Electronic Armageddon, or Just Good Marketing?

This is the moment that serious Blackberry addicts such as myself have long feared... iPhone or no iPhone? The only good news about this quandary is that coverage of the Paris Hilton incarceration and re-birth might be temporarily on hiatus.

Apparently the primary source of the digital addict's confusion is based on the fact that the iPhone email function may not be of much use to the hip and happening professional. Whether or not corporations allow iPhone emails to be pushed through their servers is the difference between next generation high-tech digital efficiency device and over-priced play thing of the wealthy and infamous. Indeed, according to one law blog that I often visit to remind me how paltry my salary really is, many law firms are leaning away from catering to the Apple crowd in this regard.

As a result, users may have to rely on Web based email accounts, which tend to be slower (regardless of the service provider, which in the case of iPhone is AT&T). For the terminally impatient, such as, well, me, and for the fatally cheap, which is also, me, the sticker price for an electronic toy box may be more than some can handle. (Man, if only I could get Sony to bundle its Reader and the PSP into a single device...).

Even if iPhone receives the same backhanded treatment from corporate America that Apple computers routinely receive, the iPhone does represent one more item that needs to be added to your standard list of devices to consider in serving out litigation holds and discovery requests. Just because a corporate target does not facilitate the use of an iPhone doesn't mean that the corporation's
employees aren't using the iPhone to conduct business.

Comparing Rotten Apples to Rotten Oranges

"Well I heard Mister Young sing about her

Well I heard ole Neil put her down

Well I hope Neil Young will remember

A Southern Man don't need him around anyhow"

Sweet Home Alabama

Lynyrd Skynyrd

A few weeks ago I got cross-ways with the State of Alabama, based on a recent ethics opinion regarding the use of metadata. The issue arose based on a recent ABA opinion indicating that counsel had no ethical restrictions against viewing the metadata disclosed by opposing counsel. New York, Alabama, and potentially Florida, have decided the issue, at least through state bar ethics opinion, contrary to the conclusion reached by the ABA. At the suggestion of the respected Richard Carmody, I promised to address the New York state ethics opinion that the Alabama bar relied upon. Since the matter had to be largely cut out of the recent NYCLA presentation, due to time constraints, here we go...

The problem in New York actually stems from 2 different (and rapidly aging) ethics opinions. The first is Opinion 749 - 12/14/01. The background of the opinion discusses primarily two issues: 1) "sophisticated users" have the ability to "get behind" electronic documents and perhaps learn the author of the document or see previous drafts or comments on a document (citing to M. David Stone, "Deleting Your Deletions," PC Magazine November 20, 2000); and 2) the concern of counsel's use of "bugs" in email to trace the recipients and comments of the original email, so-called email "wire-tapping" (citing www.privacyfoundation.org/privacywatch, "E-Mail Wiretapping", posted February 5, 2001).

The 2001 opinion only topically addresses the former issue, and relied on the then existing cases and opinion regarding inadvertent disclosure. The opinion relies more heavily on phrases such as using technology to "surreptitiously obtain privileged or otherwise confidential information", or behavior involving "dishonesty, fraud, deceit or misrepresentation."

In the case of email wire-tapping, it is pretty easy to see that the earlier NY opinion is right on target. At the very least, as suggested by the opinion itself, such behavior probably violates federal law, such as the Electronic Communications Privacy Act, 18 USC sec2510 et. seq. Although I trust the security of email only about as far as I can trust my ex-wife, the issues relating to email wiretapping or email security seem to have taken on new dimensions post-Enron and post-9/11. At any rate, the the opinion, 6 years later, seems to lack the intellectual forward-thinking persona that New Yorkers like to rub in the faces of us mere mortals living down here on the South 40.

Fast forward to NY Opinion 782-12/8/04 on the topic of emailing client documents that may contain hidden data reflecting client confidences and secrets. The '04 opinion is at least better versed in the "buzz" words, but is lacking in substance. The short opinion starts with the premise that lawyers may not "knowingly" reveal client confidence or secrets, citing DR 4-101(B)(1). From there, the opinion takes a short hop to the conclusion that a lawyer must use reasonable care to prevent the inadvertent disclosure of the client's confidential information; and I quote (using my best Lewis Black impersonation), "Reasonable care, may, in some circumstances, call for the lawyer to stay abreast of technological advances and the potential risks in transmission in order to make an appropriate decision with respect to the mode of transmission. See N.Y. State 709 (1998)". Well, allow me to reply.

Finally, the '04 opinion advises receiving counsel that they have an obligation not to "exploit an inadvertent or unauthorized transmission of client confidences or secrets." Supporting this proposition is the earlier Opinion 749, concluding that the use of "computer technology to access client confidences and secrets revealed in metadata constitutes 'an impermissible intrusion on the attorney-client relationship...'".

Ethics opinions like this, and the inevitable proposed FRE 502, will certainly go a long way towards covering our collective behinds when it comes to revealing confidential information. I wonder though, how lenient judges will be when it comes to determining how reasonable one must be in taking "reasonable care" not to disclose privileged or confidential information. (Yes, I saw the headline that the judge in the Spokane Diocese bankruptcy denied the newspaper's motion to unseal certain documents, but I haven't read the opinion yet...).

Not to be out done, in September of 2006, the Florida bar proposed and Advisory Opinion 06-2 regarding the disclosure and "mining" of metadata. The proposed Florida opinion, although more well reasoned, reaches the same conclusions as, and indeed references in footnotes, the New York Opinions.

I am not sure of the status of this opinion, but did find one proposition that I can agree to without hesitation, "Where a lawyer is not required by applicable law to do so, the decision to voluntarily return such a document is a matter of professional judgment ordinarily reserved to the lawyer."

C'mon New York. The rest of us seem to be following your lead... as usual. The attorney-client privilege is to be jealously guarded by the attorney, not opposing counsel, whether or not the bar is densely populated by "sophisticated users" of technology. Pull over to the side of the road for a moment, turn off the luxury sedan programmed by the smart key that remembers your height, weight, driving style and hot or cold beverage preference, turn off your GPS enabled IPhone with the zillion mega pixel camera and voice recognition calling, and engage in a quiet, zen-like reflection of what today's "sophisticated user" of technology will be asking us to do for them 6 days, 6weeks, 6 months and 6 years down the road. The old maxim that ignorance of the law is no defense is rapidly spreading to the land of technology.

The Arrogance of My Fleeting Youth

"Reluctanly crouched at the starting line

Engines pumping and thumping in time

The green light flashes, the flags go up

Churning and burning they yearn for the cup

They deftly maneuver and muscle for rank

Reckless and wild, they pour through the turns

Their prowess is Potent and secretly stern

As they speed through the finish, the flags go down

The fans get up and they get out of town

The arena is empty except for one man

Still driving and striving as fast as he can..."

The Distance

by Cake

For a brief moment, I was packing a bag and headed to Kansas in hopes of clerking for Judge Robert E. Nugent, Chief Bankruptcy Judge in the US Bankruptcy Court for the District of Kansas. (For those fans of the long-departed Seinfeld, you will recognize what was actually the beginnings of a serious man crush). Judge Nugent recently wrote what may be one of the first true "ESI meets bankruptcy" type opinion, in the case In re Krause, Case No. 05-17429, Adversary No. 05-5775. The opinion is currently being reported at 2007 Bankr. LEXIS 1937.

In the Krause case, the court was faced with an apparently unrepentant wiper of hard drives and scrubber of data necessary for the Trustee to discover assets of the estate, which appear to have been fairly significant in the recent past.

During the recent NYCLA panel presentation on Bankruptcy and E-Discovery, I warned the participants that the judiciary is educating itself about this ESI stuff a lot faster than most of the rest of the bankruptcy bar. Judge Nugent is, if I may be so bold, Exhibit A that demonstrates my point.

According to the opinion, the Debtor filed his bankruptcy in 2005. Throughout 2006, various interested parties, including the IRS, took some great interest in obtaining the Debtor's electronic documents. (Keep in mind, much of this was occuring post-Zubulake and pre-2006 FRCP amendments). If I am following the time line correctly, the Debtor turned two computers over to the Trustee on Oct 17, 2006. However, it was later discovered that the debtor allegedly installed, on October 4 and 16, 2006, respectively, a handy dandy little program called GhostSurf Platinum 2006. One of the functions of GhostSurf, as Judge Nugent abley explains, is to "wipe or purge files, thereby destroying electronic files...". The Judge also explains later that GhostSurf does more than a "Microsoft delete" which removes only certain markers telling the operating system where the data is stored.

As though this weren't enough, the Court found that GhostSurf had been installed on both machines after the ourt ordered that the requested electronic evidence be turned over. Poor Debtor, tricks are for kids!

Judge Nugent produced a thorough opinion exploring the spoliation, the computers the Debtor turned over (and those that he didn't), a techinical summary of how GhostSurf actually works, and the Debtor's imaged hard drives (as well as questions about the effect of booting up, or starting, the Debtor's computer prior to imaging the drives). At this point while reading the opinion, my heart is pounding, my hands shaking while trying to find the phone number to the bus station so I can buy my ticket to ride.

The Trustee and the IRS, aside from asking for a spoliation charge, also sought sanctions which pretty literally included throwing the Debtor under the jail. The opinion recites a litany of the shady dealings, questionable trusts, and off-shore accounts that the Debtor was alleged to have been connected to. First, the final chapter, because that isn't really what interests me. Judge Nugent essentially gave the Debtor 10 days to get his crap together and get all the ESI turned over (opinion was issued on June 4, can someone call Kansas for me?), otherwise, the Debtor is getting tossed under the jail until he can cleanse himself of his contempt.

Based on the judge's recitation of facts, this is exactly what needed to happen. But Judge Nugent broke my heart, and only gets 4.5 stars out of 5, and here is why. Relying on Zubulake, the Court found that the Debtor's duty to preserve his ESI arose when he had "notice that the evidence is relevant to litigation or should know that the evidence may be relevant to future litigation." Zubulake cited to the 2nd Circuit's Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423 (2d Cir. 2001) for that proposition. As such, the Court found that the Debtor might have had notice when the IRS started squeezing the Debtor pre-petition. Barring that, the Debtor surely had notice, says the Court, when the IRS filed its adversary complaint in November of 2005.

Although I haven't checked Fujitsu, I am guessing that it, like Zubulake, was not a bankruptcy opinion. I have said many times, and will continue to say until I am blue in the face (which is a real trick this week with sun burn I have), that bankruptcy ain't quite like litigation. When a Debtor, ESPECIALLY in a voluntary case, agrees to be probed and prodded by the bankruptcy system, certain duties and obligations arise on day one! It isn't really necessary to look beyond section 521 or 541 of the Bankruptcy Code to see that. Zubulake (and the amended FRCP), in a bankruptcy context, ought to be viewed as a damn good standard to look at when an adversary has commenced, but that should not ever mean that the Debtor is excused of all obligations of preservation until someone decides to sue. In a chapter 7, that ESI that the Debtor in Krause allegedly played fast and loose with belonged to the Trustee the moment the petition was filed.

No slight is intended to Judge Nugent, or to the lawyers involved in the case. God knows there is a reason that Judge is the Judge, and that the lawyers are out trying cases while I huddle in a dark office and play blogger-geek.
All I need is just one opinion, and if nothing else, Judge Nugent has significantly raised the bar for bankruptcy lawyers...

As a post-script, the opinion wasn't clear if the Debtor filed his BK pro se or not. If that was the case, all is forgiven, and my world is still in balance!

And a Small Child Shall Lead the Way...

Congrats to Rudy in Pittsburgh, PA who identified the BACA (Bikers Against Child Abuse) chapter closest to him. Since Rudy took the time to shoot me an email, he now has a free Amber Stick coming his way!

To my surprise, even though BACA has three Pennsylvania chapters listed through its main site, the chapter closest to Pittsburgh is actually the Tri-County Ohio chapter in Huntsburg, Ohio. Rudy, who is apparently neither a lawyer nor a biker professed that E-Everything for Bankruptcy Lawyers is a "fairly interesting" sight, which makes him either intellectually curious, or an intellectual curiosity... either way, thanks to Rudy for stopping by. More importantly, thanks for caring enough about the people (especially the short ones) in your life to go the extra step for the Amber stick.

NYC Survives My ESI-in-Bankruptcy War of Aggression

The panel presentation on Bankruptcy and E-Discovery, hosted by NYCLA, went off without a hitch. Although the rain and the Monday evening schedule may have kept away some less-committed tire kickers, the presentation was well attended and seemed to be very well received.
Even with the wide range of perspectives and experience the panel brought to the table, I must say that Judge Andrew Peck is even more impressive in person than through his written opinions. Mark Foley, of Foley and Lardner, kind of stole the show though. Aside from the fact that he is clearly a world class lawyer, he has lots of neat James Bond toys and entertaining war stories to match. Kudos also to Bruce Weiner and Todd Duffy, who were able to officiate while Jack Seward and I played battling microphones.
Based on some of the comments from the crowd, as well as some of the discussions among even the panel, it is clear that the bankruptcy bar has a long way to go before reaching the level of education, technical competence, comfort and perspective that would keep me satisfied (or at least quiet). Once bankruptcy attorneys consider the kind of value they can add to their services by addressing ESI as an issue of estate administration rather than a litigation issue, it is just a matter of time until the organic growth in bankruptcy practice and ESI issues resembles Google stock prices during its IPO.
Sadly there is never enough time to cover everything that needs to be covered, and that was certainly true in our case as well. One of the big issues that we didn't get to was the proposed Federal Rule of Evidence 502, addressing waiver of privilege through involuntary disclosure. The proposed rule flies in the face of the current Department of Justice policy, and even has some interesting comparisons and contrasts to the proposed Attorney-Client Privilege Protection Act of 2007. There should be an article about the likely applications and impacts of proposed Rule 502 in bankruptcy in the upcoming Texas Bar - Bankruptcy Section newsletter...
The second item we didn't get to was the ethics opinions from New York and from Florida regarding attorney's obligations regarding the care and feeding of the metadata of others. I made a promise to Richard Carmody, which I intend to keep, so look for that next week.
Finally, I guess it really is true that every dog gets his 15 minutes of being in the bush with two birds, or something like that... it seems that my old friend Jack Seward managed to sneak one by the editorial staff at the ABI, and got me mentioned on page 54 of the June 2007 ABI Journal. More scandalous than Paris getting prematurely released from lock-up!

Does that Come with Complimentary Chocolate?

A recent article on Breitbart.com provides a snippet of information about a Swiss company by the name of C-Channel who may offer the ultimate in digital storage and protection. It seems that C-Channel has procured abandoned army bunkers buried deep beneath the Alps, and installed servers and private security. (I didn't know the Swiss had an Army. I wonder if they dug out the bunkers with those mondo-cool Swiss Army knives.)

A C-Channel spokesman claims that the data is secure from theft, fire, hackers, viruses, tape worms and foot-rot. Customers are provided security codes, allowing them to directly access up to 200 megabytes of storage space at any time.

The service has also been characterized as a "Swiss Fort Knox". Wouldn't it be something if this service becomes the next generation of impenetrable Swiss bank account? If data is the currency of the information age, why not? Has anyone alerted NTL to this service yet?

One word of caution though... there is one specific threat that I doubt even C-Channel can ward off... the threat of the Mighty Dig-Dug! For those of you who didn't grow up in the 80's, here is an additional primer to make this post a little humorous.

Have a good weekend. For everyone wise enough to sign up for the NYCLA presentation on Bankruptcy and E-Discovery: How to Adequately Address E-Discovery While Protecting Privilege, see you in NYC!