Sunday, January 14, 2007

Forget Abusing Bankruptcy Debtors, this is all about the E-Life

In October of 2005, bankruptcy lawyers across the nation hunkered down in their offices in order to prepare for, and understand, the sweeping changes ushered in by "bankruptcy reform". More than a year later, while there still exists some debate as to how much has really changed as a result of the politically motivated, disjointed and inconsistent BAPCPA reforms, it seems clear that one of the few groups benefitting from the reform act are those hardy souls who will litigate the meaning and the boundaries of the sometimes contradictory statute.

While absorbing the effects of the new bankruptcy laws, changes in the Federal Rules of Civil Procedure aimed at modernizing and standardizing the rules regarding electronically stored documents, and how those documents might be used in discovery and at trial, may radically impact the practice of bankruptcy law... even more so than BAPCPA. Truly a glorious era for litigators.

The amendments to the rules of procedure at last address a problem that has been growing in nature since at least the 1970's. Previously, "documents and things" were required to be produced or made available for inspection during the course of litigation. Relative to a spammer's email list, the DMV's electronic database containing my alleged crimes against the driving public, or the "boot-log" of a laptop used to send web-based emails with proprietary information to a business competitor, items such as a written contract or a stack of letters are items easily classified as documents subject to discovery.

A decade ago, Dave Letterman was making fun of the sudden appearance of "www." placed in front of every corporate logo and proper name. Within the last few years, "documents" filed as pleadings in federal court are almost exclusively filed as electronic documents in .pdf format. While explaining this to a particularly cynical client defending a Trustee's lawsuit, he asked if .pdf format stood for "Pretty Damned Funny". Such cynicism aside, this rapid growth, acceptance and implementation of a digital workplace led to increasing problems for courts, and has opened the door to limitless opportunity for litigators. The recent amendments to the rules of civil procedure are to litigators what the Super Bowl XXXV half-time performance featuring N'Sync, Aerosmith and Britney Spears was to pop-culture.

Bankruptcy lawyers are, out of necessity, a different breed. Bankruptcy is an "Alice through the looking glass" type of practice, and we are foot soldiers for the Mad-Hatter. While litigators of all breeds may be licking their collective chops at the opportunity to forge new law, blaze profitable new trails and maybe even have a star named after them, the formal recognition of "electronically stored information" ("ESI" from now on) will likely have far-reaching impacts in the universe of bankruptcy. One lawyer's ESI discovery product is another's set of books and records, AND property of the estate, AND collection of processes necessary to complete monthly operating reports, AND applicable non-bankruptcy reporting and disclosure obligations, AND post-petition managment tool, AND source of significant drain on DIP resources, AND source of significant data for an unsecured committee, AND a wildly unrecognized source for potential malpractice, AND... get the picture?

At the dawning of the Industrial Age, blacksmiths were needed specialists who would eventually outlive their own economic usefulness. Prior to the commercial extinction of the village blacksmith, and contrary to the popular image of the burly smith toiling away with nothing more than a single hammer and burning steel, smithies were often the first to adopt and implement revolutionary methods and processes that were, for a short time, on the cutting edge of technology. Until such time as companies and consumers alike learn to exist without failing, can succeed without the "fresh start" of bankruptcy, our collective lot is not that of the village blacksmith. However, the reach and scope of bankruptcy practice may soon propell our colleagues to the forefront of all things ESI.

Just as Gutenberg made his printing press, this site is intended to serve as a gathering place, a podium for the towne-crier, and a collection point for information and developments related to, well, all things E-Everything for Bankruptcy Lawyers. Enjoy!

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