement Journaling function, if available (or other similar auto-archiving mechanisms). 32

34 Tips for In-House Counsel: Corporate and Individual Liability United States v. Mix, 791 F.3d 603 (5th Cir. 2015): Former BP drilling engineer was indicted and convicted by a jury for deleting text messages relevant to an investigation despite receiving multiple Company-issued legal holds. Company defensibly executed a legal hold to the individual employee, which is one factor for the individual indictment rather than Company-wide liability exposure 33

35 Tips for In-House Counsel: Corporate and Individual Liability HM Electronics, Inc. v RF Technologies, Inc., No. 12-cv- 2884, 2015 WL (S.D. Cal. 2015): Defendant s counsel failed to instruct its client to implement a litigation hold because the CEO said: [a]s far as I know, nobody destroys anything within our company. According to the Court, [t]he attorney must learn their client's organizational structure and computer data structure in order to adequately advise the client of the duty and method for preserving evidence. Sanctions imposed for failing to preserve. 34

36 Tips for In-House Counsel: Commonly Overlooked Sources of ESI BYOD iphones, ipads, personal computers; Instant/Text Messaging; Personal cloud storage (e.g., DropBox, Google Drive, One Drive); Social Media; Wikis/SharePoint Sites; Structured Data; Outsourced information (e.g., third party vendors). 35

37 Tips for In-House Counsel: Disseminating Legal Holds to Third Parties Obligation to identify, preserve, and collect potentially relevant information, including from third parties (within care, custody, or control) Consider a tailored legal hold notice Third parties may have their own legal hold process Seek affirmation of the preservation obligation or collect the information early 36

38 37 Questions

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