THE BASICS OF ELECTRONIC DISCOVERY: PART 1 OF 2

On September 1, 2012, Florida’s newly minted e-discovery rules went into effect.  The purpose of this article is to give practitioners who are unfamiliar with e-discovery a basic understanding of the concepts, terms, and applications of this “brave new world”.  The breadth and scope necessitates that we address this in two parts; Part One will provide you with a basic understanding of e-discovery, the key terminology used, and examine some of the technology impacting this field.  Part Two will explore the technology in more detail, address the defensibility of the technology, and conclude with how this all affects you as a practitioner.

YOU CAN DO THIS !

Discovery is not new to lawyers; you have been doing it for years and have developed a level of comfort with the procedures and the applicable case law.  Like me, you also keep up with the latest developments in the law and advise your clients at the outset of litigation that there will be inquiries to probe the facts of the claims and assertions, including depositions, and requests for documents and that they shouldn’t shred or destroy these materials.  You also probably communicate with your clients by e-mail, exchange drafts of documents that way, and may have even begun scanning documents and electronically storing them in your own office.  Also like me, you have probably figured out you can do all of this from a multitude of gadgets and devices from almost anywhere.  Well, our clients have been doing it as well and you are already equipped with the capabilities to perform e-discovery and probably don’t realize it.

E-discovery is not new either; it has been an integrated part of civil cases in our federal courts for several years.  There is a growing body of federal case law addressing e-discovery as well, some of which you may rely upon in the next several years as Florida develops its own body of law on the topic.  It is important to note, however, that Florida’s new State Court E-discovery Rules are slightly different from the Federal Rules, so the federal cases you cite must apply to the same concepts contained in Florida’s new Rules.  With the new Rules, you will likely see CLEs, seminars, and White Papers on these differences, but the two broad ones are that the new Florida Rules do not have a mandatory “meet and confer” requirement and lack the sanctions components of the Federal Rules.

At its simplest form, e-discovery is just amassing and producing the electronically stored information that your clients used to keep in paper format.  It will not obviate paper discovery; it just compliments it.  Depending on how much you do and how much you want to invest, your method of production can range from simply e-mailing data to saving data and documents to some transportable media like a CD or a thumb drive to software of varying sophistication and cost.  Whatever method you employ, the fundamental purpose remains the same as it was with paper dicovery; the production of responsive non-privileged or protected materials.

TERMINOLOGY

It is helpful to understand some of the more common and important terms used in e-discovery:

  • ESI (Electronically Stored Information) – this is the data. Think of it as the old stack of papers you used to have to look through to produce responsive documents
  • EDRM (Electronic Discovery Reference Model) – the process of e-discovery consisting basically of collecting and preserving data, processing it, reviewing it, and finally producing it
  • De-Duping/De-Duplication – the process of identifying and segregating true duplicates
  • De-Nisting – the removal of system and application files from ESI
  • Filtering – narrowing a search of data or a subsequent search
  • Hash Value – like a VIN number for a car, the unique “fingerprint” assigned to each file
  • Keywords – identified/pre-selected words used to search ESI in the review process
  • Metadata – information about the data, e.g. who created it, edited it, when, on what computer, etc.
  • Native Format – the original format for data, such as MS Word, which can then be converted into another format for production, such as pdf or tiff, if appropriate
  • PST – the file where e-mails are stored
  • Preservation – maintaining the original data in an unaltered state
  • Spoliation – the loss or destruction, either inadvertent or intentional, of data that will challenge our Judges to craft an appropriate remedy and keep our appellate courts busy for years to come

TECHNOLOGY

The pace of technological developments in the past few years is nothing short of astonishing.  While I was reviewing e-mails on my tablet while on a boat in the Bahamas recently, my twelve year-old nephew remarked that he understood e-mail to be something older people use to send documents back and forth.  E-mail really only came into common use in his lifetime, but the past few years have seen an explosion of social media and an increase in other forms of electronic communication, such as texting.  All of this technology is producing and creating data that can be a potential goldmine in any litigation and can dynamically alter the course and outcome of a lawsuit.

Whether you are a do-it-yourselfer by nature or prefer to hire an outside expert or whatever your particular case and client require, there is a wealth of technology that is growing and expanding at an exponential pace to assist you.  To find the right fit, you’ll have to do a little research, no different than when you selected your computer or phone.  Organizations, such as the Association of Certified E-Discovery Specialists have compiled a substantial amount of helpful and timely information on software, vendors, and case law.  There are also several conventions where these vendors gather, such as the annual ACEDS Conference in Ft. Lauderdale.

In Part Two, we will explore the technology in greater detail and its defensibility, as well as how all of this will now affect your practice.

How do you set up a business in Florida – Part 9: Trademarks are not your only protection

While trademarks and service marks are one method by which a business can add value to and protect its brand, non-compete agreements, non-solicitation agreements, and non-disclosures are also mechanisms by which a business can place itself in a position to more easily enforce its rights and protect itself.  However, there are certain legal restrictions that apply to some of those documents leading one to the recommendation of “don’t try this at home”.  Business owners that elect to create their own contracts or download these documents from an unknown source and opt not to invest in expert business law advice, such as that from Florida Bar Board Certified business litigation lawyer David Steinfeld of the Law Office of David Steinfeld, usually create a bigger and more expensive problem for the business later.

A business that relies on its self-created documents can, for years, believe that it is protected by such defective documents only to find out when it tries to enforce them that the business is unprotected, has exposed its proprietary and confidential business information, and created its own competition that can damage or destroy the business.  After spending years and significant sums to grow a business, one of the worst imaginable issues that the owner or owners can face is learning that they are helpless to fight off an attack from a former employee or new competitor who has absconded with what the business owner thought was protected proprietary business information.

Thus, sophisticated business owners invest the time and money to consult with Florida law business experts like David Steinfeld to understand the options available to them and to be able to make informed decisions on those points, which avoids more costly future disputes ever time.

Protect Your (Business) Assets

One of the roles of a business lawyer is that of counselor; to advise business people on how to stay out of trouble.  I have stated many a time in many a venue that next to a house or maybe a nice boat, a business is likely the largest investment of time and money that a person can make.  Why jeopardize it by failing to plan for success and growth with the right business documents.

Most small to medium sized businesses start with an idea and grow based on advertising and the quality of its goods or services.  Most small to medium sized business owners focus their energies externally by investing their time and money into promoting their business and obtaining and improving those goods or services.  But, the sophisticated and truly successful business owners plan for that success by incorporating solid contracts and other legal documents into their business.

A business, like its office building, can be easily understood to have an interior and an exterior.  When it deals with people outside the business, such as customers or suppliers/vendors, that is, of course, its external face.  In that venue, it needs well-planned contracts that help to promote the strength and sophistication of the business.  When it deals with people inside the business, like employees, independent contractors, and consultants, it also needs properly crafted agreements, such as non-compete and non-disclosure agreements, independent contractor agreements, and partnership/shareholder/operating agreements.  Even the single owner should have some form of governing document, just like a Will, in the event that some calamity befalls the owner.  This allows the business to continue or to be more easily sold so the hard work of the owner is not lost.

Are these documents expensive?  Not as expensive as not having them is the answer.  Where do you get them from?  A qualified and experienced business lawyer is your best bet.  You can find many of these on-line, but unless you have the expertise of a qualified business lawyer, you won’t know what you are getting.  Would you buy a house without inspecting it or a car without test driving it or having a mechanic look it over?  Then why build a business without the expertise of a qualified and experienced Board Certified business lawyer to craft these critically important documents for your business.

In the final analysis, building and operating a business costs money.  But, why give up your security and piece of mind by not having a good business lawyer counsel and guide you on what documents you need and when and having that person prepare them for your business.

Saved Money by Having Your Accountant or CPA Draft Corporate Legal Documents?

You wouldn’t go to your dentist for your taxes or your doctor to paint your house, right?  So why allow your accountant or CPA to draft critically important legal documents for your business?

Recently a number of clients seeking my help to fix problems and solve disputes have uttered the statement, “well, my accountant drafted that document for me”.  When non-lawyers try to prepare important legal documents for business, the business owner cannot go back to the accountant or CPA to fix the disaster because they lack the competence to do so.  It is actually a third-degree felony in Florida to practice law without a license, not to mention the fact that it upsets real lawyers because those people can cause a great deal of harm.  So, for those accountants and CPAs thinking you are doing someone a favor preparing contracts, bylaws, shareholder agreements, operating agreements, and the like . . . beware.

Accountants and CPAs have special training and experience in financial matters and taxes, not in business law.  Business lawyers do that and Florida Bar Board Certified business litigators are the only recognized experts in the field.  Florida’s business laws change and update in response to an ever changing commerical landscape.  It is a full time job for lawyers to keep on top of these laws.  Accountants and CPAs plainly are not qualified to prepare important legal documents under these laws.  For example, as of January 1, 2015, we have new limited liability company laws in Florida that apply to all LLCs regardless of how old they are.  Would an accountant or CPA know what changed and why?

Setting up or forming a business in Florida is relatively easy on sunbiz.org.  But, determining which corporate entity offered under Florida law is most appropriate is something to discuss with a business lawyer.  You also discuss the tax implications with your accountant or CPA, but the analysis is different.  By the way, there is no such thing as an “S Corp” as a corporate entity.  That is a tax election as compared to a “C Corp” or other choices, like sole proprietor and partnership, as to how you are treated for tax purposes.

The recognized corporate entities under Florida law are: (i) a corporation, regulated by Chapter 607 and identified by “Inc.”, (ii) a limited liability company, formerly governed by Chapter 608 and now by Chapter 605 and identified appropriately by “LLC” after the name, and (iii) a partnership, which is regulated by Chapter 617 and can have several identifiers depending on what kind of partnership it is.  For reasons your accountant or CPA can’t explain to you, the LLC is now the most common form of corporate entity used in Florida.

Depending on the circumstances of each business, it might need or be best served by having certain documents that govern its operations and internal structures.  These are commonly called “corporate governance documents”.  A corporation has bylaws and shareholder agreements.  LLCs have operating agreements, and partnerships, of course, have partnership agreements.  There are certain laws that apply to each and some of these can be bent and some can be changed.  However, an accountant or CPA that doesn’t have a license to practice law in Florida is not the right person to prepare those, just as the young person in the fast food drive-thru window probably isn’t the right person to prepare your taxes or give you tax advice, right?!

So what about contracts, non-competes, non-disclosures, and other important and useful business documents?  Yes, when not serving time for the felony, your accountant or CPA is the perfect person to prepare those for you and they can also run 60 mph and lift heavy objects as if they were a pen! Folks, don’t ask your accountant or CPA to break the law and prepare these legal business documents.  Get a good and experienced business lawyer and ask that person.  Florida has laws that impact all of these documents and lawyers, not accountants, CPAs, or anyone else, are responsible for knowing those laws and preparing documents that properly use those laws and don’t violate them.

What Are Your Document and Data Preservation Obligations?

Our world is becoming increasingly digital.  Businesses are keeping more and more information in electronic format, which highlights the question of what must a business operating in Florida keep and what can it delete in the context of a civil lawsuit.

The simple answer of keep everything may not be practical or efficient.  Sure, storage media is cheap, but storing everything also means someone at a law firm has to look through it, which can translate in enormous electronic discovery costs in litigation; we’ll get to that in a minute.

Not long ago, Florida adopted procedural rules in civil cases (contract suits, car accidents, divorces, etc.) that were modeled largely on existing Federal Rules.  Our Florida Rules require that parties perserve relevant data when served with a lawsuit or receive reasonable notice to keep data, whichever is earlier.  So, for example, if your business isn’t suing or being sued, you can freely clean out your hard drive, but you might want to consult with counsel first or archive data just to be sure.  You can still delete data if you are involved in a suit, just not data relevant to that dispute.  If you do, bad things can happen called sanctions for spoliation of evidence.

So then, what’s the easy solution? Have a data management plan and preservation policy and follow it.  If you do, you are in the safe harbor of the Florida Rules.  What do you put in that Plan?  That’s something a Board Certified expert in business litigation with experience with electronic discovery should craft for you.

Now, what is electronic discovery you asked? It is the process of obtaining and processing relevant data by and between parties in a civil lawsuit.  More simply, it’s getting your e-mails and stuff in a lawsuit.  It takes the old process lawyers used of gathering all the documents and exchanging them in a case and brings it into the 21st Century.  It recognizes that businesses and people have a lot of data and it makes efficient use of technology to process that data.  But, someone still has to look through a certain amount of that data and that’s what increases your costs.

In e-discovery as it is called, there are two large costs; the software and the lawyers who use it.  The software cost depends on the vendor and there are about a thousand of them.  Some charge for upload of data and for use.  So, the more data you have to upload and store, the more expensive it is and that’s why storing everything isn’t always the best answer.  The attorneys’ fees naturally depend on the billing arrangement with the law firm, but at the end of the day, someone has to look through some part of that data.  So, the less data there is, the less time it takes, and the less it costs.  Getting the picture?

So, in sum, storing all data for a business isn’t necessarily the best solution as doing so may inadvertently cause future e-discovery expenses to balloon in any lawsuit.  In Florida’s State Courts, businesses now have a legal obligation to preserve electronic data when demanded (with limits) or when sued, whichever comes first.  The intelligent reaction for any business or business owner is to have a proper data management plan and preservation policy for the business in place now to reduce e-discovery costs and exposure to liability later.  For that, look to one of the 240 Board Certified business litigation experts in Florida who can guide you through this developing area of e-discovery.

I left my job and have a non-compete: What can I do and what can’t I do?

Under Florida law, non-compete agreements are considered restraints of trade and are strictly construed according to our Statutes.  Non-compete agreements must have consideration to support them and must be reasonable in their geographic scope and time limits.  Consideration for a non-compete can be the job, if entered into at the start of the job, otherwise they generally have to have some other consideration, like an increase in pay or a bonus.  Whether a non-compete is reasonable in its geographic and time scopes depends on the specific situation and what interests are to be protected.  When the Law Office of David Steinfeld drafts a non-compete for a business, for example, it will include factual explanations of the reasoning for these limitations to guide the Court and enhance the enforceability of the document.

So, if you have a non-compete and have left that job, it depends on the language in the agreement and the particular circumstances of the situation as to what you can and can not do.  For example, if there was a written employment agreement and the employer breached that, the non-compete tied to it may not be enforceable.  However, if there was no such agreement and the employee quit, then the non-compete may be enforceable as long as it has the requisite consideration and is reasonable in its limitiations.

Whether the limitations in a non-compete are reasonable is generally a factual determination for a Judge.  For that reason, the non-compete agreements that the Law Office of David Steinfeld prepares have the agreed facts embedded in the document.  Without that, the employer usually must provide separate evidence to prove the reasonableness unless it is specifically deemed reasonable by Statute.  Agreements that limit future employment for one year or less and generally automatically reasonable.  Those that are between one and two years after employment are usually enforced.  Agreements that go beyone two years after employment are subject to review by our Courts.  That is not to say an employer can’t have a five year non-compete, it is just that there has to be a legally valid reason to impose such a restriction on a former employee.

Non-compete agreements can also be temporarily suspended if they are violated.  A series of cases in Florida has determined that if a party subject to a valid non-compete breaches the agreement, the employer isn’t getting the full benefit of the limitations so while the breach is ongoing, the limitations can be suspended until the breach stops, which then restarts the limitation from that point.

What you can and can not do then depends on the agreement you signed and the particular circumstances.  Non-compete agreements may also be married with non-disclosure agreements that will also restrict use of specific knowledge gained during employment.  Non-disclosures are not subject to the same limitations as non-competes and are often much broader as they are designed to protect proprietary information of the business.

The best thing to do is consult with a Board Certified expert in business litigation or in labor and employment law before you, as the employee, undertake actions that may subject you to liability or before you, as the employer, hand a non-compete or non-disclosure to an employee to sign.  You can easily find such professionals through the Florida Bar’s website – flabar.org or through a local Bar Association, such as the Palm Beach County Bar- palmbeachbar.org.

As an employer, if you suspect that a former employee subject to either a non-compete or non-disclosure or both, is violating the agreement, the best initial action is to consult with a Board Certified expert in business litigation or in labor and employment law before you undertake any action.  You, as the employer, must understand your rights and comprehend how the legal process allows for enforcement of these agreements.  Also, as an employer, you are best served to have a Board Certified expert in business litigation draft these non-competes or non-disclosures for your business to know that they will be enforceable in your local courts when and if the time comes.

The worst feeling is preparing these documents on your own to save some money and finding out later that they are utterly unenforceable and that your former employee is now free to compete with your business armed with all the knowledge and experience your business has imparted to that individual.  Be smart, plan ahead, and consult with a Florida Bar Board Certified expert in business litigation.

What you need to know before starting a business in Florida

This article addresses some facts you should know before starting a business in Florida.  The author is a Florida-licensed attorney who is recognized by the Florida Bar as an expert in business litigation law, but this article is not meant to provide legal advice or to form an attorney-client relationship.  It is meant only to provide general information about this topic.  Each situation is different so it is best to consult with an attorney as to your particular circumstances.

Any person or existing business can incorporate and own a business in Florida.  Florida does not have residency restrictions on the owners, but there must be a registered agent in the State for service of process.  An agent for service of process accepts lawsuits and other legal documents.  There are various companies that will provide this service for a fee, but any such company hired should have clear methods by which they will quickly notify you as to when and whether any such documents are served.  Using the power of the internet, it should be relatively easy for such an enterprise to simply scan and e-mail such documents, therefore, it is prudent to inquire as to their notification methods.

From one perspective, starting or incorporating a business in Florida can be as much procedural as substantive.  The actual incorporation process, registration of any necessary occupation licenses, and leasing of physical offices or storefronts is a matter of filling out forms.  However, substantive actions like understanding and negotiating the terms of a commercial lease and drafting agreements between the owners, such as operating, partnership, or shareholder agreements, is where the enterprise will most benefit from the services of a qualified and experienced business attorney.

Although some documents used for the formation of businesses are available on-line through various services, those can be likened to the difference between clothing purchased off the rack versus those that are custom tailored for an individual.  While do-it-yourself or one-size-fits-all type documents may cover a broad range of situations, chances are they will not address all of the particular circumstances of an individual transaction and lack the advice, counsel, and explanations that experienced attorneys can provide.

On that point and to stress the importance of seeking qualified legal counsel before starting a business in Florida, the reader should know that in the summer of 2010, the Florida Supreme Court decided a case called Olmstead versus Federal Trade Commission, which confirmed that any member’s ownership interest in a limited liability company was property that could be seized by judgment execution.  In response, however, in July 2011, the Florida Legislature amended Florida’s LLC laws to clarify that only membership interests in single-member LLCs are subject to judgment execution.  The new Statute states that multi-member LLC interests are only subject to a charging order and can not be taken from the owner.  Whether and how this impacts your plan for your new business is not something that DIY documents can address; only an attorney can discuss and explain the impact and suggest modifications to your plan.

The significance of this recent change to Florida’s a Limited Liability Company Laws highlights the importance of obtaining advice from an experienced business attorney before incorporating a new business.  Whether it is better to set up your business as a company, partnership, or LLC and whether it should be a single-member or multi-member LLC is a matter specific to your circumstances and something to discuss with a business attorney.  Seeking and obtaining proper counsel and advice from a Florida-licensed attorney with experience and expertise in this area of the law early and throughout this process can increase your chances of avoiding problems later.

 

The Florida Bar recognizes those attorneys who are experts in business litigation with Board Certification in Business Litigation Law.  To attain such recognition, attorneys must try a certain number of jury and non-jury trials, pass a comprehensive examination, and receive satisfactory reviews from their peers and Judges before whom they have practiced.  A complete listing of Board Certified attorneys in Business Litigation Law and other areas is available on the Florida Bar’s website at www.flabar.org.