Not Without a Trace

by Perry L. Segal

?Time to clean up those files.? Those six simple words were emailed by an employee of Credit Suisse First Boston to one of the bank's departments. Frank P. Quattrone, a high-level investment banker at the firm, added a tag to endorse the email, which reiterated the bank's document-retention policy. There was just one problem: According to the government, Quattrone was already aware that the bank had received federal SEC and grand jury subpoenas relating to both civil and criminal investigations into its business practices.

The government further alleged that Quattrone?who'd had a hand in bringing Netscape and Amazon.com public?knew or should have known that he was obligated to preserve all relevant data and issue a litigation hold. Instead, Quattrone allegedly encouraged the destruction of evidence and was charged with obstructing justice, a criminal charge that came with the possibility of more than 20 years in prison.

The following four years of his life included an initial trial, a hung jury, and then a retrial resulting in his conviction and an 18-month prison sentence. After the conviction was overturned on appeal (United States v. Quattrone, 441 F.3d 153 (2d Cir. 2006)), Quattrone completed a one-year period of supervision and then, as agreed, prosecutors dismissed the charges.

Quattrone probably never imagined the trouble he would get into when he responded the way that he did to his subordinate's email. But once charged, the fact that he wasn't a lawyer was, perhaps, his biggest strength; there was a defense available to him about his intent. (See 441 F.3d at 179?180.)

Attorneys have no such wiggle room. Their ethical duties are clearly defined before they are licensed. An attorney may not facilitate or suppress the fact that alteration or destruction of evidence?known as "spoliation"?has occurred. Where lawyers go off the ethical track is in not fully appreciating the difference between zealously representing a client and colluding with one by not revealing information when required. They incorrectly, and sometimes deliberately, shroud their conduct under the protective cloak of attorney-client privilege, resulting in dire consequences for both attorney and client.

When the evidence is digital, the decision not to disclose cannot be predicated on the belief that spoliation will not be detected?odds are high that it will.

There is no digital equivalent to a paper shredder. Shredding paper documents may eliminate them permanently, but clients who negligently or intentionally "electronically shred" evidence by modifying or destroying it will leave behind an electronic trail. What if they delete that trail? They'll leave a new trail establishing that they deleted their old trail.

Today, we call that trail metadata. It's essentially data about other data, and it allows a forensic examiner to know intricate details about the client's electronically stored information (ESI). It will tell the examiner what the client has been up to, even if the client won't. It's akin to removing from a wallet two one-dollar bills that are stuck together. The client sees one dollar, but a forensic examiner sees both. Furthermore, in many cases, the examiner can determine from metadata whether ESI was deleted and a source intentionally wiped clean to avoid detection.

There is no shortage of established case law on this, and most of it doesn't reflect well on attorney conduct. For example, in 1100 West, LLC v. Red Spot Paint and Varnish Co. (2009 WL 166518 (S.D. I11. 2009)), a law firm learned during discovery that its client had deliberately withheld documents relevant to the proceedings. The firm, however, elected not to counsel the client nor reveal the suppression to the court despite knowing it had a duty to disclose the violation under ethical guidelines.

In his ruling, federal Judge Larry J. McKinney dropped the hammer on the firm. After noting that the client's conduct made "a mockery of a witness oath to testify to the whole truth," the judge said that when the defendant's law firm failed to disclose the misconduct, it "compounded the problem by, like a chameleon, becoming indistinguishable from its client and allowing [the client] to evade the truth." The court added that "only the most onerous sanction, default, can remedy [this] violation of the rules of discovery." (2009 WL 1605118 at *29, *35.)

The downside of ESI spoliation?and the accompanying potential exposure to sanctions and penalties?is great indeed. Attorneys ignore that danger at both their own and their clients' peril.

Perry L. Segal is an IT executive turned e-discovery attorney and consultant. He is a member of the California State Bar's Law Practice Management and Technology Section Executive Committee.

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