Much has been written regarding a lawyer’s duty of competence in the digital age since the release of revised comment 8 to ABA Model Rule 1.1 nearly two years ago. That comment requires a lawyer to understand “the benefits and risks associated with relevant technology” as part of its overall duty to “keep abreast of changes in the law and its practice.” The relevant technological topics have largely focused on e-discovery and have been primarily directed to outside counsel.

Of particular interest is the draft ethics opinion that the California State Bar recently published regarding the impact of e-discovery on a lawyer’s duty of competence. That opinion generally focuses on the steps that outside counsel should take to competently deal with e-discovery. An overlooked though equally important question raised in connection with the opinion is the nature of in-house counsel’s ethical duties on these very same technological issues.

State Bar e-discovery hypothetical

To frame its views on the issues, the draft State Bar opinion includes a hypothetical e-discovery scenario. In the hypothetical, a lawyer agrees to a blanket search of his client’s electronic databases in a trade secret dispute against a competitor. The lawyer does so under the mistaken belief that a clawback agreement he has entered into will allow him to retrieve any information that is non-responsive or privileged. By so doing and by allowing a wide-ranging search to proceed under a set of extraordinarily broad keywords (jointly developed with opposing counsel), the lawyer unwittingly permits several classes of confidential, non-responsive, and privileged information to be turned over to the other side. This situation is exacerbated by the lawyer’s failure to review that information before its disclosure to opposing counsel. Moreover, other information disclosed in response to the search reveals that the lawyer’s client has apparently allowed its electronic information systems to destroy potentially relevant data after a duty to preserve was triggered. As a result, opposing counsel seeks evidentiary and monetary sanctions for spoliation.

E-discovery competence for in-house counsel

The lawyer’s conduct has obviously created a host of problems for his client’s position in the litigation and in future business dealings vis-à-vis its competitor. Getting beyond these issues, it is also worth examining what steps in-house counsel can take to protect the client’s interests in such a scenario.

As an initial measure, in-house counsel should meet with its retained outside counsel at the outset of the case to gauge the lawyer’s e-discovery competence. Such a meeting should enable in-house counsel to determine whether outside counsel has developed effective ESI preservation, search and review processes. In-house counsel should also evaluate the technologies supporting those processes, along with the e-discovery workflow that retained counsel has designed to identify and isolate attorney-client privileged communications, and other highly confidential information. Finally, in-house counsel should also discuss strategy and tactics for securing clawback agreements, protective orders, and (in federal discovery practice) orders protecting against inadvertent waivers of the privilege under Federal Rule of Evidence 502(d).

The next step for in-house counsel is to share with its outside lawyers pertinent aspects of the client’s information governance plan. To minimize miscommunications, in-house counsel should provide outside counsel with ready access to appropriate IT personnel and pertinent business leaders (the owners of the relevant information). Outside counsel cannot be effective – and may get in-house counsel and the client into hot water – without fully understanding the client’s information retention and governance policies. In contrast, such information will help outside counsel more easily negotiate key issues surrounding the discovery of ESI at the Rule 26(f) conference and Rule 16(b) scheduling conference. Moreover, open communication regarding this matter will facilitate strategy and logistics regarding the preservation and collection of relevant information.

Finally, in-house counsel should make sure that the client has developed a litigation hold process and has properly applied it in a given case. Such a process typically requires counsel to identify the key players and data sources possessing potentially relevant information. Counsel or others within the enterprise who are responsible for preparing the hold should draft the hold instructions in an intelligible fashion. The hold should then be circulated immediately — and then followed up on — to prevent data loss. By implementing such an approach, in-house counsel can more readily ensure that client information subject to a preservation duty is actually retained and thereby avoid costly satellite litigation.

While there are any number of additional measures that could be adopted, following the basic steps outlined in this article should enable in-house counsel to protect the e-discovery interests of its client. By ensuring that the client’s outside counsel is e-discovery competent, that outside counsel understands the client’s information governance program, and that an effective document preservation protocol is in place, in-house counsel can satisfy its respective duty of competence on these issues.