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eDiscovery and the Ethical Responsibilities of Legal Holds

ethical responsibilities of legal holds

Lawyers are being sanctioned for shirking their ethical responsibilities of legal holds.

There has been a lot of discussions recently about California’s move to clarify (and arguably heighten) an attorney’s eDiscovery ethical responsibilities of legal holds, but that’s not the only jurisdiction to do so.  Courts in several jurisdictions are already holding counsel responsible for ensuring that their clients are issuing and properly maintaining legal hold notices.

Several cases in recent years have focused on both a party’s and outside counsel’s eDiscovery ethics – specifically, their roles and responsibilities regarding litigation hold obligations.  More to the point, many recent cases have found fault with counsel, raising both ethical and malpractice concerns.

In Procaps S.A. v. Pantheon, Inc., Case No. 12-24356-CIV-Goodman (S.D.F. Feb. 28, 2014), the Court sanctioned both the defendant and defendant’s counsel for not instituting a proper litigation hold, along with other eDiscovery ethics failures. While not specifically requiring it, he Court “urged” the law firm to “explore which attorneys caused, or helped cause, this discovery failure and to determine whether those attorneys (rather than the firm itself) should pay all or some of the {sanction}.”

In another action, NVE, Inc. v. Palmeroni, 2011 WL 4407428 (D.N.J. Sept. 21, 2011), the Court imposed an adverse inference & attorney’s fees sanctions because the plaintiff did not institute the litigation hold properly. The Court specifically faulted outside counsel (who left the process to a non-lawyer CFO) for not properly overseeing the process.

And it’s not just for civil cases either.  In United States v. Suarez, 2010 WL 4226524 (D.N.J. Oct. 21, 2010), the Court issued a spoliation instruction against the United States, allowing the jury to infer certain deleted emails were favorable to the defendants. The Court specifically criticized the U.S. Attorney’s Office eDiscovery ethics for failing to issue a litigation hold to the FBI for seven months after the onset of the investigation.

Sanctions can also be imposed for a counsel’s failure to maintain documents in regulatory settings.  In FDIC v. Malik, 2012 U.S. Dist. LEXIS 41178 (E.D.N.Y. Mar. 26, 2012), the Court found that a bank’s former lawyers had an eDiscovery ethical obligation and a legal duty to preserve ESI relating to the firm’s prior representation when the firm could only produce some emails concerning many loans it had documented.  The Court noted that the law firm had an affirmative duty to preserve certain emails based on applicable professional-responsibility rules and attorney-ethics opinions.

So while the primary focus of sanctions in most cases has been in reaction to a party’s failures regarding the ethical responsibilities of legal holds, the cases above make it clear that more and more courts are placing at least some of the responsibility, and the blame and sanctions for not fulfilling that responsibility, at the feet of counsel too.  

For more information about ethical obligations and eDiscovery, check out our webinar, Risks & Responsibilities – The Ethics of Legal Holds.