llustration by Andrew J. Nilsen

Digital Detective

A State Bar opinion on electronic discovery underlines a new reality — lack of technology competence isn’t just a competitive risk, but an ethical one

Back Longreads Jun 15, 2017 By Steven Yoder

In August 2015, a lawsuit involving a trademark dispute took a last-minute turn that has since mutated into a second case, pitting the original case’s defendant against its own lawyers.

The first plaintiff was HM Electronics, based outside San Diego, which makes the headsets fast-food workers use to take drive-through orders. The defendant, RF Technologies, repairs headsets like those and sells its own rival brand. Among other charges, HME accused RFT of creating a fake internal quality control document designed to look like it was written by HME. That document discussed nonexistent structural problems with the headsets, and HME said RFT distributed it to customers and competitors to boost market share for RFT’s products.

Judges in the case ordered RFT to search its files for anything relevant to the case, including the bogus report. As the case progressed, one of RFT’s lawyers, Los Angeles-based Thomas O’Leary, certified several times that RFT had obeyed the judges’ orders and done a thorough search. Their search didn’t produce the phony document.

But it turned out that RFT had indeed created the document. O’Leary admitted under questioning that he hadn’t paid close attention to the search process. At one point, HME’s attorney repeatedly asked him whether his client had produced all the documents asked for. O’Leary stuck to his talking points: “Everything has been produced,” he said. The HME lawyer asked him about the methodology RFT had used to search for the electronically stored information. “I didn’t conduct the ESI search, so I don’t know the methodology. They were told to look for documents on their computer,” O’Leary said.

RFT produced the phony report only after the court ordered it to do further searches of its files. The defense also failed to produce 375,000 pages of other materials relevant to the case, a District Court judge ruled.

The judge was none too pleased — he sanctioned RFT, ordering them to pay $1.3 million in legal fees that HME incurred trying to wring missing documents out of their opponent over almost two years. RFT appealed that sanction, and a second District Court judge ruled that the $1.3 million in fees was already reflected in a $9 million settlement the parties had reached the previous summer.

Then last November, RFT sued members of its defense team, including O’Leary, for alleged legal malpractice, claiming in part that they’d failed to oversee the discovery process. That case is now in federal court.

What Good E-Discovery Looks Like

That crabs-in-a-barrel outcome shows the perils of cases involving electronic discovery, the search for electronically stored information for court cases. Stories like it are why the State Bar of California adopted a formal opinion in June 2015 that advises lawyers that “a basic understanding of, and facility with” e-discovery is part of their broader ethical duty of competence. If the opinion changes attorneys’ behavior, it should mean fewer cases in which clients are badly served by their lawyer during the discovery process.

Related: Ron Bodenmann on How Businesses Handle Electronically Stored Information

E-discovery is increasingly hard to ignore in law, say experts. “I’ve had attorneys in the last year still say, ‘Well I do litigation, but I haven’t had a case that involves e-discovery,’ and I think they’ve probably missed something,” says Don Vilfer of Califorensics in Sacramento, which contracts with law firms on e-discovery and digital forensics. Every case potentially requires e-discovery. Even a slip-and-fall case in a grocery store now involves electronic information like text messages, photos on phones and digital footage from security cameras, Vilfer says.

But some data indicate that most lawyers don’t have the expertise they need. In a January 2017 survey, none of 22 federal judges agreed with the statement that the typical attorney has the knowledge needed to effectively counsel their clients on e-discovery.

The Bar’s opinion provides an off-ramp to lawyers who don’t have e-discovery expertise — they can work with another lawyer or with a technical consultant. But in that case, attorneys have to supervise the work of those they hire. The lawyer “remains the one primarily answerable to the court,” the Bar said in the opinion.

Supervision doesn’t just help ensure that an attorney will meet judges’ demands for thoroughness. Good leadership on e-discovery also means less wasted effort and lower costs for the client, says Marcia Augsburger, a partner at King & Spalding in Sacramento who has lectured and published on legal topics including e-discovery. When she leads an e-discovery effort that involves outside attorneys she’s contracted, Augsburger typically does a three-day immersion training for the team at the outset, briefing them on the issues in the case, the industry and industry terms, what they’re looking for and which documents are privileged.

After that, she checks in with the team through daily conference calls to discuss problems it might run up against. “Otherwise, people just keep making the same mistakes,” she says. “So often if you hire outside … reviewers, you look at these documents and you think, ‘What were they doing?’”

E-Discovery’s Technical Pitfalls

E-discovery can go wrong in other ways. Judges look none too kindly on forgotten or misplaced data sources. In working with a new client and their attorney, Vilfer, who formerly headed Sacramento FBI’s white collar and computer crime unit, does a structured interview to ferret out forgotten data sources — a hard drive in a basement, documents in a warehouse in Chicago, text messages on employee cell phones.

And review teams need specialized tools to preserve the integrity of data in a way that satisfies the court. That means just dragging and dropping files onto a hard drive isn’t going to work, in part because the date-stamp of the last time the file was accessed has to be preserved — which doesn’t happen when a file is dragged onto an external hard drive, Vilfer says.

Another common mistake by defense lawyers is to convert files created with specialized programs, like Excel or AutoCAD, into image files (like pdf or tif). That erases the formulas that were the basis of the data and could result in sanctions, Vilfer says. On the flip side, plaintiffs’ lawyers sometimes don’t know enough about e-discovery to demand that the defense provide files in those native programs, says Ron Bodenmann, who ran an e-discovery consulting firm for more than 20 years and now is a founding partner at Sacramento-based CyberCorp Forensics.

All of that is why Vilfer recommends that lawyers who hire help find a vendor who specializes in e-discovery, not simply an IT consultant.

Understanding Tech Isn’t Optional

E-discovery is just one area in which the State Bar has concluded that understanding tech is essential to responsibly serving clients. Another is cybersecurity, as law firms remain a tempting target for hackers. In April 2016, digital pirates carried out a simple operation, targeting the global law firm Mossack Fonesca, that turned into the largest data breach of all time — now known as the Panama Papers hack.

A 2010 State Bar opinion warned attorneys that they must ensure their use of technology doesn’t put client information at undue risk of unauthorized disclosure, and the American Bar Association’s model rules of conduct include similar language.  

But if national statistics are a guide, it’s unclear what effect those guidelines are having on behavior. In a 2016 ABA survey of attorneys on technology, more than 1 in 5 respondents said their firm had no technology policy addressing cybersecurity. Only 1 in 4 reported using encryption to email confidential or privileged communication. And many law firms let their attorneys use their own laptops to avoid having to invest their own money, says Russell Jackman of Novato-based Calmputer Consulting Services, an IT consultant to law firms. Those machines are often pre-programmed for access to the firm’s network and don’t have strong enough passwords, so when they’re lost or stolen the firm’s data is at risk, he says.

Technological backwardness also affects productivity, which could have ethical implications too. The ABA model rules call for attorneys to be prohibited from collecting “unreasonable” fees, and the State Bar’s rules of professional conduct don’t allow attorneys to collect “unconscionable” fees. That makes being proficient in basic software like word processing and spreadsheet programs an ethical duty — because it cuts the time needed for tasks, argues Casey Flaherty, a Los Angeles lawyer who founded Procertas, a company that tests lawyers’ skills with those programs. But many law firms are costing their clients money by underusing tools like those, he says. Indeed, the 2016 ABA survey found that fewer than half of lawyers use document assembly software, which allows firms to generate templates that automate the creation of frequently used documents. And just over half use document management software, which makes materials easy to find and ensures version control, among other features.

That discomfort with tech gives rise to odd situations like one Bodenmann encountered about four years ago. A law firm wanted his company to search a trove of emails for keywords as part of e-discovery. When he showed up to the office to discuss the job, the staff handed him 20 boxes of emails their client had printed out. Instead of giving him a digital file to search, they wanted Bodenmann to scan the paper versions into digital form and then run the search. Bodenmann told them doing it their way, instead of going back to the client to get a digital file, would cost their client about $20,000, four times as much as it should. But they didn’t want to go back to the client. So Bodenmann did it their way, and his first step was to hire someone to manually go through the boxes to separate e-mails from each other.

Firms that are behind on technology should get a consultation from an ethics lawyer on what’s considered the standard of care in technological competence and how they stack up, says Zachary Wechsler, president of the California Association of Discipline Defense Counsel, which represents attorneys and others in disciplinary proceedings. When it comes to technology, he says, “I don’t think the rules can ever be too strong.”