When Can Inadvertent Disclosure Constitute Waiver of Privilege? Factors To Ensure The Maintenance of Privilege

The attorney-client privilege is not as inclusive as some may think. The privilege protects confidential communications between attorney and client in order to “encourage full and frank communication between attorneys and their clients.” The attorney-client privilege only applies if the following conditions are met. The asserted holder of the privilege is or sought to become a client; The person to whom the communication was made is an attorney; The communication relates to a fact of which the attorney was informed; (a) By the client, (b) Without the presence of strangers, (c) For the purpose of securing an opinion of law or legal services; and The privilege has been claimed and not subsequently waived. Commonly, disclosure of confidential information functions as an abdication of attorney-client privilege. Unintentional disclosure, however, does not constitute a waiver of the attorney-client privilege if: (1) the disclosure is inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable steps to rectify the error. Courts also look to factors such as the quantity of the disclosure and the overriding interests of justice when determining whether the attorney-client privilege was inadvertently waived. In this case, a discovery dispute arose because the defendant unintentionally disclosed two privileged documents to the plaintiff. The first document was a letter from the defendant to an attorney for the purpose of soliciting legal advice. The second document was a response letter from the attorney providing counsel to the defendant. The court here found that these two documents are clearly covered by attorney-client privilege. So, the issue then became whether or not the defense waived attorney-client privilege when the party unintentionally disclosed the privileged documents. The court first considered the precautions taken by the defense to prevent accidental disclosures and discovered that there were none. For one, the defendant did not maintain a privilege log. Additionally, the defense did not even mark or designate the letters as confidential. For purposes of maintaining privilege, this factor weighed heavily against the defendant. The next factor the court looked to was the number of inadvertently disclosed documents. These documents were a mere three pages among a total of 3,500 pages of discovery documents. This factor weighed in favor of maintaining privilege. The third factor considered was the extent of privileged information disclosed. This factor weighed in favor of waiver because the information contained on the letters was clearly privileged. The court reasoned that the extent of the defendant’s carelessness weighed against maintenance of attorney-client privilege. The fourth factor considered was the extent of any delay in correcting the inadvertent disclosure. Since the defense took more than three months to attempt to rectify their mistake, this factor was found to be in favor of waiver. As to the last factor, the court stated that the defense did not offer any explanation as to why, in the overriding interest of justice, the letters should still be privileged. Since the majority of factors were found to be in favor of the waiver of attorney-client privilege, the court held that the defense has waived attorney-client privilege with respect to the letters. It is imperative to keep in mind that the attorney-client privilege can be waived unintentionally. One of the most effective ways to prevent an inadvertent disclosure is to maintain a preventative mechanism. Mark all privileged documents as privileged, keep a detailed privilege log, and constantly double check all disclosed documents so any mistake can be corrected quickly. If these steps are followed, a party will likely be able to maintain privilege even if the party inadvertently discloses privileged documents. Daniel received a B.A. in Criminology and Criminal Justice from The University of Maryland. He will receive his J.D. from Seton Hall University School of Law in 2015. Presently Daniel is serving as a legal intern in the Juvenile Justice Clinic. After graduation Daniel will clerk for a trial judge in the Superior Court of New Jersey. Want to read more articles like this?  Sign up for our post notification newsletter, here

How Generous Can a Court Be in Rewarding Legal Fees As a Result of Violation of Discovery Rules?

When a party’s violation of discovery rules causes added legal expenses to its adversarial, courts appear to be very generous in approving fee applications. An application only needs to provide itemized ledger entries of attorney/paralegal hours with simple explanation of the relation of the corresponding work to the discovery violation. Courts are going to exercise broad discretion and place the burden on the violating party to show with particularity why each logged hour is unreasonable. It appears that courts will only disprove hours that are obviously excessive or clearly redundant on the face of the ledger. In Tangible Value v. Town Sports International, Inc., Tangible Value (“TV”) sued the defendants for not paying for services provided according to an oral contract, which the defendants denied. The bulk of its claim was reflected in an invoice stating an unpaid balance of about $800,000. Upon discovery request by the defendant, TV, refused to produce metadata and other documents related to the invoice. The court then ordered such production. During the course of the discovery, TV repeatedly provided insufficient documentation as requested and the defendant had to examine the documents and determine their sufficiency, converse with counsels of TV, and initiate court conferences multiple times to compel additional documents. It was later discovered that the invoice was not real but was created by TV after the fact to justify a damage claim. At that point, the defendant filed a motion for contempt and sanction. The court granted the motion. The defendants then filed their fee application seeking to recoup legal expenses as a result of TV’s discovery violation, which  totaled 423.2 hours at rates varying between $180-$562 for attorneys (associates and partners) and $95-$153 for paralegals. The Magistrate Judge of the District Court for the District of New Jersey generously awarded the defendants 384 hours. Several observations can be made on how the court dealt with various legal charges. First, court deemed all charging rates reasonable by comparing the proposed rates to the rates approved previously by the court in other matters. Second, the court automatically approved any hours that were not objected to by TV. Third, once specific objections of hours were made, the court used a great deal of discretion and required particular showing why the hours objected were unreasonable. Fourth, the court approved internal attorney conferences without much hesitation. Fifth, hours logged for preparation for court conference were approved 100%. Sixth, the court was only willing to consider obviously excessive or unnecessarily redundant work as unreasonable. Seventh and most astonishingly, the court was extremely generous in allowing hours associated with legal research and drafting of Motion for Sanction and Fee application, approving a whopping 250 hours, or over 6 weeks’ worth of work for a single attorney! For my fellow law students, that is half of one entire law school semester. Thus, for executives and legal counsels in similar situations, make a good faith effort to obey the discovery request. Otherwise, the other side will surely take full advantage of the generosity of the court and obtain a humongous reimbursement in legal fees. For easy reference, the table below summarizes the court’s disposition of all hours included in defendants’ fee application in the Tangible Value case. Note: DP stands for Document Production. Fee Items Hours Applied Court Comments Reduction of Hours by Court Assessment of deficiencies in initial DP 8.3 none Communications with TV Re deficiencies in initial DP 9.8 2 Court conference/preparation Re deficiencies in initial DP 1.8 none Communications with TV Re deficiencies in its 2nd DP 5.8 none Court conference/preparation Re deficiencies in 2nd DP 3.1 none Investigation of the invoice and assessment of documents related to the derivation of the invoice 19.2 Multiple paralegals on same task. 4.9 Communications with TV Re deficiencies in its DP concerning the invoice 10.7 Two entries on similar work. 4.4 Court conference Re the deficiencies in DP concerning the invoice 0.8 none Assessment of deficiencies in the 3rd DP 2.2 none Communications with TV Re the deficiencies in 3rd DP 2.4 none Assessment of the 4th DP 1.5 none Assessment of the 5th DP 7 Ledger is unclear. 0.5 Communications with TV Re deficiencies in the 5th DP 1 none Assessment of 6th DP and accuracy of TV certifications 5.9 none Communications Re deficiencies in 6th DP and accuracy of certifications 7.7 none Communication with TV Re deficiencies in 7th DP 1.3 none Communication with TV Re deficiencies in 8th DP 0.5 none Letter to Court summarizing DP deficiencies and seeking permission to move to compel 3.9 none Motion to Compel, including drafting, legal research. 23.5 none Oral argument Re Motion to Compel and Status Conference with court. 4.4 none Revision of Scheduling Orders throughout litigation due to discovery delays 4.2 none Letter request for permission to move for sanction, including review and legal research 9.8 Two attorneys repeated same task. 2 Review of TV response to the letter above 8.2 none Motion for Sanction, including legal research and drafting 80.8 none Review of TV response for the Motion for Sanction, preparation of reply, and review of Magistrate Report and Recommendations. 28.1 The 4 hours for reviewing Court Report excessive. 1 Fee application including review of records and case law research 89.9 Excessive only by 12.2 hours 12.2 Review of TV’s opposition to the Fee Application and draft reply 77.7 Excessive  only  by 12.2 hours 12.2 Gang Chen is a Senior Segment Manager in the Intellectual Property Business Group of Alcatel-Lucent, and a4th year evening student at Seton Hall University School of Law focusing on patent law. 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When Is An Employer Permitted To Monitor and Review An Employee’s Internet Activity and Usage?

On March 10, 20108, Marc Liebeskind began working at Rutgers Facilities Business Administration Department.  By March 28 of that year, Liebeskind was terminated for lacking the basic skill set needed to perform his job in addition to having a poor attitude while on the job. Liebeskind’s supervisors had suspected he was spending an unreasonable amount of time on non-work related activities on his work computer. Having doubts about Liebeskind’s work performance, his supervisors reviewed the browsing history on Liebeskind’s computer by using an application called IEHistoryView. It is important to note that this search only entailed browsing history, and there is no evidence that Liebeskind’s supervisors were granted any access to his personal or password-protected information and accounts. After his termination, Liebeskind filed suit against Rutgers University and his supervisors, claiming invasion of privacy, among other claims. On appeal, the New Jersey Superior Court Appellate Division affirmed the lower court’s ruling, which ruling struck down all claims that Liebeskind’s privacy was violated as a result of his supervisors’ investigating the browser history on his computer. The appellate court referenced the New Jersey Supreme Court’s Stengart ruling, which had set the precedent for an employer’s right to monitor employee Internet activity and usage. Closely followed in previous eLessons Learned posts, the 2010 Stengart ruling held that an employee’s email communication with her attorney, using a company-issued computer, but via a personal, password-protected email account was held to be protected by the attorney-client privilege. However, the court’s decision to uphold Stengart’s privacy was not intended to forbid employers from monitoring employees’ actions on company-issued computers or devices in the future. In Stengart, New Jersey’s highest court stated: “Companies can adopt lawful policies relating to computer use to protect the assets, reputation, and productivity of a business and to ensure compliance with legitimate corporate policies.” As noted in Liebeskind, Rutgers’ “Acceptable Use Policy for Computing and Information Technology Resources” was in effect during the time of Liebeskind’s employment. This policy expressly stated that an employee’s privacy “may be superseded by the University’s requirement to protect the integrity of information technology resources, the rights of all users and the property of the University.” Additionally, Rutgers University “[r]eserve[d] the right to examine material stored on or transmitted through its facilities.” Unlike the findings in Stengart, the court established that Liebeskind did not have a “reasonable expectation of privacy.” In addition, the court agreed that Rutgers had a “legitimate interest in monitoring and regulating plaintiff’s workplace computer.” All companies can learn from this case and the policies in place at Rutgers that protected its right to monitor and search an employee’s computer. One of the most important lessons to be learned here is the need for a written internet usage policy. At the very least, these written policies should mandate that employees are expected to use the Internet and their work issued computers for work related activities only. Additionally, the possible disciplinary actions for any violation of this policy should be made available to employees. As seen in in this case, the existence of an internet usage policy and the reserved right of a company to monitor its employee’s Internet activity is the key to eliminate an employee’s reasonable expectation of privacy.

Erasing Videotapes Can Be Dangerous for Everyone, Not Just Politicians!

In McCann v. Kennedy Univ. Hosp., Inc., the plaintiff Robert McCann sued Kennedy University Hospital, asking the court to sanction the hospital for intentionally or inadvertently destroying necessary videotapes.  The plaintiff contended that the videotapes contained an account of the defendant’s emergency room lobby on the night the plaintiff claims to have been mistreated by the defendant’s staff. The plaintiff argued that the defendant knew or should have known that the video tapes were discoverable material and that there was actual withholding or suppression of the videotapes, which constituted spoliation. On December 21, 2011, the plaintiff was transported to the hospital after suffering extreme rectal pain and trouble breathing. The Plaintiff claims to have been in excruciating pain while he was waiting to be seen by the hospital staff. He states that he was ignored and neglected for at least seven hours. During the time that he was at the hospital, the plaintiff claimed to have collapsed on the floor and was left lying on the floor for over ten minutes, while staff walked over him without offering assistance. McCann also claimed that when he was eventually seen by the hospital staff, they treated him in ways that made him feel humiliated and uncomfortable. The hospital allegedly refused to treat McCann because he did not have insurance. On December 23, 2011, the plaintiff sent an e-mail to Renae Alesczk, the assistant to the Senior Vice President of the Kennedy Health System, complaining about his experience at the hospital while also threatening to sue. A few hours after the email was received, Aron Berman, formerly employed as the defendant’s Director of Guest Relations and Service Improvement, forwarded the McCann’s e-mail to Kim Hoffman, the Corporate Director of Patient Safety. The defendant claimed to have conducted an internal investigation of the complaints at that time, and notified the plaintiff that his complaints were being addressed. The hospital staff then stated that the investigation showed that the hospital staff acted appropriately and managed the patient’s clinical care in a professional manner. So far, so good. However, the plaintiff’s attorneys requested videotapes of the emergency room lobby, which showed the plaintiff waiting without being treated by staff. The defendants claimed that there was no videotape footage because they did not have enough disc drive space to keep all their video footage and had already erased the footage from the night in question. The plaintiff argued that the defendants knew or should have known that the videotapes would be requested in discovery, and that the defendants should not have destroyed the videotapes. The plaintiff claimed such activity as obstruction of justice and an intentional spoliation of evidence. The defendants argued that the tapes only show the time period during which the patient was in the waiting room, and are irrelevant to the plaintiff’s complaints about the treatment by staff when he was seen in the hospital. The Third Circuit has adopted a four-factor test for evaluating spoliation claims, finding that spoliation occurs where: “(1) the evidence was in the party's control; (2) the evidence is relevant to the claims or defenses in the case; (3) there has been actual suppression or withholding of evidence; and (4) the duty to preserve the evidence was reasonably foreseeable to the party.” Here, there is no argument that the tapes were in the party’s control. The court found that the tapes were not relevant to the plaintiff’s claims and that the defendant did not have a duty to preserve the video tapes at issue.  Therefore, there had not been actual suppression or withholding of the evidence. The takeaway from this case is that the court found it was reasonable for the hospital to destroy the videotapes because the plaintiff’s claim was specifically in regard to his being treated while at the facility, NOT his experience while waiting in the lobby. However, to be safe, videotapes of the night in question should be preserved to avoid this kind of confusion. Rebecca Hsu, a Seton Hall University School of Law student (Class of 2015), focuses her studies in the area of patent law, with a concentration in Intellectual Property. She is also certified in Healthcare Compliance, and has worked in Compliance at Otsuka America Pharmaceuticals, Inc.  Prior to law school, she graduated, cum laude, from UCLA and completed graduate work in biomedical science. She has co-authored two medical science research articles, as well as completed fellowships through UCLA Medicine and the Medical College of Wisconsin. In addition to awards for her academic achievements, Rebecca has been honored by awards for her community service with disadvantaged communities. In her spare time, Rebecca regularly practices outdoor rock climbing, and can be found camping in the Adirondacks. Want to read more articles like this?  Sign up for our post notification newsletter, here

Court Protects Against Requested Deposition of An IT Witness for Fear of Opening Floodgates

Philips and Hunt may have been debating the ownership of the tagline “Sense and Simplicity,” but it seems the U.S. District Court for the District of New Jersey was more interested in exploring the sense and simplicity of Rule 26 of the Federal Rules of Civil Procedure when it handed down the ruling in Koninklijke Philips N.V. v. Hunt Control Systems.  After noting that Rule 26 permits a broad scope of permissible discovery, Magistrate Judge James B. Clark, III held that a responding party need not use every tool in their toolbox in order to comply with a Fed.R.Civ.P. 30(b)(6) deposition request. In his memorandum opinion, Judge Clark held that an alternative approach to ESI collection, as requested by Hunt, was burdensome and likely to be unproductive.  The collection was such a burden, in fact, that Judge Clark granted Philips’ motion for a protective order against further such requests. Hunt had previously interviewed “a Philips IT/ESI discovery professional” regarding Philips’ ESI practices.  Months later, Hunt noticed a deposition for an IT witness claiming that Philips’ responses for eight questions were not adequately answered by the interviewee.  Philips objected to the deposition request and petitioned the court for a protective order. Hunt argued that the IT deposition was necessary in order to discover whether Philips was using appropriate search tools for the ESI discovery requests.  Hunt’s argument was supported by an IT professional who opined that Philips’ “cloud-based IT structure” and Philips’ “sophisticated and comprehensive state-of-the-art document search and location tools” meant that Philips was obligated to use a particular method to accommodate Hunt’s electronic discovery requests.  Hunt further argued that the deposition did not create an undue burden on Philips so as to outweigh the likely benefits. In seeking a protective order, Philips counters that the provided answers were accurate and that Philips has consistently used “a custodian-based approach to collecting ESI” and thus, shouldn’t be required to employ alternative approaches at the request of Hunt.  The court agreed with Philips, citing three individual reasons.  First, the Court found that Hunt failed to carry its burden of showing that Philips’ production has been materially deficient.  Significantly, Judge Clark wrote that just because Hunt was dissatisfied with the result of Philips’ production, such dissatisfaction was “not enough to reopen the door to the collection of ESI discovery under an entirely different method.”  Because Philips’ responses were true and accurate, there was “no compelling reason” to force Philips to use Hunt’s preferred method of production. Second, the court held that even if an alternative approach to ESI collection was more appropriate than Philips’ “custodian-based” search, Hunt still failed to produce evidence showing that conducting another search under their preferred methods would substantially alter the results Philips already produced.  Again, Judge Clark takes the opportunity to emphasize that employing multiple methods of production would be “duplicative” and “an inefficient use of time and resources.” Third, and most importantly for future cases involving these circumstances, Judge Clark wrote that it was not Hunt’s requested deposition that caused an undue burden on Philips, but rather “the possibility of opening the door to more (and likely unproductive) discovery with no apparent end in sight.” Putting a stern period on the end of a judicial statement, Judge Clark concluded by noting that the proposed deposition contained only a “marginal benefit” to Hunt that is “heavily outweighed” by the “tremendous burden” to Philips.  Judge Clark made it clear (and seemingly warned future litigators) that the court will not entertain duplicative and seemingly petty disputes over the method of e-discovery production, so long as the information produced is not “materially deficient.” In light of this decision, parties requesting discovery would be wise to make their requests as specific as possible in the first instance, including a specified or desired approach to collecting ESI.  Such specificity (accompanied with reasonability) may result in more beneficial discovery as well as preventing the scorn of wasted judicial time. Nicole was a 2010 magna cum laude graduate of Northeastern University located in Boston, Massachusetts, where she earned her B.A. in English and Political Science.  In 2015, Nicole will receive her J.D. from Seton Hall University School of Law.  After graduation, Nicole will serve as a clerk to a trial judge of the Superior Court of New Jersey in the Morris-Sussex Vicinage.

How Can You Be Found Guilty of Computer Sabotage When You’re No Longer Working For the Company? Easy; Put A Timed Virus Into The System Before You Leave.

On July 31, 1996, plaintiff Omega Engineering Corp. ("Omega"), a New Jersey based company, lost its computer programs relating to design and production permanently from its system. Omega manufactured “highly specialized and sophisticated industrial process measurement devices and control equipment” for NASA and the United States Navy.  The deletion of these programs debilitated their ability for manufacturing as well as costed the company millions of dollars in contracts and sales. From 1985 to July 10, 1996, defendant Timothy Lloyd worked as the computer system administrator at Omega.  He trained with the Novell computer network and installed it to Omega’s computer system.  The program worked to ensure that all of Omega’s documents could be kept on a central file server. Lloyd was the only Omega employee to maintain the Novell client and have “top-level security access” to it; however, the defense asserted that others at the company had access.  According to a government expert, access "means that ... [an] account has full access to everything on the server."  Lloyd was also the only employee in charge of backing up the information to the server. In 1994 or 1995, Lloyd became difficult.  The company moved him laterally in hopes of improving his behavior. A government witness testified that even though it was a lateral move, it was in fact, considered a demotion by the company.  Lloyd’s new supervisor asked him about the back-up system and wanted him to loop a couple more people in but he never did.   Moreover, he instituted a company-wide policy that employees were no longer allowed to make personal backups of their files. On top of the above issues, there was also a “substandard performance review and raise.”  The combination of the two factors, according to the government, showed Lloyd that his employment with the company would soon be terminated.   This established Lloyd’s motive to sabotage the Omega computer system.  On July 10, 1006, Lloyd was terminated. On July 31, 1996, Omega’s file server would not start up.  On July 31, “Lloyd told a third party, that "everybody's job at Omega is in jeopardy.” days later it was realized that all of the information contained on it were permanently lost.  More than 1,200 of Omega’s programs were deleted and, as per Lloyd’s policy, none of the employees had their own personal backups.  There was no way for any of these programs to be recovered. A search warrant conducted on Lloyd’s house turned up some backup tapes and a file server master hard drive.  Experts hired by Omega found that the deletion of information was “intentional and only someone with supervisory-level access to the network could have accomplished such a feat.”  The commands necessary to pull off such a purge were characterized as a “time bomb” set to go off on July 31st when an employee logged into the system.   There was evidence found by these experts of Lloyd testing these specific commands three different times.  This string of commands was further found on the hard drive that was in Lloyd’s home. Lloyd was convicted of a federal count of computer sabotage.  It was remanded due to a jury member’s claimed use of outside knowledge during deliberations. Julie received her J.D. from Seton Hall University School of Law in 2014. Prior to law school, she was a 2008 magna cum laude graduate of Syracuse University, where she earned a B.A. in History and a minor in Religion and Society. After law school, Julie will serve as a law clerk to a judge of the Superior Court of New Jersey.

Can a Court Sanction a Pro Se Party for Deleting Evidence? The Third Circuit Will, So Do Not Delete Your Data!

Whenever sanctions are involved, you can expect to see questionable behavior from one or more parties.  In this particular case, a pro se litigant tried to be cute and the court called him out for it.  The Appellant here used to own a company which provided consulting services to the Appellee.  Since the company became defunct, the owner became the only remaining party being sued. The district court had entered a discovery preservation order in which the parties agreed the appellant would return a laptop computer along with all of its data.  However, the appellant deleted data off the laptop minutes before signing the agreement.  Then the appellee initiated post-settlement litigation to obtain sanctions.  The appellant’s attorney then withdrew and the appellant continued pro se.  The judge found the appellant to be in civil contempt and awarded sanctions of over $50,000. The appellant raised three contentions on appeal.  First he argued sanctions under 28 U.S.C. § 1927 could only be awarded against attorneys, not pro se individuals.  Circuits are split on this issue.  The Third Circuit navigated around the issue, asserting that the district court judge could have justified its sanction under other grounds. Second, the appellant argues that monetary sanctions should not have been awarded because the information was deleted before the discovery agreement was signed.  The Third Circuit called out the argument as being a bit too clever and was not persuaded.  It all but accused the appellant of deliberately misleading the district court.  More damning was the actual language of the agreement.  It exposed the appellant to liability arising from the agreement itself, which governed the return of the laptop. Third, the appellant challenges the award for all attorneys' fees.  On this issue the Third Circuit remanded for a determination of what fees fairly reflect compensation for the appellant's contumacious conduct.  What is more vital here is the punishment for deleting data off the computer.  Those who try to outsmart the court will get their just deserts and acting pro se does not provide any sort of loophole.

New Jersey Passes Social Media Privacy Bill

Everyone enjoys their privacy, even legislators! Privacy bills are becoming ubiquitous in state legislatures across the country. With the increased use of social media in and around the workplace, states are legislating to protect the dueling interests of employers and employees. Ten states, including New Jersey, passed laws that restrict employers from accessing the social media accounts of employees.

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When deactivating your Facebook account becomes the intentional destruction of evidence

Deactivating your Facebook account and passively allowing it to be permanently deleted can be considered the intentional destruction of evidence. The Plaintiff in Gatto is now facing a potentially damaging adverse jury instruction if he takes his case to trial. In Gatto, a ground operations supervisor at JFK Airport was injured in his course of employment when one of the United Airline’s planes bumped into a set of fueler stairs, causing them to run into the plaintiff. In his suit, Plaintiff alleges that due to the crash he has suffered various serious injuries, is permanently disabled, hasn’t been able to work since July of 2008, and his physical and social activities have been limited. Defendants sought access to Plantiff’s Facebook account in relation to these claims.

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Court’s Broad Definition of “Control” Requires That Litigation Hold Include Independent Agents

For discovery purposes, “control” over documents does not necessarily require actual physical possession.  In fact, certain agency contracts can designate that a company has “control” over documents held by its independent agents.  In Haskins v. First American Title Insurance Company, the United States District Court for the District of New Jersey held that First American Title Insurance (defendant) had to assert a litigation hold on its present and former independent title agents.

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