ESI Lessons Learned: CREDO & Qualcomm...

Qualcomm Inc. v. Broadcom Corp., Case No. 05cv1958 (BLM) (S.D. Cal.), issued on January 7, 2008, should be a major wake-up call for corporate litigants. (The U.S. District Court for the Southern District of California) This case is about electronically stored information (ESI) and the ability to manage and produce the correct records at the time requested.

Evidence Lifecycle Management (ELM) is imperative in the context of Governance Strategy Execution within the halls of corporate legal departments. Having an Operational Risk Framework to address legal matters is the "Holy Grail" for many Audit Committees of global Fortune 50 institutions and the General Counsel. What are some of the elements of enterprise ELM? To start:

• Automated identification, preservation, and collection of structured and unstructured matter-specific ESI from all accessible eRecords sources
• Role-based collaboration and communications that drive all case-specific ESI activities
• Auditing and reporting of all ESI communications and events, including litigation holds

Duane Morris LLP has this to say about the Qualcomm case:

Emphasizing that it is the responsibility of attorneys (both in-house counsel and retained counsel) to make certain that their clients carry out an effective and comprehensive document search, the court noted that "[p]roducing 1.2 million pages of marginally relevant documents while hiding 46,000 critically important ones does not constitute good faith and does not satisfy either the client's or attorney's discovery obligations." The court suggested that in-house counsel have a duty to confirm the veracity of any signed papers produced during discovery.

The district court's solution was to order Qualcomm to implement a "comprehensive Case Review and Enforcement of Discovery Obligations ('CREDO') program" which, at a minimum, includes:

(1) identifying the factors that contributed to the discovery violation, (2) creating and evaluating proposals, procedures, and processes that will correct the deficiencies identified in subsection (1), (3) developing and finalizing a comprehensive protocol that will prevent future discovery violations, (4) applying the protocol that was developed in subsection (3) to other factual situations, such as when the client does not have corporate counsel, when the client has a single in-house lawyer, when the client has a large legal staff, and when there are two law firms representing one client, (5) identifying and evaluating data tracking systems, software, or procedures that corporations could implement to better enable inside and outside counsel to identify potential sources of discoverable documents, and (6) any other information or suggestions that will help prevent discovery violations.

The court ordered that the attorneys submit a proposed protocol for the court to evaluate and revise, if necessary. While the district court's immediate goal was to remedy this specific instance of misconduct, the court hoped that its opinion would be a "road map" for electronic discovery and would "assist counsel and corporate clients in complying with their ethical and discovery obligations and conducting the requisite 'reasonable inquiry.'"

The risk associated with non-compliance of the Federal Rules of Civil Procedure (FRCP) is a major facet of Operational Risk Management. The fusion of the Corporate Governance Strategy Execution comes together with a dedicated internal "Task Force" inside the enterprise. Comprised of the General Counsel, CIO, CISO and VP of Human Resources, this team provides the mechanism for effective policy implementation and operations accountability. The mission is to carry out the fiduciary duty to create a culture of legal compliance within the organization.

The Board of Directors have learned their lesson turning over the entire process to outside counsel. The trend of outsourcing the many tasks and duties assigned to the discovery and admissibility of (ESI) is coming to an end. Soon the General Counsel will be standing up the internal "Task Force" to identify and produce in a reliable and cost-effective manner. The trend is gaining momentum and law firms are getting more "Requests for Information" (RFI) on their true electronic discovery capabilities.

Establishing "A Defensible Standard of Care" within the enterprise continues to be the ultimate goal. While some law firms have started to offer services to determine the readiness of their clients for large ESI cases, more corporate institutions are reversing the economic process associated with E-Discovery and asking:

"What are the Electronic Discovery Capabilities of our outside counsel?"

operational risk