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NEW YORK � The company handling electronic document production in the Enron civil suits says a software bug may have erased text in e-mails produced for discovery in the case over an 18-month span. Applied Discovery Inc., a Bellevue, Wash.-based division of LexisNexis, says one client has reported a problem so far. And lawyers handling the Enron litigation said it was too early to predict the potential impact. But several of the lawyers, speaking on condition of anonymity, said that if the problem was widespread and had corrupted the discovery process, it could cost tens of millions of dollars to fix and could foul up both pending and settled Enron litigation. So far, no one is panicking. Scott Nagel, a vice president and managing director at Applied described the problem as “pretty small in scale” and said his company was working with Microsoft Corp., which produces the e-mail program at the heart of the problem, and the client that first reported the issue to come up with a fix. The company declined to name the client. The issue was first disclosed in a July 7 letter sent by Paul, Weiss, Rifkind, Wharton & Garrison to all of the counsel in the largest Enron civil suit, Newby vs. Enron Corp. Paul, Weiss would not comment on the problem nor would it say whether it was the client affected by the software glitch. The firm’s letter, however, says that “according to Applied Discovery, when Microsoft Outlook 2003 is used to open e-mails created in prior versions of Outlook, some e-mails appear to be blank.” As a result, “responsive information” in the original e-mails would not be identified through electronic searches or manual review: “The problem appears to affect electronic e-mail processing handled by Applied Discovery during the period of October 2004 through April 2006 � and quite possibly electronic e-mail processing handled by other document processing vendors.” The e-mail bug delivers messages with only the subject lines and sender information intact, but does not capture the body text of the e-mail. Lawyers working on the Enron litigation said it would be easy for document reviewers to overlook such e-mail, thinking it may have been blank in the first place. In 2005 Paul, Weiss helped Citigroup Inc. settle a class action brought by Enron investors for $2.58 billion. Applied Discovery was hired to produce electronic discovery in the case. After the problem was discovered earlier this summer, Applied notified Paul, Weiss, which in turn alerted Citigroup. “We have advised Citigroup of the nature of the problem, and Citigroup has instructed us to advise all parties to the Enron litigations of this development,” the letter from the firm says. “Since the problem does not affect any document productions before October 2004, the extensive document productions made on behalf of Citigroup to government regulators and investigators and the Enron bankruptcy examiner in 2002 and 2003 were not affected.” The letter says the firm asked Applied Discovery to immediately reprocess all e-mails from the affected period. During that period discovery was ongoing for dozens of clients, including Deutsche Bank AG, Merrill Lynch & Co., Inc., and Vinson & Elkins. Paul, Weiss is one of three firms who lawyers say is managing e-discovery in the case. The other two are Shearman & Sterling and lead plaintiff’s firm Lerach Coughlin Stoia Geller Rudman & Robbins. All three firms declined to comment. Applied Discovery is one of the five market leaders in the $1 billion electronic discovery processing business, according to the Socha-Gelbmann Electronic Discovery Survey in the August issue of Law Technology News, an affiliate of The Recorder. The company, acquired by LexisNexis in 2003 for $95 million, uses software to translate e-mail and other documents into a more readable and searchable format for lawyers. Nagel described the problem as “a Microsoft issue.” He said the problem is not e-discovery specific, meaning that anyone who uses an unpatched version of Microsoft Outlook 2003 to open a type of file called a .PST from Microsoft Outlook 2000 might find that the e-mail opens blank. Nagle declined to comment on whether the company was reviewing all e-mails processed during the 18-month period, or how much a review, if conducted, might cost. Microsoft did not respond to questions about the problems on Wednesday. Craig Ball, a computer forensics and electronic discovery consultant in Montgomery, Texas, said he is surprised to learn that a market-leading company like Applied would use Microsoft Outlook to search e-mail. He said Outlook is good about opening files, but inaccurate when it comes to searching file content and is limited in its ability to do Boolean and other searches. As for the problem being a Microsoft issue: “I’m blown away at an effort to point the finger at Microsoft by any e-discovery vendor. Every vendor is responsible for the tools they select and deploy,” he said. Ball said electronic mail makes up the greatest percentage of electronic discovery, and that Microsoft Outlook accounts for 50-70 percent of all e-mail. And while he has no specific knowledge about this case, “anything that excludes a chunk of the most important and prevalent electronic discovery is a significant omission,” he said. “This is not a trivial situation.” Ben Hallman is a reporter with The American Lawyer, a Recorder affiliate based in New York City. Brian Baxter of The American Lawyer contributed to this article.

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