Corporate Counsel and IT are Partnering to Reduce Cost, Mitigate Risk and Prepare for Litigation

Tuesday, December 28, 2010 by Thought Leadership Team

The role of the corporate attorney has traditionally involved counseling principals across the organization in an effort to avoid or at least mitigate corporate risk.


Generally speaking, corporate lawyers have focused their attention on legal issues involving such areas as human resources, financial reporting, contracts, tax and regulatory compliance. However, in a rapidly evolving digital age, the corporate attorney has been forced to expand their role. Technological innovation has stretched corporate counsel's sphere of responsibility to include creation and implementation of corporate litigation preparation strategies and policies. Those strategies and policies are imperative in order to quickly and efficiently respond to requests for electronically stored information (ESI), whether made in the context of a civil suit or regulatory investigation. Until recently, corporate attorneys have routinely—almost reflexively—deferred to Information Technology (IT) professionals on issues involving electronic data. In fact up until a few years ago, legal's interaction with IT was mostly limited to requests for help-desk assistance. This is no longer the case.

Corporate attorneys are now teaming with IT to tackle such topics as data archiving, accessibility and collection. The disastrous economic conditions of the past two years have forced corporations to slash discretionary spending including expenses relative to information management and responding to litigation. In this new environment, corporations are creating and implementing policies to routinely purge needless data and safeguard information that is necessary for business continuity and legal purposes. They are also investing in infrastructure and new technology to optimize management of ESI, including that which is potentially responsive to litigation. Such actions are a necessary response to forces beyond the boardroom, where, for example, judges are becoming decreasingly tolerant of corporations that fail to preserve electronic evidence when a claim should have been anticipated or even after receiving a notice of preservation.

With heightening economic pressures and judicial expectations as a backdrop, corporate attorneys and IT professionals have risen to meet the challenge, locked arms and forged ahead in an effort to reduce expenses while still effectively minimizing risk. Working together, legal and IT have created internal policies to reduce and organize volumes of stored corporate data as well as prepare for and respond to litigation and investigatory inquires. There is no question that the partnership between IT and legal is yielding beneficial results. However, there continues to be numerous instances where the courts have concluded that corporate planning and response efforts have fallen short.

Recent Case Law: Failure to Preserve

The case law is peppered with examples of legal and IT departments that did not effectively work together and consequently incurred sanctions for failing to properly safeguard potentially responsive ESI. In the July 2009 case of KCH Services., Inc. v. Vanaire, Inc., Judge Jennifer Coffman, of the United States District Court in the Western District of Kentucky, granted the plaintiff manufacturer's motion for adverse inference sanctions, holding that the defendant's failure to preserve ESI after the receipt of a preservation letter evinced a "continued unwillingness to place a meaningful litigation hold" on potentially responsive data. In the same month and about 800 miles to the west, Magistrate Judge Paul Cleary of the Northern District of Oklahoma ordered that the defendant staffing company in the case of Pinstripe v. Manpower fund a program on litigation holds for the Tulsa County Bar Association after it failed to implement a litigation hold that had been drafted by outside counsel retained for that very purpose.

In a recent Delaware patent-infringement suit, Micron Technology, Inc. v. Rambus, Inc., a defendant microchip technology manufacturer authorized "shred days" where relevant documents were destroyed after litigation was deemed "inevitable" and "reasonably foreseeable." The court found the defendant's destruction of documents to have been in bad faith and imposed the sanction of declaring the patents unenforceable against the plaintiff. In another recent patent-infringement case in Utah, Phillip M. Adams & Assocs., LLC v. Dell, Inc., a software manufacturer argued that email servers were not designed for archival purposes and encouraged employees to locally preserve emails of long-term value (as determined by each individual employee). The court held that the defendant's "irresponsible data retention practices [were] responsible for the loss of significant data," but delayed the decision of whether sanctions were warranted until after discovery closed.


The corporate union of legal and IT is still novel and rather immature. Calamitous economic conditions, advancements in technology and heightened judicial expectations have forced legal and IT to create and implement solutions that economize and minimize the risks associated with data management and litigation. Together, legal and IT have risen to the challenge and are creating and implementing processes that increase the efficiency of corporate ESI management protocol, litigation preparedness and responses to legal requests. Recent case law reveals that there are still instances when corporations fall miserably short in preparing for or responding to requests for ESI. However, the merging of these formerly-disparate professions is promoting economy, efficiency and better outcomes for corporations that must respond to legal and regulatory requests for ESI.