By Johnny Lee | Follow Johnny Lee on Twitter @forensicupdate
It is almost axiomatic in American jurisprudence that the duty to preserve arises for a party when that party “knows or reasonably should know” that litigation is foreseeable. That said, a recent matter out of the federal courts in New York has raised a very interesting question about evidence preservation duties, as well as when and how they extend to certain parties — including their counsel.
Corporate and litigation counsel alike recognize their (somewhat nebulous) triggering event as the “reasonable anticipation” of a dispute arising, and they respond by issuing data preservation instructions to custodians to ensure that all potentially relevant information is retained for possible review and use in such a matter. However, federal magistrate judge Joan Azrack has indicated that counsel for a party that destroys evidence might be sanctioned for failing to preserve — independent of a litigation hold — certain documents (including emails) that relate to “the lawyer’s negotiation and documentation of a loan agreement.”
What’s novel in this matter is not that this duty arises for counsel, but when and why. The case (FDIC v. Malik) involves a suit brought by the FDIC, in its role as the receiver for a mortgage company, against the mortgage company’s attorneys (et alia) relating to a series of loan transactions.
It is important to note that this case is still in process, so its implications (both for litigation- and for records-management) will be watched closely. Of particular note here is the implication that document retention regulations (in this case, arising out of the attorney’s professional responsibility rules) can establish evidence-preservation obligations where the affected party is “a member of the general class of persons that the regulatory agency sought to protect in promulgating the rule.” If we were to extrapolate this to organizations across the legal spectrum, this could represent a precedent of staggering influence to corporate America and the way it manages information.
This article originally appeared in Forensic Update, June 5, 2012
Johnny Leeis a management and litigation consultant, specializing in data analytics, computer forensics, and electronic discovery in support of investigations and litigation. A former attorney, he also provides advisory services to companies working to address complex data governance and records / information management issues. Johnny is a frequent speaker, panelist, and contributor on issues involving eDiscovery, Records and Information Management, Data Analysis, Business Intelligence, and the effective use (and risk management) of Information Technology. He has delivered solutions in both the public and private sector on the effective mitigation of business, compliance, and litigation risk to Law Firms; General Counsel; Boards of Directors; Audit Committees; and Chief Financial, Compliance, and Operations executives.
Johnny received his Juris Doctorate from the Georgia State University College of Law and his Bachelor’s degree from Emory University. He was admitted to the State Bar of Georgia in 2000, where he maintains an active law license. He has delivered projects across a variety of industries, including advanced technology, software, communications, private equity / venture capital, healthcare, hospitality, manufacturing, financial services, insurance, retail, construction, transportation, and legal.
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