Attached is an article written by Steve Puiszis, DRI's State Rep to Illinois, which originally appeared on Practical Ediscovery, a blog sponsored by Hinshaw & Culbertson LLP.
In Green v. McClendon, the court ordered that sanctions be entered against Mrs. McClendon and her counsel for the failure to preserve certain electronically stored information (“ESI”) about an Excel spreadsheet that she produced in discovery. The ESI was lost when “the son of a friend” who was “familiar with computers” reinstalled the operating system on her home computer. The court in Green was uncertain if the plaintiff had actually been deprived of any information because all files on the defendant’s home computer were downloaded onto discs before the hard drive on the computer was reinstalled, and those discs were subsequently produced in discovery. Nonetheless, the court ordered that sanctions be entered, and in the process fashioned an order that may have spawned a potential conflict of interest for defendant and her counsel.
One of the criticisms of ediscovery is that it has evolved into a tactical game of “gotcha,” where one of the goals is to shift the focus from the merits of the case to sanctions on the opposing party. The court’s opinion in Green suggests that trend has not abated. Unfortunately, in a zeal to protect all things digital, the court in Green assumed either that a litigation hold was not properly issued or that the client “brazenly” disregarded those instructions. The court apparently never considered whether the client may not have known or failed to realize that the reinstallation of her home computer’s hard drive would result in the loss of electronic information under the circumstances.
An issue simmering beneath the surface of Green is how detailed must a lawyers’ litigation hold instructions be in order to comply with the attorney’s ethical and professional duties? Does the applicable standard of care require that lawyers now specifically advise their clients to not reinstall the hard drives on their home computers? If so, given the myriad of technological ways ESI can be lost, must a lawyer’s litigation hold letters be written by an IT professional? It is the client’s obligation to preserve evidence not the lawyer’s responsibility. As litigation-hold letters become longer and more detailed, how likely is it that they will be read, understood and followed by the client?
The defendants in Green were a New York couple who committed to purchasing a piece of art for $4.2 million dollars from the plaintiff, a London-based art dealer. After making an initial payment of $500,000, the couple experienced marital problems which resulted in a separation in anticipation of a divorce. They never paid the balance due and never took possession of the art. Plaintiff subsequently filed suit asserting claims of breach of contract and promissory estoppel.
Several months after responding to plaintiff’s discovery requests, Mrs. McClendon produced an Excel spreadsheet in written form apparently created on her home computer which referenced various pieces of art including the artwork involved the lawsuit. Plaintiff requested information about the spreadsheet including the date it was created, modified and the names of anyone involved in its creation or modification. Mrs. McClendon produced three additional electronic versions of the spreadsheet which varied from the original, along with a partial electronic history for each. No further ESI could be provided about the spreadsheet because “the son of a friend” reinstalled the operating system for Mrs. McClendon’s home computer. That caused the loss of the electronic information stored on the computer prior to the reinstallation process. However, files from the computer were downloaded onto discs prior to that reinstallation, which were produced to the plaintiff.
Court Assumes Litigation Hold Instructions Were Not Provided.
Admittedly, the court in Green may have been aware of facts or information not mentioned in its opinion which influenced its decision. However, the court in Green apparently assumed that counsel failed to meet his discovery obligations. This is evident from the court’s conclusion that “[u]nless [the defendant] “brazenly ignored her attorney’s instructions, counsel apparently neglected to explain to her what types of information would be relevant and failed to institute a litigation hold to protect relevant information from destruction.”
Thus, without knowing what if any litigation-hold instructions were provided to the client by her counsel, with “little insight into the precise circumstances under which the electronic information was destroyed” and despite being “uncertain whether the plaintiff ha[d] actually been deprived of any information” since “all of the files previously contained on [the computer’s] hard drive were purportedly transferred to CDs” which were ultimately produced in discovery, the court in Green nonetheless entered sanctions against both the client and her counsel.
How Detailed Must Litigation Hold Instructions be to Comply With the Standard of Care?
Green prompts the question of how detailed a litigation-hold letter must be to comply with a lawyer’s professional and ethical duties? Do your litigation-hold letters specifically instruct clients not to reinstall the operating systems of their personal or work computers? More importantly should they? These questions should not be confused with a lawyer’s ethical duty of competence under Model Rule 1.1, which requires that an attorney possess the knowledge and skills “reasonably necessary for the representation.”
Have we reached the point in the digital litigation era where lawyers must now advise their clients as to every conceivable technological way that ESI may be lost, and instruct clients not to take any such action without first contacting them? For instance, ESI can be lost as the result of a computer virus – in fact, that is frequently why operating systems need to be reinstalled on home computers. In order to comply with applicable ethical and professional duties, must a lawyer advise the client to maintain the latest version of virus-protection software? Is the lawyer at risk of having sanctions imposed if he fails to so advise the client and ESI is lost? Before answering the question, remember that installing new software can also trigger the loss of ESI. So what advice is legally or ethically required? Rules of Professional Conduct arguably do not require that lawyers be experts in the use of technology.
Merely turning on or off a computer can cause the loss of ESI, but no one would suggest that the standard of care requires that a client be advised that every company computer where potentially relevant ESI may be found must be taken out of service to harvest that ESI or that a forensic image of the hard drive be made before it can be reused. The mere loss of ESI does not necessarily established that a lawyer violated his professional or ethical duties, yet arguably, that appears to be the basis for the sanctions order in Green. These examples are intended to be provocative, because far too little thought or discussion has been devoted to the issues raised in this post.
Is an instruction to take no action with a computer that could result in the loss or deletion of ESI legally and ethically sufficient hold advice? If not, should lawyers now as a matter of routine consult with IT professionals and should their litigation hold letters now be written by IT professionals rather than counsel? Do more detailed instructions have to be provided to clients who may not be technologically savvy or to small businesses who may not have IT departments? Does the standard of care vary, given the nature of the client being represented? If so, how is a lawyer supposed to gauge the level of a client’s technological expertise?
Getting back to the original purpose of litigation hold letters, how likely is it that clients will read, understand and follow a lengthy and technologically detailed litigation hold letter? While from a risk management perspective, lawyers may feel compelled to make their hold letters longer and more detailed, as those hold letters grow longer and technologically more detailed, do they actually become counter productive? And is a lawyer’s litigation hold letter potentially creating evidence that can be used against the client in this context?
Is it time to reexamine the scope of the lawyer’s duty under Zubulake? In the Seventh Circuit, district court decisions are not considered precedential. See Futuresource, LLC v. Reuters, Ltd., 312 F.3d 281, 283 (7th Cir. 2002) (“The reasoning of district judges is of course entitled to respect, but the decision of a district judge cannot be controlling precedent”). However, courts follow Zubulake as a matter of routine without ever critically considering, whether on balance, the decision “got it right” or should be followed in light of the potential conflicts it arguably (some would argue inevitably) triggers between the attorney and client.
Potential Conflict of Interest Arguably Triggered by the Court’s Sanctions Order.
A troubling aspect of the court’s decision in Green is its proposed method for allocating fault in its sanction order. The court ordered that the defendant be re-deposed and permitted any person involved in the creation or modification of the spreadsheet also be deposed in order to determine if anything was actually lost. Following the completion of that discovery, the court directed plaintiff’s counsel to submit a fee application. Because the court could not currently ascertain the “respective blameworthiness” of the defendant and her counsel, the court indicated that after amount of the monetary sanctions was determined, it would afford Mrs. McClendon and her attorney “the opportunity to agree on an appropriate allocation or present this issue to me for determination.”
Such an order puts counsel in an untenable position. Unless both the attorney and client immediately agree that one of them is at fault, they are arguably potentially adverse to one another, and when adversity exists, the attorney has an ethical obligation to advise the client of her right to seek separate counsel at that juncture. For instance, the client in Green may have received a hold letter from the attorney but did not realize that reinstalling the computer’s operating system would result in the loss of ESI. In that scenario, would it not be in the client’s best interests to take the position that her lawyer should have advised her about that possibility? Wouldn’t the lawyer want to take the position that his advice was reasonable and appropriate under the circumstances or that he didn’t know about the clients’ plans?
Do both the attorney and the client need separate counsel from this point on if they can’t agree on who is at fault or their respective percentages of blameworthiness? Can a lawyer ethically negotiate with a client who is not represented by separate counsel how to divide up such a sanctions award? Ultimately, how can the court resolve the respective blameworthiness of the attorney and client without trampling the privilege that would otherwise exist as to their communications?
In the end, if the plaintiff was not deprived of any information, and if the defendant was not given an unfair evidentiary advantage, is the potential damage to the legal system and to the attorney-client privilege caused by the court’s sanctions order in Green under these circumstances worth it?
Can a Variation of the Mt. Healthy Rule on Damage Causation be Applied in this Scenario?
Even if no litigation-hold instructions were provided by counsel in Green as the court apparently assumed, a legitimate inquiry is whether the issuance of reasonable litigation hold instructions would have prevented the purported loss of ESI in this instance. In Green, the client was not a sophisticated IT professional. Otherwise she would not have had the son of a friend reinstall her home computer’s operating system.
The record is silent as to whether the defendant was aware that the reinstallation of a computer’s operating system would result in the loss of any ESI, once all files on the hard drive were loaded onto CDs. The opinion in Green also fails to mention whether the client ever called her attorney to let him know that she may need to have her home computer’s hard drive reinstalled. If a reasonable standard arguably does not require that the lawyer specifically advise the client to not reinstall the hard drive on a home computer, and if the client was not aware that ESI could be lost by the reinstallation of her computer’s hard drive, then one must question what damage resulted from the purported failure to provide the litigation hold instructions, if in fact they were not provided?
In Carey v. Piphus, 435 U.S. 247 (1978), the Supreme Court adopted the so-called Mt. Healthy rule on damage causation. Under this doctrine, if a defendant can demonstrate that the same result would have occurred absent the constitutional violation, a plaintiff is not permitted to recover damages because the plaintiff cannot establish that the constitutional violation was the cause in fact of any damages. Here, if a properly issued litigation hold instructions would not have advised the client to avoid reinstalling the hard drive of her computer, than the rationale of the Mt. Healthy rule would seemingly be in play.