Main Takeaways

• When new technology is first introduced, it can be difficult to predict exactly how it will be used and how that use may become an issue in litigation.
• When it comes to decentralized applications (Dapps) such as Ethereum, the major difference with applications we know well, is there is no central authority.
• Litigation will reach the decentralized doorstep at some point.  When it does, a careful, educated approach to preservation, collection, and use will be key.

New technologies often create unique challenges in discovery.  Often when new technology is first introduced it can be difficult to predict exactly how it will be used and how that use may become an issue in litigation.  Ethereum, and the underlying capabilities associated with this protocol, is a good example.

We’ve all heard about the Bitcoin Blockchain. The Blockchain includes all the transaction information – a ledger – for the exchange of Bitcoin. This ledger is distributed across the network of its users. Distributing this information ensures there is no single point that can be corrupted to modify the ledger. Ethereum takes the idea a step further so that, in addition to simple transaction information, more complex uses of the network resources can be created.

In its original whitepaper, Ethereum was described as a decentralized, open source, computing platform that allows users to create smart contracts and decentralized applications. These services run in a distributed environment running on top of the Ethereum network. This network is called the Ethereum Virtual Machine (EVM). It allows a larger set of applications to be created, payment being only one of them.

These decentralized applications, or Dapps, aren’t all that different from applications we know well. 

For example, Twitter is a simple application most of us are probably familiar with.  In the case of Twitter, a user creates an account and uploads their content to the application so others who log into the application can view it.  The content is stored by a central authority, Twitter, for that and other purposes.  The data, at least to some degree, becomes the property of that central authority.  Twitter also has the power to censor this content and monetize it or even remove a user from the application entirely if they choose.

When it comes to Dapps, the major difference is there is no central authority.  For example, EtherTweet is a decentralized blogging platform similar to Twitter but because it is a Dapp, content posted to it cannot be censored.

Another example is Golem.  Golem is an open source, decentralized supercomputer that anyone in the world can access.  Users can rent their unused computing power to other users, creating what amounts to a global market for computing power.  Within this market a user can build applications, utilize computational resources and/or offer their idle computational power in exchange for cryptocurrency tokens (GLM).

What does this mean for litigation? 

Does it create questions about what is in the custody and control of a party?  Does it create difficulties in attributing content to particular individuals or entities?  How will the information be collected (or will it, given it is in a structure that maintains the integrity of the information)?  Will parties renting computing power be responsible for what those contracts are used for?  Will the distributed nodes of a Blockchain-based network replace traditional servers or cloud platforms for offering computational services?

New Dapps are being created all the time and are reaching levels of monetization that ensure more will continue to be created.  Whether these tools replace existing infrastructure or create new paths for data creation and storage, one thing is certain: litigation will reach the decentralized doorstep at some point.  When it does, a careful, educated approach to preservation, collection, and use will be key.

Main Takeaways

• The State Bar of California Standing Committee on Professional Responsibility and Conduct formal opinion no. 2015-193 discusses the ethical responsibilities of attorneys in California dealing with eDiscovery issues.
• It uses a hypothetical situation that underscores the need for counsel to be aware of the intricacies of discovery in the modern age.
• The opinion makes clear that an attorney needs to either be sufficiently familiar with eDiscovery and ESI (electronically stored information), or utilize an expert that is capable of advising on the matter.

Recent Case: DR Distributors v 21 Century Smoking.

 
In the end, sanctions were issued.

1. Defendants were required to conduct a reasonable search for all responsive ESI and produce the responsive material to Plaintiff.
2. Defendants were barred from using any information not previously disclosed to Plaintiff.
3. Defendants’ expert witnesses were barred from testifying that their opinions would not change had they considered the documents and information that was disclosed late.
4. Defendants were barred from contesting that certain parties were performing work for Defendants through thedate the metatag was removed from Defendants’ website.
5. The jury will be informed of Defendants’ failure to provide the Counter defendants with the documents they requested.
6. Evidence relating to Defendants’ failure to preserve ESI may be presented to the jury hearing Defendants’ counterclaims and the jury will be instructed that “it may consider that evidence, along with all the other evidence in the case, in making its decision.”
7. The jury will also be instructed that Defendants had a duty to preserve the spoliated Yahoo! Chats and GoDaddy emails, that the spoliated Yahoo! chats and GoDaddy emails were relevant to the claims in the case, that Defendants failed to take reasonable steps to preserve the spoliated Yahoo! chats and GoDaddy emails, and that the spoliated Yahoo! chats and GoDaddy emails cannot be recovered.
8. Defendants and the former defense counsel must pay Plaintiff’s reasonable attorneys’ fees and costs incurred in creating specific docket entries that were derailed because of Defendants’ and the former defense counsel’s discovery failures. Defendants and the former defense counsel must also pay Plaintiff’s reasonable attorneys’ fees and costs for post-hearing briefs. The fees and costs will be paid in the following proportions: Duke to pay 50% and the former defense counsel to pay 50%, with former defense counsel Thomas Leavens paying 80% and former defense counsel Peter Stamatis paying 20% of that 50%.
9. The Court also required former defense counsel to complete at least eight hours of continuing legal education (CLE) on ESI.

 
Conclusion

This is no doubt a tough pill to swallow for counsel given “. . .the Court was left with the firm conviction that [the client] took advantage of the ineptitude, carelessness, or disinterest of his attorneys.” In the end though, this is exactly the issue being addressed in the ethics opinion noted above. If counsel is not familiar with ESI and eDiscovery, a third party should be engaged to manage those issues to protect counsel and the client from inadvertent mistakes.

Document review has long been associated with large rooms filled with teams of people reviewing documents at a furious pace.  Unfortunately, this model requiring everyone to be in the same physical location has significant downsides (especially today).  At Harbor, we chose a different route for our review teams from the beginning, and this new remote model has proven itself again and again in large-scale litigation.  Particularly during the current pandemic.

The best argument for the team being in the same physical location is collaboration.

When we set out to create a remote review team, this kind of collaboration was key to us.  Questions and new information need to be provided to the team quickly, and ideally a sense of team should be promoted within the group.  We wanted to provide our client law firm teams with access to our review teams in real time.  One of our core design elements was to include tools that allowed for this type of collaboration despite being remote from one another.

Security was another core concern.

The idea that having a team in one physical location makes it easier to control client information was another common basis for a single physical location.  It was key to us that, despite our licensed attorneys having an ethical obligation to the client, we implemented technological hurdles to client information being released.  To that end our workstations are designed to give our team access to all the same tools, links, and other information, but limit their ability to export that information to local devices (i.e. outside our system).

In addition to the fact that we built a system that works better than local systems, we do more to ensure our talent pool is better as well.

We test our teams to ensure their dedication to the goals of the specific review.  This testing allows us to ensure not only the speed of each reviewer but also their ability to identify the nuances of a given review.

In the end, because we are able to pull talent from any location, we can build the best teams for a given task.  We’ve spent years building the best technological resources to ensure security, but in some ways more importantly, we’ve ensured a team-building environment where information moves seamlessly between clients and our review teams.  Frequently, our review team members are offered higher rates for onsite reviews, but turn them down because our model is better.  Try the Harbor solution and see for yourself.