1. © Copyright DTI CONFIDENTIAL 1 Adam Bottner, Esq. Director of Business Development DTI April 15, 2016

2. 2 © Copyright DTI CONFIDENTIAL What is eDiscovery? Why does counsel need understand it? Effective representation/competency Accuracy of discovery certifications Duty of candor Unauthorized practice of law Duty to supervise non-attorneys Protection of attorney-client privilege Data mining

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4. 4 © Copyright DTI CONFIDENTIAL Our corporate client is counting on us to do so We are ethically obligated to do so There are risks involved in not understanding it (increased cost, producing too much/too little, producing privileged information)

5. 5 © Copyright DTI CONFIDENTIAL –These rules govern the procedure in all civil actions and proceedings in the United States district courts, except as stated in Rule 81. They should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.

6. 6 © Copyright DTI CONFIDENTIAL Corporate Legal Budgets are CUT by ~ 20% Litigation is not going to stop – but will INCREASE –Securities, IP, Bankruptcy, M&A, Employment In a challenging economic environment, how can attorneys: –Manage and reduce eDiscovery costs? –Mitigate and reduce eDiscovery risks? –Fulfill legal, regulatory and ethical obligations?

7. 7 © Copyright DTI CONFIDENTIAL Adopt a documented eDiscovery process –Preserving and producing electronic evidence (common law/FRCP) Use preferred providers and review platforms –Duty to supervise non-lawyer vendors (ABA MR5.3) Contract and Offshore Reviewers –Lawyer with direct supervisory authority…(ABA MR 5.1) Duty to preserve client confidences and privileged communications (ABA MR 1.6) Mitigating against privilege waiver (Use FRE 502)

8. 8 © Copyright DTI CONFIDENTIAL ABA Model Rules of Professional Conduct Rule 1.1 Competence A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. ABA Comment: Lawyers must maintain the requisite knowledge and skill..including the benefits and risks associated with relevant technology…

9. 9 © Copyright DTI CONFIDENTIAL 4 th Annual Law Bulletin eDiscovery Survey 52% of attorneys responding had handled a case involving eDiscovery –36% familiar with identification issues –41% familiar with litigation hold issues –41% familiar with collection issues –36% familiar with processing/review issues

10. 10 © Copyright DTI CONFIDENTIAL ABA Model Rules of Professional Conduct Rule 3.3 Candor Toward the Tribunal A lawyer shall not knowingly: (1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made ……… (3) offer evidence that the lawyer knows to be false….

11. 11 © Copyright DTI CONFIDENTIAL FRCP 26 (g) –“…By signing, an attorney or party certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry: (A) with respect to a disclosure, it is complete and correct as of the time it is made…”

12. 12 © Copyright DTI CONFIDENTIAL Rule 3.4: Fairness A lawyer shall not: (a) unlawfully obstruct another party’s access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act….

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16. 16 © Copyright DTI CONFIDENTIAL Tamburo v Dworkin 2010 WL 4867346 (N.D.Ill. 2010, Mag. Judge Nolan) William A. Gross Construction Associates, Inc. v. American Manufacturers Mutual Insurance Co. 2009 WL 724954 (S.D.N.Y. 2009) Newman v. Borders 2009 WL 931545 (D.D.C. 2009) Mancia v. Mayflower Textiles Servs. Co. 253 F.R.D. 354 (D. Md. Oct. 15, 2008) SEC v. Collins & Aikman Corp. 2009 WL 94311 (S.D.N.Y. 2009) Aguilar v. Immigration and Customs Enforcement Division of the U.S. Dept. of Homeland Security 255 F.R.D. 350 (S.D.N.Y. 2008) William Gipson v. Southwestern Bell Telephone Company 2008 U.S. Dist. LEXIS 103822 (Dec. 2008)

17. 17 © Copyright DTI CONFIDENTIAL Once again, this Court is required to rule on an e-discovery issue that could have been avoided had the parties had the good sense to “meet and confer,” “cooperate” and generally make every effort to “communicate” as to the form in which ESI would be produced…” From Judge Scheindlin’s opinion in National Day Laborer Organizing Network v. US immigration and Customs Enforcement Agency From 2003 through 2009, sanctions were granted in 56% of the cases where sanctions were sought. Out of a 230 cases in which e-discovery sanctions were granted, a failure to preserve electronically stored information (“ESI”) was cited in a total of 136 cases and as the sole basis for the sanction in 46 of those cases. A failure to produce ESI was cited in a total of 102 cases and as the sole basis for the sanction in 35 of those cases. A delay in production of ESI was cited in a total of 61 cases and as the sole basis for the sanction in 16 of those cases.

18. 18 © Copyright DTI CONFIDENTIAL 2004 2005 20062007 Zubulake V Morgan Stanley FRCP Amendments Qualcomm 2008 Victor Stanley Montreal Pension 20092010 Rimkus

19. 19 © Copyright DTI CONFIDENTIAL Even before the new rules were effective, the preservation and collection of ESI presented challenges to corporate counsel Highly-publicized cases and significant judgments (including Zubulake and Morgan Stanley) emphasized the importance of proper treatment of ESI discovery

20. 20 © Copyright DTI CONFIDENTIAL Sanctions: Adverse inference instruction & costs $29.3 Million Verdict –$9.1 Million Compensatory –$20.2 Million Punitive Failure of counsel in ethical obligation to client Legal hold alone is not enough → Counsel failed: –To communicate with key players –To monitor compliance –To locate relevant information

21. 21 © Copyright DTI CONFIDENTIAL Counsel must: –Actively monitor compliance with litigation hold –Become fully familiar with client’s document retention policies, data retention architecture and electronic systems, and communicate with all key players regarding their ESI storage and retention obligations –Ensure that relevant backup tapes or other backup media are retained

22. 22 © Copyright DTI CONFIDENTIAL The court ordered Qualcomm to pay Broadcom’s attorneys fees of over $8.5 million for failure to produce documents Court imposed sanctions outside counsel for failure to conduct reasonable inquiry into client’s production In addition, the judge initiated state bar sanction proceedings against Qualcomm’s in-house and outside attorneys because they may have violated their ethical obligations The court also ordered the attorneys to participate in a Case Review and Enforcement of Discovery Obligations (“CREDO”) program to identify failures in discovery process and alternatives to prevent future failures

23. 23 © Copyright DTI CONFIDENTIAL Court permitted breach of attorney-client privilege under self defense exemption, and allowed additional discovery by sanctioned attorneys “massive discovery failure resulted from significant mistakes, oversights, and miscommunication on the part of both outside counsel and Qualcomm” Court found insufficient evidence that attorneys engaged in the requisite bad faith Declined to impose sanctions on attorneys

24. 24 © Copyright DTI CONFIDENTIAL Court found that Defendants waived privilege on 165 inadvertently produced documents because of failure to “take reasonable precautions” Defendants used inadequate key word searching and failed to use a QC process to guard against inadvertent disclosure Court endorsed Sedona Conference Best Practices for search and information retrieval

25. 25 © Copyright DTI CONFIDENTIAL The duty to preserve evidence arises when a party reasonably anticipates litigation or government investigation or audit Standard is “reasonable and good faith efforts” Often difficult to determine when obligation is triggered or define the scope of information to be preserved –Fact-specific inquiry based on evaluation of the circumstances as they are known at the time

26. 26 © Copyright DTI CONFIDENTIAL When litigation or administrative proceeding is reasonably anticipated: –Claim Letter or Lawsuit –Filing of an Administrative charge –Cease & Desist letter in a copyright action –Catastrophic Incident –Fact-sensitive assessment Claim letter or a lawsuit may be too late

27. 27 © Copyright DTI CONFIDENTIAL Did not involve “any examples of litigants purposefully destroying evidence” Failure to timely institute written litigation holds constituted gross negligence “Careless and indifferent” preservation and collections efforts warranted the imposition of severe sanctions Judge Scheindlin reaffirmed Zubulake V guidelines for taking proactive steps to identify and preserve potentially relevant ESI

28. 28 © Copyright DTI CONFIDENTIAL Negligence –Innocent party must prove both relevance and prejudice –Additional discovery may be ordered –Possibly only monetary sanctions Gross Negligence –No need for innocent party to prove relevance and prejudice –Lost evidence presumed to be favorable to innocent party Willfulness –Severe Spoliation Sanctions → Possible Dismissal –Allegations are deemed admitted and must be accepted as true

29. 29 © Copyright DTI CONFIDENTIAL The lessons of the Zubulake, Morgan Stanley, Qualcomm, Victor Stanley, Montreal Pension Plan and Rimkus cases all come down to the need for corporate counsel to have a documented, repeatable eDiscovery plan and to get a handle on their companies’ ESI

30. 30 © Copyright DTI CONFIDENTIAL Evidence of a comprehensive and defensible process and plan for handling ESI preservation, collection and production right from the start Evidence of compliance with the plan Active management of the execution, timelines and milestones associated with the plan

31. 31 © Copyright DTI CONFIDENTIAL Practical difficulties and conflicting case law in eDiscovery privilege protection Origins of FRE 502 Factors for evaluating inadvertent disclosure Case law under FRE 502 Practice advice – protective order negotiation

32. 32 © Copyright DTI CONFIDENTIAL Federal Rule of Evidence 502(d) - CONTROLLING EFFECT OF A COURT ORDER.— Federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court—in which event the disclosure is also not a waiver in any other Federal or State proceeding

33. 33 © Copyright DTI CONFIDENTIAL “Data Mining” – searching a document’s underlying metadata for hidden or embedded information –May include prior drafts, track changes, or hidden fields on spread sheets ABA Model Rule 1.6(a): “A lawyer shall not reveal information relating to the representation of client, unless the client gives informed consent…” –Does not contain specific prohibition against data mining

34. 34 © Copyright DTI CONFIDENTIAL ABA Opinion 06-442 (August 2006); explains steps to avoid transmitting metadata; searching for metadata is permissible New York, Florida, Alabama and Arizona opinions say that it is an impermissible intrusion on the attorney- client relationship DC, Pennsylvania and Colorado: more situational approach

35. 35 © Copyright DTI CONFIDENTIAL Ill. Rules of Professional Conduct 1.6(a) “A lawyer shall not... use or reveal a confidence or secret of the client... unless the client consents....” State bar ethics opinions provide for reviewing information received in good faith, but no guidance on searching for it (data mining) in January 2010 revision of Ethical Rules

36. 36 © Copyright DTI CONFIDENTIAL Adam Bottner, Esq. Director, Business Development DTI (312) 752-0063 abottner@dtiglobal.com