SEC steps up its enforcement actions as it defines its priorities

November 26th, 2008   Filed Under E-discovery, legal news  

One thing is going up in this faltering economy, the number of enforcement actions being initiated by the SEC.  The number of SEC enforcement actions are at an all-time high.  By the close of this fiscal year the SEC had brought a total of 671 enforcement actions in this year alone.  Insider trading cases are  up 25%, market manipulation related cases up 45%, and there are at least 50 pending sub-prime related investigations.  Insider trading and market manipulation cases have reached record highs.  In the SEC’s Fiscal 2008 Enforcement Results there is a clear upward trend in investigations and enforcement actions.  Further, with the new Congress promising to increase regulation of the financial markets it is not implausible that these numbers will increase even more in 2009.  In a recent statement issued by the SEC, it’s evident that the regulatory body will require much more information from corporations in a much shorter turn-around time.  Three of the goals that the SEC outlined as its priorities are:

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Litigation Holds

November 25th, 2008   Filed Under E-discovery, IT, Litigation holds  

Knowing when to issue a litigation hold is key to a successful litigation strategy.  The cost of a mistake can be significant.  This is an interesting article about the cost of a misstep on this front.

In the court case Consolidated Aluminum v. Alco, the defendant suffered monetary sanctions for failing to properly apply litigation holds. In spite of the fact that Alco had a litigation hold policy in place, someone was asleep at the wheel. There were several serious issues: Alco issued the holds after litigation had begun, did not make the holds broad enough, and did not enforce holds when key employees deleted relevant data.

One of the federal rules of civil procedure’s strictures requires that companies demonstrate consistent litigation hold practices. This does not mean that litigation holds must be issued willy-nilly. No one (with the possible exception of opposing counsel) believes that a company must lock up all its active data in case of potential relevance, no matter how slight. However, litigation holds do come into serious play when looming litigation is “reasonably anticipated” and when data has high potential relevance, no matter where it may be located.

This area is another example where human oversight and e-discovery technology can and should work together. Attorneys and IT should work together to decide what electronically stored information (ESI) should be retained for upcoming discovery actions, which individuals have custody of the relevant ESI, and where the files are located — fileshares, email servers, archives, laptops. Once these decisions are made, then the firm can use e-discovery tools to search for and hold the relevant data.

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The Glory Days are Over….we are now entering the Renaissance of litigation practice

November 16th, 2008   Filed Under E-discovery, legal news  

Remember in the glory days when corporations would shrug off litigation cost as a possible cost of doing business rather than a definite cost of doing business.   Corporate legal departments have begun to recognize the need to be more proactive in meeting regulatory and legal requirements.  Such departments are also looking for cost-effective ways of meeting the litigation demands of the corporation.

The current financial crisis has been an additional wake up call for many who have not yet got their information management house in order.  A poorly managed information system can reak havoc with risk management causing litigation cost to rise three or four times the amount it would be if there is an effective, efficient system in place prior to the litigation.  With the increasing cost and decreasing timelines of most litigation, it is critical that a corporation has a rapid response system in place for assessing risk, collecting data, and processing and reviewing information.  Run-a-way e-discovcery can make a huge dent in a corporation’s budget.  However, there is a way around it.  The solution is planning for a litigation before it hits.

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Ediscovery: Two different Judges, different reasoning, same conclusion, ease the discovery process

November 12th, 2008   Filed Under E-discovery  

Leonard Deutchman of Pennsylvania Weekly wrote an interesting article about the Mancia v. Mayflower Textile Service Company and the Containment Technologies Group v. American Society of Health Systems Pharmacists cases.

Two thoughtful jurists issued opinions in discovery matters that took opposite tacks in different situations to achieve the same goal. 

In Mancia v. Mayflower Textile Service Company, No. 1:2008cv00273 (D.Md. Oct. 15, 2008), the well-respected Judge Paul W. Grimm held that the party requesting discovery must make tailored requests while the producing party must supply specific responses as to why a request may be overboard, inaccessible or otherwise burdensome.

In Containment Technologies Group v. American Society of Health Systems Pharmacists, No. 1:2007cv00997 (S.D. Ind. Oct. 10, 2008), Judge Tim A. Baker held that a producing party may broadly include e-discovery within a protective order and does not have to review each part of each file before so doing. The specificity required in Mancia and its absence in Containment Technologies both have the same goal, which was one of the goals of the 2006 Amendments to the Federal Rules: to move along the discovery process. They also both shed light on the practices emerging from the amendments as well as illustrate one tenet of those practices, namely, that in e-discovery practice, informed, smart answers win.

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