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E-Discovery Malpractice: Major Law Firm Sued for Failure to Supervise Contract Attorneys

Created on June 16, 2011

Senior Manager, Marketing Programs

J-M Manufacturing Company, Inc. v. McDermott Will & Emery

Take note law firms and in-house legal departments: outsourcing legal work may not transfer liability in electronic document review from the supervising party to the contracted party. On June 2, J-M Manufacturing (JM) sued its former representing legal counsel, McDermott Will & Emery for e-discovery legal malpractice, on the grounds that they produced 3,900 privileged documents in a pending lawsuit. JM's opposing counsel now refuses to return or destroy JM's privileged documents based on them waiving the attorney-client privilege by twice producing privileged documents. Lawyers should pay close attention to the ruling on this case because it could change how legal teams outsource their e-discovery needs.

Listed below are the ensuing events that set in motion this subsequent lawsuit by JM against its former attorneys for failing to adequately protect privileged records.

  • In 2006, McDermott represents JM regarding subpoenas, which require JM to produce documents. Together they identify 160 custodians who likely have relevant ESI.
  • McDermott copies applicable custodians data and transfers it to an e-discovery vendor, who searches the data for responsive documents based on a keyword list.
  • Based on the searches, McDermott produces documents to opposing counsel.
  • A large number of privileged documents were found in this production. Opposing counsel asks JM to do a privileged review, followed by a subsequent document production.
  • In response, McDermott employed contract attorneys to conduct the document review to determine and remove all privileged documents within the original document set. After the review, McDermott conducted a limited “spot-check" of the contracting attorney's work.
  • Approximately 250,000 electronic documents were produced in this second production set.
  • In 2010, JM retains new counsel to replace McDermott.
  • Opposing counsel, subsequently notifies JM that McDermott produced 3,900 privileged documents in the latter document production
  • Opposing counsel refuses to return privileged documents because JM waived the attorney-client privilege based on McDermott conducting two privilege reviews.

Morale of the Story: Amid the rising trend of outsourcing e-discovery, there is still an unclear standard on how much lawyers need to supervise outside service providers during document review within the e-discovery process.

The Solution: Organizations must bring e-discovery in-house with a solution that enables attorneys to protect the companies/law firms they work for by quickly doing a first pass review for standard and important material like privilege and confidentiality issues. This will allow attorneys to accurately review outsourced work and protect corporations from future liability, thus avoiding a situation like the one JM currently faces.

Mike Hamilton, J.D. is the E-Discovery Market Analyst at Exterro, Inc. Hamilton works in a product management and marketing role to ensure Exterro's Fusion e-discovery applications closely reflect the needs of legal teams. Within the complex e-discovery world, Hamilton's knowledge, legal acumen and experience give him a valuable perspective on bridging the gap between IT and legal teams.


~ Select Clients ~

United Health
American Express
Lockheed Martin
New York Life
Golden Living
Hanover Insurance
Consolidated Edison Company (Con-Ed)
Los Alamos National Lab
Washingon AGO
Juniper Networks
American Airlines
Lifepoint Hospitals
Columbia Pipeline Group
Lower Colorado River Authority (LCRA)
State Compensation Insurance Fund
The AES Corporation
Stryker Corporation
South Carolina Ports Authority
TD Ameritrade
Pernod Ricard
University of Colorado
Johnson & Johnson
Harley Davidson