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

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.