LawyersUSA

A judge's recent decision to slam attorneys with $8.5 million in sanctions for failing to monitor their client's e-discovery failures – and report them to the state bar for possible disciplinary action –sent ripples of fear through the legal world.

But now that some of the dust has settled, attorneys are assessing what can be learned from the ruling in Qualcomm v. Broadcom.

"The case is not the least bit typical, but the range of issues for litigators to think about and talk about is typical," said Timothy Devine, a partner with Honigman Miller in Detroit and co-leader of his firm's e-discovery practice group.

In particular, the case will force attorneys to face head-on their responsibilities in the e-discovery process.

In a unique move, the judge ordered Qualcomm's in-house attorneys and outside counsel to submit to a comprehensive court-supervised e-discovery protocol, which she called "a baseline in other cases."

What the judge made clear, said Mary Mack, technology counsel with Fios, Inc., a company that provides corporate litigation response plans, "is you can't just take a client's word that they searched their computers."

'Monumental discovery violation'

Qualcomm filed a patent infringement claim over whether digital video signals complied with a certain industry standard. One of its main arguments was that it had not participated in a standards-setting body.

The company discovered 21 e-mails on the subject, but failed to produce them or investigate whether more e-mails existed. Meanwhile, it maintained the argument in court that it did not take part in any meetings and that no e-mails existed.

In the end, more than 46,000 e-mails were found that had not been produced.

U.S. Magistrate Judge Barbara Major called this a "monumental discovery violation" and sanctioned six of Qualcomm's outside attorneys for "ignoring warning flags" and not making a "reasonable inquiry" into whether the company's document production was adequate.

"An adequate investigation should include an analysis of the sufficiency of the document search and, when electronic documents are involved, an analysis of the sufficiency of the search terms and locations," the judge wrote.

The court ordered Qualcomm, which lost the patent suit, to pay all of Broadcom's attorney fees and costs of more than $8.5 million and referred the sanctioned attorneys to the state bar for investigation of ethical violations.

The judge also ordered that the six sanctioned lawyers and Qualcomm's five in-house attorneys complete a "Case Review and Enforcement of Discovery Obligations" protocol that requires them to analyze their discovery failures, develop a comprehensive e-discovery protocol to prevent future violations, and apply the protocol to various factual situations, such as when a client has no in-house counsel, one in-house lawyer, a large legal staff, or two outside law firms.

In addition, Qualcomm must pay for Broadcom's lawyer to participate in the meetings with the judge, which began late last month.

Mack said that judges are increasingly taking an active role in the e-discovery process. For example, she noted that a magistrate judge in Kansas has required attorneys to videotape their "meet and confer" conference (a required meeting under the new federal rules), so he can watch it before he rules on their respective e-discovery proposals.

Basic steps to e-discovery

The case illustrates the importance of advising your clients to develop and implement a comprehensive e-discovery strategy. According to a recent Aberdeen Group survey of 364 companies, businesses that followed this approach experienced significant cost savings and lowered their litigation risk.

Here is what attorneys advise:

• Establish a records policy.

Although most companies have a records retention policy, many do not robustly enforce it, said Devine, especially when it comes to work-related information on home computers, Blackberries or other devices used off-site.

It's important for outside counsel to communicate with the in-house legal team as well as the in-house IT people to make sure they are getting the policy "from the horse's mouth," said Michael Hindelang, an attorney in Detroit and an expert in e-discovery.

"By doing it up-front, you avoid a lot of the pressure … when litigation hits," said Devine.

• Create a content map.

Another basic feature of an e-discovery plan is a map that lays out where all the content is and who is responsible for it, said Mack.

"The content map tells you, 'OK, my accounting is over here, my e-mails for this division are over there, my retention period is 'x,' the person I go to to issue a legal hold is Joe Smith and his email address is this,'" she said.

In-house counsel can assist with this because they are in a position to assess various "risk points" of the business as it changes, such as acquiring a new affiliate and incorporating two retention policies or dealing with electronic data stored on computers when an office is closed or employees are laid off, said Hindelang.

• Get surgical.

A mistake that some lawyers make is "save everything, review everything and produce everything," said Devine. "That's the wrong answer."

Lawyers should get more tailored in their electronic discovery, not more broad.

A developing trend is for opposing counsel to sit down and negotiate search terms for electronic data, said Kansas City commercial litigator Maxwell Carr-Howard, who recently did just that in a case he handled involving a corporate investigation by the Department of Justice.

• Collaborate.

The Qualcomm case makes clear that in-house and outside counsel have to strengthen their collaboration.

"It may mean that the process becomes more formalized as to different people's roles and responsibilities," said Charles R. Morgan, former general counsel of Bell South and current managing director and special counsel for FTI Consulting in Atlanta.

This includes outlining "touch points for communications" when litigation does happen, said Mack.

However, she noted that the ruling could add friction to the relationship between in-house and outside counsel because outside counsel in the case weren't allowed to breach the attorney-client privilege once they faced sanctions.

"Some outside counsel will request a waiver of the privilege [to protect themselves] if their work is questioned, and in-house counsel should be looking closely at their engagement letters," she said.

But Carr-Howard said this is problematic because it would undermine the trust between attorney and client.

Questions or comments can be directed to the writer at: sylvia.hsieh@lawyersusaonline.com