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J-M Manufacturing vs. McDermott, Will & Emory Joins List of Potential E-Discovery Game Changers

Created on January 24, 2012

By Bob Rohlf, Esq.

A sideline to my work for Exterro involves staying on top of industry trends.  This often includes reading case decisions regarding e-discovery , to try to identify where critical processes were either handled appropriately or went astray.  Needless to say, there is no shortage of material for review.  The cases I most enjoy reading are what one might characterize as “game changers."   These cases add drama to the otherwise dry landscape of e-discovery law by setting new expectations or raising the bar. 

2010's Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497 (D. Md. 2010) was one such case.  Finding the defendant's e-discovery behavior to be the most reprehensible he'd seen in his many years on the bench, Judge Paul Grimm included a possible jail sentence in his package of sanctions recommended to the trial judge.  While Ralph Losey points out that this wasn't the first time a party was threatened with jail time for e-discovery misbehavior (see http://e-discoveryteam.com/?s=in+re+krause ), the case caught a lot of us by surprise and engendered much conversation.  While monetary sanctions are unpleasant, they can be dismissed as a “cost of doing business" if a litigant chooses the wrong approach to discovery.  Given the low incidence of imposed sanctions, the misbehavior might be worth the cost.  Going to jail, on the other hand, might not be an acceptable cost to most corporate decision makers.  The availability of such a sanction could very well discourage unacceptable behavior.  Judge Garbis ultimately affirmed Grimm's proposal for monetary sanctions but diminished the immediate threat of jail.

Many of us are now watching 2011's suit, J-M Manufacturing vs. McDermott, Will & Emory, in which J-M Manufacturing accuses it's former outside counsel, in a key, multi-year case, of improperly disclosing a large number of privileged documents and of failing to adequately supervise contract reviewers.

Clients hire law firms to win their cases.  They presume that their attorneys are competent in performing the basic discovery operations.  In fact, ethics rules demand that lawyers be competent in representing clients.  So clients are likely to be more than a little disappointed if their firm loses the case or suffers major setbacks because their firm was negligent or otherwise dropped the ball.  J-M Manufacturing represents the cutting edge of response, in which the client takes active steps to transfer their loss back to the firm; in essence, holding their attorneys accountable for the results of their case management.

Given that any case involves a lot of moving parts, and that most law firms handle a multitude of cases, giving rise to a very complex environment, it's easy to see that something could slip.  Many firms have embraced technology to leverage their ability to manage all of these processes.  In fact, McDermott was using software to support the review in question.  But technology alone won't prevent a disaster.  The marriage of good technology with good process is required.  In this case, plaintiff alleges that McDermott failed to do a second level review to catch mistakes prior to production.  The failure to blend technology with good practice brought devastating results.

Given the tension between containing litigation costs (from the client) and the need to be profitable (from the law firm), the temptation is always there for attorneys to take shortcuts that seem reasonable at the time.  But if J-M Manufacturing is an indicator, law firms had better be ready to defend their choices.  Whether or not this becomes a bellwether case remains to be seen, but at a minimum it represents a shot over the bow.  It's going to be an interesting case to follow and has a high potential for being a “game changer."

To learn more about other e-discovery cases and predictions for 2012, click here.

Mike Hamilton, J.D. is a Sr. E-Discovery Analyst at Exterro, Inc., focusing on educating Exterro customers, prospects and industry experts on how  to solve e-discovery issues proactively with technology. His e-discovery knowledge, legal acumen and practical experience give him a valuable perspective on bridging the gap between IT and legal teams. You can find him on Google+, Twitter and Linkedin.