Government regulators lose sleep, too. This was the message delivered by Leonard Gordon, director of the Federal Trade Commission’s Northeast Region during a spirited panel discussion that also featured David Keyko, litigation partner and regulatory expert from Pillsbury Winthrop; Josh Weiss, special counsel from Cadwalader, Wickersham & Taft; Fios’ Director of Strategic Account Relationships, Dennis Kiker; and me, Mary Mack, as moderator.
The panel discussion took place at an invitation-only lunch hosted by Fios during Legal Tech New York, and focused on helping outside counsel prepare for an anticipated increase in e-discovery and regulatory actions in 2010.
Gordon was the recipient of most questions, as the attendees tried to understand where the agency will be focusing and how best to comply in a cost-effective manner to investigations. He said that, among other actions, his agency will be pursuing actions to protect consumers from deception during the economic crisis.
As in civil litigation, Gordon recommended preservation and cooperation when being investigated. Unlike civil litigation, in investigations there is no “meet and confer” where both parties give and take to limit scope. The process is more like a “plea” than a “negotiation,” recounted David Keyko. Third parties have more luck than the targets of investigation when it comes to negotiating search terms and having them stick. There was general agreement amongst all of the speakers that agencies are not likely to stop at one bite of the apple, even when search terms are “approved.”
Josh Weiss suggested early cooperation to determine a starting point and to narrow scope. The Statement of the Federal Trade Commission’s Bureau of Competition on Guidelines for Merger Investigations outlines the following guidelines:
- Provide, at the earliest possible time, organizational charts and information on data and document flows and systems so that the staff can evaluate the search methodology;
- Provide a glossary of industry and company terminology;
- Provide proposed search methodologies (including the applications that will execute the search) and the results of a sample search or searches so staff can evaluate how the search is working;
- Submit a rolling production, so any deficiencies can be detected and corrected;
- In certain cases, agree that certain key employees’ files will be physically reviewed in addition to, or in lieu of, being term-searched;
- In certain cases, agree to safeguards such as a stipulation to produce any responsive documents not identified in the term search, but identified by other means, before certifying substantial compliance, or a stipulation that documents not identified in the term search will not be used or cited by the parties before the Commission or in litigation.
Dennis Kiker added that because of the short time frames typically involved in governmental investigations, it’s important for counsel to help their clients get their house in order now. This should include partnering with a qualified e-discovery vendor that delivers the infrastructure, expertise and project management services necessary for defensible and rapid collection, processing and hosting of the evidence.
Another concern shared by the audience focused on privilege. Gordon said that he was not aware of requests for Federal Rule of Evidence 502 protection of privilege. The agency is open to hosted solutions rather than productions. Native files are sometimes requested as a default, and Gordon indicated that production can be negotiated.
Both counsel and regulators have varying degrees of understanding of e-discovery practice. Gordon expressed frustration over the tendency of some counsel to play dumb about electronic data, while panelists and audience members expressed frustration with commissioners who do not understand the costs of compliance, particularly around preservation. Even when the alleged conduct occurred in the past, one unidentified regulator would not allow a company under investigation to stop preservation of data created after the fact.
Sometimes there is coordination among regulators, Weiss related, even among state and federal regulators. In David Keyko’s experience, however, it is difficult to get multiple agencies to coordinate requests to reduce costs.
The economic crisis is causing some mergers and acquisitions to move through quickly, and the agency is sensitive to companies on the verge of bankruptcy. However, lack of credit or capital to comply with a request may provoke sympathy but not forebearance.
Regulators have a great deal of discretion. Even if faced with a regulator who does not “get” electronic discovery, never “end run” a commissioner.
This event was also covered by The National Law Journal.
Filed under Home Page Featured, Sound Evidence, Technology Counsel.