Part of our coverage of “Law Firm Evolution:  Brave New World or Business As Usual?”, a conference held March 21-23, 2010 by the Georgetown Center for the Study of the Legal Profession.  For all our posts on the conference click here.

Reported by:  Gregory P Bufithis, Esq.    Founder,  ThePosseList.com/ProjectCounsel.com

The dramatic steps that law firms have taken as they adjust to market conditions reflect fundamental changes in their business model.   Susan Hackett, Senior Vice President and General Counsel of the Association of Corporate Counsel, believes that the only answer to this conundrum is to shift the emphasis onto the value of the response:  “‘The legal industry has become used to using time as the only way of measuring value, so we base fees and budgets on that, rather than on the importance of that work to our business.”

We had a chance to discuss these issues of value with Susan at the conference: 

Our coverage of “Law Firm Evolution:  Brave New World or Business As Usual?”, a conference held March 21-23, 2010 by the Georgetown Center for the Study of the Legal Profession.  For all our posts on the conference click here.

Reported by:   Gregory P Bufithis, Esq.    Founder,  ThePosseList.com and ProjectCounsel.com  

Last week we had the opportunity to attend and report on the Georgetown Center for the Study of the Legal Profession conference “Law Firm Evolution:  Brave New World or Business As Usual?”.     The Center is devoted to: 

*  Promoting interdisciplinary scholarship on the profession informed by awareness of the dynamics of modern practice; 

*  Providing students with a sophisticated understanding of the opportunities and challenges of a modern legal career; and 

*  Furnishing members of the bar, particularly those in organizational decision-making positions, broad perspectives on trends and developments in practice. 

In support of its mission, the Center sponsors symposia, research, publications, workshops, and speakers designed to foster exchanges among scholars, practitioners, and students.  The Executive Director of the Center is Professor Carole Silver, and the Co-Directors are Professor Mitt Regan and Professor Jeffrey Bauman.

The Conference

As we know, law firms have been affected to an unprecedented degree by the current economic downturn.  Many have made deep cuts in lawyers and staff.  Others have reduced salaries and hours, rescinded outstanding offers of employment, frozen hiring, delayed start dates for incoming lawyers, and even paid graduates to forgo the positions they earlier were offered.  Many have lost clients as entire sectors of the economy have disappeared or have been radically realigned.  

The purpose of the conference was ambitious:  to examine, among other things, whether the dramatic steps that firms have taken are temporary adjustments to market conditions which will have limited long-term effect after economic recovery, or whether they reflect fundamental changes in the business model of law firms that are likely to transform the market for legal services and the legal profession in general.

For some background on how the conference came to be please see our video interview with Mitt Regan, Georgetown Law professor and Co-Director of the Center, here:

For the full program and details on all the presenters at the conference click here.

And if  a fight was going to break out at this conference it would have happened at the opening session.   After dinner, the conference was opened with a panel discussion “Emerging Relationships Between Law Firms and Clients”.  Panel members included Trevor Faure (Global General Counsel, Ernst & Young), Susan Hackett (Senior Vice Presdient and General Counsel, Association of  Corporate Counsel), Thomas Yannucci (Chair Emeritus of Kirkland & Elllis) and Reena SenGupta (managing Director RSG Consulting).

Trevor Faure set the stage with a short history of the law profession and its economics, and where the current economic downturn has put law firms today.   What followed was a rather animated discission/debate/shout-out among/between panelists and audience that focused on lawyers need to identify the relative value in their work, and then cost and manage it accordingly.  And Susan Hackett lay the responsibility for this firmly at the feet of ACC’s members:  “In-house legal departments talk about the need to change the way that their external counsel bill and budget for work but where are the incentives for law firms to change?”

As might be expected, Tom Yannucci came to the defense of law firms and said “we have changed, we are changing.  We recognize that the ‘lock-step’ system is dead, that we need to build sustaining relationships with clients, that we saw 2,000 partners switch firms in the last year and we need to change our model.

But there was blood in the water and Yannucci seemed to come under attack from the audience — and from some of his fellow panelists.   As audience members said, the whole law firm model has become dependent — is still dependent — on large teams of people churning through large volumes of work.  Hackett believes that the only answer to this conundrum is to shift the emphasis on to the value of the response:  “‘The legal industry has become used to using time as the only way of measuring value, so we base fees and budgets on that, rather than on the importance of that work to our business.”

But how do you set that value?   Reena SenGupta offered that it must be driven by the client’s objectives.   And Leah Cooper who was in the audience (and a presenter at the panel on new emerging trends of legal services) said ”it must also allow employment of a low-cost staffing option.  Legal departments just aren’t having the appropriate conversations before work starts.  The project isn’t defined; it just starts and later a bill arrives, so there are no expectations to meet or be measured against.”

Hackett believes that this has led to a dangerous environment in which law firms just bill until the work is complete with little insight into the business case behind it: ‘Law firms can rack up huge bills for cases that the company ultimately loses, engage in all sorts of work that perhaps isn’t necessary for the case or assign it to a more senior person than is required, and the company is faced with a bill that has no relationship to the outcome of the work.”

Yannucci shouted out “au contraire” (well, maybe not in French).  He said “we look at all possibilities and options for clients and their relative costs and find better/cheaper alternatives” and ran through a series of examples in a complex litigation.  And , he said “we accept that is our responsibility and we offer accountability”.

But many members of the audience said it was more than legal services should necessarily be cheaper.  They should be more predictable and better aligned to the value in the outcome — a point Yannucci did not seem desirous of conceding.   He said “it should be acceptable to charge a higher fee for certain work, if the value to the business is great”, a point agreed to by most of the audience.    But the point really is:  you don’t need to use high-level lawyers, who are charged out $800 an hour, for routine tasks such as document review, standard research, etc.   You can get that done by equally competent and intelligent people for much less than that.  And it was point reemphasized by Hackett and Cooper.  No one argued that high-level judgement work should not continue to go to lawyers.   But a memo or brief “drafted for the 37th time” — better done a bit lower on the $ chain.

The session ended on a somewhat down note: the inertia among law firms and in-house cousel.  Law firms know this just as well as in-house counsel:  change is difficult.   Audience and panel comments seemed to echo the same thought: that it’s natural that individual lawyers are loathe to suggest change.   Yes, everyone sees the logic for changing processes and systems, and for adopting new methods of measurement, but in reality:  will the profession change?   Will this recent economic crisis force the issue?   Has it become “the tipping point”, the phrase used by many in the audience?   Previous economic recessions have brought readjustments, but there was always a sense that “things would go back to normal”.

The general mood in the room?  This time “it is different” and it will take time.  But the change is happening.

For an excellent review of this opening session see the post by Aric Press for The American Lawyer by clicking here.

I covered the conference along with Lisa DiMonte, Chief Executive Officer of MyLegal.com.  We had the daunting task of attending all the panels and conducting video interviews with 27 of the presenters and attendees.    Here are our notes and comments for each panel which includes links to the papers presented at each panel plus our video interviews with some of the participants on each panel.   We’ll be adding more to each entry as time permits:

▪  Creative Destruction and Innovation

      The panel discussed long-established economic principles concerning technological innovation and transaction costs to bear in the context of the elite law firm, where they have been largely overlooked in the commentary to date.  These are helpful in explaining a number of the events observed in recent years.  Our coverage includes video interviews with panel members David McGowan (Lyle L. Jones Professor of Competition and Innovation Law, University of San Diego Law School, and attorney with Durie Tangri LLP, San Francisco) and Larry Ribstein (Mildred Van Voorhis Jones Chair in Law and Associate Dean for Research, University of Illinois Law School).  For our full post click here. 

▪  Emerging Trends in Legal Services

       The panel’s focus was on the evolving relationships in today’s corporate legal market between clients and service providers, and why.  There was a full discussion of the purchase of legal services by large companies and the overall  ways that ongoing changes in the legal market are affecting the choices large companies make in managing law firm relationships and the extent of variation in those choices.   Our coverage includes video interviews with panel members Paul Smith (Partner, Eversheds), Leah Cooper (Director of Strategy, CPA Global), and Michele DeStefano Beardslee (Associate Professor of Law, University of Miami Law School).  Also included are video interviewes with audience members Ron Friedmann (Senior Vice President of Marketing for Integreon) and Joshua Kubicki (The Legal Transformation Study).  For our full post click here,

▪  Business Model: Strategy and Governance  

       Just what is strategy and governance really about?  We are experiencing a sea change yet the world as we know it will not exactly end.   Our coverage includes video interviews with panel participants  Bruce MacEwen (President of  Adam Smith, Esq.) and Stephen Mayson (Director, Legal Services Policy Institute; Professor of Strategy, The College of Law, London).  For our full post click here.

▪ Managing the Law Firm Labor Force

       Bottom line:  the war for talent will return and law firms need to be on the cutting edge of talent management and new ways to work.   Culture and environment will become more important for firms to distinguish themselves and compensation will be less of an enticement to recruit or retain talent.  Our coverage includes video interviews with panel participants  Deborah Epstein Henry (Founder and President of Flex-Time Lawyers LLC) and Cynthia Fuchs Epstein (Distinguished Professor of Sociology at the Graduate Center, City University of New York).  For our full post click here.

▪  Capitalizing Law Firms

      The buzz phrase: litigation funding.  Litigation funding allows people with money to “fund” court cases (and, increasingly, arbitrations) on behalf of others who lack either the resources — or the appetite — to pay themselves.  The funders, typically sophisticated institutional investors, take a slice of the winnings if the case is successful and share the pain if not.   Our coverage includes video interviews with panel participants Anthony Sebok (Professor of Law, Cardozo Law School) and Timothy Scranton (President, Juridica Capital Management (US) Inc.).  For our full post click here.

▪  Rethinking Legal Education and Training

       Law schools can do a much better job of training lawyers and change is long overdue. Legal education has changed remarkably little in over a century. The approach that Harvard Law School devised in the nineteenth century, emphasizing professors teaching from casebooks in relatively large classes, has virtues.  The method has taught countless generations of lawyers how to analyze issues and develop legal arguments. It is also very cost-effective to have one teacher in front of a large number of students. Some law schools generate significant profits for their universities.  But the reality is that few law students graduate from law school ready to practice law. Studies show that the majority of law students never meet a client or have any practical experience.  Our coverage includes video interviews with panel participants Thomas D. Morgan of  George Washington University Law School, Jordan Furlong, of  Edge International, and José M. de Areilza who is Dean of the IE Law School, Madrid.  We also have vide interviews with attendee Marisa Mendez of the IE Law School.  For our full post click here.

▪  Conference Dinner with Richard Susskind, John Palfrey, Paul Lippe, Mark Harris, and Jeffrey Carr

    The conference dinner was titled “What is our legacy to the next generation of lawyers?” and featured as the keynote speaker Richard Susskind, IT Adviser to the Lord Chief Justice of England but best known for his book “The End of Lawyers?”  and a panel discussion with Paul Lippe (Founder and CEO, Legal On-Ramp), Mark Harris (CEO and Founder, Axiom), Jeffrey W. Carr (Vice President, General Counsel & Secretary, FMC Technologies Inc.) and John Palfrey (Henry N. Ess III Professor of Law; Vice Dean, Library and Information Resources, Harvard Law School; Faculty Co-Director, Berkman Center for Internet & Society).  For our full post click here. 

▪  Concluding Remarks by David B. Wilkens

      David B. Wilkins (Lester Kissel Professor of Law and Director, Program on the Legal Profession, Harvard Law School) provided some closing remarks.  He addressed the big structural changes and the impact of those structural changes on the legal profession.  For our full post click here.

▪  A video interview with Richard Susskind, author of “The End of Lawyers?”

      If only we had been listening to Richard Susskind these past 5 years.  He knew before all of us where we were headed.  It was in his 1996 book The Future of Law wherein he claimed that the law would be transformed by IT.  The book generated enormous interest and influenced public policy-makers and top managers in law firms around the globe.  Many of its predictions have already come to pass.   Our legal market melt-down merely accelerated the pace.    But we all know him best for his monumental book The End of Lawyers? : Rethinking the Nature of Legal Services published in 2008.  For our interview click here.

▪  A video interview with Susan Hackett, General Counsel of the Association of Corporate Counsel

      The dramatic steps that law firms have taken as they adjust to market conditions reflect fundamental changes in their business model.   Susan Hackett, Senior Vice President and General Counsel of the Association of Corporate Counsel, believes that the only answer to this conundrum is to shift the emphasis onto the value of the response:  “‘The legal industry has become used to using time as the only way of measuring value, so we base fees and budgets on that, rather than on the importance of that work to our business.”  For our interview click here.

▪  A video interview with Reena SenGupta on the UK legal market

        The UK legal services market is embarking on a period of rapid change driven by factors such as market liberalization, new business structures and models, technological developments, and an increasingly sophisticated and discerning customer base.   There is no better source for a conversation about the legal market than Reena SenGupta who has over 15 years’ experience of researching, reporting on and analyzing the legal sector.  As editor and publishing director of Chambers Publishing, she devised the research methodology behind the Chambers and Partners guides to the legal profession and launched the first ever Chambers Global guide.  For our interview with Reena click here.  

▪  A video interview with Rees Morrison on the challenges facing in-house law departments

     Rees Morrison was not presenting at the conference but attending.  And as the guru of law department management with one of the most highly read online blogs Law Department Management we requested an interview.  He is the eponymous founder of Rees Morrison Associates (RMA) which has for the past 20 years consulted solely to law departments: operational reviews, cost control, re-engineering, structure and organization assessments, client satisfaction, technology, benchmarking, and other issues.  For our full interview with Rees click here.

▪  A video interview with Jordan Furlong on the U.S. legal market as an extraordinary laboratory

      Jordan Furlong is a partner with Eedhe International which provides consulting services to law firms on strategic planning and tactical matters.  But most of us know Jordan as an award-winning blogger who chronicles the extraordinary changes underway in the practice of law at his blog Law21: Dispatches from a Legal Profession on the Brink.   For our full interview with Jordan click here.

All of the interviews can be seen on our YouTube channel by clicking here.

All of the papers and presentations can be accessed by clicking here.  

As we have said in several of our posts about last week’s ACC meeting, there was a lot to cover.  There was a cornucopia of information:  excellent panels on intellectual property, doing business in China, handling bankruptcy litigation, real estate practices, creating an in-house law department, pro bono opportunities for in-house counsel, HR and employment law issues, primers on trade laws, etc. 

And there was a lot of discussion about how corporations continue their trend to by-pass law firms and go directly to data management and e-discovery vendors to manage their compliance, ESI needs, etc. as they seek to “save a buck” and secure more ownership over the costs – especially the e-discovery process.  As Ari Kaplan pointed out yesterday in his column “In a market where in-house legal teams must control cost, many are seeking to eliminate it completely, at least with respect to their technology budgets” (click here).

We are going to post a series of interviews on the complex enterprise-wide technology systems available and discussed at ACC, the technology available and best practices.  We also interviewed several GCs, several vendors, a number of legal staffing agencies, etc. and we’ll share all that. 

But first a recap of the seven formal presentations we covered which we thought would be beneficial to our membership.  We provide these to Posse List members who are involved in these legal areas, as well as to to Posse members who might be interested in some “primers” and want to learn more.

In this Part 1 we cover:  (1) crossborder e-discovery, (2) basic bankruptcy law, (3) the FCPA and (4) board of director liability and the financial industry/subprime litigation. 

▪  CrossBorder Discovery

The panel was composed of Michael Butler (attorney for UPS), Mary Mack (Corporate Technology Counsel for Fios, Inc.) and Kenneth Rashbaum (consultant to Fios, Inc. and Principal of Rushbaum Associates)

With the increase of corporate globalization, potentially relevant evidence can reside in many countries. From foreign language and computer language barriers, to privacy laws and safe harbor issues, counsel encounter numerous challenges when litigation is anticipated. It’s critical to understand the rules and regulations that govern the access to and the use of foreign data. This session will examine ethical issues and practical solutions for cross-border e-discovery, including e-discovery vs. e-disclosure — managing conflicts between US and foreign laws and procedures, cross-border, multi-language e-discovery requirements — managing data from collection and translation through review and production, and cost containment — managing the costs of e-discovery while data volumes and legal complexities explode.

The panel focused on issues involving the production of electronically stored information (ESI) pursuant to civil discovery.   The practitioner in U.S. civil litigation may expect to confront three facets of discovery of ESI either physically stored outside of United States jurisdiction or otherwise subject to concurrent jurisdiction and, thereby, foreign legal impediments to disclosure. These concern:

1.  court control of discovery practice

2.  extraterritoriality of U.S. procedural law, and

3.  foreign compulsion

However, the legal principle of reasonableness requires U.S. courts to remain cognizant of the potential foreign aspects of U.S. discovery when exercising this manner of jurisdiction.  Decisions have established conditions under which foreign law or foreign governmental interests can have legal aspects on discovery pursuant to U.S. proceedings.  However, even in cases with the strongest foreign aspects, a U.S. court with jurisdiction to adjudicate will not be deprived of its jurisdiction related to discovery; rather, the foreign elements will merely factor into the U.S. court’s exercise of its power to compel discovery or to sanction for noncompliance with its discovery orders.

It should also be noted that the use of discovery in establishing personal jurisdiction over a nonconsenting foreign defendant further distinguishes the reach of United States judicial rules.

The Federal Rules of Civil Rules leave federal courts to factor, on one side, their very “robust” power to compel production of discovery maintained abroad or otherwise subject to foreign law and, on the other side, their duty to duly regard conflicts with foreign laws precluding or limiting such disclosure. In recent years, the explosive growth in the reliance on electronic data integrated in webs of geographically dispersed communication networks has increased the volume and variation of material beyond U.S. borders yet susceptible to the scope of discovery in U.S. litigation. At the same time, the amount and nature of information stored on U.S. territory yet subject to concurrent jurisdiction of another state is similarly increasing. Foreign compulsion may apply not only to ESI abroad but to U.S. situated information with a foreign origin or a connection to a foreign legal relationship (e.g., banker-client confidentiality), making illegal or otherwise limiting under the foreign jurisdiction any production or disclosure of the information in discovery conducted in the U.S. court. The exponential proliferation of electronic mail is a very obvious source of the sort of growth and geographic dispersal precipitating these issues of concurrent jurisdiction, as is the ascent of Web.  Trading platforms of integrated capital and financial markets located in traditional centers such as New York, London, Shanghai, and Tokyo and emerging loci like Singapore, Shenzhen, and Dubai are other manifestations of such vast streams of data generation and cross-border exchanges capable of posing jurisdictional conflicts in civil litigation.

Discovery controversies in U.S. courts due to the laws of a concurrent, foreign jurisdiction long predate the ascent of ESI as the main material of discovery. In the former era, the general crux of the disputes about extraterritorial discovery concerned a) whether a U.S. court would compel a party to produce certain information the disclosure of which, it would be argued, was prohibited by foreign law, or b) in the event such production had been compelled and was then not produced, how—if at all— foreign compulsion in the given case informed the court’s determination regarding sanctions for such noncompliance.

The current era presents recurrences or variations on those previously manifested questions. For instance, many trial and appellate courts have addressed the extent to which Civil Rule 34(a) notions of “possession, custody, or control” extend abroad.

However, the extent to which “control” should be made to apply to various types of ESI maintained abroad by a nonlitigant affiliated with the party subject to the given discovery obligation may be seen to generate distinct considerations. As another example, many courts have had to address foreign laws prohibiting the production of information due to confidentiality and/or privacy.

But the panel zeroed in on how foreign laws specifially relating to data privacy and/or confidentiality introduce novel questions.

A series of short definition set the tone.  “Privacy Law” in US  = “Data Protection” in EU.  “Data Subject” is usually an individual, but can also be a legal entity (Italy).  “Data Processing” can be storage, or mere accessing of data. Preservation (Litigation Hold) may be considered processing if it involves manipulation of data, such as moving data to a secure server or even preserving in place.  “Discovery” in U.S. = “Disclosure” in Civil Law jurisdictions.  And e-mail in U.S. is “Personal Data” in EU and elsewhere.

There are also differing notions of privacy.  Privacy is a fundamental right in much of the world.  Definitions of personal data subject to privacy protection outside the U.S. are extremely broad.  Privacy protections in the U.S. are industry specific.  Personal data subject to protection is limited to specific categories (e.g., social security numbers, medical information, banking data).

And we must deal with common law vs. civil law.  Common law: expansive pre-trial discovery conducted by the parties with judicial supervision as needed to resolve disputes or manage court calendar.  The U.S. has the most expansive: discovery is permitted of documents which may lead to admissible evidence.  Canadian “semblance of relevance” test seems almost as expansive.  In the U.K.: parties must produce “documents relied upon and documents that adversely affect or support litigant’s position” but document request must seek specific documents, not broad categories.

The panelists provided the following as excellent sources for more information:

The Sedona Conference® Framework for Analysis of Cross-Border Discovery Conflicts: A Practical Guide to Navigating the Competing Currents of International Data Privacy & e-Discovery (click here)

The Model Rules (click here)

Case cites  (click here)

Industry websites:

Fiosinc.com (click here)

discoveryresources.org  (click here)

The Posse List  (click here)  (yes, we were cited)

For an excellent article that touches on all of these issues see Scaling the Virtual Tower of Babel by Ken Rashbaum (click here).

               Note: later this week we will be posting an extensive interview we conducted at ACC Boston with Mary Mack and Ken Rashbaum that details many of these crossborder discovery issues.

▪  Basic Issues in Bankruptcy

This presentation was led by Ronda Bayer (associate general counsel for the The Valspar Corporation), David Garfield (Deputy General Counsel of Wells Fargo & Company) and Timothy Howe (Senior Lawyer for  Cargill, Incorporated).

The more you know about bankruptcy, the less overwhelming it is.  This program introduced in-house counsel with minimal knowledge of bankruptcy to the basics of the process.  Topics addressed were various creditor remedies, proofs of claim, impact on intellectual property, licensing agreements and leases, responding to preference demands and the purchase of assets from a company in bankruptcy.  The purposes:  to gain a broad-based understanding of bankruptcy that will help you navigate the process.

Much of bankruptcy terminology is unique to the bankruptcy process and unfamiliar to those who do not regularly practice bankruptcy law.  The panel recommended a glossary of bankruptcy terms on the U.S. Courts’ web site (click here). 

The two principal forms of business bankruptcy:  Chapter 7 liquidation, which is the selling off of assets, and Chapter 11, which can be a reorganization or a liquidation. 

Basically, you’re stripping off “stuff” to keep the enterprise going, or selling off pieces of everything that you have of value, until there’s nothing left.  You can start either as a 7 or 11, and then convert from one to the other. 

The panel ran through the principal Chapters (chapter refering to the chapter number of the Bankruptcy Code):

Chapter 7: Individual or Corporate Liquidation.  Chapter 7 provides a structure for: liquidating non-exempt assets; pursuing claims to recover assets; determining allowance of claims of creditors against the bankruptcy estate; and ultimately distributing assets to the creditors.  The U.S. Trustee appoints a Chapter 7 trustee, who locates and sells assets, distributing the proceeds to creditors.

Chapter 9: Municipalities.  It is designed for municipalities and is seldom used.

Chapter 11: Individual or Corporate Reorganization.  Chapter 11 is “Reorganization.”  While a Chapter 11 reorganization will not magically cure financial problems, Chapter 11 provides a formal procedure for operating and possibly reorganizing a company, partnership or individual, and for dealing with its creditors in an organized fashion. Once a Chapter 11 petition is filed, most creditors are held at bay for a period of time to give the debtor, operating as a debtor-in-possession, “breathing room” to attempt to formulate a reorganization plan. While breathing room is the theoretical goal, in reality, the debtor is generally required to breathe twice as fast just to keep up.  For the uninitiated, the one-year to 18-month or longer period that companies are generally in a contested reorganization is like an Antarctic Expedition: unfamiliar territory; difficult and strenuous conditions; and what appears to be the whole world against you. Chapter 11 has, however, provided many debtors with a final opportunity to reorganize and has produced many success stories. Many debtors use Chapter 11 as the avenue to sell their assets and then either convert to Chapter 7 or seek confirmation of a liquidating plan. A debtor-in-possession in Chapter 11 generally has the rights of a trustee.  Confused by the terms?  See glossary cited above.

Chapter 12: Family Farmer or Family Fisherman Reorganization.  Chapter 12 provides an abbreviated reorganization alternative for those who qualify as family farmers or fishermen and, if successful, results in a confirmed plan of reorganization.

Chapter 13: Individual Reorganization.  Chapter 13 provides an abbreviated reorganization alternative for individuals who: do not qualify for Chapter 7 because they have the ability to repay creditors in part; have certain non-dischargeable debts they hope to satisfy; or need payment terms with respect to taxes or certain secured debts.

Chapter 15: Cross Border Cases.  Chapter 15 is a new section of the Bankruptcy Code which applies to crossborder bankruptcy cases.

Chapters 1, 3 and 5:  These apply to all.  These Chapters of the Bankruptcy Code (and sections contained therein) include sections on general bankruptcy issues, case administration, creditors, debtors and the estate, and are generally applicable to each of the other Chapters. For example, a Chapter 11 case will be governed by these three Chapters along with Chapter 11.

The bankruptcy laws provide a scheme defining the various claims a creditor can file to protect his interest, and a priority scheme that governs distributions to creditors.  All very detailed stuff and a bit much to go into here (but see references at end of this piece).  

Other issues they covered:

With respect to litigation, you can get an automatic stay, but you need to file a suggestion of bankruptcy with each court where you have a matter pending.  Pending litigation does not equal a claim of bankruptcy, therefore you will need to perfect your claim.  This applies to your legal fees for those claims.

So, legal fees are considered unsecured claims.  They’re capped at $25,000 a month for an ordinary business.  If the amount is more than $25,000 for litigation, or other matter, then you have to have to file a claim with the bankruptcy trustee, and it has to be approved by the other creditors.  If you have claims against executives, directors, etc. which are not stayed by bankruptcy, you will need to request a stay. 

Note:  government investigations are not stayed by bankruptcy, director and officer legal fees and employment agreements are not stayed, either. 

This brings an interesting question of whether the company will be obliged to pay the legal fees, or if they have to try and get the insurance company to pay the legal fees.

If the insurance is something in the “ordinary course”, or you get it in your articles or your by-laws that you’re required to pay legal fees for representation for officers and directors, you may be able to have the company’s D&O insurance cover the legal fees if they’re less than $25,000 a month.

You need to have good records.  And records management becomes a critical thing throughout the bankruptcy period.  So, with records management, a lot of it comes down to spending the money to have your records brought in order by a certain deadline.  If you haven’t done that, it’s going to cost you considerably more money, just because you’re going to need to do so much more work in a short amount of time.

For insurance, your D&O policy is very important if litigation continues against a director and officer.  For example, if you have $500 million in D&O insurance, you have to look at whether this is a corporate asset or not.  If litigation is ongoing, and there’s no formal discovery request, and then the litigation is stayed, then there’s no obligation to disclose the amount of the insurance coverage.

For example, you have an ongoing securities fraud litigation, and you’ve just filed for bankruptcy.  If the insurance company revokes the policy, it has to refund the premium.  But if it doesn’t reach the limit of the policy, or the policy is not rescinded, that $500,000 is gone.

So, one of the things you may look at is whether you need to go along with a revocation of the policy.  Because the company is your client, not the directors and officers.  Or if it’s in the interest of the company to fight to keep the policy from being rescinded, and grab the cash value of that policy.

Another interest that comes up with bankruptcy considerations is that the attorney-client privilege.  The trustee in the bankruptcy becomes your client.  The trustee becomes the company and has the absolute unilateral right to waive attorney-client privilege, and all files — including legal files — become company files and trustee files.  The CEO of the company can’t waive the privilege, it has to be the bankruptcy trustee, and that trustee can waive attorney-client privilege retroactively.

Another issue that comes up is affiliate and subsidiary companies.  As an in-house counsel, you may have multiple roles.  With respect to the subsidiary companies, you may be General Counsel for those, or you may also be the Secretary for those.  In the bankruptcy, you may have to resign from the boards of the subsidiary, and file notice of your resignation from those boards.

With a foreign subsidiary, and an insolvent parent company, the parent is the whole owner of the stock in that company, all of your assets may be coming in from the foreign, solvent subsidiary.  So, you may look at selling off the subsidiaries in order to pay off your domestic creditors. 

These are just some of the considerations that come into play with bankruptcy.

For several bankruptcy reference material/resources sites, the panel suggested:

1.  The American Bankruptcy Institute  especially their bookshop.  

2. Bankruptcy petitions, schedules and all pleadings are readily available electronically at http://pacer.psc.uscourts.gov.  This site can also be searched to confirm or dispel a rumor that a bankruptcy filing has occurred.

▪ The globalization of U.S. business – the FCPA

This session was led by Jeffrey Harwin (First VP, Anti-Corruption & Code Ethics Executive at Bank of America), Howard Sklar, Global Trade and Anti-Corruption Strategist at Hewlett Packard) and Alexandra Wrage (Chief Legal Officer at Trace International).

The Foreign Corrupt Practices Act (FCPA) criminalizes an offer, promise of a payment, or anything of value to a government official, including government employees of state-owned enterprises.   You are (generally) not going to violate the Act through bad recordkeeping, but bad recordkeeping can result in FCPA violations particularly if you don’t correctly account for what it is that you’re giving as a gift or a hospitality to a government employee or official.  We have covered the FCPA in numerous posts (click here).

The grey areas are gifts and hospitality.  Everybody does it.  It’s a “cultural” thing.  But globally there are different standards, and things that may be customary — whether it’s a wedding in India, where everybody gives the gift of $200 or you offer moon cakes in China during the New Year’s festival.  So these things aren’t really addressed under the FCPA. 

And there are great reasons for transparency.  Bribery:

- increases the cost of doing business;

- induces officials to contrive new rules and delays because of the availability of bribes;

- distorts the playing field by shielding firms with connections from competition and leads to inefficient distribution of resources;

- negatively impacts business growth;

- discourages foreign direct investment and can amount to as much as a 20% tax on such investment;

- undermines the rule of law and provides fertile ground for organized crime; and

- leads to a general loss of confidence in public institutions.

But all of this hits a certain “common sense” level:  what would be customary vis-à-vis directly related to the execution or performance of a contract with a government agency.  That’s really what you’re looking at here.

The Act doesn’t put a limit or a dollar amount on materiality.  So what you need to do is look at the country and the country policies, in addition to the FCPA.  It is all very much a look at what the appearances are.

If you have centralized control over what your people are doing globally, this can be very helpful because you’re giving guidance to the man in the field, and that’s what the government wants.  If you’re looking at gifts for an official, what you’re really looking at is what’s reasonable and customary, complying with your own business policies and the laws of the other country, and no cash gifts (ever) are allowable.

The other thing that you’re looking at is the pattern of gifts.  If you have an employee in another country making routine gifts or presents to government personnel you need to know further who those people are, what they’re doing, and why they’re doing it, and how much it involves.

The other thing is how they’re being presented.  If these are small things that are presented at a press release, like a plaque or a certificate, that may be more appropriate.  What you’re trying to do is to avoid doing anything improper or illegal, or that would have the appearance of impropriety or illegality.

So part of this is contextual, and a lot of it is really complying with your internal control policies, as well as the laws of those countries.  One of the things that you never want to do if you have a government official traveling to a company site for business or for an event is have their spouse or children along on side trips.  That’s strictly forbidden, it looks bad, and it gives the appearance of a gift to the foreign official.

You never do political contributions, because those can be seen as payments.  One of the solutions is to work with your business people, and explain to them in business terms — versus legal terms — why payments such as cash are not acceptable.  It’s not just a matter of law or company policy, it’s bad business.

For example, if you’re in India and somebody brings in a bunch of protesters outside of your plant, and then you pay  to make them go away, all that does is encourage other people to come and do the same thing.  So it’s a form of extortion.  Once you do this, you’re opening the floodgates. 

And ask them what their operating expenses are, and if they increase month over month, because this is where the money would be coming from to pay this.  They need to account for those under operating expenses, and chances your business people will realize very quickly that making this “facilitation payment” is not the best thing to do, and they’ll come up with alternate strategies in order to adhere to company policy and local law.

Facilitating payments are essentially small bribes and are inherently illegal

and therefore should be avoided. Every bribe of a government official, regardless of size, breaks the law of at least one country. No country permits the bribery of its officials.  Paying facilitating payments is poor legal practice and it is bad business practice. Widespread payment of small bribes sets a permissive tone, which invites more and greater demands. These types of payments amount to a hidden tax on business, tend to proliferate, and buy an uncertain, unenforceable advantage. Well-run businesses seek clear, dependable terms and enforceable contracts. Small bribes introduce uncertainty, risk and delay. Permitting facilitating payments engenders cynicism and disregard for foreign laws and the cultures in which a company operates.

One of the best ways to rollout FCPA compliance issues globally is to start with the U.S.  Tell them it’s simple:  conviction for corruption can be jail for a U.S. person.  Then look at the local scene for examples of real-world treatment.

And talk to your locals about the U.N. Convention and take this outside of the FCPA and cast it in the language of local anti-corruption laws and the U.N. Convention.  It makes it much more palatable for your overseas affiliates, subsidiaries and business partners then tying in FCPA as just an extension of U.S. law.

If you’re doing an internal investigation, the cost of your investigation and litigation can be huge (attendees quoted $300,000 to investigate an ordinary allegation of corruption) and often you find out nothing happened, that there was no actual corruption.  It can be an expensive undertaking. 

But … the flip side is if you don’t do it and there is something that you’ve missed your costs can be well into the millions.  So, the $300,000 — while not cheap — is money well-spent to make sure that your own internal compliance policies are in place to conduct an in-person interview, to do the digging globally and to really tighten up your ship.

You need to be sure you have good internal controls and that you are monitoring the systems, and that it’s enforced.  And be sure you look at the local laws in the countries in which you’re operating, to make sure that those controls comply with the laws of this country and are enforceable.

Another thing that you need to look at are your audit provisions.  If you have it in your bylaws or your articles or your company policies that you’re going to do audit and then you don’t do the audit .. there is a failure and you have a corruption allegation or an investigation … the DOJ can use that against you and attribute knowledge to the company or to the officials that are involved.

So you either need to either make sure that you’re doing your audits regularly and that you can police yourself internally and have strong indemnity provisions.

Another issue is jurisdiction.  You won’t win any arguments with DOJ over whether or not they have jurisdiction — they’re going to have jurisdiction, regardless.  So, once you make a disclosure to DOJ — whether it’s unofficially, or not — they’re going to push you to waive your attorney-client privilege, and have you cooperate with them in order to get a private settlement agreement out of them. 

Even though it’s not being “required”  now and again, there is “unofficial” pressure to disclose and cooperate.  You can’t stop cooperating once you start, and you can’t pull back a disclosure once you make one.  So, again, part of this is having all of your ducks in a row before you go to DOJ.  You don’t want them coming to you, you want to go to them, but you need to do it smartly, and make sure that you’ve taken appropriate measures with your own internal investigation.

Another thing is third-party due diligence, particularly for mergers and acquisitions.  There are the equivalent of SEC no-action letters.  An opinion released by DOJ on the FCPA has the equivalent effect of an SEC no-action letter.  You’re going to get this before you act, and you’re not going to take any action until you get the no-action letter, or opinion from DOJ.   To elicit the opinion release form, you can go to usdoj.gov for the FCPA and see what they’re doing now on those.  They don’t have precedential value, but they are very instructive.

So, what’s happening now?  Some bullet points at the end of the session:

1.   There are going to be heightened FCPA enforcement.

2.  There will be a closer look at individuals versus firms.

3.  Multi-jurisdiction prosecution has escalated.

4.   There is (has been) increased industry and sector-wide investigation and not just “by company” investigation.

5.  There is an increased focus on transactional and M&A activity, and also other non-FCPA crime such as obstruction, false claims, and export control and asset trust — are all things that you need to look at on a globalization basis.

TRACE has published a guidebook on facilitating payments titled “The High Cost of Small Bribes,” which can be found on the TRACE Resource Center (click here).   For an excellent primer on the FCPA click here.

▪  Board of Director Liability and the Subprime Mess

The panel consisted of Charles Blixt (Director, Krispy Kreme Doughnut Corporation), Jennifer O’Neill (In-house Counsel and Vice President Zurich – Management Solutions Group) and Thomas Schroeder (Senior Attorney Georgia Lottery Corporation)

This session focused on recent developments and emerging trends in D&O liability, indemnity and D&O insurance coverage issues.  Shaken by seismic waves generated by the sub-prime mortgage debacle, the credit crisis, and billion-dollar Ponzi schemes, among others, financial institutions and their directors must now suffer the aftershocks of securities lawsuits seeking damages in the billions.   No director likes to be reminded of the possibility, no matter how remote, of being sued and held personally liable for service on a board.  

Boards like to hear:  “we have the broadest indemnification permissible under the law and the D&O insurance program we have constructed is world-class and will you safely through even the worst-case scenario”.

When public companies get into trouble, very frequently it is for a violation of the securities laws. Its not a topic to be messed with. The liability is significant. The issues are complicated. The impact can be mind boggling. Don’t be uninformed.

In the last year, what we’ve seen is $7 trillion mortgage credit crisis, versus $68 trillion credit default crisis.  Over the last three years, there’s been a spike of class actions.  Part of this is because of huge losses in the financial sector, which is where the bulk of these suits have been.

From the materials provided at the presentation, the litigation tsunami in a nutshell (and the tsunami in document reviews):

Lawyers filed individual suits and class actions in 2006 and 2007 on behalf of shareholders, securities investors, plan participants, and a wide variety of other claimants.  First to be sued in 2006 and 2007 were the players most irectly involved in subprime lending, such as lenders, originators, and home builders.   Next in line for 2008 were companies involved in the securitization process, including banks, insurance companies, rating agencies, bond insurers, and pension funds,7 as well as entities that directed or advised investments in those securities. Investment banks have been hammered by lawsuits in both waves because they are involved in virtually every stage of the origination and securitization process.  Auction rate securities have also been a litigation lightning rod in this latest round, with firms that structured or sold them being involved in 20 securities class action suits and 10 securities fraud suits through October 2008.   During 2007 and 2008, the subprime and credit crisis spawned more than 650 major federal and state lawsuits.  Fully one-half of the 210 federal securities class actions filed in 2008 are related to the subprime and credit crisis, and the estimated maximum dollar loss attributable to these 2008 filings is a staggering $856 billion, a 27% increase over 2007.  Although the number of shareholder derivative suits decreased from 2007 to 2008 by an estimated 22%, derivative plaintiffs now typically seek substantial monetary damages.  Monetary settlements are now becoming both more frequent and larger as exemplified by a September, 2008 derivative suit that AIG executives agreed to settle for $115 million.

Financial firms bore the brunt of the 2008 filings, having been named as defendants in half of the securities class actions and half of all securities lawsuits.   To put this into perspective, nearly one-third of all large financial firms in the U.S., representing two-thirds of the industry by market capitalization, were sued in a securities class action in 2008.  In addition, financial firms hold 46% of the estimated $856 billion maximum loss for 2008 class action filings.  Plaintiffs’ lawyers pulled directors and officers into the fray in 62% of “credit crisis” complaints filed in 2008.

The subprime and credit crisis has also generated an impressive number of investigations by regulatory and law enforcement agencies around the world, including 48 investigations by the SEC, 21 investigations by the FBI’s Subprime Mortgage Industry Fraud Initiative, and 40 investigations by the Financial Industry Regulatory Authority. Because the subprime and credit crisis had caused such a spike in securities lawsuits, it may be surprising to hear that the October, 2008 plunge in global stock markets did not trigger an avalanche of filings. Some believe this is because the downturn was so widespread that few companies escaped its impact.   As one commentator explained, “the market volatility has been so large that plaintiffs found it difficult to isolate companyspecific stock movements that could be alleged to be the result of fraudulent activity from the noise generated by a market that could swing 5 percent in a single day.”  Another theory is that the major financial players had already been sued during the 2007-2008 flurry of class action filings arising out of the sub prime and credit crisis.  

However, having begun as a lion, the year 2008 did not go out like a lamb. Bernie Madoff was arrested on December 11, 2008, and lawyers managed to file 37 Madoff-related lawsuits before the end of the year, 29 of which are securities suits.   Through the second quarter of 2009, the total number has increased to 189.

Outside of the financial sector, the year 2008 was largely uneventful with average filings against the usual defendants. IT companies were sued in approximately 12% of 2008 securities cases, and life sciences companies (including pharmaceutical and biotechnology companies) accounted for 5% of total filings.  The healthcare industry came in at 4%. 

Litigation in 2009:  the first half of 2009 saw 87 total securities class action filings in federal court, of which only 35 were filed in the second quarter. On an annualized basis, this is a 22% decrease from 2008.  Financial firms continued to shoulder the heaviest burden as defendants in more than 60% of 2009 federal securities class actions.   More than 40% of 2009 federal securities class actions relate to the subprime and credit crisis. 

During the second quarter of 2009 is the precipitous increase in the estimated maximum dollar loss.  The estimated dollar loss for securities class actions filed in the first half of 2009 is $429 billion, 22.2% higher than the second half of 2008.   Seven “mega-filings” accounted for a whopping $367 billion, with five exceeding $25 billion each.  Three of the seven mega-filings are related to the credit crisis.   Including all state and federal securities-related lawsuits, rather than just federal securities class actions,  we saw 361 filings through the second quarter of 2009, which on an annualized basis marks a 28% increase from 2008.

Coming soon to a law firm near you:  businesses outside of the financial services sector will be impacted in the next wave of securities litigation that will surely flow from the increasing number of bankruptcies.  Federal class action filings against companies outside the financial sector have continued to be essentially flat through the first half of 2009.

The evolution of securities litigation:  another interesting development in 2008 and 2009 is the metamorphosis of securities class action complaints into pleadings exceeding 100 pages and asserting, in addition to traditional theories, novel, often common-law theories sounding in tort, contract and breach of fiduciary duty.  Defense lawyers theorize that the complaints are longer and more complex because the facts are more complicated; class action attorneys are attempting to distinguish their suits to avoid consolidation with similar suits; and detailed complaints maybe more likely to survive a motion to dismiss, especially post-Twombly and Iqbal.  A significant increase in defense costs is an inevitable result of lengthier pleadings and novel, complex liability theories. 

Only time will tell whether the new liability theories will pass judicial muster under the heightened judicial scrutiny of pleadings.  However, the statistics from the first batch of 48 subprime and credit crisis cases resolved through March, 2009:  courts granted complete dismissals of 48% and partial dismissals of 4%, while plaintiffs voluntarily dismissed 13%, and parties settled 15%.

Now, D&O insurance, explained very well for the unschooled (read: us).  Companies are still still clamoring for company business and are more than willing to underwrite business risks in the toughest environment that the insurance industry has experienced in decades.

How it all works (ok, in a nutshell):  standard D&O insurance policies typically provide three forms of claims-made coverage often referred to as Sides A, B, and C. Side A protects directors and officers for loss resulting from “claims” alleging “wrongful acts,” but only if the insured entity cannot provide indemnification. Side B covers losses incurred by the insured company when it indemnifies directors and officers for “claims” alleging “wrongful acts.” Side C indemnifies the company for claims made directly against it. The scope of Side C coverage, otherwise known as “entity coverage,” varies significantly from policies that restrict coverage to securities-related claims to others that broadly cover claims alleging “wrongful acts” by the company. Some policies provide only Sides A and B coverage. More recently, excess Side A/DIC [Difference in Conditions] policies have also garnered a significant percentage of the marketplace.  Finally, D&O coverage is sometimes bundled with fiduciary liability [ERISA], commercial crime, or EPLI [Employment Practice Liability] coverages.  The scope of “wrongful acts” coverage provided by these insuring clauses, when viewed separately from the exclusions, is seemingly all-encompassing. Indeed, the term “wrongful act” is typically defined broadly to include, for example, “any actual or alleged breach of duty, neglect, error, misstatement, misleading statement, omission or act.”  The categories of claims that may trigger coverage include securities lawsuits, derivative actions, antitrust or environmental lawsuits naming individuals,129 as well as simple business torts such as false advertising, commercial fraud and negligence, and intentional interference with prospective business advantage. Because of the broad scope of coverage available under

Side C in some policies, all business tort complaints, whether or not naming individuals, should be analyzed for coverage under a D&O policy.

Oft-repeated is the unfortunate remark that private companies do not need D&O insurance. This is not true. Directors and officers of private companies owe similar duties to their shareholders as their counterparts in publicly-held corporations. While the risk of being sued may be smaller in a private company, the risk is still not worth taking when the personal assets of the directors and officers are the potential sacrifice. Consider also that D&O policies cover claims asserted by a host of claimants other than shareholders, such as employees, competitors, regulators, creditors, suppliers, and customers. Chubb conducted a random survey of 451 privately-held companies in 2005 and determined that 26% of the companies or their directors or officers had been sued in the past few years by a customer, government agency, vendor, or partner/shareholder.

What do you do on all these liability issues?  One of the key things the panelists said they are at the securities litigation reform, and how it will affect liability and litigation.   The case to look at is Twombly and you also need to look at the impact of the Tellabs and the Dura Pharmaceuticals cases if you’re trying to get dismissal of securities fraud at the pleadings stage.

Hubbard is another case, and that focused on scienter, and dismissal for lack of specific facts showing individual directors had knowledge of allegations that were made by the SEC.

You need to look at the potential causes of a stock disclosure, which must be considered in the general market decline, industry complaints, etc. in order to show proximate cause.  So if you fail to also list, not just your specific facts, but also the overall industry facts, like the overall market decline, the overall industry decline, et cetera, in your pleading, you can be dismissed, because you’re not taking into all of the other factors that may have caused your stock to dip.

There have been a number of recent cases in multiple jurisdictions that touch on derivative actions and liability of directors and officers, as well as indemnification.   

With respect to D&O insurance, if there’s a material misstatement that was made at the time that the policy was written, most states allow the insurance company to deny coverage of payment, and rescind the policy if the policy was issued at a price for a type of coverage based on an incorrect assumption or a false disclosure by the applicant. 

This can result in a huge hit to your bottom line because the company may not be able to have the insurance company pay that indemnity, and pay those legal fees which could be in the millions.  And they may yet be on the hook to indemnify that employee or officer, and have that money come out of their hide, instead of from the insurance policy, because it was revoked for failure to properly inform them of the correct status of the company at the time the policy was written.

Another issue is change of control.  If you’re trying to cut off wrongful acts, which are covered up to a certain time prior to a merger or acquisition, you can have limited coverage, or a gap in coverage.  For example, the merger occurs at 2:00 in the afternoon, but your new insurance policy doesn’t kick in until 12:01 a.m. the following day.  So, you’ve got 8 hours of gap, where if something happened in that gap, it’s unclear who picks up the tab, or who’s liable, or if there’s no insurance coverage.  So, you may want gap coverage, or try and have your policies back up to each other so that there is no gap coverage — no gap period.

Another thing is post-claim dialogue.  You’ve got to give prompt notice of a claim, which is broadly written, for all other applicable policies.  So, if you have a new claim or an amended complaint or an indictment, you need to make sure that those are covered.

If you’re relying on the broker to send notices of amendments or changes, you need to follow-up with the broker to make sure those notices went out and where they went.  Don’t roll along “fat, dumb and happy” in hopes that everything was sent properly into where it’s supposed to go because brokers can make mistakes. 

There are also some international risks that you need to look at.  All policies pay or provide worldwide coverage, where legally permitted.  In some countries, they do not allow for D&O coverage (Brazil being one of them).  So, if you have an international policy with coverage, you want to also look at country by country, where you may need to get in-country insurance coverage, supplemental to your U.S.-based policy, because your U.S.-based policy won’t be honored.  

And be aware that certain countries also have Sarbanes-Oxley-type laws — Japan and Germany being the primary ones — and those countries have enhanced shareholder rights.  This is something that you will also need to consider when you’re looking at international risks and coverages.

For the BEST site to follow all the “what’s what”:  Kevin LaCroix’s D&O Diary (click here). 

Coming up in Part 2:  the personal liability of a general counsel, and DOJ/SEC enforcement efforts in 2009

And then … tech, tech and more tech as we chat with ACC Alliance members about all the enterprise-wide technology systems available (complex and otherwise) for in-house legal departments.

We are still in Boston (we had some post-ACC interviews to do today) and we have about 6 detailed posts to complete on ACC but we thought we’d post our initial reflections of the conference.”

First, a million thanks to Kim Howard, Marthea Davis and Robin Scullin of ACC for all they did to assist us at the conference.  They made the coverage so much easier for us.

As we said in our pre-ACC Boston post, there was a lot to cover.  There were  excellent panels on intellectual property, doing business in China, handling bankruptcy litigation, real estate practices, creating an in-house law department, pro bono opportunities for in-house counsel, HR and employment law issues, primers on trade laws, etc.  We covered a wide-range of these presentations and we will highlight our favorites in a later post.  Oh, and ACC made sure we all had the opportunity to stuff ourselves at breakfast, lunch and dinner.

We focused on themes we have discussed the last 1+ years:  what corporations must do to protect themselves/work through increased litigation, audits and regulatory investigations; the plethora of ESI and other legal-related technology out there for in-house law departments to consider; and managing/controlling ESI costs/needs.  And how corporations do all of this with budget cuts.

Note: many of these topics have been brilliantly covered by our colleague, Rees Morrison, and we will integrate several of his links in our more detailed posts to come.

So right now a few comments on the issues that affect and involve the majority of Posse List members — the issues we outlined above — each of which deserves (and will get) a detailed follow-up post in the coming days.

The following are reflections based on several presentations we attended in the formal program, a number of e-discovery/compliance/litigation ‘’roundtables” to which we were invited, and several “chats over drinks” with a number of GCs and AGCs we met.

“Brute force e-discovery”

A common rant from attendees:  why do so many ESI vendors think “one size fits all” in discovery and insist on a “brute force, shove it all down our pipe and you’ll be fine” approach?   Yes, GCs are sometimes confused by the myriad, disparate technology systems out there.  Plus the issue we have all discussed:  the consolidating of e-discovery vendors due to failures or buyouts (recurring comment at ACC:  “who will survive?  Who do we pair up with?”)

They know they must take back control of the process from outside counsel, both for cost reasons and piece of mind.  And those that have retaken control prefer vendors not wedded to a given technology but who are flexible, adaptable to a case, a situation.  (We’ll profile the vendors often mentioned by GCs and those they liked but in a later post).

They all mentioned “enterprise class products” because of the global convergence of audit, compliance, regulation, and risk.  Because the mantra was: cost and communication.  Give us technologies that make all our information “reasonably accessible and at an affordable cost …. help us close the gap between the technology out there and what we need”.

All the GCs and AGCs we spoke with said “our issues fall into three broad categories: litigation, investigation, compliance/regulation.  All our ESI is going to fall into those 3 areas”.   We talked about audit issues but most said that was a subset of compliance/regulation.

And (almost) everyone we spoke with said “we really need an ESI coordinator/ESI officer”.  They viewed their C-level suite as composing of the general counsel, the compliance officer, the finance officer … and outside counsel as a “shadow figure”.  But they saw the need for an ESI coordinator, mostly likely under the GC or the compliance officer.  It is why there is a natural inclination to turn to the IT department because these guys “talk the talk” …. even if (as many GCs admitted) they don’t really understand it.  But a well-versed ESI coordinator, under the GC or compliance, would work.

So, yes, all the GCs we spoke with acknowledged they must ensure compliance/risk/litigation is managed effectively, to make certain they can react quickly and more importantly, cost effectively when and if an issue arises.

And has there been a movement to bring in-house contract attorneys and computer forensics/ESI temps?  Yes said Verizon, and Reebok, and many others.

Note: we’ll have a more detailed post in a few days on the increasing trend we’ve reported on over the last year, the “pairing” of ESI vendors and staffing agencies (for example Huron/The Dine Group and Fios/Ajilon) as well as ESI vendors who have built their own project management/staffing component such as eTERA Consulting.   And we’ll comment on the proposed Adecco purchase of the MPS Group.  We recently met Patrick De Maeseneire, chief executive of Adecco, at a conference in Europe, who had a major role in the proposed acquisition.

In-house law department budget cuts: doing more with less

As has been the case with law firms, in-house legal departments have been forced to cut their budgets.  But with a greatly increased workload.  And it is due not just to the increase in litigation/investigations but because of regulatory/compliance issues.  As one GC told us, “we have more and more regulatory/compliance issues and we are seeing far more regulatory inquiries than in prior years … and we simply cannot cover it all”.  Worse are the “information requests” which seem to have tripled. 

Plus our old favorite, the Foreign Corrupt Practices Act (Mark Mendolsohn, deputy chief of the fraud division at the DOJ, was slated to be on the FCPA panel but he could not make it). 

That’s the dilemma:  in-house legal teams tasked with managing risk and responding to potential litigation with the constant pressure to reduce their budgets, leaving many firms in the unenviable position of having to identify and manage potential risk with less resource at their disposal, while the amount of data passing through any company is growing exponentially year on year.

So, what to do?  To cope with this increasing workload/shrinking budget, legal departments have turned to service providers and their in-house counsel.  And as we all know, this comes at a time when law departments have decided to reduce spending on outside counsel.  And it is fraught with difficulty.  As one AGC told us: “Knowing when to hire a law firm rather than handling a matter in-house is sometimes more of an art than a science”.

For some companies, the nature of their business or the composition of the legal team makes the in-house/outside counsel split easier to determine. A legal department may handle routine matters in-house and retain outside counsel for more complex issues, such as large-scale litigation or a merger. Departments that have attorneys with expertise in a particular area of law, may do both commodity and specialty work in-house. Still another way legal departments can allocate work is to think in terms of high-value versus routine or basic activities. Using this approach, the legal department in-sources certain tasks, such as routine contract work, to employees within the company who have been trained to follow a basic framework or template the department creates.

And legal departments are becoming more systematic about managing and directing this partnership. For example, legal departments whose companies are involved in litigation are increasingly applying uniform task-based management (UTBM) to their outside counsel’s activities. (Note:  UTBM is a series of litigation codes developed by the American Bar Association, the Association of Corporate Counsel and a group of major corporate clients and law firms coordinated and supported by PricewaterhouseCoopers.   We’ll cover that in a more detailed follow-up post).

There was also a lot of discussion about alternative billing, using smaller law firm/boutique law firms/solo practioners, all within the framework of the ACC Value Challenge (click here).  That will be a longer post.

Roadmaps to managing all that ESI

We’ll end this short “reflections” post with roadmaps.  There were several presentations devoted to “roadmaps” … and a large number of panels that incorporated roadmaps …for managing all of this e-discovery/ESI compliance.  We will try to summarize the kep points raised knowing this topic requires a loooong post so we can only brushed the surface:

1.  You need management commitment to compliance.  Once you have management commitment, you cannot turn back or relax.

2.   There are three key components that make up an effective e-discovery and compliance program:  governance, process, technology.

3.  A governance package sets organizational standards, processes and compliance rules for streamlining document-handling activities, providing ease of reference and reducing the amount of information you need to manage. A document and records governance package can consist of any number of policies and procedures, based on your organizational culture, external risks, infrastructure complexity and compliance impact.

4.  The most challenging step:  understanding how information is processed throughout its lifecycle.  Process also means change, especially as it relates to electronically stored information.  If you do not have individual, departmental or functional standards for describing how electronic documents and e-mail are to be indexed, retained or disposed, any imposed standards can change how you process information.

5.  You must you must you must conduct surveys and interview users by department or function to create a realistic picture of your complex enterprise. Only after you capture storage protocols and understand how information is currently cataloged or indexed can you begin to break down the silo effect of storing information.

         Note:  and therein lie the Four Horsemen of the Litigation Apocalypse:  chain of custody, spoliation, authenticity, metadata

6.   You need to manage your information proactively.  As one attendee put it: “your ESI is a core asset”. 

7.  Whether information is in a paper document, an electronic document or a record, it is potentially discoverable. Therefore, you need to capture information upon creation and manage it through its lifecycle to disposition.

8.  Technology is your friend.  It can help you.  Do not be afraid.  There are vendors (too many, alas) that can provide lifecycle management of ESI, capture ESI, and manage ESI according to your company policies for retention and disposition of information.

As we said, reflections in brief.  More to come.

With two major conferences back-to-back, The Masters Conference (click here) and the ACC Annual Meeting (click here) we have been a bit pressed for time to write up our thoughts on both plus all the interviews we conducted at each.

We agree with Brett Burney’s observation:  vendors at the Masters Conference seemed to emphasize a general lean towards the “left side”” of the Electronic Discovery Reference Model.    For Brett’s full post click here .

And it was the same at the ACC Annual meeting.  The seminars and presenters (and the attendees) repeated the same theme:  how do we, as in-house counsel, manage our endless streams of digital data?  It was more than just “how do we reduce the costs for e-discovery and cut the time necessary to complete EDD projects?”   As we said in our first post from ACC (click here) corporations need “enterprise class products” because of the global convergence of audit, compliance, regulation, and risk.  Because the mantra was: cost and communication.  Give us technologies that make all our information “reasonably accessible and at an affordable cost …. help us close the gap between the technology out there and what we need”.  And help us manage the data at the start.   Our coverage at ACC was extensive, and we chalked up 8 major interviews.  We’ll have much more on ACC in our wrap-up later today. 

But now, some observations on The Masters Conference:

On Tuesday and Wednesday, October 13 and 14, 2009, the Ronald Reagan Center hosted the Masters Conference Series for Legal Professionals with a theme of Navigating through Discovery, Risk and Security.

The big news: the guiding light of the Conference, Sasha Hefler, has left The Masters Conference and has joined a major e-discovery consulting company (for our profile on Sasha click here).   There will be a press release issued this week detailing her new position.  It is a company that has pioneered “early information assessment” and is a step ahead in the ECA market. 

One big take-away for contract attorneys who make up the largest percentage of Posse List members was a suggestion by Dave Benton (head of Digital Forensics & eDiscovery at The Home Depot) who recommended that those interested in developing the skills needed for new e-discovery should become members of the American Society of Digital Forensics and eDiscovery (www.asdfed.org) a non-profit organization that promotes education and the distribution of information related to digital forensics and electronic discovery.  There is a Washington, DC chapter.  With so many contract attorneys moving away from the document review side of the EDRM (or who want to move away from that side) it is a good suggestion.  We’ll have a more detailed post about Asdfed.

We had various reporters at the two days of educational tracks and the following are some highlights from various panel discussions and seminars on everything from leveraging cloud computing, to early case assessment tool evolution, to discovery cost determination and cost cutting. The sessions were held in 3 staggered conference rooms with space for 100 to 250 attendees in lecture hall format, including two projection screens for presenting the more difficult lecture or panel concepts. (For a more detailed agenda of what was covered click here).

Each day had its own keynote speaker.

On Day One the keynote speaker was Randy Sabett, a partner in the Sonnenschein law firm and based in the D.C. office  He is a member of the Internet, Communications & Data Protection practice. He counsels on information security, privacy, Public Key Infrastructure (PKI), digital and electronic signatures, federated identity, Sarbanes-Oxley, state and federal information security laws, identity theft, and security breaches among other areas.  Randy is a commissioner for the Commission on Cyber Security for the Obama Administration and teaches information policy as an adjunct professor at George Washington University and is on the faculty of IANS.

Sandy’s address was entitled  “The Evolving Nature of Data Protection…And Some New Ideas  To Consider” and focused heavily on one of the themes of the conference, “cyber security.” 

Historically, corporate America has perceived data protection purely as an unavoidable expense.  A number of factors have contributed to a shift in this view point, including continued and worsening data breaches involving personal information, much more focused and insidious attacks, and very high profile losses of intellectual property.  Now, Congress has become an active participant with at least 30 bills pending that in some way, shape, or form relate to data security.  What are some of the more radical players considering in protecting their data?  Some of Randy’s comments:

 1.  There is growing activity at the state and federal levels:  States are increasingly enacting breach of security notification and encryption requirements.  Earlier this year the Health Information Technology for Economic and Clinical Health Act (HITECH Act) was signed as a part of the Stimulus bill, providing funds to improve health IT systems for greater data production.  Over 30 other security related bills that are still pending. 

2.  Security DOES NOT equal compliance:  Balance must be achieved between security and compliance because by solely focusing on security you might miss something that is required from a compliance perspective.  On the other hand, you may be in compliance, but overlook something that needs to be done to keep your data secure.  

3.  Protecting the network enterprise:  The “perimeter” can no longer be the sole focal point as more of as more information resides outside the “perimeter” of a company.  This presents increasing vulnerability/risk to cyber attack.  A security culture must be developed within an organization to protect the network enterprise. 

4. What does cyber security have to do with e-discovery?  According to Sabett, there is a large overlap.  Figuring out where data is stored and how to preserve the data free of security risks is necessary for both computer security and eDiscovery professionals. There is procedural and technical overlap that requires computer security professionals to play active role in both areas: Some of the procedures followed and technical methods developed from an information security perspective are the same techniques and procedures used and applied on the ediscovery on side of equation: example ediscovery procedures and techniques need to take into account how and to what extent encrypted data will be identified, accessed, etc.

5. One of the keys in dealing with information security and e-discovery is to think progressively about data protection and balance that progressive way of thinking with the number one issue: the budget available to achieve it.  Information security and ediscovery are cost sources.

6.   Other examples of progressive thinking:

         - Offensive cyber capabilities

         – Cross compliance initiatives

         -  Cloud computing

         -  Follow trends in information security laws and legislative activities

         - Develop a security culture within the organization

         - Getting rid of credit card numbers altogether (the technology is available)

The Day Two keynote speaker, Magistrate Judge John Facciola, has been a US Magistrate Judge in DC since 1997. Prior to the bench, Judge Facciola was an assistant DA in Manhattan from 1969-1973, and in private practice in DC from 1974-1982. He joined the U.S. Attorney’s Office in 1982 and served as Chief of the Special Proceedings section from 1989 until his appointment as magistrate judge. He now is a frequent lecturer and speaker on the topic of electronic discovery as well as a member of the Sedona Conference Advisory Board and the Georgetown Advanced E-Discovery Institute Advisory Board. He is also the former editor in chief of The Federal Courts Law Review, the electronic law journal of the Federal Magistrate Judges Association. He has recently been appointed to the Board of Directors of the Federal Judicial Center. His most recent publication is Sailing on Confused Seas: Privilege Waiver and the New Federal Rules of Civil Procedure, 2006 Fed. Cts. L. Rev. 7 (2006). He received his A.B. from the College of the Holy Cross and his J.D. from the Georgetown University Law Center.

Judge Facciola focused his remarks on ESI and how best to navigate competent legal practice with a perspective from both sides of the bench. He instructed that attorneys with the best approach to ESI as a litigation tool know that:

▪  humility is a key trait: A judge notes when an attorney does not have the humility required, by overpromising – waiting until discovery deadline is impending only to assure a judge that 30 days is sufficient to get discovery done….several months in a row. And by underpromising – as in telling a judge that something like removing software cannot be done, only to have the judge’s clerk do just that in chambers during a 15 minute recess. Both affect credibility with the judge.

Have the humility to appreciate that on the technical side of discovery, there is a lot to understand and there must be a willingness to educate oneself and/or associate with those who have the technical skills or knowledge necessary to assist in educating oneself. You must be willing to associate with others who know the e-discovery industry and be prepared to work collaboratively between and among lawyers, and those in the technical services industry. Failure to do so, can often lead to making tactical errors in a case and bringing into question the issue of attorney competence and ability to effectively represent the client.

▪   birds of a feather: associate with those who know what they are doing in the ESI realm. Attend a Rule 26(f) conference with a forensic scientist with you every time.

 ▪   law is becoming a team sport: more and more, law is only for those that never stop learning, and look to their fellow members of the bar to help them learn the nuances in this Brave New World.

▪    the unique roleof the judge: a judge brings order, peace and sanity to litigation – and must handle larger volumes than ever thought possible. For example, the next generation of servers and PC’s will include storage capacity of an ectobyte – to provide some perspective, FIVE ectobytes of storage would include “all words ever spoken.”

He emphasized:  the role of the judge is bring order, peace, and sanity to pending cases by entering orders or enforcing orders which bring teeth to the notion of cooperation between and among the parties.

Although there is a great notoriety around cases in which there are court ordered sanctions against an attorney, party or both ( i.e spoliation) in reality,  judicial attitudes toward the sanction power is this: let’s not order sanctions and rather mediate toward “How do we fix this?” prior to the point of sanction. The success of a judge depends upon their ability to get people involved in litigation to cooperate and work collaboratively.. And judges must also be willing to self educate in the technical realm of discovery and associate with those in the industry that have the technical expertise.

▪   put some teeth in it: the judge is in the position to ensure litigants and their attorneys cooperate, and challenge the adversarial system as we now know it.

▪   break new ground: a judge observing the Sedona Conference carefully also notes that each session “blows up” a chapter at a time from the civil procedure textbook. He challenged attendees to contemplate what “the cloud” is doing to such basic concepts as personal jurisdiction when servers are anywhere in the world.            

His conclusion: judges and lawyers are lay persons when it comes to the subject matter of e-discovery and have an obligation to develop a level of competency and willingness to work collaboratively. Both need to recognize and understand what they are capable of from a competency stand point and where they need education or expertise.  

And that provides a nice segue to the key panel of the conference ….

US-UK Judicial Panel on E-Discovery

Although the US leads the world in both the legal and technical aspects of electronic discovery, there is a general acceptance that there is much to do to make this aspect of litigation an efficient and cost-effective component of case management. Although the essential difficulties are the same in England and Wales, the approach taken is a slightly different one, and there is growing recognition that the two jurisdictions have something to learn from each other.
 
Chief US Magistrate Judge Paul Grimm and US Magistrate Judge John Facciola are the undisputed leaders of judicial thought in this area in the US. Their counterparts in the UK are Senior Master Whitaker and His Honour Judge Simon Brown QC.

These four were brought together again by Chris Dale of the UK based e-Disclosure Information Project (for our profile on Chris click here and for a link to his site is click here).  It was a repeat of a successful panel in London in May 2009, moderated by Patrick Burke, Assistant General Counsel at Guidance Software.  For our profile on Patrick click here.

Patrick has already written about the panel on his blog so rather than duplicate comments please click here for his analysis.

Among the other sessions we covered:

E-Discovery: The Government Perspective

Private industry struggles with the scope and burdens of e-discovery, but so do government entities, whether as the requesting or responding party. This panel discussion addressed how government agencies are structuring their internal e-discovery groups and how they expect private industry to respond to their requests.

Wendy Butler Curtis, Special Counsel for E-Discovery, Orrick, Herrington & Sutcliffe LLP was moderator, and she encouraged a healthy discussion among Paul Bohr, enforcement  attorney with the SEC; Larry Creech, of the U.S. Postal Service; and David Shonka, Principal Deputy General Counsel at the FTC. The panel discussed, among other things, how the government addresses the cost of electronic discovery.

A summary of their comments:

- The FTC encourages dialogue, Shonka said.  His agency makes broad requests necessarily, and will refine those requests often after a discussion with an attorney or based upon prior, recent investigations. They key is to pick up the phone and discuss costs in time and money with the government. With the FTC handling the data in house, the government lawyers are most able to have discretion during an investigatory request.

-  Bohr states that he is always shocked when private securities attorneys say there is a “lack of communication”’ with the SEC – because he is always willing to meet on costs of his requests, and yet seldom even get the initial phone call.  His preference is to get a call from a compliance officer, perhaps with a series of report layouts to guide the discussion, so that Bohr’s request targets the most relevant and available information. The SEC also handles produced data in house, so Bohr and his colleagues welcome discussion on what makes sense financially and practically.

- Creech’s ” businessman’s perspective” was apparent during his overview of policy. He feels strongly that every entity should have a “datamap” of all electronic information held by the entity. This datamap will guide internal resource planning and budgeting through retention schedules and federal retention laws, and will guide discussions with government when a request arrives. He reminds the panel and attendees that this is not a “money maker” per se, so has not received the attention it deserves. Creech cautions that as the matters work through the courts, such information can be a “money loser” when policy-not-followed results in judicial sanctions/fines or in information being produced  to adversaries in discovery and resulting in large awards in litigation.

Effective Document Collection, Legal Hold Protocols (… and the cost, my God, the cost!!)

This was a panel discussion with a Powerpoint presentation that never got past the first slide.  Well, that’s not quite true – at the end they showed the last slide, with the names of the moderator and panelists.  The moderator was Craig Carpenter (Recommind, in-house counsel), while the panelists were Wendy Curtis (Orrick Herrington), Julia Peixoto (DHL in-house counsel), and Tess Blair (Morgan Lewis) and they did a fabulous job.

The reason that the session never got beyond the first slide was that it took on a life of its own and wandered from the path dictated by its deck of slides.  It was a wonderful collaborative stroll with comments triggering supporting comments or segues onto related topics. Comments and questions from the audience were welcomed and incorporated into the discussion and the session was very fruitful and covered the topic as well as it could in an hour.  The panelists’ contributions complemented each other effectively and they were obviously chosen for the different perspectives that they brought to the session.

Having said this, what were the paths strolled down?  Our notes went all over the place and maybe somewhat cryptic, but here is a reconstruction of the main points:

    Discussion of the legal hold process.   First takeaway:  There is no specific or standard form, no one rule, no one size fits all.   Second takeaway: It is important to know your client, the corporate culture, how employees work together, and what tools are available.  Also, to what extent legal matters are handled in-house.  Third takeaway:  There is little case law in this area and few judges are aware of the law.  Therefore, be balanced, be reasonable, be consistent, and be practical.   A plaintiff will send out a litigation hold notice, also called a preservation notice, when there is a “reasonable anticipation of litigation”.  It is also at this point that you can start to apply any privilege protection under the Work Product doctrine.  At this point you should get a survey of what documents people have.  From this you can determine who the key custodians are, what the sources of the data are, and what types of documents or data you have.   You will later provide a collection certificate that specifies the locations of all the relevant documents and that they have been produced.  You will be able to show good faith by establishing and following policy for the 1) training, 2) implementation, and 3) managing of the collection.   You need to have a good faith argument for not preserving data.  Factors usually used are proportionality and cost.  As a practical matter, a lot of negotiation is done behind the scenes and you can have a meet and confer on the side.  

     Quick preservation of relevant data.   A litigation hold affects all of the data that is within the possession, custody, or control of the company.  The company has to identify, preserve, and collect this data.  The company  can make this easier by having the proper processes in place and by anticipating litigation.  This is especially important for a company that is sued frequently.  Most records now are electronic and they present their own challenges.  It is important to be consistent and understand the consequences of what you are doing.  In-house counsel does not want to overconserve, because of the significant costs involved.  You cannot do this in an ad hoc manner.  You need to have policies and procedures for document retention and production.  Also, you need to spend some time and effort up front.  This will save you a lot of time later, and you need to convince the finance people of this savings.  The use of ediscovery tools can be used to automate the process and also save some of the costs.  Advise your client that ESI that is not stored, is not in its possession, custody, or control and, therefore, does not need to be produced.   Similarly, and for the same reason, IM is usually not saved or archived.  You need to ask each person in the organization how they manage their data and advise them accordingly.  (The caveat with this is that as soon as you give advice to your client, the technology will have changed.)   In the discussion on back-up tapes, it was noted that this is the least efficient method for storage and recovery, that the data is generally elsewhere, and that backup tapes are redundant. They only form a snapshot at a particular point in time and it is the last full back up tape that is the most important.  The company can save lots of money by even a slight modification in its backup procedure and schedule.  Note here that if data is not deemed to be reasonable accessible, it does not have to be produced.  The client should be counseled to use back up tapes only for disaster relief.

    What about the costs?   It is expensive to lock down data.  Internally, the company should have a policy in place to prevent the unnecessary retention of records.  Ninety-five percent of a business’ records consists of junk!  Determine what needs to be retained and involve the IT, business, and records management people. It is useful to use date ranges for this purpose.  Outside counsel should be used to narrow the scope and to negotiate – that is where they are effective. But don’t let outside counsel run the matter and don’t do things by consensus; the company needs to take ownership and determine the direction, so long as it’s done reasonably.   Use proportionality.  Consider the dollar value of the cases and give priority to your high profile cases; for a small case take a less costly approach (it might be sufficient to stash a CPU or retain a hard drive in a storage area, for example).  Also, limit the number of vendors that you send your data to.

     Some of the questions asked/answers given:

              Q.        Do you always have to consult outside counsel before lifting the hold?

             A.         No.  In fact, you can schedule an automatic lift that will occur unless there is an affirmative objection by outside counsel.  It is often advisable to do a “targeted” preservation instead of a “blanket” preservation, and this makes it easier to lift a hold.

             Q.        Do you have to notify the custodian that you are preserving his data?

            A.         No, and there are ways to preserve the data without notifying the custodian.  In fact, there are even ways to download his electronic data from the back end.

            Q.        What if your client is involved in the litigation, but is not a party to it?

           A.         Sorry.  Pursuant to Rule 45, a subpoena applies equally to a third party.  But you can move to quash.

            Q.        What do you do if you are served with a subpoena?

           A.         If you get an agency subpoena, be sure to wear both a belt and suspenders initially (Wendy Curtis).  Later, you can negotiate the scope with the agency or move to quash.

           Q.        What about data archiving?

           A.         Very few companies have archives in place at the moment.  Archiving is a massive (and expensive) undertaking.

          And a shout from the audience:  “Eh, what the hell.  The world is going to be Google-ized anyway!”

        Our “notable quotes” concerning the present state of effective document collection:

                “Business is not designed to preserve records — it is designed to make money.”

                 “The cost of preservation is peanuts compared to the cost of collection.”

                 “To reduce the costs, eliminate the junk.”

                 “We are at the end of the beginning” (Tess Blair).  It will take another decade to get to the middle and most clients are still at the fundamental stage.  We desperately need people with new skill sets to come on board”.

                  “Technology can help, but first you need to have a very solid process in place.”
Legal Outsourcing:  Analysis of the Myths and Realities and its Impact to Counsel

Changing business drivers within the U.S. legal industry have compelled corporate counsel and law firms to reassess the traditional cost structures and resource allocation within their relationship.   Legal outsourcing (the proponents say) has proven to be “valuable for both when properly integrated into the litigation process”.   Well, they would say that, wouldn’t they?  But is the bane of U.S. contract attorneys.

And although many global corporations and law firms are embarking upon outsourcing strategies, questions and hesitancies remain for many regarding qualifications, capabilities, ethics, and geographic considerations.

But we have decided to award this session the booby award.  This so-called “analysis of myths and realities” created its own self-serving construct, spoke in generalities, and did not give enough attention to the special nature of legal offshoring.  The real value of this session consisted of the comments from the audience and not the presenters, who made me think of something Judge Facciola said earlier in the day: the importance for lawyers in knowing what they don’t know.  Perhaps the presenters, unknowing as they are, could have improved their session by outsourcing it.

New World Technology and Enterprise Opportunity: Cloud Governance, VOIP and Unified Messaging – Mission Impossible and Information Assurance

Just when corporations began to stabilize their IT services, an explosive new portfolio of technologies are emerging. These new services are economically compelling, but present general counsel with new legal complexities. Suddenly, all of the related records are “in the cloud” , e-communications are tweets and texts, “unified communications“ are Voice over the Internet (VoIP), email converts to voice recordings, voice converts to text, systems track “presence” and location. Privacy, discovery, surveillance, Federal communications law, cloud computing—how does legal ever gain control over the risks?

This new “kid” on the block (unified communications)  was introduced to attendees at the Masters Conference by Jeff Ritter (of Waters Edge Consulting) with the claim that, as a new way for storing business communications, it will displace email.  Instant messaging, VOIP, Video, email to voicemail, voicemail to email, and presence are all contained in unified communications (“presence” is the ability to let the system know how to communicate with you and where you are.)  These forms of communication are all creating kinds of records, with huge amounts of context, that defy “finding”.  And when you try to find them, it may violate the Electronic Communications Privacy Act. 

In the world of electronically stored information (ESI), and especially in the rapidly expanding space where corporate communications thrive, there is an evolution of data forms which, although not well understood by lawyers generally, is actually already being stored and is subject to discovery under the new Federal Rules.  In some cases, like that of cloud computing, it is the manner of storage that is innovative; in other cases, it is the behind-the-scenes technology of innovations whose surface functionality we are all familiar with as users, such as internet telephony (Voice-over-Internet-Protocols), Instant Messaging (IM), audio to text and text to audio message conversions, and so-called “presences” which, in response to messaging, signal an individual’s presence or absence at a certain place and time.

Ritter raised three crucial questions:

1. What unified communications services are being brought in and what will be allowed?

2.  What unified communication session-related content and data will be stored?  (session logs, session content records, source content records)

3.  What uses will be made of any stored unified communication related content or management content?  (What will we do with the data?  Security wants to analyze records historically, for example.)

There was discussion of the provisions of the Electronic Communications Privacy Act (major point is that it is illegal to listen to conversations in audio form) and the difference in privacy distinctions between Europe and the United States.  There was discussion of who should make up the unified communication implementation team of the business.  And there was considerable discussion of packet architecture, since this is the common denominator of the different communications and of different protocols.  Importantly, once the packet is sent, it cannot be reassembled without all of the data that is in the packet.  None of these topics will be explained here, since those interested in them can readily research them on the internet or in publications. 

Ritter has an uncommon talent for visualizing the digital landscape in lawyerly terms.  Seen through his eyes, the sensory overload of resources and devices on the scene today – and even those still barely discernible on the horizon – take on legal shape and substance. And they have consequences.  One of Ritter’s strengths is his ability to clarify the datalogic of these digital forms of communication. As he drills down, you see that they all rely on a packet architecture similar to internet protocols, and you realize that all are decodable and can be reconstructed to recover supposedly transient historical conversations and messages. Indeed, Ritter’s bread and butter is expert testimony. He delights in deconstructing the assertions and credibility of corporate affiants whose claims conflict with the historical record he produces – a record most were unaware existed.  

Another strong focus of his presentation is trustworthiness. His warning: security for these stored data forms is frequently absent. Ritter told stories of “penetration” tests of clouds in which the expert discovered worms capable of exporting data to offsite bad actors. In some particularly embarrassing cases, cloud storage techniques in use by discovery vendors were found to be insecure – vendors to whom in-house counsel had entrusted all manner of sensitive corporate data under an assumption of confidentiality.  

Many of Ritter’s presentations from previous events are already viewable on his blog (click here) but we encouraged him to make this one available as well.  You will his presentation by clicking here and a companion piece by clicking here.   The Posse List plans to publish a more in-depth interview with Ritter.

Bridging the Gap Between Forensics and Native Review

With many corporations defaulting to forensic imaging as a standard methodology for data collection and the cost savings associated with performing at native review – many corporations and service providers are seeking ways to bridge the gap between these two approaches. The session focuse on how new techniques for performing economical forensic acquisitions, an ways of extracting information from these sources.

The panel was sponsored by Nuix and before the session we spoke at length with Stephen Stewart, CTO of NUIX.  The panel discussed the different generations of tools for harvesting data, emphasized full forensic imaging, told war stories of criminal investigations where they had discovered key evidence in the unallocated disk space (i.e., perps had “erased” incriminating computer files), and admonished attendees to be ever mindful of sound forensic processing procedures to preserve chain of custody, etc.

The benefit of the session for professionals engaged in criminal investigations was clear. We suppose some of the more technical takeaways would apply equally to professionals harvesting for Early Case Assessment in corporate environments (hence the presence of Intel’s in-house litigation support expert, Steve Watson, who we met at the IQPC conference in Brussels.

After the session the panelists raved to us about the power of NUIX in ECA. Chuck Kellner (Vice President of E-Discovery Consulting, Anacomp) spoke of its incomparable power and speed; Gary Amos (Professor of Forensic Technology, George Mason University) added that, unlike other software, NUIX seems to have been written with the Rules of Evidence in mind.   But during the session, none really mentioned this tool – they were all focusing on a stage of harvesting that precedes use of NUIX – the stage when best practice tools include FTK Imager (by AccessData who was not at the conference) and Encase by Guidance Software.

Which brings us to our last bit … early case assessment, the gorilla in the room and the subject area that seemed to dominate the conference.

As we have reported in several posts these last few months, early case assessment (ECA) has been a major focus this past year an a half.   And, there have been no shortage of of ECA solutions to hit the market.  Obviously, as we have also been contending for over 18 months, a single integrated and affordable e-discovery platform will revolutionize e-discovery processing. 

Right now there seem to be 3 vendors leading the ECA market according to surveys conducted by The Cowen Group and ILTA:  ClearWell, Recommind, and Digital Reef.   But coming up fast are eTERA Consulting , CentralCentral, Nuix and Orange Legal Technologies. 

We recently profiled Recommind (click here).  We had extensive interviews with Digital Reef, eTERA, Nuix and Orange Legal Technologies at the Masters Conference, and we interviewed CaseCentral at the ACC annual meeting.  Those interviews will post this week in our ACC follow-ups and our special post on ECA.

The key in all of these attempted solutions is:  start with ECA and extend through analysis, review, production and post-production re-use.  Oh, and at a price point that changes the current ECA pricing model.

But we are getting ahead of ourselves.  Given the size of the e-discovery market, and given the history “first movers” in the technology industry, there is going to be plenty of room for additional players and several next generations of integrated ECA before the eventual market leaders emerge.

Wal-Mart Stores Inc. plans to add evaluation of a law firm’s flextime policies to its list of criteria for evaluating outside firms, according to a panelist at the ACC annual meeting in Boston.

Joseph West, associate general counsel at Wal-Mart, said the company plans to add flextime policies to its current list of law firm measures: cost-effectiveness, performance and diversity.

West was one of eight panelists on an Oct. 20 panel covering how in-house counsel departments can get more value from the law firms they work with: “50 Ways and Counting to Drive Value into Law Firm Relationships.” 

The panel reviewed a myriad of steps in-house departments can take to focus on value, including setting guidelines for when to use outside firms; developing uniform invoice review guidelines; using templates for recurring legal matters; and using early case assessment to figure out whether to settle.

The process of establishing guidelines for when in-house lawyers can engage outside counsel “is just as important as what the guidelines say,” said Philip Crowley, an assistant general counsel at health care products maker Johnson & Johnson. “We need to tease out of lawyers a description of their best practices for their department,” Crowley said.

Johnson & Johnson developed litigation guidelines, including early case assessment within 90 days of the start of case, and generalized them for other areas. The guidelines “force the [company] lawyer to have a discussion with the outside counsel as to what it’s going to cost and how its’ going to be approached,” Crowley said.

Once corporate law departments develop templates for certain types of legal work and guidelines for using outside counsel, the next step is creating policies that require in-house lawyers to really use the systems, said Ganesh Natarajan, president and chief executive office of legal support services company Mindcrest Inc.

“It has to be clear to all the lawyers in the department that you must use this template,” Natarajan said. “Without that level of accountability, the system itself doesn’t work.”

At Hewlett-Packard Co., lawyers “are expected to manage their budgets effectively” and meet stringent goals, said deputy general counsel Kevin Light. “Even if we’re operating in budget, [the goal may be to] reduce travel by X percent or by X dollars,” Light said.

The panel also discussed ways to manage outside firms’ behavior, such as designating some work for competitive bids and crafting performance measurements systems.

Measuring outside lawyers and firms requires studying the company’s past legal spending and the outside attorneys’ past work to set a baseline, said Keith Hawk, vice president of client relations for U.S. Legal Markets at the LexisNexis Group subsidiary of Reed Elsevier PLC.

“We’ve talked so much about being able to forecast forward with metrics, but the greatest source of knowledge is to look backward,” Hawk said.

In-house lawyers at generally smaller companies met later in the day to brainstorm about ways to import the ACC Value Challenge to the smaller legal environment in a session called “Translating Big Firm/Big Department Innovation into Small Law Success.”

The panelists and participants talked about how to share risks with outside firms in alternative billing arrangements, using flat fees for projects or categories of legal services and using lower-cost alternatives such as boutiques, solos and associates.

Kenneth Grady, general counsel at shoe maker Wolverine World Wide Inc., said in-house lawyers need to figure out what’s valuable to them and structure the relationship accordingly. Grady said he’s farmed out securities work on a fixed-fee arrangement with the condition that the company have access to two key partners.

“The amount per year didn’t change, but our access to high-cost counsel increased,” Grady said.

Let outside firms know when lower-cost options work well, said Danette Wineberg, general counsel at The Timberland Co., which sells outdoor footwear and products. Wineberg said she lets the partner know when an associate assigned to a matter does a great job.

“That reinforces the value behavior if you felt you got really good quality service for what you were paying,” Wineberg said.

There have been two major press releases issued by the ACC during its annual meeting here in Boston.  (They were included in our registration packet but there is so much to cover we overlooked them).

The first:  the Association of Corporate Counsel will launch what it calls the ACC Value Index. According to a press release from the group, the index “will allow members of ACC to share ratings of law firms based on client satisfaction so that they can better meet company demands.”  For the story from law.com click here.   We are actually sitting in a session right now as they go through the criteria being used.

The second:  a study by the ACC has found that for the first time in three years, controlling the costs spent on outside counsel is a top priority for in-house legal chiefs.  The collaborative survey between the ACC and Serengeti Law found that compliance concerns are second to cost concerns, a sign that the economic downturn has affected how in-house counsel do their jobs.  

Almost 70 percent of in-house respondents offer up specific suggestions to outside counsel on how to increase the value of their services. While hourly billing rates remained the norm for outside lawyers, use of alternative fee structures rose to 61 percent of in-house counsel and fixed fees about 38 percent. Project retainers (15.4 percent) and contingency fees (10.5 percent) were also increasingly popular alternatives, states the ACC report.

For the background story on the release  click here.  We picked up a copy of the study here at ACC and we will report further later this week.

ACC kicked off its Annual Meeting with a Welcome Reception and networking event in the Exhibit Hall last ight.  The Posse List team is here all week to cover the event.  Posse List members will recall the ACC Docket provided us copies of its May 2009 issue on document review (click here) and we starting covering the ACC last year when the General Counsel of The Gap suggested in-house law departments should use contract attorneys on a wider basis (click here). 

This week there are over 100 event sponsors and exhibitors from international law firms, litigation support providers and vendors/leaders in knowledge management.  Suprisingly, with the challenges many have been confronted with, along with the cuts in travel budgets, the Annual Meeting is expected to draw a crowd of more than 2,000 in-house counsel and over 2,500 total attendees.  ACC President Fred Krebs is extremely satisfied with this year’s turnout, and he noted during the Leadership Dinner last night  “We have more attendees here with us this year than last year….and ACC closed out the fiscal year on September 30 with over 25,000 worldwide.”

There is an emphasis this year on a theme we have discussed the last 2 years:  how corporations can protect themselves against the risks associated with high-profile scandals, security breaches, IP threats, increased litigation, audits and regulatory investigations.  As we have mentioned, corporations continue their trend to by-pass law firms and go directly to data management and e-discovery vendors to manage their compliance, ESI needs, etc. as they seek to “save a buck” and secure more ownership over the costs – especially the e-discovery process.

Note:  last night we chatted with several GCs about the consolidating of e-discovery vendors (failures, buyouts, etc.) and “who will survive?  Who do we pair up with?”

And all of this segues into the area of governance, risk and compliance (GRC).  This is not a “new new thing” and has been chronicled for well over the last year and half.  But this convergence of e-discovery and GRC technology and management is reshaping the industry and providing new opportunities and new directions for contract attorneys and other members of the Posse List. 

And the event is packed with vendors (and the swag is high-end and overflowing, an indication of the elite audience vendors are targeting).  One of the most interesting so far is the Practical Law Company (click here)  who gave us stacks of CDs that cover the “how to” of just about every area of law.  We will be discussing with them distribution options of this material for Posse List members.

It will be a great conference and we will be reporting on it all week.  For some pix from yesterday, here is a slide show provided us by Rob Robinson at Orange Legal Technologies (who provides us the “Top 10 plus” e-disc0very stories every week):  http://bit.ly/zRb3J

The summer and Labor Day holidays are over, and so we are off.

The ILTA conference (our coverage is here) held two weeks ago was an eye-opener on new trend lines, jobs for contract attorneys, etc. — especially the amount of Federal government work in the pipeline and the surge in work in Europe.  We’ll have more on ILTA later in this post.   First, some general comments on the contract attorney market.

1.   In many areas of the country the contract attorney/document review market seems to have broken open.  We hesitate to say “exploded” but as Gabe Acevedo of the über e-discovery site Gabe’s Guide said “in the old days it would be an uptick.  But in this lousy economy, in this market call it exploded.”

2.  We have posted 87 projects/positions in the last 2 weeks across all 70+ job lists, most being in the South and the West. 

3.   But DC is alive.  In the past 2+ weeks we have seen new projects or ramp ups from Covington and from Crowell (two law firms that do direct hire) plus projects from De Novo, Firm Advice, Hudson, Kelly Law, Lexolution, Palmer, Pat Taylor, Phase Legal, Special Counsel, and Update.  And Fulbright & Jaworski has a monster going: 120+ attorneys in two locations.

4.   NYC has remained fairily moribund.  The subprime and credit-crisis related work we all expected to hit DC and NYC seems to have avoided both markets for the most part although we count a combined 4 “financial crisis related” doc reviews in DC and NYC.  (We use feedback from Posse List members, Kevin LaCroix’s site http://www.dandodiary.com/ and a few other sites to track the progress of cases and their location, and determine which law firms are handling them).

5.   A good portion of the subprime and credit crisis-related doc review work seems to be centered in the Atlanta area, the Carolinas and the Midwest — lower cost regions.  As we have mentioned before, farmshoring has been gaining favor (click here).

6.  That doesn’t discount the projects that have scuppered off to India.  We have received feedback from our India-based Posse List members who work for LPOs (as we have previously reported scores of U.S. attorneys have been hired by LPOs as project managers).   They report 3-4 “credit crisis-related” projects.   We try to rectify those numbers with various media reports (many of dubious validity because they tend to be press releases by LPOs).  But admittedly we do not have full coverage in India.  Of the 85+ Posse List members based in India only about 10-15 report in on a regular basis and they cover only 5 LPOs and there are lots of LPOs out there.

     Note: the summer issue of ACC Docket, the magazine of the Association of Corporate Counsel, did a series on outsourcing and Indian LPOs — the good, the bad, the problems.  We hope to provide a detailed post this month with links to the issue as we did on the ACC Docket series on document review (click here).

7.    But on the bright side for DC and NYC (and London and Brussels) is that the increase in economic tensions/issues and the increase in high-profile scandals has lead to a rise in government data requests, compliance audits and investigations from both a state and federal level.  We have chronicled, among other investigations: the DOJ investigation of DTCC in the credit default swap probe; the EU target investigations of the energy, tech, and drug markets (the EU has stepped up antitrust enforcement in the technology, energy, drug and transportation sectors); the LCD makers cartel investigation and the DOJ review of the telecom industry.

8.   Foreign language projects still rule the roost with the FCPA and IP litigation cases dominating, and they are all over the market: DC, LA, NYC, Philly, the South, and West.  Europe postings have also increased.  We have posted 21 foreign language projects in the last 3 weeks.   Many are part of the rising number of FCPA follow-on civil lawsuits, projects we also track through Kevin LaCroix’s site (cited above).

9.    Lastly, in answer to your many questions, our job listings have expanded because our membership includes a great number of EDD vendors, in-house legal departments, and other entities who have posted projects and positions that benefit from a legal background.  In the last few weeks we have posted a number of project management and client services positions (not responsible for generating revenue) where the vendor has sought a contract attorney to manage a project (legal and non-legal) and handle the inevitable issues that arise, or, for instance, manage the contract administration function.  These have been with law firms, litigation support providers, corporate legal departments and corporate finance departments.

Some housekeeping:

a.  To subscribe to our job lists go here:  http://theposselist.com/mailman/listinfo   The master Posse List (called “Distribution” on that link) normally posts only articles of interest, trend reports, webinars/webcasts, etc.  If a project/position is national in scope or permits telecommuting then we will post on the “Distribution” list.

b.  starting this week, foreign language projects will post ONLY to the master foreign language listserv and the respective language listserv and will not post to the respective city/region listserv.  To subscribe to the Master Foreign Language listserv go here:  http://theposselist.com/mailman/listinfo/foreignlang_theposselist.com

We are still building out the individual language listservs.  So far we have:

Arabic

Chinese

Dutch

French

German

Greek

Hindi.Punjabi

Japanese

Portuguese

Spanish. 

We will be adding more and if you are on the Master Foreign Language list you will be notified what languages have been added.

Now, on to ILTA.   There have been some good blog posts (besides our own) which summarized the conference and we have them below.  But a few points from the conference that affect contract attorneys:

1.   Our  favorite “mantra” which we heard continually: greater use of contract attorneys by corporations, a trend we reported on earlier this year (click here) and recently confirmed by the Sapire Search Group (click here) and which Rees Morrison has covered numerous times on his blog (click here).  It has been reflected in our job postings.

     Note:  this is a topic area at the ACC annual meeting in October (http://am.acc.com) which we will be covering so we’ll have more to report.

2.   The march of EDD vendors into document review continues, the accelerating trend of corporations by-passing law firms and going directly to vendors.  Many EDD vendors are trying to move more into the “right side” of the EDRM as EMC has done (click here).  

3.   More important to the EDD vendors success is the continuing move of EDD directly into corporations and the (incessant) mantra of “early case assessment early case assessment early case assessment …” which is critical, of course, to the corporate client.  It’s the EDD vendors that can do this, not the regular staffing agencies, although many staffing agencies have paired up with EDD vendors to provide A-to-Z service (for example The Dine Group and Huron Consulting).  The reason is obvious:  the better you assess and plan, the lower the volume of data to review – and review is the biggest cost in the entire process.   Companies are desperate to save a buck or two, so they’ll be more likely to secure more ownership over the e-discovery process to enhance control and reduce costs.  Leveraging in-house technologies, internal legal teams will deploy early case assessment methodologies and data reduction strategies.

4.   And there is the Europe-Asia factor.  As litigation and arbitration cases are increasingly becoming global in nature, and data may come from a variety of countries, there is a mixture of legislative jurisdictions involved as well as a myriad of languages and cultures – including vast differences in the maturity of attitudes towards e-discovery.   With cross-border cases ever more frequent, the process of disclosure grows more complex. Documents created in any country and any language can be, and increasingly are, relevant to lawsuits, investigations or regulatory matters. 

     Note:  Much of the European work has been captured by EDD vendors and agencies with “boots on the ground” in Europe such as Hudson Legal London, Merrill Brink, Trilantic, and Outindex.  Much of this is attributable to the use of blocking statutes and the impact of European privacy laws which we have chronicled on our Europe page (click here). 

5.       Which is why … taking points 2, 3 and 4 above … you have the one-stop-shop-solution that corporations have been seeking and why companies like Catalyst Respository Systems,  eMag Solutions, EMC, eTERA Consulting,  FTI Consulting, Huron Consulting, and Merrill Brink have made such inroads.

6.   But “The Big Enchilada” discussed was Federal government contract work.  There is a flood of work from the FDIC, SEC, Treasury, etc. …  standard financial document review/processing contracts … hitting the FBO (see our background post by clicking here).

Many staffing agencies bid on and get these contracts (for example Pat Taylor and Associates in D.C. which is GSA qualified and has placed many contract attorneys on Federal projects).  But the EDD vendors are looking for the the large dollar projects such as, for example, Mega 3 contracts (competitively awarded contracts with the DOJ) that are for providing information technology and automated litigation support services to wide range of Federal government agencies.  These contracts go into the millions of dollars.  Scores of EDD vendors (and a growing number of regular staffing agencies) are now GSA Schedule qualified and bid on these contracts and many are setting up special teams for these projects which include contract attorneys.   We have posted a large number on our job lists.

7.   Another growth area:  the use of contract attorneys in the area of governance, risk and compliance (GRC) markets.  This is not a “new new thing” and has been chronicled for the last year and half (see for example here) but it was given heavy emphasis at ILTA.  There will be/has been a convergence of e-discovery and GRC technology and management and it is reshaping the industry.  Many contract attorneys are employed in these markets already.  Given the rate of technology shown at ILTA, and discussions we had with vendors, most e-discovery and GRC solutions will be cloud based in 10 years and corporations are moving toward solutions. 

In the U.S. and Europe one of the big combinations covering this area is eDiscovery Solutions Group, a major player in the GRC market, and Trilantic, a leading European-based e-discovery company.  See their recent press release here.  Another significant player is Fios Inc.

    Note:  we’ll discuss the GRC area is area in more detail in the coming weeks, most likely after the Association of Corporate Counsel annual meeting in Boston which we have been invited to attend.  The areas of governance, risk and compliance are major topics at this year’s event.

NOTE:   any and all projects or positions that we have received relating to points 1 through 7 immediately above have been posted and will continue to be posted to the appropriate Posse List job listserv.  In answer to your questions, there is no one geographic area where these jobs are.  We have posted them all over.  And there are scores of companies staffing in all of these areas.  We have only mentioned ones we interviewed at ILTA or in our D.C. office.

Now, for some good coverage/analysis of ILTA we recommend:

—  Chris Dale blog Edisclosure Information Project which you can access here and here.      

—  Ron Friedmann’s blog Prism Legal whch you can access here.

—  The ILTA/InsideLegal.com Technology Purchasing Survey which you can access here

—   The Above and Beyond KM blog which you can access here

Many of these topics deserve further discussion and analysis and we will attempt that in the coming weeks. 

And rather than bombard you daily with posts and articles about e-discovery and/or the contract attorney market, check our Twitter feed (top of the right hand column) or if you have a Twitter account follow us here:  www.twitter.com/PosseList

The May 2009 issue of the ACC Docket, the magazine of the Association of Corporate Counsel (ACC), is devoted to the subject of litigation: effective management of e-discovery, running large document reviews, litigation holds, managing expenses, etc.    Although written for the in-house counsel audience, the issue is nevertheless a gold mine of information for everyone in this business: in-house counsel, law firms, contract attoneys, and e-discovery or litigation vendors.

We take note of two of the articles in the issue:

“And You May Find Yourself in a Large Document Review” gives you the nuts & bolts of document reviews, authored by: Frank Vecella, associate general counsel-litigation for Ericsson Inc.; Tom Fasone of the law firm McKool Smith; and Cathy Clark of the discovery management company IE Discovery.  The article is a “Here’s How You Do It” primer for large document reviews.

The issue also includes an article titled “Effective Management of Litigation Holds and Ediscovery” authored by our friends at Fios Inc. : Mary Mack, corporate technology counsel; Dennis Kiker, director of Fios Consulting; and Tom Mighell, senior manager at Fios Consulting.

We have links below to the first few pages of each article.  Here’s a summary of each:

“And You May Find Yourself in a Large Document Review”

Any article that starts off with a quote from the Talking Heads has to be good.  And this article is a great overview of the entire document review process from A-to-Z.  As the authors state “litigation has always been a fountainhead of cost and it is no secret that document review comprises a huge part of that expense.”   (The article cites the KPMG study “A Revolution in Ediscovery” which is one of the best e-discovery analytics pieces we have read and is a “must read” for those of us in this business: contract attorneys, law firms, in-house counsel, vendors.   It is publicly available and you can access it by clicking here.)

“And You May Find Yourself in a Large Document Review” is loaded with useful information such as a nifty paper-to-electronic-estimate conversion table (for example 500,000 pages equals 10 gigabytes of data), how you estimate the size of your collection and understanding technology.  But the article does not just focus on the mammoth amount of data in a typical document collection.  The article discusses other challenges in a document review such as:

* globalization

* short time frames

* simultaneous matters

* limited budgets

* complexity

* “no technology” background for some participants

* the confusing landscape of ediscovery solutions

And there is cornucopia of useful tips such as five things you need for a meet and confer,  methodologies behind collecting documents, how you compute billing costs by law firm partners, associates, contract attorneys, and vendors.  And there is a neat section “document review in action.”     

In summary, it’s a great review of the entire document review process from A-to-Z.

“Effective Management of Litigation Holds and Ediscovery”

Mary Mack and her band of Merry Men from Fios (a company which seems to be popping up all over the e-discovery universe these days) have written a great intro article (with a large amount of details, actually) on litigation holds: what they are and how you manage them.   We recommend this as a “must read” for everybody in this industry.

We’ll give you our very basic, simple definition: a legal hold is a process which an organization uses to preserve all forms of relevant information when litigation is reasonably anticipated.  It’s a definition fraught with issues (especially “reasonably anticipated”) but it’s a start.

The focus of the Fios article: developing “an effective, defensible legal hold process for your company”.  They base their presentation and suggestions around five key questions:

1.  When does the preservation obligation begin?

2.  What electronic data should you preserve and how will you do it?

3.  How much evidence do you need to preserve?

4.  In what format should you preserve the data?

5.  How can you preserve at low cost?

They run through the key Federal case law (including our dear, dear friend Laura Zubulake) and then lay out the basic steps to establishing a sound legal hold process.  They cover volume of evidence, specificity, robustness … and sanctions.  They also detail the “ESI Content Map” which will not only provide in-house counsel with the information necessary to execute a litigation hold but “provide outside counsel with the information necessary to speak competently about the company’s legal hold efforts …”

For a link to the first few pages of “And You May Find Yourself in a Large Document Review” please click here.

For a link to the first few pages of “Effective Management of Litigation Holds and Ediscovery” please click here.

Please note:  these articles are reprinted with permission of the authors and the Association of Corporate Counsel.  Copyright  ^© 2008 the Association of Corporate Counsel.  All rights reserved.  Legal resources such as this are available to members at no charge.  If you are interested in joining ACC, please go to www.acc.com, call 202.293.4103, ext. 360, or email membership@acc.com.   This licence is for single use only.  Reprint of the articles in any other format or location must be approved in writing by ACC.

We also want to thank Kim Howard, Editor in Chief of the ACC Docket, for all her help in securing the permissions for this post.

A special note to Posse List members:  nonmembers of the ACC can buy a copy of the May issue (you can see the titles of the lead articles in the May issue by clicking here) by contacting the ACC via its website www.acc.com.  But we are giving out free copies to 50 Posse List members who email us and tell us:

(1) how they find The Posse List website/blog helpful

(2) what you’d like us to add to the site, or what information you’d like us to provide to the list membership (which now includes contract attorneys, law firms, in-house counsel, bar associations, e-discovery vendors/general legal vendors, and professional associations) 

(3) your name and your mailing address where we can send a copy of the magazine

Email us at manager@theposselist.com and put in the subject line “ACC MAY ISSUE”.      

Posted by:  Gregory Bufithis, Esq., Founder and Chairman, The Posse List

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