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.

About the Author

A Board Certified expert in business litigation by the Florida Bar, David Steinfeld, Esq. is the owner of the Law Office of David Steinfeld in Palm Beach Gardens – davidsteinfeld.com.  As a member of the Association of Certified E-Discovery Specialists, Mr. Steinfeld keeps on top of e-discovery developments.  He also teaches Judges, lawyers, and paralegals how to perform e-discovery for Everything e-Discovery, LLC eveythinge-discovery.com.  He is AV-Preeminent rated by Martindale-Hubbell, 10.0-Superb rated by AVVO, and was highlighted as “One to Watch” for 2014 by Attorney-at-Law Magazine.  He has been named one of Florida’s Legal Elite for 2012, 2013 and 2015, recognized as one of the top business lawyers in Florida by The Legal Network for 2013, 2014, and 2015, and was selected for inclusion in the list of Florida Super Lawyers for 2014 and 2015.

Mr. Steinfeld is the incoming Vice Chair of the Florida Bar Board Certification Committee for business litigation and is the current Chair of the Palm Beach County Bar’s Business Litigation CLE Committee.  He is also a member of the Board of Directors of the North County Section of the Palm Beach Bar and was appointed by the Florida Supreme Court to its Committee on Business and Contract Jury Instructions.  He is an invited Fellow in the Litigation Counsel of America and a full Professor of Law at Dankook University Law School in South, Korea.  Informative videos and articles are available for free at davidsteinfeld.com.

The Law Office of David Steinfeld –

E-mail: info@davidsteinfeld.com

Tel: (561) 316-7905.

JANUARY 1, 2015 IS COMING – IS YOUR LLC READY?

On January 1, 2015, Florida’s Revised Limited Liability Company Act will apply to ALL LLCs incorporated in and doing business in Florida and it will be the new rule.  The changes from the old LLC Act are dramatic and substantial.  Is your LLC ready?

The old LLC Act was missing a lot of default provisions that previously had to be addressed by operating agreements, if the business had one.  The new Act fills in those gaps and, taken together, operate as a fallback operating agreement for businesses that don’t have one.  But, do you even know what those new provisions are and really want what the Legislature has chosen for your business?

If your company has no operating agreement, the new Act provides that it is deemed member-managed from January 1, 2015.  That may not be the way your company is set up, but it will be on January 1 unless you make a new operating agreement.  Also, members will have certain rights that they previously did not and that you might not want to give them, such as appraisal rights.  Most notably, the new Act sets the value of membership interest as “fair value”, which is a somewhat nebulous concept and requires expensive expert evaluation and testimony to establish.  Maybe your business is better served by a set amount or a formula such as three times EBITA.  Without an operating agreement, you will be stuck with fair value from January 1, 2015.

Your updated or new operating agreement can depart from these new statutory defaults and apply a different set of rules and standards that serve the unique needs of your business.  The cost? Far less to make an operating agreement before January 1, 2015, than to litigate these issues later.  Of course, you can also wait until after January 1, 2015, and hope for the best if you are the gambling type and like to take risks with the business that you built.

The prudent and proper way to approach this situation is to sit down with a qualified expert in business litigation who understands how these issues are litigated and how to structure them to avoid litigation or at least maximize the opportunities for success in future disputes.  Your business is one of the most important elements of your life and livelihood.  If you had a water leak in your house or a problem with your car’s engine, would you just leave it and hope for the best?  Of course not.  So, the optimum time to “repair” your LLC is before the changeover on January 1, 2015.

To schedule an evaluation of your LLC and the preparation of a new operating agreement or other important documents, such as contracts, liability waivers, non-competes, and non-disclosures, to name a few, contact the Law Office of David Steinfeld at (561) 316-7905 or through http://www.thepalmbeachbusinesslawyer.com or http://davidsteinfeld.com

SEO Evolving…

SEO has evolved a great deal within the last few years. It’s no longer a technical function of website development and the individuals/businesses that succeed at SEO are the ones that understand marketing and consumer behavior. The search engines now favor websites that provide visitors with great information and content has become the focus of any SEO campaign. Once content has been created it should be optimized by incorporating specific keywords, but that’s not all that the search engines or web users are looking for. In order for content (on site or off site) to have any impact whatsoever, it must have the following qualities that go far beyond keyword usage.

Successful SEO content is:

Original
There’s no doubt that creating content on a regular basis can be a difficult task. There’s so much content out there already, why not use that? There are ethical ways to “reuse” the work of others. As long as you cite your reference and include a link back to the content that others have created, they usually don’t have a problem with it. While this kind of approach may be a way to reach your content quotas, it really isn’t adding any value. The purpose of your marketing content is to share your opinions, not the opinions of others. The content that you create is a way for potential customers or clients to get to know your business and brand. If you are just rehashing what’s already out there, you are missing out on this opportunity to be seen as a thought leader. You’ll only be viewed as a thought sharer.

Informational
Marketing content does not equal promotional content. The purpose of marketing content is not only to get noticed by the search engines. That’s actually only a side benefit. The true purpose of online marketing content is to share your knowledge with target audience members. Help them solve a problem that they may have or allow them to better understand certain aspects of your industry. If all of your content reads like an advertisement it will be treated like an advertisement and tossed to the side. Keep the sales speak out of your marketing content.

Relevant
When creating content, it’s important to keep it as related to your business and industry as possible. The nature of a blog or social media is that it is generally a less formal way to market a business but that doesn’t mean that it’s OK to share just about anything. Some businesses forget this. It’s OK to show some personality, in fact you are encouraged to do so, but it should be the personality of your brand. Creating content that isn’t focused on a niche can result in the wrong kinds of visitors to your site that will never convert.

Shareable
Social media is now an important part of an SEO strategy as the search engines include social sharing data as part of the search ranking algorithm. The search engines want to rank content that people want to see, and if something is shared in social media it must be valuable in some way. Include social sharing buttons on all content that is created to make it easy for people to pass the information along to their networks that may find it useful.

Oh no, I’m getting deposed !

First thing – don’t panic.  A deposition is a method in a civil lawsuit in Florida by which a party can obtain information by asking questions directly to the deponent.  They are generally transcribed by a court reporter and can also be videotaped.  Simply put, they are like a Q and A session, but can sometimes be a critical junction in a lawsuit and can make or break the strategy of a party.

Please Note:  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.  This article is written on the perspective of a business lawsuit in a Florida State Court.  With litigation in particular, each matter is factually distinct, therefore, it is best to consult with your attorney as to the particular circumstances of your case.

In Florida, it is possible to depose someone before a lawsuit is filed, but such instances are not common and most depositions occur during the discovery phase of a lawsuit.  The discovery phase is normally after the pleadings or documents forming the suit are filed with the Court, but before a trial.

Procedurally, the participants coordinate the time and date for the deposition and provide written notice, which, in State Court unlike Federal Court, is filed with the Clerk of Court.  If the person or corporate representative being deposed is not a party to the lawsuit, then the notice is in the form of a subpoena and is served by a process server unless such service is waived.  Thus, because our Courts oversee the process to a certain extent, failure to appear or participate can result in sanctions unless there is a proper basis to do so.

If you are a represented party to a lawsuit, your attorney will discuss where and when the deposition will occur, who will be there, and what you can expect.  The most important thing your attorney will tell you is always tell the truth.  When you begin a deposition, you will be placed under oath to tell the truth.  Not only it is improper and illegal to intentionally violate that oath, but it will seriously damage or destroy your credibility and claims if you don’t tell the truth.

Your attorney will also discuss whether you should review any documents before the deposition and whether you should bring any materials to the deposition.  Some other important Dos and Don’ts in preparing for a deposition are:

  1. Don’t volunteer information particularly where no question ahs been asked
  2. Don’t divulge what you and your attorney have discussed unless your agree in advance with your attorney to do so
  3. Do listen to the question and consider your answer – it’s ok to take your time
  4. Do inform the attorney if you don’t understand the question and ask the attorney to rephrase it
  5. Don’t guess – it is acceptable to say “I don’t know”
  6. Do always tell the truth
  7. Don’t try to answer questions about documents without seeing the documents
  8. Do review any document provided to you fully before answering a question about the document
  9. Do inform your attorney if you need to take a break or if you are uncomfortable or unsure of anything
  10. Do be sure to answer verbally to make it easier on the Court Reporter – nods of the head don’t translate well in a transcript and “uh-huh” can mean a variety of things
  11. Do dress appropriately if the deposition will be videotaped (you’ll know in advance)
  12. Don’t try to outsmart the other lawyer or to play lawyer
  13. Don’t accept the other attorney’s statements, representations, “facts” or opinions unless they are absolutely and unquestionably accurate

David Steinfeld, Esq.

Florida Bar Board Certified Business Litigation Lawyer

Martindale-Hubbell AV-Preeminent (Highest) Peer Review Rated

Contact me at:             dave@davidsteinfeld.com

 

WEBSITE:         www.davidsteinfeld.com

FACEBOOK:     http://www.facebook.com/pages/David-Steinfeld-Esq/193459194021369#

TWITTER:         http://www.twitter.com/DSteinfeldEsq

LINKEDIN:         http://www.linkedin.com/in/davidsteinfeld

AVVO:               http://www.avvo.com/attorneys/34996-fl-david-steinfeld-1244715.html

MARTINDALE:  http://www.martindale.com/David-Steinfeld/2444967-lawyer.htm

2014 – New Revised Limited Liability Company Act

Midnight December 31, 2013, the ball dropped, fireworks went off, and people rejoiced.  Why were they so happy? Because that moment in time marked the end of Florida’s Limited Liability Company Act and sounded the opening bell for the Revised LLC Act for companies formed after January 1, 2014.

If you own or manage an LLC that existed before January 1, 2014, you can breathe a sigh of relief because you aren’t affected, but you will be.  January 1, 2015 is when the new law applies to you, whether you like it or not.

So, you just formed an LLC in Florida and have a great business idea that is going to make a lot of profit in 2014.  What are some of the big changes that will impact your new LLC and what are you supposed to do?  Probably the biggest one that affects you is the management; the Revised Act serves as a default or fallback in the event you don’t have an operating agreement.  So let’s assume you haven’t gotten with me yet to prepare that document and you have a partner or a few investors.  Under the new Act, they will now be deemed more than just silent investors, they are members with many, many rights that you might not have intended they have.  These members can also sell and transfer their interest under the new Act, meaning you may have new “partners” that you didn’t intend and don’t want as partners.  What can you do about it if you don’t have a proper operating agreement prepared by a skilled and qualified business lawyer . . . nothing.  The new default is member managed.  If you want to have the business run by a manager or managers, that has to be in your operating agreement.  No operating agreement, no controlling manager.

Also, the business has to keep certain records and the members have rights to see them.  Thus, by saving money not getting an operating agreement, you cost the company more in responding to records requests or even lawsuits for records that you didn’t think the “silent investors” should get, not realizing they are full-fledged members because you have no operating agreement.

Arguably, not having proper documents, like an operating agreement or contracts, may even be a breach of a manager’s fiduciary responsibilities to the company.  The cost of having the Law Office of David Steinfeld prepare these documents, for example, is negligible as compared to the cost of lawsuits by members for mismanagement for not having them.  Which also highlights a “safe harbor” in the new law that allows business owners to protect and insulate themselves from liability in most cases by obtaining opinion letters from professionals, such as lawyers and CPAs.  What’s the cost of these letters – much less than not getting them, that is for certain.

Business owners put a lot of time, energy, and money into their business to build and grow it.  It only makes sense to protect it with proper internal documents, like operating agreements, and documents for external use, such as contracts, non-disclosure agreement, and non-compete agreements.  Failing to invest in protecting your business can literally bring down the whole house of cards.

If you are a single-member LLC, if someone gets a judgment against you, the owner, they can literally take away your ownership and they own the company and all its assets.  Does that make you a more attractive target?  How can your business afford to defend an expensive lawsuit, even if you did nothing wrong?  All good questions to ask yourself when looking forward to 2014 and realizing now is the time to have the Law Office of David Steinfeld or any other Board Certified expert in business litigation law sit down with you, review your documents, and advise you on your options for doing things the right way under Florida’s Revised Limited Liability Company Act.

For more information please visit http://davidsteinfeld.com

 

Mediating e-Discovery Disputes

By David Steinfeld, Esq. and Edmund J. Sikorski, Jr., J.D.

Discovery of Electronically Stored Information (ESI) is the newest and developing area of practice in civil litigation.  E-discovery began in complex commercial disputes, but is now appearing in a multitude of cases and will continue to develop and permeate all manner of civil cases.

Mediation is a useful and efficient method to deal with e-discovery issues.  It can afford the parties control over the process and reduce their costs. In any mediation, the Worst Alternative to a Negotiated Agreement (WANTNA) is one where a Judge “splits the baby”.  This may have a greater impact in e-discovery because it can propel a case on a course that the parties did not intend or desire.  In e-discovery mediation, the parties take control over the outcome of the process, what is being requested, how it is produced, and when.

The Commitee comment to Florida’s new and amended Rule 1.280 provides, “The parties should consider conferring with one another at the earliest practical opportunity to discuss the reasonable scope of preservation and production of electronically stored information. These issues may also be addressed by means of a Rule 1.200 or Rule 1.201 case management conference.”  This guidance strongly suggests that parties would be wise to consider mediation in the early stages of the e-discovery process in appropraite cases to avoid unnecessary litigation and use of limited judicial resources.

Unlike ordinary mediation that is geared toward resolving the entire dispute, e-discovery mediation is limited to a singular issue within the dispute that must be resolved before a case can advance to a final mediation or trial.  E-discovery mediation is a cost-effective mechanism to manage the situation.  The parties’ good faith attempts to resolve the issue may even shield them from the imposition of sanctions.

Some of the advantages of e-discovery mediation are:

  • Identification and remedying of miscommunications and misunderstandings
  • Designing workable solutions for issues of ESI sources, presentation, and form of production
  • Definition of parameters and confidentiality issues
  • Determinations of relevancy
  • Development of timelines and sequences for production
  • Avoidance of spoliation
  • Allocation of costs

The goal of e-discovery mediation is for parties to conclude with an agreed e-discovery plan over which they have and will maintain control.  This control, in turn, results in a product that reduces costs and allows for the efficient adjudication of any civil dispute.

From a practitioner’s perspective, e-discovery mediation, just like e-discovery itself, may not be necessary or appropriate in every case, however, the costs of e-discovery and ESI experts, whether borne by a plaintiff or defendant, can be substantial and can even rise to the level of precluding a party from having the merits of its claim reached.  Thus, where appropriate, e-discovery mediation can be an extremely beneficial mechanism for all the parties to a dispute and can form the foundation necessary for parties to begin the process of working together to ultimately resolve their dispute in a manner and form that is acceptable to them.

Is Your Cloud Data Really Secure?

I read an interesting article not long ago by Mr. Michael Geist, a well-respected Canadian law professor, that got me thinking whether data stored in the cloud by Florida businesses is really secure.  The article and Professor Geist’s impressive bio can be found at michaelgeist.ca/content/view/6755/125.

At an increasing pace, businesses around the globe are transitioning their data to cloud storage for a variety of reasons.  On September 1, 2012, the Florida legislature enacted a set of comprehensive electronic discovery rules for civil cases that now allow parties in lawsuits to obtain electronically stored information (ESI) from other parties and even non-parties.  Businesses can and should be taking steps now to ensure they can avail themselves of the safe harbor provisions of those Rules with data management and litigation hold plans prepared by and with their business counsel.  The Law Office of David Steinfeld has several videos and articles on these plans on its website at http://www.davidsteinfeld.com for your reference.

Which brings us to the question of whether data is secure in the cloud and why this is important for every business to consider when selecting a cloud storage provider.  In addition to protecting proprietary data and trade secrets of the business and ensuring access at all times, you should consider where the data is stored and what the policies of the storage provider are with regard to allowing third-party access.

Professor Geist’s article addressed the US Government’s efforts to obtain the cloud data of a company under investigation in a criminal case, but in civil discovery the standard that Judges apply is whether a business has possession, custody or control over certain data.  While a business may not have physical possession or actual custody over ESI as it once did when paper documents were in a file cabinet at the business’s office, the choice to store ESI on servers hosted by another will most likely lead to a determination by a Court that the business at least has control over the data requiring production of the data if all other requisite elements are met.

Therefore, it is important for any business storing data in the cloud or migrating data to the cloud to consider the policies and procedures of the cloud provider and to understand when that provider may refuse access or allow third-party access to the business’s data.