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Reducing the electronic 'paper' trail - why it's good to talk
1 October 2010
Recent developments highlight the challenges faced by in-house
lawyers in this information age and why it could be better to talk
than write. Most organisations now generate a mass of electronic
data. This presents enormous difficulties for in-house counsel
responsible for disseminating legal advice and managing internal
communications with a view to protecting privilege and anticipating
disclosure requirements in any future proceedings or
investigations.
Talk to your IT team
Recent cases and rule changes emphasise the need for
organisations to be litigation-ready. As soon as contentious
proceedings are contemplated, companies come under a duty to act
swiftly to preserve potentially relevant material. The plethora of
information platforms can make it difficult to track down documents
and automated e-mail and data deletion programmes make electronic
documents extremely vulnerable to destruction. The case of
Earles v Barclays Bank Plc is a particularly salutary
tale. Despite winning, the bank had its costs halved for failing to
address the issue of electronically stored documents. Both the
bank’s in-house legal team and its external lawyers were heavily,
and publicly, criticised by the judge for allowing critical
documents to be destroyed and for failing to search for particular
electronic documents.
The courts are concerned that, at a time when the majority of
commercial documents are electronic, parties are just not dealing
with them adequately. The clear message is that this will no longer
be tolerated. There are signs that we may be moving towards the US
concept of “litigation hold”, where organisations are expected to
have formal document retention and disposal procedures able to be
suspended the instant proceedings are anticipated in order to
preserve potentially relevant material.
From 1 October, new court rules place greater emphasis on
electronic documents. Where they apply, parties must collaborate
and agree on how electronic documents should be dealt with and the
efforts that should be made to unearth potentially relevant
material. Electronically stored information must be handled in a
proportionate and cost-effective manner and the court will expect
to be presented with costed options.
This is only possible with full knowledge of the extent, nature
and location of electronic data within an organisation and an
understanding of how it is processed, so it’s worth a dialogue with
the IT team.
Is your organisation litigation-ready?
- Do you have a well thought out document retention and data
destruction policy?
- Have you identified the moment when data is destroyed?
- Is this appropriate, given the nature of the organisation?
- Is the policy applied consistently across the
organisation?
- Can automatic e-mail deletion and data destruction processes be
suspended rapidly?
- Are there communication channels in place to let relevant staff
know quickly?
- Are there adequate procedures in place to be able to identify,
secure and retrieve potentially relevant data?
The new rules re-emphasise the duty to take steps at a very
early stage to preserve potentially relevant documents. It may be
worth consulting specialist IT service providers. They work closely
with lawyers to determine the best and most cost effective ways of
preserving, retrieving and disclosing electronic data and can
support with giving costed options to the court.
Competition law - talk to external lawyers
The ECJ’s recent ruling in Akzo Nobel Chemicals Ltd is
unwelcome news for in-house lawyers. It confirms that their advice
is not privileged in the context of EU competition law
investigations carried out by the European Commission. The
reasoning is that employed lawyers cannot be truly independent
because they cannot ignore the commercial strategies of the
employer. According to the ECJ, only the advice of independent
lawyers qualified in the EEA is covered by legal professional
privilege. What are the practical implications of this?
- You must find out at the beginning of any competition
investigation whether it is under national or EU law. If it
is the latter, your advice will not be privileged. This is
also the case where the OFT assists the Commission with an
investigation although where the OFT carries out an investigation
on the Commission’s behalf UK rules apply.
- Consider taking external advice from an EEA qualified lawyer in
competition law matters to ensure privilege applies.
Legal advice – talk to people
It’s worthwhile organisations reviewing internal communications
policies with privilege and disclosure issues in mind:
- Avoid creating unnecessary records in the first place; consider
giving advice on sensitive matters orally instead. Any written
advice that is given should be clearly marked as “privileged and
confidential” and filed separately.
- Legal advice - as opposed to litigation - privilege only
protects communications between a lawyer and “the client” but,
following the House of Lords Three Rivers case, not all
employees of an organisation are counted as “the client”. Only
those individuals whose role it is to request and receive legal
advice on a particular issue are treated as the “client”. Where
litigation is not in prospect, communications should be restricted
to those who really “need to know”, so review e-mail circulation
lists to make sure they are no wider than necessary.
- In-house lawyers should always be involved at the outset
whenever legal issues arise so that privilege is properly
considered before potentially damaging, disclosable material is
created.
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