Managing Internal Communications to Avoid … INTERNAL COMMUNICATIONS TO AVOID LITIGATION HEADACHES...

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March 18, 2014 http://delvacca.acc.com MANAGING INTERNAL COMMUNICATIONS TO AVOID LITIGATION HEADACHES

Transcript of Managing Internal Communications to Avoid … INTERNAL COMMUNICATIONS TO AVOID LITIGATION HEADACHES...

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March 18, 2014

http://delvacca.acc.com

MANAGING INTERNAL COMMUNICATIONS TO AVOID LITIGATION HEADACHES

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Introductions

John V. Gorman Partner Morgan Lewis John V. Gorman is a partner in Morgan Lewis’s Litigation and Intellectual Property Practices. Mr. Gorman represents corporations and non-profit organizations in intellectual property disputes and complex commercial litigation. Mr. Gorman has represented plaintiffs and defendants in patent, trademark, trade secret, copyright, and complex commercial cases in courts throughout the United States. He has handled all aspects of litigation from inception through trial and post-trial appeals. Mr. Gorman's cases have involved a wide range of subjects, including consumer products, industrial products, medical devices, computers, mobile devices, plastics, mechanical devices, nanotechnology, academic standardized tests, medical treatments, and automatic fire protection equipment.

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Introductions

Rebecca J. Hillyer Partner Morgan Lewis Rebecca J. Hillyer is a partner in Morgan Lewis's Litigation Practice and a member of the Commercial Litigation Steering Committee. Ms. Hillyer concentrates her practice in commercial litigation, focusing on complex business fraud, business competition, trade secrets and intellectual property, mergers and acquisitions, and product liability. She has represented clients in the medical device, pharmaceutical, healthcare, oil and gas, technology, and financial industries.

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Introductions

Michael A. Duff DELVACCA President and Senior Vice President and General Counsel Penske Truck Leasing Co., L.P. Michael Duff is Senior Vice President and General Counsel of Penske Truck Leasing Co., L.P., a global transportation services provider headquartered in Reading, PA. He has been with Penske’s legal department since 1991, and has been its general counsel since 2001. He manages the company’s legal department, which comprises eight lawyers and three paralegals and represents the company in a variety of matters, including contract negotiations, mergers and acquisitions, real estate transactions, intellectual property and information technology matters, and employment matters. He also manages government affairs for Penske.

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Agenda • Managing Privilege to Avoid Litigation Headaches • Managing Documents to Avoid Litigation Headaches • Managing Other Communications to Avoid Litigation

Headaches • Questions and Answers

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Managing PRIVILEGE to Avoid Litigation Headaches

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Why Privilege Issues Are Litigation Headaches

• Without privilege, communications between attorney and client may be revealed

• Litigation strategy may be revealed • Other client problems may be revealed

o To the other side, to the court, or even to the public

• In litigation, party asserting privilege generally has burden of proving it o More expensive and time consuming for close calls

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Counsel’s Deposition: A Litigation Headache

• You, as in-house counsel, may become a deponent in a litigation

• Your emails, handwritten notes, and documents may be discoverable

• Your communications with employees, and even with outside counsel, may be discoverable

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Beware of Jurisdiction

• Not all jurisdictions consider communications with all employees and in-house counsel to be privileged o Control group test o Subject matter test o Upjohn v. United States

• You may be in PA, but different jurisdiction’s law may apply to privilege issue o Federal or state court? Which state’s law applies?

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Privilege in a Corporate Setting

• Legal v. Business Advice o Where does the privilege begin and end? o Varying standards: “clear showing”; “but for”; “predominantly legal” o Counsel’s title

• Related companies o How far does privilege extend?

• Merged and acquired companies o Who owns the privilege, and when?

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Minimizing Waiver • Communications to friendly parties can ruin privilege

o Even if inadvertent

• Scope of waiver can extend to all privileged communications relating to the subject matter o Scope of “subject matter” can be a major fight in litigation

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Minimizing Waiver • Best Practices

o Restrict circulation attorney advice on a “need to know” basis • Sometimes people need to leave the room

o Reduce amount of writing related to attorney advice o As counsel, tell your audience to keep it to themselves

• Avoid disclosure in business negotiations o As counsel, keep your legal advice separate from your business

advice

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Managing DOCUMENTS to Avoid Litigation Headaches

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Why Document Issues Can Create Litigation Headaches • Documents create issues wholly separate from the

content within them • Not having a sensible document retention policy can

mean that documents necessary to present a case are not maintained

• An overly robust policy makes it harder to: o Find what you need in litigation o Delete sensitive information pursuant to court orders

• Failure to implement litigation hold notices can lead to spoliation

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Document Retention Policies • What should be destroyed? How often? • What should not be destroyed? For how long?

o Computers of departing employees o Relevant vs. irrelevant evidence

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Document Retention Policies • What is a document?

o Emails, text messages, voicemail, word-processed documents, databases, documents stored on portable devices (memory sticks, mobile phones), documents stored on servers and back-up systems, deleted documents, metadata and other embedded data

• Where are documents housed? o Portable data storage media, services, off-site storage, laptops,

handheld devices, PCs, databases, back-up tapes, mobile phones, notebooks, PDAs

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Document Retention Policies

• Sometimes holding on to too much data can lead to litigation headaches o More data = more information to be reviewed = more cost and

more time o Holding on to older documents = possibly more damaging

documents

• Example: contract negotiation documents

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Litigation Hold Notices • Consequences of not implementing or following a

Litigation Hold o Spoliation = BIG litigation headache

• Example: Discrimination Suit involving global energy co. o Executives instructed employees to destroy bad company

documents to avoid producing them in litigation o Settled for $141 million

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Litigation Hold Notices • When to implement?

o Duty to preserve arises when party has notice or should have known that evidence is relevant to (future) litigation

o Once party reasonably anticipates litigation, party is on notice of duty to preserve evidence as of that date

• What should you do if documents are destroyed? o Cover up is always worse than the crime

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Document Retention and Litigation Hold: Best Practices • Implementing, discussing and signing document retention

policies • Beware of extremes • Monitoring compliance with document retention policies

and litigation hold notices o Do not rely solely on employees to preserve evidence

• Learn from past, and do not repeat prior misbehaviors

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Managing OTHER COMMUNICATIONS

to Avoid Litigation Headaches

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Why Communications Can Cause Litigation Headaches • Incorrect statements, imprecise language or insensitive

communications can become the tail that wags the dog in a case

• Drives litigation expense o Litigators spend a lot of time developing a record and context to

disprove misstatements made by their own clients

• Jurors pay more attention to seemingly adverse statements that come from the client’s own lips o Even if they don’t understand them

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Examples

• “I don't see how we'll get past the auditors another year.” • “I assume you [k]new this but just in case. Can you find

another clueless auditor for next year?” Reply: “That's the plan. Worked perfect this year.”

• “Hey man, I don't know where you come up with some of this stuff, but you saved the day. It's been a rough year but it's been damn good. Nice work dude. Let's get paid!”

• “I don't know anything about [the contracts] and I don't want to cook the books anymore. We need to stop doing that.”

SEC complaint, filed 3/6/14, against Dewey & LeBoeuf LLP executives, accountants

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Examples

• Zubulake v. UBS Warburg • Email drafted by supervisor upon learning that employee

had filed EEOC charge of discrimination: o “Let’s exit her ASAP before she is entitled to a bonus.” o Jury returned verdict of $29 million, $20 million in punitives

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Examples • American Home Products • Internal documents revealed embarrassing evidence

against maker of “fen-phen” diet drug o Internal e-mail among company employees: “I don’t want to spend

the rest of my career paying off fat people who are a little afraid of some silly lung problem.”

• Plaintiffs collected more than 33 million documents, including electronic files

• American Home Products settled litigation for $3.75B

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Best Practices • Before a Litigation Issue Arises • After a Litigation Issue Arises

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Best Practices for Communications, Before a Litigation Issue Arises • You cannot turn non-lawyers into lawyers, but you can

counsel on best practices • Don’t put anything in writing that you would not want on

the front page of The New York Times • Discourage quick responses and informality in emails • Make sure you confirm the recipients are correct • Not just e-mail is in play -- instant messages, voice mails,

non-work accounts are as well

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Best Practices for Communications, Before a Litigation Issue Arises • Confidentiality – an issue not only for privilege

o Identify persons in the organization who would access to such information

o Make sure the client knows what to keep confidential Research and development – patents, trade secrets Obligation in specific agreements Other sensitive information

• Make sure the client knows how to keep information confidential

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Cutting Down the Chatter After a Litigation Issue Arises • Minimize amount of non-privileged communications

• Discourage independent investigation by personnel, other than that managed by counsel

• Discourage clients from having internal discussions outside presence of counsel

• Discourage clients from having external discussions with customers o Unless you’re comfortable with information getting back to your

adversary!

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Cutting Down the Chatter After a Litigation Issue Arises • Train people to raise legal issues orally, in first instance

o May be counterintuitive to most o Formal writing can always be drafted later, if warranted o If writing needs to be created in first instance, ensure it is as factual

as possible and minimizes assessments or opinions

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Cutting Down the Chatter After a Litigation Issue Arises • Minimize amount of chatter with the adversary

o Interaction may be outside litigation arena (conventions, conferences, industry meetings, etc.)

o Any interaction is a chance to provide the adversary with information s/he would not otherwise have from the litigation process

o Difficult to manage information o Avoid talking about dispute with adversaries

• Public statements about the litigation/dispute should have attorney input

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Questions and Answers

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Thank You!

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John V. Gorman Morgan Lewis [email protected] 215.963.5157

Rebecca J. Hillyer Morgan Lewis [email protected] 215.963.5160

Michael A. Duff Penske [email protected] 610.775.6292