Josh J.T. Byrne ()
Attorneys run the gamut in adopting technologies, from those who eagerly embrace and utilize new technologies, to those who tend to fear them. Changes in technology create opportunities for growth and efficiency, and create pitfalls for the unwary practitioner. As the pace of technological change increases, the risks and benefits of relevant technologies increase as well.
The amendments to the Federal Rules of Civil Procedure that specifically permitted e-discovery are eight years old. The courts have seen the first legal malpractice actions based upon e-discovery and electronic data, and the Pennsylvania Rules of Professional Conduct were amended to specifically include a requirement of technological competency. Attorneys around the country have faced sanctions and ethical discipline for technology-based reasons.
What do Pa. Professional Conduct Rules Require?
On Oct. 22, 2013, the Supreme Court of Pennsylvania ordered the Pennsylvania Rules of Professional Conduct be amended effective in 30 days. The order adopted the changes suggested in 43 Pa. B. 1997, Notice of Proposed Rulemaking to “address the need for changes in detection of conflicts of interest, outsourcing, technology and client development, and technology and confidentiality.” Rules changed include 1, 1.1, 1.4, 1.18, 4.4, 5.3, 5.5, 7.1, 7.2 and 7.3. Many of the changes are minor, such as the substitution of “electronic communications” for “email,” and adding “information in electronic form” to the types of information that need to be screened. However, some of the changes are more significant.
Knowledge of ‘Relevant Technology’—Rule 1.1
Much of the focus on these amendments has been on the amendment to comment 8 to Rule 1.1. This comment creates a requirement that lawyers “keep abreast of changes in the law and its practice including the benefits and risks associated with relevant technology.” The essence of this rule is practicing attorneys must have a modicum of understanding of technologies associated with the profession. However, no one yet knows what this requirement means. The amendment to the comment parrots language recommended by the American Bar Association, which has not provided further definition for this requirement. A number of commentators have suggested this is a warning to the bar that “ignorance is not an excuse” for failing a client where technology is concerned.
Confidentiality of Information—Rule 1.6(d)
There is also significant new language in the comment regarding the duty of attorneys to guard against the “unauthorized access by third parties” of confidential client information. The rule “requires a lawyer to act competently to safeguard information relating to the representation of a client against unauthorized access by third parties and against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision.” The comment notes an attorney is not guilty of a violation if the attorney takes reasonable efforts to safeguard the information. The comment sets forth several factors to determine what constitutes “reasonable efforts,” including cost, difficulty of implementation, and the extent to which additional measures would adversely affect the ability to represent the client. The rule notes an attorney does not have an obligation to make a device or an important piece of software “excessively” hard to use.
The changes to this rule suggest attorneys must make reasonable measures to protect the confidentiality of client information on their devices. At a minimum, attorneys probably should have their devices password-protected, and should have the ability to remotely wipe phones and laptops. Attorneys are also required to make sure that those under their supervision—associates, paralegals and secretaries—take reasonable measures to protect client confidentiality. The comment also notes a client can require an attorney to implement measures not included under the rubric of “reasonable efforts.”
Respect for Rights of Third Persons—Rule 4.4(b)
Rule 4.4(b) and its comment were also amended to specifically encompass inadvertent disclosure of electronic information including metadata. The comment requires a lawyer who knows or reasonably should know a document, including electronically stored information (including metadata), was sent inadvertently to promptly notify the sender in order to permit that person to take protective measures.
Use of Nonlawyers Outside the Firm—Rule 5.3
There is significant new language regarding the use of nonlawyers outside the firm added to the comment to Rule 5.3. “Nonlawyers” include retention of “investigative or paraprofessional service, hiring a document management company to create and maintain a database for complex litigation” and use of third parties for scanning or printing documents. The amendment requires attorneys to make “reasonable efforts” to ensure “the services are provided in a manner that is compatible with the lawyer’s professional obligations.”
Legal Malpractice Arising Out of Technology Issues
In 2011, the law firm McDermott Will & Emery was sued by its former client, J-M Manufacturing. The basis of the action was an allegation McDermott did not adequately supervise contract attorneys and an e-discovery vendor during a whistleblower lawsuit, leading to the disclosure of nearly 4,000 privileged documents (out of a disclosure of approximately 250,000 documents). Although McDermott eventually won the legal malpractice action, the very existence of the action establishes the professional liability concerns created by new technologies is very real.
Sanctions for Failure to Understand Technology
In Metropolitan Opera Association v. Local 100, 212 F.R.D. 178 (S.D.N.Y. 2003), the court imposed sanctions including a finding of liability on the part of the defendants and an order for the defendants to pay the plaintiff’s attorney fees due to discovery abuse when defendants and their counsel failed to search for, preserve, or produce electronic documents. The court found the defense counsel: (1) gave inadequate instructions to clients regarding discovery obligations; (2) disregarded the lack of a document retention system; (3) delegated document production to a layperson without instructing them about the scope and procedure for documents; and (4) blatantly disregarded repeated discovery requests by the court and the plaintiffs by responding incorrectly that all documents had been produced.
Earlier this year, the law firm Quinn Emanuel Urquhart & Sullivan was sanctioned for violating a protective order issued by the court in Apple v. Samsung Electronics, Case No. 5:11-cv-01846-LHK (N.D. Cal. Jan. 29, 2014). The sanction was for providing an unredacted expert report received from Apple to Samsung, despite a protective order from the court that such a disclosure was not to be made to the clients. Although Quinn Emanuel avoided punitive sanctions, it was required, inter alia, to pay Apple’s costs for litigating the motion for sanctions.
Sanctions for Deletion of Social Media
Two decisions last year imposed or upheld sanctions when a party deleted a Facebook account after receiving a discovery request for social media. In Allied Concrete v. Lester, 736 S.E.2d 699, 702, 705, 709 (Va. 2013), the court found the plaintiff and his counsel acted “intentionally and improperly,” and upheld an award of sanctions to the defendant, including an adverse inference jury instruction and $722,000 to cover the defendant’s fees and costs in defending against the misconduct. Of the $722,000, $542,000 in sanctions were imposed against the attorney. In Gatto v. United Air Lines, No. 2:10-CV-0190 (D.N.J. March 25, 2013), the court granted a motion for an adverse inference instruction to be given to the jury without monetary sanctions after the deletion of a Facebook account when the plaintiff was “not … motivated by fraudulent purposes or diversionary tactics.”
In In re Pradaxa (Dabigatran Etexilate) Products Liability Litigation, MDL No. 22385 (S.D. Ill. Dec. 9, 2013), the court imposed nearly $1 million in sanctions for “the gross inadequacy” of the company’s efforts to safeguard documents. The court imposed a duty to suspend auto-delete systems for relevant text messages and found the company did not appropriately suspend the auto-delete on company-issued smartphones, among other things.
The issues for attorneys created by rapid changes in technology are very real, and have real and current implications for malpractice-avoidance best practices. Attorneys may not hide their heads in the sand. Our Rules of Professional Conduct do not allow it. It does not take much imagination to envision the many different legal malpractice actions that could (and will) arise due to failure to conduct electronic discovery or out of sanctions imposed due to a failure to properly respond to electronic discovery.
Josh J.T. Byrne is a partner with Swartz Campbell’s professional liability group. Byrne is the vice chair of the Pennsylvania Bar Association’s professional liability committee. He speaks throughout Pennsylvania on malpractice avoidance. Byrne also regularly contributes blog entries to Swartz Campbell’s professional liability blog. •