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Although the start date of the new electronic discovery procedural rules is still three months away, lawyers who haven’t sat down with clients to devise a plan may be losing a race against time. The changes to the Federal Rules of Civil Procedure, effective on Dec. 1, are intended to catch up with communications technology, which has turned matters of once-routine litigation into discovery nightmares as parties and courts grapple with electronic databases, e-mail, backup tapes and much more. While the new rules largely come into play once a dispute has arisen, a short timeline for parties to hash out e-discovery issues imposed by the changes means that clients-and their lawyers-need to get organized before the process server comes knocking. “Everybody is a little terrified,” said Martha Dawson, a partner with Seattle-based Preston Gates & Ellis. Dawson practices in the firm’s document analysis technology group. With some litigants in recent cases subjected to harsh sanctions for bungling e-discovery demands, clients and attorneys are worried about their ability to organize unwieldy information systems, she said. Creating particular anxiety is one component of the rules that requires parties to meet and address the preservation of electronic information 21 days before their first scheduling conference. New Rule 26(f) calls for parties to discuss “any issues relating to disclosure or discovery of electronically stored information, including the form or forms in which it should be produced.” The upshot is that lawyers need to help clients corral their electronic information from a legal perspective should they be hauled into court. “That is the Big Kahuna,” said Sharon Nelson, president of Sensei Enterprises, an information technology consultancy in Fairfax, Va. Nelson, who is an attorney, advises companies that by Dec. 1 they need to have a “litigation hold response team” in place, which includes in-house and outside counsel, in case a lawsuit is filed or in case a company suspects that it could be sued. Becoming familiar with backup data systems, which in many companies are massive snarls of unindexed electronic information, is something that lawyers must do, Nelson said. “Case law is now mandating that attorneys understand their client’s backup system, so they will understand what data is where and what steps must be taken to preserve evidence,” she said. Just this month, Judge Harold Baer, in the U.S. District Court for the Southern District of New York, awarded $45,162 in fees and costs for a sanctions motion in an investment fraud case against the defendants and their lawyers from New York’s Mound Cotton Wollan & Greengrass. The judge imposed sanctions for destruction and late production of discovery documents. Phoenix Four Inc. v. Strategic Resources Corp., No. 05-CV-4837. And still fresh in lawyers’ minds is last year’s Morgan Stanley case, in which a Florida jury awarded $1.4 billion to billionaire financier Ronald Perelman. The verdict hinged on the mishandling by the company and its counsel, Kirkland & Ellis, of backup tapes of electronic documents. Coleman v. Morgan Stanley, 2005 WL 679071. “Nobody’s going to get to ignore these rules,” Nelson said. But grasping an understanding of a client’s electronic information systems is a difficult task for many lawyers whose legalese isn’t compatible with tech-speak. It also involves different ways of thinking, said Dawson, at Preston Gates. “You’re dealing with different personalities,” she said. “But the bottom line is that you have to understand how it works.” Mark Yacano, a partner with Richmond, Va.-based Wright Robinson Osthimer & Tatum, said he is starting to see a blending of technology and legal disciplines related to the new rules. Yacano manages his firm’s support and information management practice, which works with clients to get a handle on their electronic information. As companies have started untangling their electronic systems to get ready for Dec. 1, Yacano said he’s begun witnessing “borderless representation.” Instead of the typical scenario in which outside counsel rushes in once a lawsuit has been filed, he sees much more collaboration, where information technology personnel, company executives, in-house counsel and law firms work together to refine systems to a manageable, centralized point. But creating such systems is about progress, not perfection, he said. “Courts know you’re not going to have perfect execution of e-discovery, but you need to be able to demonstrate that you’ve approached it in good faith with a well-documented method as to how you got what you got,” he said. Besides Rule 26(f), the amendments to the Federal Rules of Civil Procedure, which, for the first time, recognize electronically stored information as a distinct category of discovery, include a host of other changes. For example, they create two tiers of electronic information: one that is reasonably accessible and another that is not because of the undue burden or cost. For parties asserting that certain information falls into the second category, they will have to show that it is unduly burdensome. The court then may order it produced after a showing of good cause by the party seeking the information. In addition, the new rules include a safe-harbor component, which provides that, absent “exceptional circumstances,” a court may not impose sanctions when a party has failed to produce electronic information that was lost as a result of the routine, good-faith operation of an electronic information system. Also, the new rules have a so-called “clawback” provision, which enables parties to retrieve information without waiving privilege if they in good faith but mistakenly turn over privileged information. The rule changes are an attempt “to address the real world and try to put some reasonable limits on discovery,” Dawson said. They also codify some of the rationale established by U.S. District Judge Shira Scheindlin in a series of rulings known as the Zubulake decisions. Zubulake v. UBS Warburg, 229 F.R.D. 422 (S.D.N.Y. 2004). But despite the new rules, the courts will still play a big role in fine-tuning questions related to accessibility, good faith and more, Dawson said.

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