A mislabelled file ends three careers: some practical steps to avoid e-discovery disasters
1 November 2017
Learning from our mistakes is good, but learning from someone else’s is a lot less stressful.
A recent multi career train-wreck in the US contains valuable lessons for the Queensland profession. E-discovery is no longer an issue solely for large corporates and the big law firms that serve them – even a small business client may have tens or hundreds of thousands of documents, emails, electronic logs and other material that is potentially relevant to litigation. As important, if not more so, hundreds or thousands of those may be shielded from disclosure and disastrous to the client (or their lawyer) if disclosed inadvertently.
So how do the trials and tribulations of the Wells Fargo bank provide a cautionary tale for us?
A dispute arose between two brothers, both employed by Wells Fargo bank (the Bank) in the US. One of them considered he had been defamed by his sibling and issued proceedings. The other issued a notice of non-party discovery requiring disclosure of records by their mutual employer.
So far, so good. Not a great career move (Bad Career Move #1) but nothing too unusual.
The Bank delayed in responding to the notice, then did it in a hurry. Relevant material was identified by an external e-discovery service which conducted an electronic search of email and electronic documents. Counsel employed by the Bank reviewed them, burned it all to disk and sent it to the requesting party.
The lawyer who reviewed the material for the bank (under considerable time pressure) failed to spot the unintended inclusion of a sub-folder containing 50,000 client files, privileged advice and transaction information relating to deals worth billions of dollars. There were also a large number of emails included which were not within the ambit of the notice. (Bad Career Move # 2)
The lawyer who received the information did see the inadvertently disclosed material but chose not return the disk. Instead he copied it, sending one copy to his client. (Bad Career Move # 3)
The client forwarded the whole thing to the New York Times. (As he was still – briefly – employed by the bank at the time, Bad Career Move #4)
On analysis, it emerged that the folder contained a mix and match of backed up information, was stored in the wrong location and mislabelled. The first few hundred documents matched the file contents, but a sub-folder containing the offending material had been included. The reviewing solicitor deposed that she had misunderstood the technical advice provided by the discovery service concerning the filters that had been applied to the data.
What lessons can be learned?
Lesson 1 – failure to communicate
Where data is be collated by external agencies or by the client, the agent or search professional (or, increasingly, predictive text algorithm) must parse the legal relevance test into search strings. Usually they are expert in the latter part of the job, but not necessarily in interpreting what is and is not legally relevant.
In the Wells case, the search agency was provided with the discovery notice but not specifically briefed as to the classes of document that would be responsive to it.
The solicitor for the disclosing party should draw the instructions to the party conducting the search, both at first instance and then once broad classes of potentially relevant documents have been identified.
Lesson 2 – failure to check in sufficient detail
Search results then need to be checked. This check must be both manual and electronic.
Many organisations rely upon the location of stored information to protect confidentiality and privilege. It is rare that any organisation has all of its data where it should be; so searches excluding out of scope material are as an important part of the process as the search capturing relevant material.
Lesson 3 – use a professional to set up the electronic search
Ok - they did in this case and it went wrong anyway but this is a complex area and not something that should be left to an articled clerk who knows a bit about IT. (See: here for some examples of how the wrong search gives the wrong result).
Lesson 4 – avoid unnecessary time pressure
Though it is self-evident, we will state the obvious that discovery will always be undertaken with resource constraints. Time pressures may be imposed externally, but all too often these arise from not getting started early enough or not pushing others involved in the process to do their part in a timely way.
Clients must also be primed about the cost of reviews so that a realistic budget is set aside to do the work.
The ethical and practice framework
Solicitors have long had the obligation to withdraw if they become aware that a client is concealing discoverable documents. Courts in the US take this a step further and impose positive duties on lawyers to locate and protect relevant evidence.
That is not the position in Australia (as yet). However the explosion in the volume of records and electronic data from connected equipment means that a solicitor’s professional obligation to explain the scope of relevant material, how this can be identified and prepared efficiently is becoming much more technical. If we are not proficient in the area (we should at least know the basics) the client should be referred to an expert.
Courts are increasingly inclined to intervene in the mechanics of the discovery process where appropriate. For an interesting recent example in Queensland see: Redpath Contract Services Pty Ltd v Anglo Coal (Grosvenor Management) Pty Ltd.
Discovery based on predictive code or the assumptions built into an algorithm is already in use in Australia, and hardcopy documents as the default medium of discovery is rapidly disappearing. Victoria in particular has been proactive in pursuing efficiency through technology in trials.
See also the eTrial resources for Queensland Legal Practitioners here: http://www.courts.qld.gov.au/court-users/practitioners/electronic-trials-etrials
1 November 2017
 SeeThe Australian Solicitors Conduct Rules 2012 (‘ASCR’), r 31; Expense Reduction Analysts Group Pty Ltd & Ors v Armstrong Strategic Management & Ors  HCA 46.
 Myers v Elman  A.C 282.
 McConnell Dowell Constructors (Aust) Pty Ltd v Santam Ltd & Ors (No. 1)  VSC 734.