Tracking down digital smoking guns

Lawyers need to know how to find evidence in gigabyte haystacks

December 05, 2004|By Tricia Bishop | Tricia Bishop,SUN STAFF

Brian L. Moffet said he saw the writing on the wall about three years ago. The Baltimore attorney was arguing a national class action suit with 50,000 pieces of paper entered into evidence when the judge asked, "Where are the e-mails?"

That sent Moffet into scramble mode.

"It was the first time I realized it was something that was going to have to be addressed," he said.

More than 90 percent of all new information is created and stored in electronic form, according to the University of California Berkeley. And more than two-thirds of that is never printed at all.

Not since the adoption of the Xerox machine 45 years ago has the centuries-old legal profession been so affected by new technology.

A handful of law firms, including Moffet's - Gordon, Fein- blatt, Rothman, Hoffberger & Hollander LLC - have created units specifically to mine for electronic information and help clients manage it. But experts say many lawyers aren't yet comfortable with hunting for electronic data and may be setting themselves up for claims of malpractice because of it.

"Think about it," said Ken Withers, an attorney at the Federal Judicial Center, the Washington-based research and education arm of the national court system. "If 92 percent of the information is in electronic form, then they're only asking for 8 percent of the information. Obviously, they're not getting a full picture of what's going on."

Recent court decisions have put attorneys and companies on notice by imposing hefty fines against businesses and public institutions that don't properly handle - or hand over - electronic records.

In July, Phillip Morris USA Inc. was fined $2.75 million for failing to keep and produce such data in a case that claimed the company marketed cigarettes to minors. That same month, a New York court instructed a jury to infer that the absence of electronic records could be considered intentional and damaging to the defendants. And a year ago, Baltimore defendants in a housing discrimination case produced 80,000 e-mail messages too late, causing U.S. District Court Judge Paul W. Grimm to refuse their admittance into evidence and preclude some witnesses from testifying.

Electronic evidence "is absolutely explosive in terms of the impact," Grimm said in a telephone interview last week. "At first it was somewhat unusual. But in the late '90s and early 2000, we started seeing a drumbeat of cases" submitting e-mail evidence in particular, which is often more salacious because of its casual nature.

"Discovery" - the technical term for the legal process of collecting evidence and information to try a case - once meant pawing through file cabinets in search of a paper trail. But the explosion of e-mail and other electronic data has complicated the procedure, making it more costly and cumbersome, but also critical. In 2002, New York Attorney General Eliot Spitzer used nearly 100,000 pages of e-mail to prove Merrill Lynch & Co. Inc. analysts were giving stocks false ratings in order to win business deals. Spitzer also used e-mail to prove the same of Deutsche Bank Securities Inc.

"Now, we not only have to sweep files for relevant information. We have to sweep the computers that are relevant, too," said Thomas P. Vartanian, a Washington attorney and a member of the American Bar Association's technology committee.

So-called "e-discovery" units remain largely concentrated among big firms with more resources.

"Lawyers are lagging behind. Very few law firms have addressed this with a system," said Donald A. Rea, who co-chairs Gordon, Feinblatt's Electronic Discovery Practice Group with Moffet.

Without in-house electronic discovery teams, lawyers and companies typically turned to outside businesses for help. The first such companies began on the West Coast in the late 1980s. But it wasn't until a decade later that the new market began taking off, said George J. Socha Jr., an attorney, market analyst and consultant in St. Paul, Minn.

Today, about 160 companies concentrate on electronic discovery. Their total revenues grew to $430 million in 2003 from $40 million in 1999.

Cases involving records mismanagement and accounting fraud - like those of Arthur Andersen LLP and Enron Corp. - have heightened mistrust of corporations by juries, said Lori Ann Wagner, a partner at Faegre & Benson LLC in Minneapolis. Her firm, which developed an electronic discovery task force in 1999, helps clients put policies in place to avoid the appearance of misconduct. But many companies still don't have well-defined or well-reasoned processes.

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