De-Fanging The Litigation Sound Byte: Tips To Minimize Litigation Risk Caused By Electronic Communications

March 4 & 5, 2008Jeffrey M. JuddJessica Hoogs

This presentation does not constitute legal advice.

2

The Era of Blockbuster Litigation

• The Vioxx Litigation

• The Fen-Phen Litigation

• Prosecution of Frank Quattrone

• Investigation Into Wall Street Conflicts

• Mercury Interactive Options Backdating Derivative Action

3

Have you ever heard a plaintiff’s lawyer say?

“We’re not going to litigate our case in the press.”

The Vioxx Litigation

Copyright C

BS

Interactive Inc.

5

6

7

8

The Fen-Phen Litigation

10

“Do I have to look forward to spending my waning years writing checks to fat people worried about a silly lung problem?”

-email between employees of American

Home Products (mfgr of“Fen-Phen”)

Prosecution of Frank Quattrone

12

“Clean up those files”-email from Frank Quattrone to Credit Suisse First

Boston colleagues, December 2000

Investigation Into Wall Street Conflicts

14

“You know everyone thinks I upgraded [AT&T] to get lead for [AT&T Wireless]. Nope. I used Sandy to get my kids in 92nd St. Y pre-school (which is harder than Harvard) and Sandy needed Armstrong's vote on our board to nuke Reed in showdown. Once coast was clear for both of us (ie Sandy clear victor and my kids confirmed) I went back to my normal negative self on [AT&T]. Armstrong never knew that we both (Sandy and I) played him like a fiddle.”

-email from CitiGroup Analyst Jack Grubman to friend

Mercury Interactive Options Backdating Derivative Action

16

17

18

A Common Thread

• Electronic Documents– Taken Out of Context

– Disclosed to the Press

– Twisted for Rhetorical Benefit, and

– Used by Plaintiffs’ Lawyers to Define the Case

19

Electronic Documents Are Pervasive

• In 2007, business email volume was predicted to total 5 billion gigabytes

– Source: IDC research study: Worldwide Email Usage 2007 – 2011 (Mar. 2007)

• The average employee sends and receives more than 135 emails per day.

– Source: Osterman Research survey for LiveOffice Managed Message Services (2007)

• A typical mid-sized company with 500 employees will thus average over 17.5 million emails per year

20

E-Discovery is Ubiquitous

• 77% of discovery requests target email and attachments

– Source: Enterprise Strategy Group (ESG) research report, Digital Archiving: End User survey and Market Forecast 2006-2010 (Jan. 2006)

• 63% of surveyed organizations have had to produce email in response to litigation requests

– Source: Osterman Research survey for LiveOffice Managed Message Services (2007)

• The average e-discovery “event” is estimated to cost a business $1.5M

– Source: Gartner research report, Cost of E-Discovery Threatens to Skew Justice System (April 20, 2007)

21

Some Observations and Conclusions

• Plaintiffs’ use of electronic documents is NOT UNIQUE TO

• Any case• Any company• Any industry

– Pharma– Finance – Technology– Energy– Insurance– Manufacturing

22

Email Is Dangerous Because

• REALITY– Accessible– Everlasting– Frequently admitted as

evidence notwithstanding foundational problems

• PERCEPTION– Private– Temporary– Informal– Conversational

23

• “It’s remarkable how many corporate executives don’t understand that the ‘e’ in email stands for both evidence and eternal”– Prof. Joseph Grundfest

(as quoted in the Wall Street Journal, 6/27/2007)

24

or writeand twisted

and your employer

and the media.or client

Anything you saycan and will be used

against you

in a court of law

25

“Anything” includes:

• Memos• Letters• Marketing Materials• Presentations• Notes• Email• Phone calls and voice-mail• Recorded conversations• Web sites• Text/Instant Messaging• Blogs, Wikis, New Communications Technology• Metadata

26

Even Instant Messaging!

27

Can We Eliminate These Concerns Completely ?

Probably NOTBut we CAN make documents

and statements more clear, precise, and complete . . .

to create a better record.

28

Where Will Plaintiffs Focus Most?

• Marketing projections/profit plans

• Communications with sales representatives

• Training Materials

• Employee Performance Reviews and Evaluations

• Communications with Attorneys

29

8 Tips To Create A Better Record

30

#1

• Maintain some level of formality– Don’t write anything you would mind seeing in the media– If you’re angry or frustrated, WAIT– Avoid strong or colorful language– Choose words carefully– Proofread before sending– Avoid using ALL CAPS– Check email addresses– Avoid “Reply to All”– Assume that email will be forwarded and saved

31

#2

• Beware of jargon and buzzwords– Marketing people may talk about “neutralizing”

people or “obstacles”– “Problem” customers or employees

32

#3

• Avoid rumor, speculation and guesswork– Don’t offer opinions outside your area of

responsibility or expertise– Recognize that you may (probably do) have

limited information

33

#4

• Don’t exaggerate or editorialize– Avoid the temptation to dramatize a situation– Avoid name-calling– Avoid personal comments

34

#5

• Don’t inadvertently imply wrongdoing– Avoid legal terminology

• e.g., “negligent,” “liability,” or “misrepresentation”

35

#6

• Be wary of humor and sarcasm– Emails cannot communicate tone or “body

language”– Colorful language may be entertaining, but also

have unintended, everlasting consequences

36

#7

• Close the loop

• If a document raises a concern– Acknowledge it– Respond in writing to it– Resolve it– Document the resolution

37

#8

• Special considerations for attorney-client privileged communications– Limit distribution to those who “need to know”– Clearly designate all privileged communications– Separate legal and business discussions to the

extent possible– Create, communicate, and enforce corporate

policies about preserving confidentiality– Email strings may not be considered single

documents for privilege analysis

38

Recap

1. Maintain some level of formality2. Be wary of jargon and buzzwords3. Avoid rumor, speculation, and guesswork4. Don’t exaggerate or editorialize5. Don’t inadvertently imply wrongdoing6. Be wary of humor and sarcasm7. Close the loop8. Treat privileged communications special

39

QUESTIONS?